Protara Therapeutics, Inc DEF 14A, filed Apr 25, 2025
Protara Therapeutics, Inc. (TARA)
About this DEF 14A
Protara Therapeutics, Inc filed this DEF 14A on April 25, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE INFORMATION
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Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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Filed by a Party other than the Registrant |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to § 240.14a-12 |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
PROTARA THERAPEUTICS, INC.
345 Park Avenue South, Third Floor
New York, New York 10010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 11, 2025
To the Stockholders of Protara Therapeutics, Inc.:
On behalf of our board of directors, you are cordially invited to attend the 2025 Annual Meeting of Stockholders (the “Annual Meeting”) of Protara Therapeutics, Inc., a Delaware corporation (the “Company”). The Annual Meeting will be held virtually, via live webcast at http://www.meetnow.global/M5F9229, originating from New York, New York, on Wednesday, June 11, 2025 at 12:00 p.m. Eastern Time. To provide a consistent and convenient experience to all stockholders regardless of location, the Annual Meeting will be held in a virtual meeting format only, via live webcast on the Internet, with no physical in-person meeting. Stockholders virtually attending the Annual Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. We encourage you to attend online and participate in the Annual Meeting, where you will be able to listen to the meeting live, submit questions and vote. We recommend that you log in a few minutes before the Annual Meeting on June 11, 2025 to ensure you are logged in when the Annual Meeting starts.
The Annual Meeting will be held for the following purposes:
1. To elect three Class II directors, Luke Beshar, Roger Garceau, M.D. and Gregory Sargen, each to hold office until our Annual Meeting of Stockholders in 2028;
2. To ratify the selection by the audit committee of our board of directors of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2025;
3. To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in the accompanying proxy statement;
4. To approve an amendment to the Protara Therapeutics, Inc. 2024 Equity Incentive Plan; and
5. To conduct any other business properly brought before the Annual Meeting.
These items of business are more fully described in the Proxy Statement accompanying this Notice.
The record date for the Annual Meeting is April 16, 2025. Only stockholders of record at the close of business on that date may vote at the Annual Meeting or any adjournment thereof.
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By Order of the Board of Directors |
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Mary J. Grendell |
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Corporate Secretary |
New York, New York
April 25, 2025
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You are cordially invited to attend the Annual Meeting. Whether or not you expect to attend the Annual Meeting, PLEASE VOTE YOUR SHARES. As an alternative to voting online at the Annual Meeting, you may vote your shares in advance of the Annual Meeting via the internet, by telephone or, if you receive a paper proxy card by mailing the completed proxy card. Voting instructions are provided in the Notice of Internet Availability of Proxy Materials, or, if you receive a paper proxy card by mail, the instructions are printed on your proxy card. Even if you have voted by proxy, you may still vote online if you attend the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other agent and you wish to vote at the Annual Meeting, you must follow the instructions from such organization and will need to obtain a proxy issued in your name from that record holder. |
TABLE OF CONTENTS
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PROTARA THERAPEUTICS, INC.
345 Park Avenue South, Third Floor
New York, New York 10010
PROXY STATEMENT
FOR THE 2025 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 11, 2025 at 12:00 p.m. Eastern Time
Our board of directors is soliciting your proxy to vote at the 2025 Annual Meeting of Stockholders (the “Annual Meeting”) of Protara Therapeutics, Inc., a Delaware corporation, to be held virtually, via live webcast at http://www.meetnow.global/M5F9229, originating from New York, New York, on Wednesday, June 11, 2025 at 12:00 p.m. Eastern Time, and any adjournment or postponement thereof. To provide a consistent and convenient experience to all stockholders regardless of location, the Annual Meeting will be held in a virtual meeting format only, via live webcast on the internet, with no physical in-person meeting. Stockholders virtually attending the Annual Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting.
For the Annual Meeting, we have elected to furnish our proxy materials, including this proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Annual Report”), to our stockholders primarily via the internet. On or about April 25, 2025, we expect to mail to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) that contains notice of the Annual Meeting and instructions on how to access our proxy materials on the internet, how to vote at the Annual Meeting, and how to request printed copies of the proxy materials. Stockholders may request to receive all future materials in printed form by mail or electronically by e-mail by following the instructions contained in the Notice. A stockholder’s election to receive proxy materials by mail or email will remain in effect until revoked. We encourage stockholders to take advantage of the availability of the proxy materials on the internet to help reduce the environmental impact and cost of our Annual Meeting.
Only stockholders of record of our common stock at the close of business on April 16, 2025 (the “Record Date”) will be entitled to vote at the Annual Meeting. On the Record Date, there were 38,579,021 shares of common stock outstanding and entitled to vote, with one vote each (together, the “common stock”). A list of stockholders entitled to vote at the Annual Meeting will be available for examination during normal business hours for ten days before the Annual Meeting at our address above. The stockholder list will also be available online during the Annual Meeting at http://www.meetnow.global/M5F9229. If you plan to attend the Annual Meeting online, please see the instructions on page 2 of this proxy statement.
In this proxy statement, we refer to Protara Therapeutics, Inc. as “Protara,” the “Company,” “we” or “us” and the board of directors of Protara as “our board of directors.” The Annual Report, which contains consolidated financial statements as of and for the fiscal year ended December 31, 2024, accompanies this proxy statement. You also may obtain a copy of the Annual Report without charge by writing to our Corporate Secretary at 345 Park Avenue South, Third Floor, New York, New York 10010, Attention: Corporate Secretary or emailing info@protaratx.com.
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QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why did I receive a notice regarding the availability of proxy materials on the internet?
Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the internet. Accordingly, we have sent you the Notice because our board of directors is soliciting your proxy to vote at the Annual Meeting, including at any adjournments or postponements thereof. All stockholders holding our common stock will have the ability to access the proxy materials on the website referred to in the Notice or to request a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Notice.
We intend to mail the Notice on or about April 25, 2025 to all stockholders of record entitled to vote at the Annual Meeting.
Will I receive any other proxy materials by mail?
We may send you a proxy card, along with a second Notice, on or after May 5, 2025.
How do I attend, participate in, and ask questions during the virtual Annual Meeting?
We will be hosting the Annual Meeting via live webcast only. Any holder of record of shares of our common stock can attend the virtual Annual Meeting live online at http://www.meetnow.global/M5F9229. The Annual Meeting will start at 12:00 p.m. Eastern Time, on Wednesday, June 11, 2025. Stockholders attending the Annual Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting.
In order to enter the Annual Meeting, you will need the control number, which is included in the Notice or on your proxy card if you are a stockholder of record of shares of common stock or included with your voting instruction card and voting instructions received from your broker, bank or other agent if your shares of common stock are held in “street name.” Instructions on how to attend and participate online are available at http://www.meetnow.global/M5F9229. We recommend that you log in a few minutes before 12:00 p.m. Eastern Time to ensure you are logged in when the Annual Meeting starts. The webcast will open 15 minutes before the start of the Annual Meeting.
If you would like to submit a question, you may do so no earlier than five days prior to the Annual Meeting, or you may otherwise do so during the Annual Meeting. If you would like to submit your question any time before or during the Annual Meeting, you may log in to http://www.meetnow.global/M5F9229 and enter your control number as shown on the Notice. Once past the login screen, click on the question icon at the top of the page. You may then type your question into the question bar at the bottom of the screen and click the icon to the right of the question bar to submit the question.
To help ensure that we have a productive and efficient meeting, and in fairness to all stockholders in attendance, you will also find posted our rules of conduct for the Annual Meeting when you log in prior to its start. These rules of conduct will include the following guidelines:
• You may submit questions and comments electronically through the meeting portal or by calling the toll-free number listed there during the Annual Meeting.
• Only stockholders of record as of the Record Date for the Annual Meeting and their proxy holders may submit questions or comments.
• Please direct all questions to Jesse Shefferman, our Chief Executive Officer.
• Please include your name and affiliation, if any, when submitting a question or comment.
• Limit your remarks to one brief question or comment that is relevant to the Annual Meeting and/or our business.
• Questions may be grouped by topic by our management.
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• Questions may also be ruled as out of order if they are, among other things, irrelevant to our business, related to pending or threatened litigation, disorderly, repetitious of statements already made, or in furtherance of the speaker’s own personal, political or business interests.
• Be respectful of your fellow stockholders and Annual Meeting participants.
• No audio or video recordings of the Annual Meeting are permitted.
Who can vote at the Annual Meeting?
Only stockholders of record of our common stock at the close of business on the Record Date, April 16, 2025 will be entitled to vote at the Annual Meeting. On the Record Date, there were 38,579,021 shares of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If, on the Record Date, your shares of our common stock were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record. As a stockholder of record, you may vote online during the Annual Meeting or vote by proxy in advance. Whether or not you plan to virtually attend the Annual Meeting, we urge you to vote your shares by proxy in advance of the Annual Meeting electronically through the internet, by telephone or by completing and returning a printed proxy card (if you request a printed proxy card in accordance with the instructions provided in the Notice).
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If, on the Record Date, your shares of our common stock were held, not in your name, but rather in an account at a brokerage firm, bank 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. You are not 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, bank or other agent regarding how to vote the shares in your account. You are also invited to virtually attend the Annual Meeting. However, since you are not the stockholder of record, you may vote your shares online during the Annual Meeting only by following the instructions from such organization and after obtaining a valid proxy from your broker, bank or other agent.
What am I voting on?
There are four matters scheduled for a vote:
• Proposal 1: Election of three Class II directors, each to hold office until our annual meeting of stockholders in 2028;
• Proposal 2: Ratification of the selection by the audit committee of our board of directors of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2025;
• Proposal 3: Approval, on an advisory basis, of the compensation of our named executive officers, as disclosed in the proxy statement; and
• Proposal 4: Approval of an amendment to the Protara Therapeutics, Inc. 2024 Equity Incentive Plan (the “2024 Plan”).
What if another matter is properly brought before the Annual Meeting?
Our board of directors knows of no other matters that will be presented for consideration at the Annual Meeting.
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How do I vote?
The procedures for voting are fairly simple:
• Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record of our common stock as of the Record Date, you may vote (1) in advance of the Annual Meeting by proxy through the internet, by telephone or by using a proxy card that you may request or that we may elect to deliver at a later time or (2) online during the Annual Meeting. Whether or not you plan to virtually attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote online even if you have already voted by proxy.
• To vote in advance of the Annual Meeting through the internet, go to www.envisionreports.com/TARA to complete an electronic proxy card. You will be asked to provide the company number and control number from the Notice. Your internet vote must be received by 11:59 p.m., Eastern Time on Tuesday, June 10, 2025 to be counted.
• To vote online during the Annual Meeting, follow the provided instructions to join the Annual Meeting at http://www.meetnow.global/M5F9229 starting at 12:00 p.m. Eastern Time on Wednesday, June 11, 2025. The webcast will open approximately 15 minutes before the start of the Annual Meeting.
• To vote in advance of the Annual Meeting by telephone, dial 1-800-652-VOTE, which is the number found on the Notice or the printed proxy card that may be delivered to you using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice or the printed proxy card. Your telephone vote must be received by 11:59 p.m., Eastern Time on Tuesday, June 10, 2025 to be counted.
• To vote in advance of the Annual Meeting using a printed proxy card that may be delivered to you, simply complete, sign and date the proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us by 11:59 p.m., Eastern Time on Tuesday, June 10, 2025, we will vote your shares as you direct at the Annual Meeting.
• Beneficial Owner: Shares Registered in the Name of Broker or Bank. If you are a beneficial owner of shares of our common stock registered in the name of your broker, bank or other agent, you should have received a Notice containing voting instructions from that organization rather than from us. Simply follow the voting instructions in the Notice to ensure that your vote is counted. To vote online during the Annual Meeting, you must follow the instructions from your broker, bank or other agent and will need to obtain a proxy issued in your name from that record holder.
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Internet proxy voting in advance of the Annual Meeting and/or internet voting during the Annual Meeting allows you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. Please be aware that you must bear any costs associated with your internet access. |
Can I vote my shares by filling out and returning the Notice?
No. The Notice identifies the items to be voted on at the Annual Meeting, but you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote by proxy in advance of the Annual Meeting through the internet, by telephone, by using a printed proxy card or by submitting a ballot online during the Annual Meeting.
What does it mean if I receive more than one Notice?
If you receive more than one Notice, your shares of our common stock may be registered in more than one name or in different accounts. Please follow the voting instructions on all of the Notices that you receive to ensure that all of your shares are voted.
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Can I change my vote after submitting my proxy?
• Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record of our common stock as of the Record Date, then yes, you can revoke your proxy at any time before the final vote at the Annual Meeting. You may revoke your proxy in any one of the following ways:
• Submit another properly completed proxy card with a later date.
• Grant a subsequent proxy by telephone or through the internet.
• Send a timely written notice that you are revoking your proxy to our Corporate Secretary at 345 Park Avenue South, Third Floor, New York, New York 10010, Attention: Corporate Secretary or via email at info@protaratx.com.
• Attend the Annual Meeting and vote online during the meeting. Simply attending the Annual Meeting will not, by itself, revoke your proxy. Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or voting instructions or vote by telephone or through the internet in advance of the Annual Meeting so that your vote will be counted if you later decide not to attend the Annual Meeting.
• Your most current proxy card or telephone or internet proxy is the one that is counted.
• Beneficial Owner: Shares Registered in the Name of Broker or Bank. If you are a beneficial owner of shares of our common stock as of the Record Date and your shares are held in “street name” by your broker, bank or other agent, you must follow the instructions provided by your broker, bank or other agent.
If I am a stockholder of record and I do not vote, or if I return a proxy card or otherwise vote without giving specific voting instructions, what happens?
If you are a stockholder of record of our common stock as of the Record Date and do not vote through the internet, by telephone, by completing the proxy card that may be delivered to you or online during the Annual Meeting, your shares will not be voted.
If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted in accordance with the recommendations of our board of directors: “FOR” the election of each of the three nominees for director, “FOR” the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2025, “FOR” the advisory approval of executive compensation, and “FOR” the approval of the amendment to the 2024 Plan. If any other matter is properly presented at the Annual Meeting, your proxy holder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
If I am a beneficial owner of shares held in “street name” and I do not provide my broker, bank or other agent with voting instructions, what happens?
If you are a beneficial owner of shares of our common stock as of the Record Date 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, pursuant to stock exchange rules, the particular proposal is deemed 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 applicable rules and interpretations, “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, and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may vote your shares of common stock on Proposal 2. Your broker or nominee, however, may not vote your shares on Proposals 1, 3 or 4 without your instructions. If you do not provide your broker, bank or other agent with voting instructions for such proposals, it will result in a “broker non-vote” for such proposals and these shares will not be counted as having been voted on Proposals 1, 3 or 4. Please instruct your bank, broker or other agent to ensure that your vote will be counted.
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What are “broker non-votes”?
As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed to be “non-routine,” the broker or nominee cannot vote the shares. These unvoted shares are counted as “broker non-votes.”
As a reminder, if you a beneficial owner of shares held in “street name,” in order to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the materials you receive from such organization.
How are votes counted?
Votes will be counted by the inspector of election appointed for the Annual Meeting, who will separately count, (i) for the proposal to elect directors, votes “FOR,” “WITHHOLD,” and broker non-votes; and with respect to (ii) (a) the proposal to ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2025, (b) the proposal to approve, on an advisory basis, the compensation of our named executive officers and (c) the proposal to approve the amendment to the 2024 Plan, votes “FOR,” “AGAINST,” abstentions and if applicable, broker non-votes. The effects of abstentions and broker non-votes are discussed below under “How many votes are needed to approve each proposal?”.
How many votes are needed to approve each proposal?
• Proposal 1: For the election of directors, the three nominees receiving the most “FOR” votes from the holders of shares present by virtual attendance or represented by proxy and entitled to vote on the election of directors will be elected. Only votes “FOR” will affect the outcome.
• Proposal 2: To be approved, the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal year ending December 31, 2025 must receive “FOR” votes from the holders of a majority of shares present by virtual attendance or represented by proxy and entitled to vote on the matter. Abstentions will have the same effect as an “AGAINST” vote. We do not expect any broker non-votes for Proposal 2.
• Proposal 3: To be approved, on an advisory basis, the compensation of our named executive officers must receive “FOR” votes from the holders of a majority of shares present by virtual attendance or represented by proxy and entitled to vote on the matter. Abstentions will have the same effect as an “AGAINST” vote and broker non-votes will have no effect.
• Proposal 4: To be approved, the approval of the amendment to the 2024 Plan must receive “FOR” votes from the holders of a majority of shares present by virtual attendance or represented by proxy and entitled to vote on the matter. Abstentions will have the same effect as an “AGAINST” vote and broker non-votes will have no effect.
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares of common stock entitled to vote are present at the Annual Meeting by virtual attendance or represented by proxy. On the Record Date, there were 38,579,021 shares of common stock outstanding and entitled to vote. Thus, the holders of 19,289,511 shares of common stock must be present by virtual attendance or represented by proxy at the Annual Meeting to have a quorum. Holders of our preferred stock are not entitled to vote at the Annual Meeting and therefore do not affect the presence of a quorum at the Annual Meeting.
Your shares of common stock 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 agent) or if you vote online during the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares of common stock present at the Annual Meeting by virtual attendance or represented by proxy may adjourn the Annual Meeting to another date.
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How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.
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 26, 2025, to our Corporate Secretary at 345 Park Avenue South, Third Floor, New York, New York 10010, Attention: Secretary.
Pursuant to our amended and restated bylaws, if you wish to submit a proposal (including a director nomination) at the 2026 annual meeting that is not to be included in next year’s proxy materials, you must do so not later than the close of business on March 13, 2026 nor earlier than the close of business on February 11, 2026. However, if the date of our 2026 annual meeting is not held between May 12, 2026 and August 20, 2026, to be timely, notice by the stockholder must be received not later than the close of business on the 10th day following the day on which public announcement of the date of the 2026 annual meeting is first made. You are also advised to review our amended and restated bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
In addition to satisfying all of the requirements under our amended and restated bylaws, any stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees at the next annual meeting must also comply with all applicable requirements of Rule 14a-19 under the Exchange Act. The advance notice requirement under Rule 14a-19 does not override or supersede the longer advance notice requirement under our amended and restated bylaws.
Who is paying for this proxy solicitation?
We will pay for the 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 additional compensation for soliciting proxies. We may reimburse brokers, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
Why do you discuss a merger in this Proxy Statement?
On January 9, 2020, we (formerly Proteon Therapeutics, Inc.), and privately-held ArTara Subsidiary, Inc. (“Private ArTara”), completed a merger and reorganization (the “Merger”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated September 23, 2019 (the “Merger Agreement”), by and among the Company, Private ArTara and REM 1 Acquisition, Inc., our wholly owned subsidiary (“Merger Sub”), whereby Merger Sub merged with and into Private ArTara, with Private ArTara surviving as our wholly owned subsidiary. The Merger was structured as a reverse merger and Private ArTara was determined to be the accounting acquirer based on the terms of the Merger and other factors.
On January 9, 2020, in connection with, and prior to the completion of, the Merger, the Company effected a 1-for-40 reverse stock split of its common stock (the “Reverse Stock Split”), Private ArTara changed its name from “ArTara Therapeutics, Inc.” to “ArTara Subsidiary, Inc.”, and we changed our name from “Proteon Therapeutics, Inc.” to “ArTara Therapeutics, Inc.” On May 11, 2020, we changed our name from ArTara Therapeutics, Inc. to Protara Therapeutics, Inc. In addition, on January 9, 2020, all of the outstanding shares of our Series A Preferred Stock were converted into shares of common stock. Shares of our common stock commenced trading on The Nasdaq Capital Market (“Nasdaq”) under the new name and ticker symbol “TARA” as of market open on January 10, 2020. Unless otherwise noted, all references to share amounts in this Proxy Statement reflect the Reverse Stock Split.
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PROPOSAL 1
ELECTION OF DIRECTORS
Our board of directors currently consists of nine members and is divided into three classes. Each class consists of one-third of the total number of directors, and each class has a three-year term.
At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to hold office from the time of election until the third annual meeting following the election. Our directors are divided into the three classes as follows:
• Class I directors: Jane Huang, M.D., Richard Levy, M.D. and Michael Solomon, Ph.D., whose terms will expire at the annual meeting of stockholders to be held in 2027;
• Class II directors: Luke Beshar, Roger Garceau, M.D. and Gregory Sargen, whose terms will expire at this Annual Meeting; and
• Class III directors: Jesse Shefferman, Barry Flannelly, Pharm.D., and Cynthia Smith, whose terms will expire at the annual meeting of stockholders to be held in 2026.
Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. Vacancies on the board of directors may be filled only by persons elected by a majority of the remaining directors. A director elected by the board of directors 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 duly elected and qualified. The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control of the Company.
Mr. Beshar, Dr. Garceau and Mr. Sargen are currently members of our board of directors and have been nominated for reelection to serve as Class II directors. Each of these nominees has agreed to stand for reelection at the Annual Meeting. Our management has no reason to believe that any nominee will be unable to serve. If elected at the Annual Meeting, each of these nominees would hold office until the annual meeting of stockholders to be held in 2028 and until his successor has been duly elected or qualified, or if sooner, until the director’s death, resignation or removal.
Directors are elected by a plurality of the votes of the holders of shares of our common stock present by virtual attendance or represented by proxy and entitled to vote on the election of directors. Accordingly, the three 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 three nominees, Mr. Beshar, Dr. Garceau and Mr. Sargen. If any nominee becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted for the election of a substitute nominee proposed by us.
Our nominating and corporate governance committee seeks to assemble a board that, as a whole, possesses the appropriate balance of professional and industry knowledge, financial expertise, diversity of experience and skills and high-level management experience necessary to oversee and direct our business. To that end, the committee has identified and evaluated nominees in the broader context of the board’s overall composition, with the goal of recruiting members who complement and strengthen the skills of other members and who also exhibit integrity, collegiality, sound business judgment and other qualities that the committee views as critical to effective functioning of the board. The biographies below include information, as of the date of this proxy statement, regarding the specific and particular experience, qualifications, attributes or skills of each director or director nominee that led the committee to believe that that nominee should continue to serve on the board. However, each of the members of the committee may have a variety of reasons why a particular person would be an appropriate nominee for the board, and these views may differ from the views of other members.
Our Board Of Directors Recommends A Vote FOR Each Class II Director Nominee Named Above.
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Information Regarding Director Nominees and Current Directors
The following table sets forth, for the Class II nominees and our other directors who will continue in office after the Annual Meeting, their ages and position or office held with us as of the Record Date:
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Name |
Age |
Position |
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Class II director nominees for election at the 2025 Annual Meeting of Stockholders |
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Luke Beshar |
66 |
Director, Chairman of the Board |
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Roger Garceau, M.D. |
71 |
Director |
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Gregory Sargen |
59 |
Director |
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Class III directors continuing in office until the 2026 Annual Meeting of Stockholders |
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Jesse Shefferman |
53 |
Chief Executive Officer and Director |
||
|
Barry Flannelly, Pharm.D. |
67 |
Director |
||
|
Cynthia Smith |
56 |
Director |
||
|
Class I directors continuing in office until the 2027 Annual Meeting of Stockholders |
||||
|
Jane Huang, M.D. |
52 |
Director |
||
|
Richard Levy, M.D. |
67 |
Director |
||
|
Michael Solomon, Ph.D. |
55 |
Director |
Two of our directors are female and one director is from an underrepresented minority group. Set forth below is further biographical information for the director nominees and each person whose term of office as a director will continue after the Annual Meeting. This includes information regarding each director’s experience, qualifications, attributes or skills that led our board of directors to recommend them for board service.
Nominees for Election at the 2025 Annual Meeting of Stockholders
Luke Beshar served as a member of the board of directors of Private ArTara from October 2018 until the Merger and has served as Chairman of our board of directors since January 2020. Mr. Beshar has over 30 years of experience in serving as chief financial officer and in executive leadership roles principally for publicly traded and privately held pharmaceutical companies. Mr. Beshar has served as chairman of the board of directors of INOTREM Therapeutics SA, an advanced clinical stage biotech company specialized in immunotherapy to control dysregulated inflammatory reactions, since May 2022, and chairman of the board of directors of Quell Therapeutics Limited, a clinical stage cell therapy company focused on durably controlling serious immune-mediated and inflammatory diseases with a single dose of engineered Tregs, since June 2024. Mr. Beshar also served on the board of directors of Omega Therapeutics, Inc., a publicly traded biotechnology company developing epigenetic technology, from May 2021 until June 2024, REGENXBIO, Inc., a publicly traded leading clinical-stage gene therapy company, from May 2015 until September 2021, and Trillium Therapeutics Inc., a publicly traded immuno-oncology company, from March 2014 until November 2021 when the company was acquired by Pfizer Inc. Previously, Mr. Beshar served as Executive Vice President, Chief Financial Officer of NPS Pharmaceuticals, Inc., a publicly traded global biopharmaceutical company focused on rare diseases, from 2007 until February 2015 when the company was acquired by Shire plc. Prior to NPS Pharmaceuticals, Mr. Beshar served as Executive Vice President, Chief Financial Officer of Cambrex Corporation, a publicly traded manufacturer of branded and generic active pharmaceutical ingredients and provider of related services, from 2002 until 2007. Mr. Beshar began his career with Arthur Andersen & Co. and is a certified public accountant. Mr. Beshar earned his B.A. in accounting and financial administration from Michigan State University and is a graduate of The Executive Program at the Darden Graduate School of Business at the University of Virginia. Our nominating and corporate governance committee and board of directors believe that Mr. Beshar’s executive leadership and financial experience and his extensive director experience on other publicly held biotechnology companies qualifies him to serve on our board of directors.
Roger Garceau, M.D. served as a member of the board of directors of Private ArTara from January 2019 until the Merger and has served as a member of our board of directors since January 2020. Dr. Garceau has more than 30 years of broad pharmaceutical industry experience. He served as a member of the board of directors of Entera Bio Ltd., a biotechnology company specializing in the oral delivery of large molecules and biologics, from
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March 2016 to July 2024, as its interim Chief Executive Officer from August 2020 to January 2021 and as its Chief Development Advisor from December 2016 to December 2021 (excluding the period he served as interim Chief Executive Officer). Prior to joining Entera, Dr. Garceau served as Chief Medical Officer and Executive Vice President of NPS Pharmaceuticals, Inc. from December 2008 and January 2013, respectively, until February 2015, when the company was acquired by Shire plc. Previously, Dr. Garceau also served in several other managerial positions with NPS Pharmaceuticals, Sanofi S.A. and Pharmacia Corporation. Dr. Garceau has served as a member of the board of directors of Enterome S.A., a privately held clinical-stage biopharmaceutical company, since December 2016. Dr. Garceau is a board-certified pediatrician and is a fellow of the American Academy of Pediatrics. Dr. Garceau earned his B.S. in biology from Fairfield University and his M.D. from the University of Massachusetts Medical School. Our nominating and corporate governance committee and board of directors believe that Dr. Garceau’s pharmaceutical industry experience, both in management and at the board level, qualifies him to serve on our board of directors.
Gregory Sargen served as a member of the board of directors of Private ArTara from November 2019 until the Merger and has served as a member of our board of directors since January 2020. Mr. Sargen most recently served as Chief Financial Officer and Executive Vice President, Corporate Development and Strategy of Cambrex Corporation from January 2017 until January 2020, following the December 2019 acquisition of Cambrex by a private equity company. Mr. Sargen previously served in various managerial roles at Cambrex from February 2007 to January 2017. Prior to Cambrex, Mr. Sargen served as Executive Vice President, Chief Financial Officer of Expanets, Inc., a communications company, from 1999 until 2002, as Vice President of Finance at Fisher Scientific International, Inc.’s chemicals manufacturing division, from 1996 until 1998, and held various positions in finance, accounting and auditing with Merck & Co., Inc., Heat and Control, Inc. and Deloitte & Touche LLP. Mr. Sargen also serves on the boards of Umoja Biopharma, Inc., a privately owned biotechnology company developing next-generation immunotherapies, Kindeva Drug Delivery, L.P., a privately owned contract manufacturer and developer of complex drug delivery systems, and Veranova, L.P., a privately owned developer and manufacturer of active pharmaceutical ingredients. Mr. Sargen also served on the board of Avid Bioservices, Inc., a publicly traded contract manufacturer focused on the development and manufacture of biopharmaceuticals, from November 2017 until its acquisition by private equity firms in February 2025. Mr. Sargen is a Certified Public Accountant (non-practicing) and earned his B.S. in accounting from Pennsylvania State University and his M.B.A. in finance from The Wharton School of the University of Pennsylvania. Our nominating and corporate governance committee and board of directors believe that Mr. Sargen’s industry experience, both in management and at the board level, qualifies him to serve on our board of directors.
Directors Continuing in Office Until the 2026 Annual Meeting of Stockholders
Jesse Shefferman co-founded Private ArTara and served as its Chief Executive Officer and a member of its board of directors from November 2017 until the Merger and has served as our Chief Executive Officer and a member of our board of directors since January 2020. Prior to co-founding Private ArTara, Mr. Shefferman served as Vice President and Head of Business Development at Retrophin Inc., a publicly traded company focusing on rare diseases, from March 2014 until October 2017. Prior to Retrophin, Mr. Shefferman served as Director, Strategy & Business Development at Vertex Pharmaceuticals, Inc., a publicly traded biopharmaceutical company, from September 2012 until March 2014. Mr. Shefferman previously served as an investment banker with Barclays Plc and Lehman Brothers Inc. Mr. Shefferman earned his B.A. in accounting from Gordon College and his M.B.A. and certificate in health sector management from Duke University’s Fuqua School of Business. Our nominating and corporate governance committee and board of directors believe that Mr. Shefferman’s experience in strategy, management and financial roles in the biopharmaceutical industry qualifies him to serve on our board of directors.
Barry P. Flannelly, Pharm.D. has served as a member of our board of directors since July 2020. Dr. Flannelly has served as Executive Vice President and General Manager, North America, of Incyte Corporation, a publicly traded biopharmaceutical company, from June 2015 until January 2025, having joined as Executive Vice President, Business Development and Strategic Planning in August 2014. He is remaining employed by the company through July 2025 to assist with the transition of his responsibilities. Prior to joining Incyte Corporation, he served as Chief Executive Officer of OSS Healthcare Inc., a biotechnology start-up company, from August 2013 to July 2014. Dr. Flannelly also served as Vice President, Global Product Strategy and Commercial Planning of Nektar Therapeutics, a biopharmaceutical company, from April 2011 until April 2013, and as Senior Vice President, Commercial, of Onyx Pharmaceuticals, Inc., a biopharmaceutical company, from August 2008 until January 2011. Dr. Flannelly has also held key positions at biopharmaceutical and pharmaceutical companies such as Abraxis BioScience, Inc. and Novartis Pharmaceuticals Corporation. Dr. Flannelly also served on the board of directors of Genomic Health, Inc., a publicly
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traded genomic-based diagnostic company, in 2019 until its merger with Exact Sciences Corp. Dr. Flannelly earned his B.S. degree in Pharmacy from the Massachusetts College of Pharmacy, his M.B.A. from the University of Baltimore and his Pharm.D. from the University of Maryland School of Pharmacy. Our nominating and corporate governance committee and board of directors believe that Dr. Flannelly’s pharmaceutical and biotechnology industry experience, both in management and at the board level, qualifies him to serve on our board of directors.
Cynthia Smith has served as a member of our board of directors since January 2021. Ms. Smith is a biotechnology executive with over 20 years of experience in the pharmaceutical industry. From June 2013 to December 2016, she was Chief Commercial Officer of ZS Pharma, Inc. through the company’s initial public offering and acquisition by Astra Zeneca Plc. From October 2008 to March 2013, Ms. Smith was Vice President, Market Access & Commercial Development at Affymax, Inc., a biotechnology company focused on the development and commercialization of novel renal therapies. Prior to Affymax, Ms. Smith was Executive Director of Healthcare System and Medicare Strategy at Merck & Co., Inc. During her tenure at Merck from June 2000 to October 2008, she also held various leadership positions in corporate strategy, public policy, and external affairs, including global crisis management for the Vioxx recall. Before joining the pharmaceutical industry, Ms. Smith served in the White House Office of Management and Budget in the Clinton Administration. Ms. Smith has served on the board of directors of Agios Pharmaceuticals, Inc., a publicly-traded biopharmaceutical company focused on cellular metabolism and adjacent areas of biology, since August 2022, and also serves on the boards of directors of Spero Therapeutics, Inc., Akebia Therapeutics, Inc. and Tvardi Therapeutics, Inc. She previously served on the board of Dicerna Pharmaceuticals, Inc. until its acquisition by Novo Nordisk A/S in December 2021. She is also a board member of the French American Foundation. Ms. Smith earned a B.A. from the University of North Carolina at Chapel Hill, an M.S. in public policy from the Eagleton Institute of Politics at Rutgers University and an M.B.A. from The Wharton School of the University of Pennsylvania. Our nominating and corporate governance committee and board of directors believe that Ms. Smith’s pharmaceutical and biotechnology industry experience qualifies her to serve on our board of directors.
Directors Continuing in Office Until the 2027 Annual Meeting of Stockholders
Jane Huang, M.D. has served as a member of our board of directors since June 2021. Dr. Huang is an experienced biotech executive and proven leader throughout the development life cycle of multiple oncology therapeutics globally. Since April 2022, she has served as President and Chief Medical Officer of Prelude Therapeutics Incorporated, a clinical stage precision oncology company. From September 2016 until March 2022, Dr. Huang was Chief Medical Officer, Hematology at BeiGene, Ltd. At BeiGene, Dr. Huang oversaw hematology drug development, and played a key role in the first approval of tislelizumab, BeiGene’s PD-1 inhibitor as well as zanubrutinib, BeiGene’s BTK inhibitor. Prior to joining BeiGene, Dr. Huang was Vice President and Head of Development at Acerta Pharma B.V., where she oversaw global clinical development of the BTK inhibitor acalabrutinib. Previously, she served as Group Medical Director at Genentech (a member of the Roche Group) where she played a leading role in drug development programs for several molecules at all stages of development, including venetoclax and obinutuzumab. Dr. Huang also serves as a Clinical Assistant Professor (adjunct), Thoracic Oncology, at Stanford University. She received her B.S. from Stanford University and her M.D. from University of Washington School of Medicine. She is board certified in hematology, oncology, and internal medicine, and she completed her residency in Internal Medicine and fellowships in Hematology and Oncology at Stanford University. Our nominating and corporate governance committee and board of directors believe that Dr. Huang’s pharmaceutical and biotechnology industry experience qualifies her to serve on our board of directors.
Richard Levy, M.D. served as a member of the board of directors of Private ArTara from December 2019 until the Merger and has served as a member of our board of directors since January 2020. Dr. Levy also currently serves on the board of directors of Kodiak Sciences Inc., Kiniksa Pharmaceuticals, Ltd. and Madrigal Pharmaceuticals, Inc., each a publicly traded pharmaceutical company. Dr. Levy previously served on the boards of directors of Aquinox Pharmaceuticals, Inc. and Constellation Pharmaceuticals Inc., each a publicly-traded pharmaceutical company, from March 2017 until March 2019 and from April 2019 until July 2021, respectively. Previously, from December 2016 until May 2019, Dr. Levy served as a part-time senior advisor for Baker Bros. Advisors, L.P., a firm that primarily manages long-term investment funds focused on publicly traded life sciences companies. Dr. Levy served as Executive Vice President and Chief Drug Development officer at Incyte Corporation from January 2009 until his retirement in April 2016, and as Senior Vice President of Drug Development at Incyte from August 2003 until January 2009. Prior to joining Incyte, Dr. Levy served as Vice President, Biologic Therapies, at Celgene Corporation, a publicly-held biopharmaceutical company, from 2002 until 2003. From 1997 until 2002, Dr. Levy served in various executive
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positions with DuPont Pharmaceuticals Company, first as Vice President, Regulatory Affairs and Pharmacovigilance, and thereafter as Vice President, Medical and Commercial Strategy. Dr. Levy served at Novartis AG, and its predecessor company, Sandoz AG, from 1991 until 1997 in positions of increasing responsibility in clinical research and regulatory affairs. Prior to joining the pharmaceutical industry, Dr. Levy served as an assistant professor of medicine at the UCLA School of Medicine. Dr. Levy is board certified in internal medicine and gastroenterology and received his A.B. in biology from Brown University, his M.D. from the University of Pennsylvania School of Medicine, and completed his training in internal medicine at the Hospital of the University of Pennsylvania and a fellowship in gastroenterology and hepatology at UCLA. Our nominating and corporate governance committee and board of directors believe that Dr. Levy’s more than 30 years of experience in the pharmaceutical and biotechnology industries, as well as his extensive board experience, qualifies him to serve on our board of directors.
Michael Solomon, Ph.D. served as a member of the board of directors of Private ArTara from May 2018 until the Merger and has served as a member of our board of directors since January 2020. Dr. Solomon has more than 25 years of experience in the biotechnology industry and has spent the last 22 years focused on creating and operating early-stage companies. Dr. Solomon served as Chief Executive Officer, and as a member of the board of directors, of Ribometrix, Inc., a privately held therapeutics company focused on targeting RNA with small molecules, from October 2017 until October 2024. He also served as a member of the board of directors of ValenzaBio, Inc., a privately-held biotechnology company, from May 2021 to January 2023 when the company was acquired by Acelyrin. Inc. Dr. Solomon served as a venture partner at SV Health Investors from December 2016 until December 2018. Previously, Dr. Solomon served as Chief Operating Officer at Decibel Therapeutics, Inc., a biotechnology company focused on hearing disorders, from 2015 until 2016. Dr. Solomon served as Chief Operating Officer of Ember Therapeutics, Inc., a publicly traded pharmaceutical company, from 2012 until 2015, and as Chief Business Officer of Link Medicine Corporation, a privately held biopharmaceutical company, from 2009 until 2012. Dr. Solomon was a founder and Vice President of Discovery at Epizyme Therapeutics, Inc., a clinical stage biopharmaceutical company, and Vice President of Discovery at Hypnion, Inc., a sleep disorder company that was sold to Eli Lilly and Company in 2007. Dr. Solomon earned his B.S. in chemistry from the University of Massachusetts, Amherst and his Ph.D. in organic chemistry from the University of Wisconsin. Our nominating and corporate governance committee and board of directors believe that Dr. Solomon’s industry experience in creating and operating early-stage companies qualifies him to serve on our board of directors.
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information regarding the board of directors and corporate governance
Independence of the Board of Directors
Our common stock is listed on the Nasdaq Capital Market. Under the Nasdaq listing rules, a majority of the members of our board of directors must qualify as “independent,” as affirmatively determined by our board of directors. Our board of directors consults with our counsel to ensure that its determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.
Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, and any of his or her family members, and the Company, our senior management and independent auditors, our board of directors has affirmatively determined that the following eight directors are independent directors within the meaning of the applicable Nasdaq listing rules: Mr. Beshar, Dr. Flannelly, Dr. Garceau, Dr. Huang, Dr. Levy, Mr. Sargen, Ms. Smith and Dr. Solomon. In making this determination, our board of directors found that none of these directors had a material or other disqualifying relationship with the Company. Mr. Shefferman, by virtue of his position as our Chief Executive Officer, is not independent.
Accordingly, a majority of our directors are independent, as required under applicable Nasdaq rules. In making this determination, our board of directors considered the applicable Nasdaq rules and the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including their beneficial ownership of our capital stock.
Board Leadership Structure
Our board of directors has an independent chair, Mr. Beshar, who has authority, among other things, to call and preside over meetings of our board of directors, including meetings of the independent directors, to set meeting agendas and to determine materials to be distributed to our board of directors. Accordingly, Mr. Beshar has substantial ability to shape the work of our board of directors. We believe that separation of the positions of board chair and chief executive officer reinforces the independence of the board in its oversight of the business and affairs of the Company. In addition, we believe that having an independent board chair creates an environment that is more conducive to objective evaluation and oversight of management’s performance, increasing management accountability and improving the ability of our board of directors to monitor whether management’s actions are in the best interests of the Company and our stockholders. As a result, we believe that having an independent board chair can enhance the effectiveness of the board as a whole.
Role of the Board of Directors in Risk Oversight
One of the key functions of our board of directors is informed oversight of our risk management process. Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through the board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure and our audit committee has the responsibility to consider and discuss our major financial and enterprise risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken and overseeing the Company’s enterprise risk management program. The audit committee also monitors compliance with legal and regulatory requirements and cybersecurity risks. The compensation committee assists the board of directors in fulfilling its oversight responsibilities with respect to the management of risks arising from the Company’s compensation policies and practices. The nominating and corporate governance committee focuses on the management of risks associated with the composition, organization, and governance of the board of directors and its committees, as well as the corporate governance structure of the Company. The scientific advisory committee reviews risks associated with the Company’s research and development programs. Each committee of the board of directors meets and reports its findings to the board of directors on a regular basis.
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In connection with its reviews of the operations of our business, our full board of directors addresses the primary risks associated with our business including, for example, strategic planning, regulatory requirements and cybersecurity. Our board of directors appreciates the evolving nature of our business and industry and is actively involved with monitoring new threats and risks as they emerge.
Meetings of the Board of Directors and its Committees
Our board of directors is responsible for the oversight of management and the strategy of our company and for establishing corporate policies. Our board of directors meets periodically during the year to review significant developments affecting us and to act on matters requiring the approval of our board of directors. Our board of directors met seven times during our last fiscal year. The audit committee met four times during our last fiscal year. The compensation committee met six times during our last fiscal year. The nominating and corporate governance committee met three times during our last fiscal year. The scientific advisory committee met five times during our last fiscal year. During our last fiscal year, each director attended 75% or more of the aggregate of the meetings of our board of directors and of the committees on which he or she served. We encourage all our directors and nominees for director to attend our annual meeting of stockholders. In 2024, four directors attended our annual meeting of stockholders.
As required under the Nasdaq listing rules, in 2024, our independent directors met five times in regularly scheduled executive sessions at which only independent directors were present.
Information Regarding Committees of the Board of Directors
Our board of directors has established an audit committee, a compensation committee, a nominating and corporate governance committee and a scientific advisory committee. Our board of directors may establish other committees to facilitate the management of our business. Our board of directors has adopted written charters for each of our committees, which are available to stockholders on our investor relations website at ir.protaratx.com. The information on our website is not incorporated by reference into this proxy statement or the Annual Report.
The following table provides membership for the year ended December 31, 2024 for each of our committees:
|
Name |
Audit |
Compensation |
Nominating |
Scientific |
||||
|
Luke Beshar |
X |
X* |
||||||
|
Barry Flannelly, Pharm.D. |
X |
|||||||
|
Jane Huang, M.D. |
X |
|||||||
|
Roger Garceau, M.D.(1) |
X |
X |
||||||
|
Richard Levy, M.D.(2) |
X* |
|||||||
|
Gregory Sargen |
X* |
|||||||
|
Cynthia Smith |
X* |
|||||||
|
Michael Solomon, Ph.D. |
X |
X |
____________
* Committee Chairperson
(1) Dr. Garceau ceased serving on the compensation committee in April 2025.
(2) Dr. Levy began serving on the compensation committee in April 2025.
Our board of directors has determined that each member of each committee meets the applicable Nasdaq rules and regulations regarding “independence” and each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to us.
Below is a description of each committee of our board of directors.
Audit Committee
The audit committee of our board of directors is currently composed of three directors: Mr. Beshar, Mr. Sargen and Dr. Solomon, with Mr. Sargen serving as chair of the audit committee.
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Our board of directors has determined that each of these individuals meets the independence requirements of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the applicable listing standards of Nasdaq. Each member of our audit committee can read and understand fundamental financial statements in accordance with Nasdaq audit committee requirements. In arriving at this determination, the board has examined each audit committee member’s scope of experience and the nature of their prior and/or current employment. Additionally, our board of directors has determined that Mr. Sargen qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of the Nasdaq listing rules. In making this determination, our board has considered Mr. Sargen’s formal education and previous and current experience in financial and accounting roles. Both our independent registered public accounting firm and management periodically meet privately with our audit committee. The audit committee operates under a written charter adopted by the board of directors, which is located on our website at https://ir.protaratx.com/. The information on our website is not incorporated by reference into this proxy statement or the Annual Report.
The functions of the audit committee include, among other things:
• evaluating the performance, independence and qualifications of our independent auditors and determining whether to retain our existing independent auditors or engage new independent auditors;
• reviewing and approving the engagement of our independent auditors to perform audit services and any permissible non-audit services;
• prior to engagement of any independent auditor, and at least annually thereafter, reviewing relationships that may reasonably be thought to bear on such auditor’s independence and their potential effects on such auditor’s independence, and assessing and otherwise taking the appropriate action to oversee the independence of our independent auditor;
• reviewing our annual and quarterly financial statements and periodic reports, including the disclosures contained under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and discussing the statements and reports with our independent auditors and management;
• reviewing, with our independent auditors and management, significant issues that arise regarding accounting principles and financial statement presentation and matters concerning the scope, adequacy and effectiveness of our financial controls;
• reviewing with management and our independent auditors any earnings announcements and other public announcements regarding material developments;
• establishing procedures, as required under applicable law, for the receipt, retention and treatment of complaints received regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
• reviewing the audit committee report that the SEC requires in this annual proxy statement;
• reviewing, providing oversight of, any determining whether to approve, reject or ratify any related-person transactions, in accordance with our related-person transaction policy and reviewing and monitoring compliance with legal and regulatory responsibilities, including our code of business conduct and ethics;
• monitoring the rotation of partners of the independent registered public accounting firm on the audit engagement team as required by laws and rules;
• reviewing and discussing with our independent auditors and management our guidelines, policies and practices with respect to risk assessment and risk management, including major financial, strategic, operational, regulatory and other risk exposures and the steps taken by management to identify, monitor and control such exposures;
• on an annual basis, reviewing the audit committee charter and evaluating, in consultation with the nominating and corporate governance committee, the performance of the audit committee;
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• reviewing, on a periodic basis, our investment policy, related-person transaction policy and signing authority to approve any changes to such policies; and
• reviewing and discussing with management our cybersecurity policies, practices and risk exposures.
Our audit committee also has the authority to retain special legal, accounting or other advisors or consultants as it deems necessary or appropriate to carry out its duties. We believe that the composition and functioning of our audit committee complies with all applicable requirements of the Sarbanes-Oxley Act, and all applicable SEC and Nasdaq rules and regulations. We intend to comply with future requirements to the extent they become applicable to us.
Report of the Audit Committee of the Board of Directors
The audit committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2024 with our management. The audit committee has also reviewed and discussed with Ernst & Young LLP, our independent registered public accounting firm for the fiscal year ended December 31, 2024, the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The audit committee has also received the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the audit committee concerning independence and has discussed with Ernst & Young LLP the accounting firm’s independence. Based on the foregoing, the audit committee has recommended to our board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and filed with the SEC.
Gregory Sargen, Chair
Luke Beshar
Michael Solomon, Ph.D.
The material in this report is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (“Securities Act”), or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Compensation Committee
The compensation committee of our board of directors is composed of three directors: Dr. Flannelly, Dr. Levy and Ms. Smith, with Ms. Smith serving as chair of the compensation committee. All members of the compensation committee are independent (as independence is currently defined in Rule 5605(d)(2) of the Nasdaq listing rules). Dr. Garceau served on the compensation committee through our compensation planning cycle for 2024 into 2025 and was then replaced by Dr. Levy.
Each of the members of the compensation committee is a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act and an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) (which is only relevant to the extent deemed necessary to qualify for transition relief under Section 162(m)). Our board of directors has determined that each of these individuals is “independent” as defined under the applicable listing standards of Nasdaq, including the standards specific to members of a compensation committee. The compensation committee operates under a written charter adopted by the board of directors, which is located on our website at https://ir.protaratx.com/. The information on our website is not incorporated by reference into this proxy statement or the Annual Report.
The functions of this committee include, among other things:
• reviewing and approving (or if it deems appropriate, making recommendations to our board of directors regarding) our overall compensation strategy and policies;
• reviewing and approving (or if it deems appropriate, making recommendations to our board of directors regarding) corporate performance goals and objectives, which support and reinforce the Company’s long-term strategic goals, relevant to the Company’s overall compensation strategy and policies;
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• evaluating and approving (or if it deems appropriate, making recommendations to the board of directors regarding) all compensation plans and programs advisable for the Company, as well as the modification or termination of existing plans and programs;
• making recommendations to our board of directors regarding the compensation and other terms of employment of our chief executive officer;
• reviewing and approving (or if it deems appropriate, making recommendations to our board of directors regarding) performance goals and objective relevant to the compensation of our other officers and assessing their performance against these goals and objectives;
• reviewing and making recommendations to our board of directors regarding the adequacy of director compensation;
• evaluating risks associated with and potential consequences of our compensation policies and practices and assessing whether risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on us;
• when appropriate (as determined by the compensation committee) establishing policies with respect to votes by our stockholders to approve executive compensation to the extent required by Section 14A of the Exchange Act and, if applicable, determining our recommendations regarding the frequency of advisory votes on executive compensation;
• reviewing and approving (or if it deems it appropriate, making recommendations to our board of directors regarding) the terms of any employment agreements, severance arrangements, change in control protections and any other compensatory arrangements for our officers (including, without limitation, any material perquisites and any other form of compensation) for our officers, including reviewing and approving (or, if it deems appropriate, making recommendations to our board of directors regarding) any payments, compensation or other awards under such agreements and arrangements;
• reviewing and assessing the independence of compensation consultants, legal counsel and other advisors as required by Section 10C of the Exchange Act;
• reviewing and considering the results of any advisory vote on executive compensation, as applicable;
• administering the Company’s stock option, stock appreciation, retirement and profit sharing, incentive, stock bonus, stock purchase, bonus and deferred compensation plans and similar programs;
• reviewing with the chief executive officer the plans for succession for the chief executive officer and other key executive officers and make recommendations to our board of directors with respect to the selection of appropriate individuals to succeed to these positions; and
• reviewing and assessing, on an annual basis, the performance of the compensation committee and the compensation committee charter.
The compensation committee will have the authority to retain special legal, accounting or other advisors or consultants as it deems necessary or appropriate to carry out its duties. We believe that the composition and functioning of our compensation committee complies with all applicable requirements of the Sarbanes-Oxley Act and all applicable SEC and Nasdaq rules and regulations. We intend to comply with future requirements to the extent they become applicable to us.
Compensation Committee Processes and Procedures
Our compensation committee meets at least annually and with greater frequency if necessary. The compensation committee also acts periodically by unanimous written consent in lieu of a formal meeting. In consultation with management, the agenda for each compensation committee meeting is developed by the chair of the compensation committee and incorporates guidance from an annual work plan. The compensation committee meets regularly in executive session. However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the compensation committee to make presentations, to provide
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financial or other background information or advice or to otherwise participate in compensation committee meetings. Our Chief Executive Officer may not participate in, or be present during, any deliberations or determinations of the compensation committee regarding his compensation.
The charter of the compensation committee grants the compensation committee full access to all books, records, facilities and personnel of the Company. In addition, under the charter, the compensation committee has the authority to obtain, at our expense, advice and assistance from compensation consultants and internal and external legal, accounting or other advisors and other external resources that the compensation committee considers necessary or appropriate in the performance of its duties. The compensation committee has direct responsibility for the oversight of the work of any consultants or advisors engaged for the purpose of advising the compensation committee. In particular, the compensation committee has the authority to retain compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. Under the charter, the compensation committee may select, or receive advice from, a compensation consultant, legal counsel or other advisor to the compensation committee, other than in-house legal counsel and certain other types of advisors, only after taking into consideration six factors, prescribed by the SEC and Nasdaq, that bear upon the advisor’s independence; however, there is no requirement that any advisor be independent.
Generally, the compensation committee’s process comprises two related elements: the determination of compensation levels and the establishment of corporate performance objectives for the current year. For executives other than our Chief Executive Officer, the compensation committee solicits and considers evaluations and recommendations submitted to the compensation committee by our Chief Executive Officer. The evaluation of our Chief Executive Officer’s performance is conducted by the chairman of the board and guided by the compensation committee, which determines any adjustments to his compensation as well as awards to be granted. For all executives and directors as part of its deliberations, the compensation committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, executive and director stock ownership information, Company stock performance data, analyses of historical executive compensation levels and current company-wide compensation levels and recommendations of any compensation consultant, including analyses of executive and director compensation paid at other companies identified by the consultant. In 2024, the compensation committee retained Aon Consulting, Inc., through its Human Capital Solutions subdivision (“Aon”), as an independent compensation consultant to provide the compensation committee with additional comparative data on executive compensation practices in our industry and to advise the compensation committee on our executive compensation program generally. In 2024, Aon provided advice and data to the compensation committee on executive and director compensation matters, including the review of our compensation peer group, comparative market pay levels, equity dilution, annual share utilization practices, incentive plan design, and trends emerging in the market. Although the compensation committee considers the advice and recommendations of the compensation consultant, the compensation committee ultimately makes its own decisions. In 2024, the compensation committee determined that Aon’s work did not raise any conflicts of interest. In making this assessment, the compensation committee considered the independence factors enumerated in the applicable Nasdaq rules.
Stockholder Advisory Vote on Executive Compensation
At our 2024 annual meeting of stockholders, our stockholders cast an advisory vote on the compensation of our named executive officers (the “say-on-pay vote”). Approximately 72% of the shares present at the meeting voted to approve, on an advisory basis, the compensation of our named executive officers as disclosed in the related proxy statement. During the year, management contacted all stockholders owning approximately 1% or more of our outstanding shares (fifteen stockholders representing approximately 44% of our outstanding shares) and offered to hold discussions between the stockholder, our chair of the compensation committee and certain members of management. One stockholder requested such a discussion and noted its general support for our compensation program. Such stockholder suggested, among others, that the Company consider including in this proxy statement additional disclosure around corporate performance goals for annual cash bonuses available to our executive officers, which suggestion has been incorporated.
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Nominating and Corporate Governance Committee
The nominating and corporate governance committee of our board of directors is composed of two directors: Mr. Beshar and Dr. Solomon, with Mr. Beshar serving as chair of the committee. All members of the nominating and corporate governance committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing rules). The nominating and corporate governance committee operates under a written charter adopted by the board of directors, which is located on our website at https://ir.protaratx.com/. The information on our website is not incorporated by reference into this proxy statement or the Annual Report.
The functions of this committee include, among other things:
• identifying, reviewing and evaluating candidates to serve on our board of directors and nominating and recommending individuals for membership on our board of directors;
• determining the minimum qualifications for service on our board of directors;
• reviewing, evaluating and considering the recommendation for nomination of incumbent directors for reelection to the board of directors;
• making recommendations regarding the membership of the committees of our board of directors;
• assessing the performance of the board of directors, including its committees, including through a formal, annual self-assessment survey process administered by counsel;
• if and when it deems appropriate, developing a set of corporate governance guidelines for the Company; and
• reviewing and evaluating on an annual basis the performance of the nominating and corporate governance committee and the nominating and corporate governance committee charter.
The nominating and corporate governance committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. The nominating and corporate governance committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having varied perspectives and experiences, having sufficient time to devote to our affairs, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of our stockholders. However, the nominating and corporate governance committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of the board of directors, the operating requirements of the Company and the long-term interests of our stockholders. In conducting this assessment, the nominating and corporate governance committee considers skills, experience and such other factors as it deems appropriate, given the current needs of the board of directors and our business, to maintain a balance of knowledge, experience and capability.
The nominating and corporate governance committee appreciates the value of thoughtful board refreshment, and regularly identifies and considers qualities, skills and other director attributes that would enhance the composition of the Board. In the case of incumbent directors whose terms of office are set to expire, the nominating and corporate governance committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the nominating and corporate governance committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing rules, applicable SEC rules and regulations and the advice of counsel, if necessary. The nominating and corporate governance committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The nominating and corporate governance committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of our board of directors. The nominating and corporate governance committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the board of directors by majority vote.
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The nominating and corporate governance committee will consider director candidates recommended by stockholders. The nominating and corporate governance committee will evaluate any director nominees received from stockholders in the same manner as recommendations received from management or members of our board of directors. Stockholders who wish to recommend individuals for consideration by the nominating and corporate governance committee to become nominees for election to our board of directors may do so by delivering a written recommendation to the nominating and corporate governance committee at the following address: 345 Park Avenue South, Third Floor, New York, New York 10010, Attn: Corporate Secretary. Any such submission must be provided at least 90 days, but not more than 120 days, prior to the anniversary date of the preceding year’s annual meeting of stockholders. Submissions must include (i) the full name, age, business address and residence address of each nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of capital stock of the Company that are owned of record and beneficially by each such nominee (if any), (iv) such other information concerning each such nominee as would be required to be disclosed in a proxy statement soliciting proxies for the election of such nominee as a director in an election contest (even if an election contest is not involved) or that is otherwise required to be disclosed, under Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder and (v) the consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
Submissions must also include (i) the name and address of the Company stockholder on whose behalf the submission is made, as they appear on the Company’s books and of the beneficial owner, if any, on whose behalf the nomination is being made, (ii) the class and number of shares of the Company which are owned by the stockholder (beneficially and of record) and owned by the beneficial owner, if any, on whose behalf the nomination is being made, as of the date of the stockholder’s notice, and a representation that such stockholder will notify the Company in writing of the class and number of such shares owned of record and beneficially as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (iii) a description of any agreement, arrangement or understanding with respect to such nomination between or among such stockholder and the beneficial owner, if any, on whose behalf the nomination is being made, and any of their affiliates or associates, and any others (including their names) acting in concert with any of the foregoing, and a representation that such stockholder will notify the Company in writing of any such agreement, arrangement or understanding in effect as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (iv) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of such stockholder’s notice by, or on behalf of, such stockholder or any of its affiliates or associates, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of such stockholder, or any such beneficial owner, or any of its affiliates or associates with respect to shares of stock of the Company, and a representation that such stockholder will notify the Company in writing of any such agreement, arrangement or understanding in effect as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (v) a representation that the such stockholder is a holder of record of shares of the Company entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, and (vi) a representation whether such stockholder intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to approve the nomination and/or otherwise to solicit proxies from stockholders in support of the nomination. The Company may also require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the Company or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.
Scientific Advisory Committee
The scientific advisory committee of our board of directors is composed of three directors: Dr. Garceau, Dr. Huang and Dr. Levy, with Dr. Levy serving as chair of the scientific advisory committee. All members of the scientific advisory committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing rules). The scientific advisory committee operates under a written charter adopted by the board of directors, which is located on our website at https://ir.protaratx.com/. The information on our website is not incorporated by reference into this proxy statement or the Annual Report.
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The functions of this committee include, among other things:
• advising the board of directors regarding endorsement of current and planned research and development programs, validating timelines, budget and key milestones;
• advising the board of directors about the progress on the Company’s research and development activities;
• advising the board of directors regarding the scientific merit of compounds for licensing and acquisition opportunities;
• providing strategic advice regarding emerging science, therapeutic trends and foreseeable opportunities; and
• providing advice to our scientific team on aspects of the programs as requested.
The scientific advisory committee holds regular or special meetings as its members deem necessary or appropriate. The scientific advisory committee has the authority to retain and determine compensation for external scientific or other advisors or consultants as it deems necessary or appropriate in the performance of its duties, provided that any such compensation must comply with applicable laws and regulations.
Stockholder Communications with our Board of Directors
Our board of directors has adopted a formal process by which stockholders may communicate with the board or any of its directors. Stockholders who wish to communicate with our board of directors may do so by sending written communications addressed to our Corporate Secretary at 345 Park Avenue South, Third Floor, New York, New York 10010, Attn: Corporate Secretary. Our Corporate Secretary will review each communication and will forward such communication to the board of directors or any of its directors to whom the communication is addressed, unless the communication contains advertisements or solicitations or is unduly hostile, threatening or similarly inappropriate. Communications deemed by the Corporate Secretary to be inappropriate for presentation will still be made available to any non-management director upon such director’s request.
Code of Business Conduct and Ethics
We have adopted the Protara Therapeutics, Inc. Code of Business Conduct and Ethics that applies to all officers, directors and employees. The Code of Business Conduct and Ethics is available on our website at ir.protaratx.com. The information on our website is not incorporated by reference into this proxy statement or the Annual Report. If we make any substantive amendments to the Code of Business Conduct and Ethics or grant any waiver from a provision of the Code of Business Conduct and Ethics to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.
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Proposal 2
Ratification of SELECTION OF Independent Registered
Public Accounting Firm
The audit committee of our board of directors has selected Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2025 and has further directed that management submit the selection of its independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP has audited the Company’s financial statements since March 2021. Representatives of Ernst & Young LLP are expected to be virtually present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither our amended and restated bylaws nor other governing documents or law require stockholder ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm. However, the audit committee is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, 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 different independent auditors at any time during the year if they determine that such a change would be in the best interests of the Company and our stockholders.
The affirmative vote of the holders of a majority of the shares present by virtual attendance or represented by proxy and entitled to vote on the matter at the Annual Meeting will be required to ratify the selection of Ernst & Young LLP.
Ernst & Young LLP audited our consolidated financial statements for the fiscal years ended December 31, 2024 and December 31, 2023 and was appointed as our independent registered public accounting firm for the fiscal years ended December 31, 2024 and December 31, 2023.
Principal Accountant Fees and Services
The following table represents aggregate fees billed by Ernst & Young LLP for the audit of our financial statements for the years ended December 31, 2024 and December 31, 2023 and other fees billed for other professional services rendered by Ernst & Young during this period.
|
Fiscal Year |
Fiscal Year |
|||||
|
Audit Fees(1) |
$ |
660,000 |
$ |
617,000 |
||
|
Audit-related Fees |
|
— |
|
— |
||
|
Tax Fees(2) |
|
4,856 |
|
94,125 |
||
|
All Other Fees(3) |
|
3,600 |
|
3,600 |
||
|
Total Fees |
$ |
668,456 |
$ |
714,725 |
||
____________
(1) Audit Fees consist of fees for professional services for the audit of our annual consolidated financial statements, the review of interim financial statements, and related services that are normally provided in connection with registration statements, including comfort letters and consents.
(2) Tax Fees consist of tax compliance services as well as fees for professional tax assistance services in connection with routine on-call tax advisory projects.
(3) All Other Fees consists of fees for subscription to online content including accounting standards and guidance.
All fees described above were pre-approved by the audit committee of our board of directors.
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Pre-Approval Policies and Procedures
In considering the nature of the services provided by Ernst & Young LLP, our audit committee determined that such services were compatible with the provision of independent audit services. Our audit committee discussed these services with Ernst & Young LLP and management to determine that they were permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act, as well as the requirements of the PCAOB. Our audit committee required that all services performed by Ernst & Young LLP be pre-approved prior to the services being performed. Pre-approval may also be given as part of the audit committee’s approval of the scope of the engagement of the independent auditor or on an individual, explicit, case-by-case basis before the independent auditor is engaged to provide each service. The pre-approval of services may be delegated to one or more of the audit committee’s members, but the decision must be reported to the full audit committee at its next scheduled meeting. During the fiscal years ended December 31, 2024 and 2023, all services by Ernst & Young LLP were pre-approved in accordance with these procedures, and our audit committee continues to require that all services performed by Ernst & Young LLP be pre-approved in accordance with these procedures prior to the services being performed.
Our Board Of Directors Recommends A Vote FOR The Ratification Of Ernst & Young LLP As Our Independent Registered Public Accounting Firm.
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Proposal 3
Advisory Vote on Executive Compensation
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Dodd-Frank Act”) and Section 14A of the Exchange Act, our stockholders are entitled to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. We currently hold this advisory vote on executive compensation, commonly referred to as a “say-on-pay vote,” on an annual basis, which is consistent with the results of the most recent vote at the 2020 Annual Meeting of Stockholders on the frequency of our say-on-pay vote. This practice will continue at least until the next vote on the frequency of future say-on-pay votes, which will occur at the 2026 Annual Meeting of Stockholders.
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. The compensation of our named executive officers subject to the vote is disclosed in the compensation tables and the related narrative disclosure contained in this proxy statement. As discussed in those disclosures, we believe that our compensation policies and decisions are focused on pay-for-performance principles and strongly aligned with our stockholders’ interests. Compensation of our named executive officers is designed to enable us to attract, retain and motivate talented and experienced executives to lead us successfully in a competitive environment.
Accordingly, our board of directors is asking the 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 stockholders of Protara Therapeutics, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers disclosed in the Summary Compensation Table and the related compensation tables and narrative disclosure in the Proxy Statement for the Company’s Annual Meeting of Stockholders to be held on June 11, 2025.”
Because the vote is advisory, it is not binding on our board of directors. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and our board of directors and, accordingly, our board of directors and the compensation committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.
Advisory approval of this proposal requires the vote of the holders of a majority of the shares present by virtual attendance or represented by proxy and entitled to vote on the matter at the Annual Meeting.
Our Board Of Directors Recommends A Vote FOR the Approval, on an Advisory Basis, of the
Compensation of our Named Executive Officers.
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Proposal 4
APPROVAL OF An Amendment to THE 2024 EQUITY INCENTIVE Plan
At the Annual Meeting, our stockholders will be asked to approve an amendment to the Protara Therapeutics, Inc. 2024 Equity Incentive Plan (the “2024 Plan”). The Board adopted the amendment to the 2024 Plan on April 17, 2025, subject to approval by our stockholders at the Annual Meeting, to increase by 2,800,000 the number of shares of common stock available to be issued under the 2024 Plan from 1,500,000 shares to 4,300,000 shares. The proposed amendment does not change any other provisions of the 2024 Plan, which was approved by our stockholders at the 2024 annual meeting.
As of April 16, 2025, an aggregate of 566,206 shares remain available for issuance under our equity incentive plans (excluding our 2024 Employee Stock Purchase Plan (the “2024 ESPP”)), comprising 79,106 shares available for issuance under the 2024 Plan and 487,100 shares available for issuance under our 2020 Inducement Plan (the “Inducement Plan”). As of April 16, 2025, an aggregate of 5,830,418 shares were subject to outstanding awards granted pursuant to our equity incentive plans, comprising stock options to purchase 5,092,783 shares and 737,635 shares subject to restricted stock unit awards. The per share weighted-average exercise price of the outstanding stock options is $6.62 and the weighted average remaining term of the outstanding options was 7.97 years.
Reasons for Amendment of the Plan
The Board believes that the future success of the Company depends on our ability to attract and retain the best available employees responsible for the continued development and growth of our business and that the ability to grant equity awards is a necessary and powerful recruiting and retention tool for the Company. We believe that equity awards motivate high levels of performance, align the interests of our personnel and stockholders by giving our personnel an opportunity to hold an ownership stake in the Company, and provide an effective means of recognizing their contributions to the success of the Company. In addition, stock options, restricted stock units and other types of equity awards are considered a competitive necessity in the life sciences and biotechnology industries in which we compete.
The Company’s equity incentive compensation needs will soon exceed the remaining shares available for issuance under the 2024 Plan. As a result, the Company will not be able to continue granting equity compensation at competitive levels and will be at significant disadvantage in attracting and retaining talented officers, directors, employees and consultants who contribute to our success.
Approval of this amendment increasing the number of shares available for issuance under the 2024 Plan will enable the Company to continue granting equity compensation awards to attract and retain highly qualified personnel and to continuing aligning the economic interests of our personnel with those of our stockholders.
As discussed below, the 2024 Plan includes features that are designed to protect the interests of our stockholders and we believe it is beneficial for our stockholders to approve the amendment to the 2024 Plan.
Key Features Designed to Protect Stockholders’ Interests
We believe the 2024 Plan’s design reflects our commitment to strong corporate governance and our desire to preserve stockholder value as demonstrated by the following 2024 Plan features:
• Maximum Number of Shares/No Annual “Evergreen” Provision. The maximum number of shares available for issuance under the 2024 Plan is fixed and cannot be increased without stockholder approval. There is no annual “evergreen” whereby the number of shares available under the 2024 Plan would be automatically increased each year. Accordingly, we are proposing an amendment to the 2024 Plan to increase the number of shares available to be issued thereunder by 2,800,000 shares, representing approximately 7% of the shares of our common stock outstanding as of April 16, 2025.
• Award Design Flexibility. Different kinds of awards may be granted under the 2024 Plan, giving us the flexibility to design our equity incentives to complement the other elements of compensation and to support our attainment of strategic goals.
• Performance-Based Awards. The 2024 Plan permits the grant of performance-based stock awards that are payable only upon the attainment of specified performance criteria.
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• No Single-Trigger Vesting Acceleration upon a Change of Control for Participants. The 2024 Plan provides for double-trigger protection following a change of control.
• Repricing is Not Allowed Without Stockholder Approval. The 2024 Plan does not permit options or stock appreciation rights to be repriced or exchanged for other awards unless stockholders approve the repricing or exchange.
• Clawback. Each award under the 2024 Plan is subject to the Company’s policies regarding the acquisition, ownership or sale of stock by officers, employees, directors, consultants, advisors or other service providers, including without limitation, our Clawback Policy.
• No Tax Gross-ups. The Plan does not provide for any tax gross-up.
• No Liberal Share Counting or Recycling. Shares used to pay the exercise price or purchase price of an award granted under the Plan or to satisfy tax withholding obligations for an award granted under the Plan will not become available for future grant under the Plan.
• Limited Transferability. Awards under the 2024 Plan generally may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner, unless otherwise approved by the administrator (on such terms as the administrator deems appropriate) or required by applicable laws.
• Annual Limits on Non-Employee Director Compensation. The 2024 Plan sets limits on the total compensation that a non-employee director may receive for service as a non-employee director during each fiscal year.
• No Dividends on Unvested Awards. No dividends or other distributions may be paid with respect to any Shares underlying the unvested portion of an award until the underlying award vests.
• Minimum Vesting Requirement. The 2024 Plan provides that in general awards may vest no earlier than the first anniversary of the grant date, subject to certain exceptions set forth in the 2024 Plan relating to relating to accelerated vesting subject to death, disability, a change of control, retirement or other involuntary termination, and awards in respect of a maximum of 5% of the number of shares available for grant under the 2024 Plan.
Summary of the 2024 Plan
The following paragraphs summarize the principal features of the 2024 Plan and its operation. However, this summary is not a complete description of the provisions of the 2024 Plan and is qualified in its entirety by the specific language of the 2024 Plan. A copy of the 2024 Plan, including the proposed amendment, is provided as Appendix A to this proxy statement.
Purpose of the 2024 Plan
Our board adopted the 2024 Plan to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants, to promote the success of our business and to align employee’s interests with stockholders’ interests. These incentives can be provided through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock and cash awards.
Shares Available for Issuance
Subject to the adjustment provisions in the 2024 Plan, our stockholders are being asked to approve an increase in the number of shares available for issuance under the 2024 Plan from 1,500,000 shares to 4,300,000 shares. If we substitute equity awards for equity awards of acquired entities in connection with mergers, reorganizations, separations, or other transactions as described in the 2024 Plan, the grant of such substituted awards will not decrease the number of shares available for issuance under the 2024 Plan. Shares may either be authorized, but unissued shares or shares held by the Company in its treasury.
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If an option or stock appreciation right granted under the 2024 Plan expires, terminates, or is cancelled for any reason without having been exercised in full, if any other award is forfeited, or if the award is settled for cash (in whole or in part) the shares of stock not purchased by the holder of the award, which are forfeited or which are settled in case, as the case may be, will again be available for awards to be granted under the 2024 Plan.
In the event of certain dividends or other distributions (whether in the form of cash, shares, other securities, or other property), reorganization, recapitalization, reclassification, stock split, reverse stock split or other similar distribution affecting our shares, the 2024 Plan administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the 2024 Plan, will adjust the number and kinds of shares that may be delivered under the 2024 Plan, and/or the number, class and price of shares of stock subject to outstanding awards, and exercise price or repurchase price, as applicable.
During the term of this 2024 Plan, we will at all times reserve and keep available a number of shares sufficient to satisfy the requirements of the 2024 Plan.
Limitations on Awards to Non-Employee Directors
The 2024 Plan also provides that no non-employee director may be paid compensation for their service as a director that, in the aggregate, exceeds $750,000 for any fiscal year of ours, increased to $1,000,000 for the non-employee director for our fiscal year in which he or she joins our board of directors as a non-employee director. For these purposes, compensation includes equity awards (including any awards issued under the 2024 Plan), with the value of such equity awards measured based on the accounting grant date fair value, and any other compensation (such as cash retainers or fees) for director service.
Minimum Vesting Requirements
Any awards that are payable in shares of our common stock under the 2024 Plan will vest no earlier than the first anniversary of the grant date of the award, other than awards in respect of a maximum of 5% of the shares available for grant under the 2024 Plan. The administrator may also provide for accelerated vesting in connection with a participant’s death, disability, retirement or other involuntary termination or in connection with a change of control.
Administration
The compensation committee of the Board will be the “administrator” of the 2024 Plan. To make grants to certain officers and key employees, the members of the committee must qualify as “non-employee directors” under Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Our board of directors, however, may itself exercise any of the powers and responsibilities assigned to the compensation committee under the 2024 Plan, and the compensation committee also may delegate to an executive officer or officers the authority to grant awards under the 2024 Plan to employees who are not officers, and to consultants, up to such maximum number and in accordance with such other guidelines as the compensation committee may specify.
Subject to the terms of the 2024 Plan, the administrator has the authority to make any determinations and perform any actions that it deems necessary or advisable to administer the 2024 Plan, such as the authority to: determine the fair market value of a share, select the service providers who will receive awards; determine the number of shares covered by each award and the terms of each award; approve forms of award agreements for use with the 2024 Plan; interpret, modify or amend each award (subject to the repricing restrictions of the 2024 Plan), including to accelerate vesting or waive forfeiture restrictions; interpret the 2024 Plan; and delegate ministerial duties to any of our employees. The administrator may allow a participant to defer the receipt of payment of cash or delivery of shares otherwise due to such participant. The administrator may modify the terms of any award under the 2024 Plan granted to a participant who is a resident or primarily employed outside of the U.S. in order that the award shall conform to the laws, regulations, procedures, and customs of the country in which the participant is then resident or primarily employed, or so that the value and other benefits of the award, as affected by foreign tax laws and other restrictions, will be as comparable as practicable to the value of such an award to a participant is who resident or primarily employed in the U.S. The administrator may establish supplements or sub-plans to, or amendments, restatements, or alternative versions of, the 2024 Plan for the purpose of granting and administrating any such modified award.
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Eligibility
All types of awards, other than incentive stock options, may be granted to officers, employees, consultants and advisors of ours and our affiliates and to our non-employee directors or any director of any of our affiliates. No non-employee director, however, may be paid compensation for service as a non-employee director that, in the aggregate, exceeds $750,000 for any fiscal year of ours, increased to $1,000,000 for the non-employee director for our fiscal year in which he or she joins our board of directors as a non-employee director. Incentive stock options may be granted only to employees of ours or any parent or subsidiary corporation of ours. As of April 16, 2025, we had approximately thirty-four employees (including one employee director), eight non-employee directors and approximately four consultants who were eligible to participate in the 2024 Plan.
Options
An option gives a participant the right to purchase a specified number of shares for a fixed exercise price during a specified period. Each option granted under the 2024 Plan will be evidenced by an award agreement specifying the number of shares subject to the option and the other terms of the option, consistent with the 2024 Plan.
The exercise price per share of each option may not be less than the fair market value of a share on the date of grant (except, in the case of a nonstatutory stock option, as otherwise required by applicable laws). However, any incentive stock option granted to a person who at the time of grant owns stock representing more than 10% of the total combined voting power of all classes of our stock or any parent or subsidiary corporation of ours (a “Ten Percent Owner”) must have an exercise price per share equal to at least 110% of the fair market value of a share on the date of grant. For this purpose, the fair market value of a share is generally the closing sales price of our stock, as reported on the primary stock exchange on which it is traded. On April 16, 2025, the closing price of a share on The NASDAQ Global Market was $4.00.
Options will be exercisable at such times or under such conditions as determined by the administrator and set forth in the award agreement. When a participant’s service ends, the unvested portion of the participant’s option generally expires. The vested portion of the option will remain exercisable for the period following the end of the participant’s service that was determined by the administrator and specified in the participant’s award agreement, and if no such period was specified in the award agreement, the vested portion of the option will remain exercisable for 90 days following the end of the participant’s service provider status.
The term of an option will be specified in the award agreement, but the term of an option may not be more than 10 years (or five years for an incentive stock option granted to a Ten Percent Owner).
The administrator will determine the acceptable form(s) of consideration for exercising an option. An option will be deemed exercised when we receive the notice of exercise and full payment for the shares to be exercised, together with any amounts necessary to satisfy withholding obligations for tax-related items.
Stock Appreciation Rights
A stock appreciation right gives a participant the right to receive the appreciation in the value of a share between the date an award is granted and the date it is exercised. Upon exercise of a stock appreciation right, the holder of the award will be entitled to receive an amount determined as the product of: (i) the difference between the fair market value of a share on the date of exercise and the exercise price per share and (ii) the number of shares covered by the exercised portion of the stock appreciation right. We may pay that amount in cash, shares, or a combination of both. Each stock appreciation right granted under the 2024 Plan will be evidenced by an award agreement specifying the exercise price and the other terms of the award.
The exercise price per share of each stock appreciation right may not be less than the fair market value of a share on the date of grant, or in the case of a stock appreciation right in tandem with options, the exercise price of the related option.
Stock appreciation rights will be exercisable at such times or under such conditions as determined by the administrator and set forth in the award agreement. The terms relating to the period of exercise of stock appreciation rights following the termination of a participant’s service are similar to those for options described above.
28
Restricted Stock Awards
Awards of restricted stock are awards of shares that are nontransferable and subject to a risk of forfeiture until specific conditions established by the administrator in its sole discretion have been met. Unless the administrator provides otherwise, participants holding shares of restricted stock will have voting rights with respect to such shares without regard to vesting. All ordinary cash dividends or other ordinary cash distributions paid upon any restricted stock will be retained by the Company and will be paid to the participant when the restricted stock vests. All ordinary stock dividends or other distributions payable in shares of stock or other securities of the Company will constitute additional restricted stock, subject to the same risk of forfeiture as the shares of restricted stock in respect of which such shares of stock were paid.
Restricted Stock Units
A restricted stock unit represents a right to receive shares upon the end of the restriction period established by the administrator and subject to a risk of forfeiture arising on the basis of such conditions relating to the performance of services, Company or affiliate performance or otherwise as the administrator may determine and provide for in the applicable award agreement. Each award of restricted stock units granted under the Plan will be evidenced by an award agreement specifying the number of shares subject to the award and other terms of the award.
A participant will forfeit any unearned restricted stock units on the date specified in the participant’s award agreement. The administrator in its sole discretion may pay earned restricted stock units in cash, shares, or a combination of both.
Performance Units and Performance Shares
Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. Performance units will have an initial value established by the administrator on or before the date of grant. Performance units and performance shares will result in a payment to a participant only if the performance goals or other vesting criteria set by the administrator are achieved or the awards otherwise vest.
Each award of performance units or performance shares granted under the 2024 Plan will be evidenced by an award agreement specifying the performance period and other terms of the award. The administrator may set vesting criteria based upon the achievement of company-wide, divisional, business unit or individual goals (such as continued employment or service), applicable U.S. or non-U.S. federal or state securities laws, or any other basis determined by the administrator, in its discretion.
The administrator has the discretion to pay earned performance units or performance shares in the form of cash, shares (which will have an aggregate fair market value equal to the earned performance units or performance shares at the close of the performance period), or a combination of both.
A participant will forfeit any performance units or performance shares not earned and not vested as of the date specified in the participant’s award agreement.
Transferability of Awards
Unless otherwise specified by the administrator or required by applicable laws, awards are not transferable other than by will or by the laws of descent and distribution.
Adjustments
In the event of the outstanding shares of stock under the 2024 Plan are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to shares of stock, as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar distribution with respect to such shares of stock, an appropriate and proportionate adjustment will be made in (i) the maximum numbers and kinds of shares provided under the 2024 Plan, (ii) the numbers and kinds of shares or other securities subject to the then outstanding awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding options and stock appreciation rights (without change in the aggregate purchase price as to which such options or rights remain exercisable), and (iv) the repurchase price of each share of restricted stock then subject to a risk of forfeiture in the form of a Company repurchase right.
29
In the event of any corporate action not specifically covered above, including but not limited to an extraordinary cash distribution on stock, a corporate separation or other reorganization or liquidation, the administrator may make such adjustment of outstanding awards and their terms as it, in its sole discretion, may deem equitable and appropriate in the circumstances. The administrator may make adjustments in the terms and conditions of, and the criteria included in, awards in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the 2024 Plan.
Change of Control
If the Company terminates the employment of a participant in the 2024 Plan without cause, or if a participant in the 2024 Plan resigns his or her employment with the Company for good reason, either case, on or within two (2) years after a change of control, then, any and all options and stock appreciation rights not already exercisable in full will fully accelerate and become exercisable; any risk of forfeiture applicable to restricted stock and restricted stock units which is not based on achievement of performance goals or other business objectives will lapse; and all outstanding awards of restricted stock and restricted stock units conditioned on the achievement of performance goals or other business objectives and the payouts attainable under outstanding performance units will be deemed to have been satisfied based on the greater of target and actual performance as of the effective date of the change of control, except to the extent otherwise determined by the administrator in its sole discretion at any time prior to, or upon, such change of control.
For awards granted to each of our non-employee directors, in the event of a change in control, all shares subject to any then-outstanding and unvested equity awards granted pursuant to our non-employee director compensation policy will become fully vested immediately prior to the closing of such change in control.
Forfeiture Events
Each award under the 2024 Plan is subject to the Company’s policies regarding the acquisition, ownership or sale of stock by officers, employees, directors, consultants, advisors or other service providers, including without limitation, our Clawback Policy.
Termination and Amendment
The administrator may amend, alter, suspend, or terminate the 2024 Plan at any time; provided, that, without stockholder approval, no amendment or modification may (i) increase the number of shares of stock which may be issued under the 2024 Plan, (ii) change the description of the persons eligible for awards, or (iii) effect any other change for which stockholder approval is required by law or the rules of any relevant stock exchange. No amendment, alteration, suspension, or termination may impair the rights of any participant with respect to his or her outstanding awards unless mutually agreed otherwise between the participant and the administrator. The 2024 Plan will continue until terminated by the administrator, but no incentive stock option may be granted after the tenth anniversary of the 2024 Plan’s adoption by our board of directors.
Notwithstanding the prior paragraph, the administrator may amend the terms of any one or more awards without an affected participant’s consent even if it does impair the participant’s rights, subject to the limitations of applicable laws, if any, if (i) such amendment is done in a manner expressly permitted under the Plan; (ii) the administrator determines in its sole discretion and prior to the date of any change of control that such amendment or alteration either is required or advisable in order for the Company, the 2024 Plan or the award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, (iii) the administrator determines in its sole discretion and prior to the date of any change of control that such amendment or alteration is not reasonably likely to significantly diminish the benefits provided under the award, or that any such diminution has been adequately compensated, or (iv) the administrator reasonably determines on or after the date of change of control that such amendment or alteration either is required or advisable in order for the Company, the 2024 Plan or the award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Code.
30
Summary of U.S. Federal Income Tax Consequences
The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the 2024 Plan. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change. The summary is not complete and does not discuss the tax consequences upon a participant’s death, or the income tax laws of any municipality, state, or non-U.S. country in which a participant may reside. Tax consequences for any particular participant may vary based on individual circumstances.
Incentive Stock Options
A participant recognizes no taxable income for regular income tax purposes because of the grant or exercise of an option that qualifies as incentive stock option under Section 422 of the Code. If a participant exercises the option and then later sells or otherwise disposes of the shares acquired through the exercise of the option after both the two-year anniversary of the date the option was granted and the one-year anniversary of the exercise, the participant will recognize a capital gain or loss equal to the difference between the sale price of the shares and the exercise price.
However, if the participant disposes of such shares either on or before the two-year anniversary of the date of grant or on or before the one-year anniversary of the date of exercise (a “disqualifying disposition”), any gain up to the excess of the fair market value of the shares on the date of exercise over the exercise price generally will be taxed as ordinary income, unless the shares are disposed of in a transaction in which the participant would not recognize a loss (such as a gift). However, if the proceeds from the disqualifying disposition are less than the fair market value of the shares on the date of exercise, the amount of ordinary income recognized by the participant will not exceed the gain, if any, realized on the sale. Any gain in excess of that amount of ordinary income recognized by the participant will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss.
For purposes of the alternative minimum tax, the difference between the option exercise price and the fair market value of the shares on the exercise date is treated as an adjustment item in computing the participant’s alternative minimum taxable income in the year of exercise. In addition, special alternative minimum tax rules may apply to certain subsequent disqualifying dispositions of the shares or provide certain basis adjustments or tax credits.
Nonstatutory Stock Options
A participant generally recognizes no taxable income as the result of the grant of a nonstatutory stock option. However, upon exercising the option with respect to any shares, the participant normally recognizes ordinary income equal to the amount that the fair market value of such shares on such date exceeds the exercise price for such shares. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of the shares acquired by exercising a nonstatutory stock option, any gain or loss (based on the difference between the sale price and the fair market value on the exercise date) will be taxed as capital gain or loss.
Stock Appreciation Rights
A participant generally recognizes no taxable income as the result of the grant of a stock appreciation right. However, upon exercising the stock appreciation right with respect to any shares, the participant normally recognizes ordinary income equal to the amount that the fair market value of such shares on such date exceeds the exercise price for such shares, regardless of whether the stock appreciation right is settled in cash or shares. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of the shares acquired by exercising a stock appreciation right, any gain or loss (based on the difference between the sale price and the fair market value on the exercise date) will be taxed as capital gain or loss.
Restricted Stock Awards
A participant acquiring shares of restricted stock generally will recognize ordinary income as the shares subsequently vest, in an amount equal to the excess of the fair market value of the shares on the vesting date over the purchase price paid by the participant for such shares (if any). If the participant is an employee, such ordinary income
31
generally is subject to withholding of income and employment taxes. The participant may elect, under Section 83(b) of the Code, to accelerate the ordinary income tax event to the date of acquisition by filing an election with the Internal Revenue Service no later than thirty days after the date the shares are acquired. Upon the sale of shares acquired under a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.
Restricted Stock Unit Awards
There are no immediate tax consequences of receiving an award of restricted stock units. A participant who is awarded restricted stock units generally will recognize ordinary income equal to the fair market value of shares issued to such participant at the end of the applicable vesting period or, if later, the settlement date elected by the administrator or a participant. If the participant is an employee, such ordinary income generally is subject to withholding of income. Also, if the participant is an employee, the fair market value of the shares covered by the award on the vesting date will be subject to employment taxes. Any additional gain or loss recognized upon any later disposition of any shares received will be taxed as capital gain or loss.
Performance Unit Awards
A participant generally will recognize no income upon the grant of a performance unit award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any cash or unrestricted shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income. Also, if the participant is an employee, the fair market value of the shares covered by the award on the vesting date will be subject to employment taxes. Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.
Section 409A
Section 409A provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Awards granted under the Plan with a deferral feature will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, when vested, which may be before the compensation is actually or constructively received. Also, if an award subject to Section 409A violates Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income and potentially penalties and interest on such deferred compensation.
Tax Effect for Us
We generally will be entitled to a tax deduction in connection with an award under the 2024 Plan equal to the ordinary income realized by a participant when the participant recognizes such income (for example, the exercise of a nonstatutory stock option or the disqualifying disposition of shares acquired through the exercise of an incentive stock option) except to the extent such deduction is limited by applicable provisions of the Code. Special rules limit the deductibility of compensation paid to our chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance. Under Section 162(m), the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000.
THE SUMMARY ABOVE IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION ON PARTICIPANTS AND US WITH RESPECT TO AWARDS UNDER THE PLAN. IT IS NOT INTENDED TO BE COMPLETE AND MAY NOT DISCUSS THE IMPACT OF EMPLOYMENT OR OTHER TAX REQUIREMENTS, THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH, OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE, OR NON-U.S. COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
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Plan Benefits
Since the adoption of the 2024 Plan through April 16, 2025, we have granted the following stock options and restricted stock units (excluding forfeited and expired options and restricted stock units) under the 2024 Plan to the individuals and groups listed below. In all cases, the securities underlying such equity awards were shares of our common stock.
|
Name and Position |
Dollar |
Number of |
||
|
Jesse Shefferman, President, Chief Executive Officer and Director |
1,691,210 |
452,000 |
||
|
Patrick Fabbio, Chief Financial Officer |
611,743 |
163,500 |
||
|
Jacqueline Zummo, Ph.D., Chief Scientific Operations Officer |
637,928 |
170,500 |
||
|
Jathin Bandari, M.D., former Chief Medical Officer(2) |
— |
— |
||
|
All current executive officers as a group (5 persons) |
3,182,423 |
850,500 |
||
|
All current directors who are not executive officers as a group (8 persons) |
— |
— |
||
|
All employees, including all current officers who are not executive officers (25 persons) |
2,009,614 |
570,394 |
____________
(1) This column reflects the grant date fair value of the applicable stock options and restricted stock units granted, computed in accordance with Financial Accounting Standard Board (“FASB”) Accounting Standards Codification Topic 718 for stock-based compensation transactions (“ASC 718”). Assumptions used in the calculation of these amounts are included in the notes to our audited consolidated financial statements included in the Annual Report. These amounts do not reflect the actual economic value that will be realized by the named executive officer upon the vesting of the stock awards or the sale of the common stock underlying such stock awards.
(2) Dr. Bandari resigned from the Company effective as of April 11, 2024 and did not receive any awards under the 2024 Plan.
New Plan Benefits
All future grants of awards under the 2024 Plan to eligible grantees are subject to the discretion of the compensation committee. Therefore, the benefits and amounts that will be received or allocated under the 2024 Plan are not determinable at this time.
Equity Compensation Plan Information
The following table summarizes our equity compensation plan information as of December 31, 2024.
|
Plan Category |
(a) |
(b) |
(c) |
|||||
|
Equity compensation plans approved by stockholders(1)(2) |
3,793,664 |
(3) |
7.58 |
2,407,000 |
(4) |
|||
|
Equity compensation plans not approved by stockholders |
512,900 |
(5) |
5.22 |
87,100 |
(6) |
|||
|
Total |
4,306,564 |
|
7.35 |
2,494,100 |
|
|||
____________
(1) This table does not include the number of shares issuable upon exercise of issued and outstanding awards under the Private ArTara Plan, which we assumed upon the closing of the Merger. No new awards may be issued under the Private ArTara Plan. As of December 31, 2024, a total of 134,328 shares of our common stock were reserved for issuance upon the exercise of outstanding options under the Private ArTara Plan, with a weighted-average exercise price of $9.18.
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(2) Includes securities issuable under our Amended and Restated 2014 Plan (the “2014 Plan”) (the predecessor to the 2024 Plan), the 2024 Plan and the 2024 ESPP.
(3) Includes (i) 93,000 shares of common stock issuable pursuant to outstanding stock options under the 2024 Plan and (ii) 3,700,664 shares of common stock issuable pursuant to outstanding stock options under the 2014 Plan. No shares were outstanding under the 2024 ESPP as of December 31, 2024.
(4) Includes (i) 1,407,000 shares of common stock available for issuance under our 2024 Plan and (ii) 1,000,000 shares of common stock available for issuance under our 2024 ESPP.
(5) Includes 512,900 securities issuable pursuant to outstanding stock options under the Inducement Plan adopted exclusively for grants of awards to individuals that were not previously our employees or directors (or to employees after a bona fide period of non-employment), as an inducement material to the individual’s entry into employment with us within the meaning of Rule 5635(c)(4) of the Nasdaq listing rules. The terms and conditions of the Inducement Plan and the equity awards to be granted thereunder are substantially similar to the 2024 Plan.
(6) Includes 87,100 shares of common stock available for issuance under the Inducement Plan. In March 2025, the compensation committee of our board of directors adopted an amendment to the Inducement Plan, which increased the number of shares of common stock available for issuance under the Inducement Plan by 600,000 shares. For more information on the Inducement Plan, see “Executive Compensation — Equity Benefit Plans — 2020 Inducement Plan”.
Vote Required
Approval of this proposal requires the vote of the holders of a majority of the shares present by virtual attendance or represented by proxy and entitled to vote on the matter at the Annual Meeting.
Our Board of Directors Recommends a Vote FOR the Approval of the Amendment to the 2024 Plan.
34
Executive Officers
The following table sets forth, for our executive officers, their ages and position held with us as of the Record Date:
|
Name |
Age |
Principal Position |
||
|
Jesse Shefferman |
53 |
President, Chief Executive Officer and Director |
||
|
Patrick Fabbio |
57 |
Chief Financial Officer |
||
|
Jacqueline Zummo, Ph.D. |
44 |
Chief Scientific Operations Officer |
||
|
Leonardo Nicacio, M.D. |
47 |
Chief Medical Officer |
||
|
Hannah Fry |
35 |
Controller |
Biographical information for Jesse Shefferman is included above with the director biographies under the caption “Information Regarding Director Nominees and Current Directors.”
Patrick Fabbio has served as our Chief Financial Officer since January 2023. Mr. Fabbio brings more than 30 years of experience in financial, operational and transactional leadership in both publicly traded and privately held life science and pharmaceutical companies. Prior to joining the Company, he served as President and Chief Financial Officer at Rafael Holdings, Inc., beginning in September 2021. Previously, Mr. Fabbio was Chief Financial Officer at WindMIL Therapeutics Inc. from March 2020 to July 2021 and Progenics Pharmaceuticals, Inc. from November 2015 to March 2020. Mr. Fabbio has also served as Chief Financial Officer of electroCore Medical, LLC, and Ikano Therapeutics, Inc., Vice President of Finance at NPS Pharmaceuticals, Inc., and Vice President of Finance, Innovation and Growth at Catalent Pharma Solutions, Inc. He also held roles in financial positions at Sanofi-Aventis U.S. LLC, UniPath Diagnostics Co., BioMatrix, Inc. and Coopers & Lybrand LLP. Mr. Fabbio has served as a board member of BeyondSpring Therapeutics, Inc. since 2018. Mr. Fabbio holds a B.B.A. in Accounting from Pace University and an M.B.A. in Finance from the Stern School of Business at New York University.
Jacqueline Zummo, Ph.D. has served as our Chief Scientific Operations Officer since January 2021 and previously served as our Senior Vice President, Research Operations since January 2020. Dr. Zummo joined Private ArTara in November 2017 and began serving as its Vice President, Clinical Research Medical Affairs, before serving as Vice President, Research Operations from March 2019 until the Merger. Prior to joining Private ArTara, Dr. Zummo served as Assistant Vice President, Medical Affairs at Vyera Pharmaceuticals, LLC, a privately held biopharmaceutical company, from November 2015 until September 2017. Dr. Zummo previously served as Medical Director at Alkermes, Inc. from 2012 until November 2015, Associate Director, Medical Affairs at Sunovion Pharmaceuticals Inc. from 2008 until 2012 and Senior Manager, Neuroscience Medical Affairs at Wyeth Pharmaceuticals Inc. from 2002 until 2008. Dr. Zummo earned her B.A. from Penn State University, her M.B.A. in healthcare marketing from Benedictine University, her M.P.H. in epidemiology from Benedictine University and her Ph.D. in global health sciences from Nova Southeastern University.
Leonardo Nicacio, M.D. has served as our Chief Medical Officer since April 2025. Prior to joining the Company, Dr. Nicacio most recently served as Head of Clinical Development and Global Medical Affairs at Stemline Therapeutics, Inc., a subsidiary of the Menarini Group, from April 2024 to April 2025. Prior to joining Stemline, Dr. Nicacio held positions of increasing responsibility at Seagen Inc. (acquired by Pfizer Inc. in December 2023) from May 2017 to April 2024, most recently serving as Vice President, Clinical Development, and prior to that as Executive Director, Global Medical Affairs and Executive Director, Clinical Development. Earlier in his career, Dr. Nicacio served as Senior Global Medical Lead, Global Medical Affairs at AstraZeneca plc from August 2015 to May 2017. Before joining AstraZeneca, Dr. Nicacio held oncology leadership roles at Flatiron Health, as well as roles at Sanofi and YM Biosciences. Dr. Nicacio earned his Medical Degree from Faculdade de Ciencias Medicas de Minas Gerais and completed a molecular biology research fellowship at New York Blood Center. He is board-certified in internal medicine and medical oncology.
Hannah Fry has served as our Controller since July 2022. Ms. Fry joined the Company in April 2020 and, prior to her appointment as Controller, served in various roles reporting directly to the Chief Financial Officer of the Company, most recently as Senior Director, Assistant Controller. Prior to joining the Company, Ms. Fry worked in public accounting for over nine years, most recently with member firms of Deloitte Touche Tohmatsu Limited from 2014 to 2020, leading audits of complex publicly traded entities. Ms. Fry received her B.S. in Accountancy from the University of San Diego. She is a licensed Certified Public Accountant in the State of California.
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Executive Compensation
For the year ended December 31, 2024, our named executive officers were:
• our principal executive officer: Jesse Shefferman, our Chief Executive Officer;
• the next two most highly compensated executive officers serving at the end of 2024: Patrick Fabbio, our Chief Financial Officer, and Jacqueline Zummo, Ph.D., our Chief Scientific Operations Officer; and
• one additional former executive officer who would have been one of our next two most highly compensated executive officers, but for having left the Company prior to the end of 2024 and who is required to be included under applicable SEC rules: Jathin Bandari, M.D., our former Chief Medical Officer.
2024 Summary Compensation Table
The following table shows for the fiscal years ended 2024 and 2023, compensation awarded to or paid to, or earned by, our named executive officers.
|
Name and Principal Position |
Year |
Salary |
Bonus |
Stock |
Option |
Non-Equity |
All Other |
Total |
||||||||
|
Jesse Shefferman |
2024 |
632,342 |
— |
112,690 |
542,604 |
432,919 |
71,288 |
1,791,843 |
||||||||
|
President, Chief Executive Officer and Director |
2023 |
607,882 |
— |
154,926 |
736,124 |
341,351 |
65,849 |
1,906,132 |
||||||||
|
Patrick Fabbio |
2024 |
464,967 |
— |
42,020 |
199,107 |
260,325 |
57,117 |
1,023,536 |
||||||||
|
Chief Financial Officer |
2023 |
412,875 |
25,000 |
— |
746,910 |
206,758 |
51,986 |
1,443,529 |
||||||||
|
Jacqueline Zummo, Ph.D. |
2024 |
475,755 |
150,000 |
43,930 |
208,226 |
266,119 |
70,159 |
1,214,189 |
||||||||
|
Chief Scientific Operations Officer |
2023 |
432,446 |
— |
60,098 |
285,592 |
200,625 |
61,087 |
1,039,848 |
||||||||
|
Jathin Bandari, M.D. |
2024 |
135,378 |
150,000 |
43,930 |
208,226 |
— |
543,742 |
1,081,276 |
||||||||
|
Former Chief Medical Officer |
____________
(1) This column reflects the one-time signing bonus paid to Mr. Fabbio in February 2023 in connection with entering into his employment agreement as well as one-time retention bonuses paid to Dr. Zummo and Dr. Bandari in January 2024.
(2) This column reflects the aggregate grant date fair value of stock awards granted during 2024 and 2023, as applicable, computed in accordance with FASB ASC 718. Assumptions used in the calculation of these amounts are included in the notes to our audited consolidated financial statements included in the Annual Report. These amounts do not reflect the actual economic value that will be realized by the named executive officer upon the vesting of the stock awards or the sale of the common stock underlying such stock awards.
(3) This column reflects the aggregate grant date fair value of the option awards granted during 2024 and 2023, as applicable, computed in accordance with FASB ASC 718. Assumptions used in the calculation of these amounts are included in the notes to our audited consolidated financial statements included in the Annual Report. These amounts do not reflect the actual economic value that will be realized by the named executive officer upon the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options.
(4) This column reflects the annual performance-based bonuses earned in 2024 and paid in 2025 upon approval of our board of directors.
(5) This column reflects life insurance premiums, health insurance premiums, disability insurance, 401(k) matching contributions paid by us on behalf of each named executive officer. These benefits are provided to the named executive officers on the same terms as provided to all of our regular full-time employees in the United States. Amounts for 2024 include for Mr. Shefferman, Mr. Fabbio, Dr. Zummo and Dr. Bandari, respectively: life insurance premiums of $1,025, $482, $713 and $60; health insurance premiums of $55,591, $45,443, $54,774 and $0; short-term disability insurance premiums of $404, $404, $404 and $34; long-term disability insurance premiums of $468, $468, $468 and $39; and 401(k) matching contributions of $13,800, $10,320, $13,800 and $13,800. This column also reflects certain payments made to Dr. Bandari following his departure from the Company pursuant to a Separation and Consulting Agreement and Release, dated March 18, 2024 (the “Separation Agreement”), by and between Dr. Bandari and the Company: (i) his base salary for a period of nine months paid in a lump sum for a total of $365,385.75; and (ii) a one-time lump sum payment of nine months of his bonus at target equal to $164,423.59.
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Annual Base Salary
The compensation of our named executive officers is generally determined and approved by our board of directors, based on the recommendation of the compensation committee of our board of directors. As a result of payroll processes, the actual base salaries paid for the fiscal year may vary from those shown below. The 2024 base salaries that became effective as of January 1, 2024 were as follows:
|
NAME |
2024 BASE |
|
|
Jesse Shefferman |
629,720 |
|
|
Patrick Fabbio |
462,800 |
|
|
Jacqueline Zummo, Ph.D. |
474,980 |
|
|
Jathin Bandari, M.D.(1) |
482,760 |
____________
(1) The Company ceased paying such base salary to Dr. Bandari upon his departure from the Company effective April 11, 2024. Pursuant to the Separation Agreement, immediately following his separation from employment with the Company, Dr. Bandari received a lump sum payment approximately equivalent to nine months of base salary, for a total of $365,385.75. For more information on the terms of the Separation Agreement, see “— Potential Payments Upon Termination or Change in Control”.
Bonus Opportunity
In addition to base salaries, our named executive officers are eligible to receive annual performance-based cash bonuses, which are designed to provide appropriate incentives to our executives to achieve defined annual performance goals and to reward our executives for individual achievement towards these goals. The annual performance-based bonus each named executive officer is eligible to receive is largely (and, in the case of our Chief Executive Officer, entirely) based on the extent to which we achieve the corporate goals that our compensation committee or our board of directors establishes each year. For each of Mr. Fabbio, Dr. Zummo and Dr. Bandari, the target bonus included an individual performance goal accounting for 10% of his or her target bonus amount. At the end of the year, our compensation committee and our board of directors reviewed the corporate goals, determined achievement levels and approved the actual bonus payout to be awarded to each of our named executive officers.
For 2024, the target bonus for Mr. Shefferman was 55% of his base salary and for Mr. Fabbio, Dr. Zummo and Dr. Bandari, the target bonus was 45% of their respective base salaries. Our corporate performance objectives for 2024, as established by our board of directors, included (i) achievement of certain clinical development milestones, such as regarding enrollment of patients in the Company’s Phase 2 clinical trials of its TARA-002 product candidate in Non-Muscle Invasive Bladder Cancer (“NMIBC”) and in Lymphatic Malformations; interim results from such Phase 2 trial in NMIBC; alignment with the U.S. Food and Drug Administration on trial design regarding elements of the Company’s NMBIC program for TARA-002 as a monotherapy and in combination with other agents; initiation of the Company’s IV Choline Chloride Phase 2 clinical trial; and (ii) successful capital raises; as well as individual performance goals. In January 2025, our board of directors approved a 125% overall achievement level of our 2024 corporate goals and awarded payouts of bonuses in accordance therewith to our named executive officers. The bonus approved for Mr. Shefferman was based entirely on the achievement of the corporate goals. The bonuses approved for each of Mr. Fabbio and Dr. Zummo also reflected individual goal achievement levels of 125% and 120%, respectively. Dr. Bandari’s employment with the Company terminated prior to the determination and payment of bonuses for 2024 and, accordingly, he did not receive a bonus for such year. However, pursuant to the Separation Agreement, following his departure from the Company, Dr. Bandari received a one-time lump sum payment of $164,423.59 representing nine months of his target annual bonus for 2024. For more information on the terms of the Separation Agreement, see “— Potential Payments Upon Termination or Change in Control”. The 2024 amounts reflected as Non-Equity Incentive Plan Compensation in the Summary Compensation Table for our named executive officers reflect bonuses earned for 2024 performance.
Equity-Based Incentive Awards
We believe that our ability to grant equity-based awards is a valuable and necessary compensation tool that aligns the long-term financial interests of our employees, consultants and directors with the financial interests of our stockholders. In addition, we believe that our ability to grant equity-based awards helps us to attract, retain and
37
motivate employees, consultants and directors, and encourages them to devote their best efforts to our business and financial success. Our compensation committee or our board of directors approves equity grants. Vesting of equity awards is generally tied to continuous service with us and serves as an additional retention measure. Our executives generally are awarded an initial new hire grant upon commencement of employment. Additional grants may occur periodically in order to specifically incentivize executives with respect to achieving certain corporate goals or to reward executives for exceptional performance.
Prior to the Merger, Private ArTara issued equity awards pursuant to the ArTara Subsidiary, Inc. 2017 Equity Incentive Plan (the “Private ArTara Plan”), which we assumed upon the closing of the Merger. Following the Merger, we have granted all equity awards pursuant to our 2014 Plan, our 2024 Plan and the Inducement Plan. The terms of the 2024 Plan are described above under “— Proposal 4 — Approval of an Amendment to the 2024 Equity Plan.” The terms of the Private ArTara Plan, the 2014 Plan and the Inducement Plan are described below under “— Equity Benefit Plans.” All options are granted with a per share exercise price equal to no less than the fair market value of a share of our common stock on the date of the grant of such award and cannot be repriced or exchanged for other awards without stockholder approval. We also do not grant any options with automatic reload features. Generally, our stock option awards vest over a four-year period and our restricted stock unit (“RSU”) awards vest over a three-year period, in either case subject to the holder’s continuous service to us.
In January 2024, in connection with the Company’s annual equity grant process, our board of directors granted the following options to our named executive officers: Mr. Shefferman was granted an option to purchase 357,000 shares of common stock, Mr. Fabbio was granted an option to purchase 131,000 shares of common stock and Dr. Zummo and Dr. Bandari were each granted an option to purchase 137,000 shares of common stock. The options granted to Mr. Shefferman, Mr. Fabbio, Dr. Zummo and Dr. Bandari had an exercise price of $1.91 per share. Each grant vests as follows: 25% of the shares vest on the one-year anniversary of the grant date, and 1/48th of the shares vest monthly thereafter over the next three years, subject to optionee’s continuous service with us as of each such date. In January 2024, our board of directors also granted the following RSU awards to our named executive officers: Mr. Shefferman was granted 59,000 RSUs, Mr. Fabbio was granted 22,000 RSUs and Dr. Zummo and Dr. Bandari were each granted 23,000 RSUs. Each RSU grant vests over three years, in equal annual installments on the first, second and third anniversaries of the grant date.
Outstanding Equity Awards as of December 31, 2024
The following table sets forth certain information regarding outstanding equity awards granted to our named executive officers that remain outstanding as of December 31, 2024.
|
Name |
Grant |
Option Awards(1) |
Stock Awards(1) |
|||||||||||
|
Number of |
Number of |
Option |
Option |
Number of |
Market Value |
|||||||||
|
Jesse Shefferman |
1/10/2020 |
111,250 |
— |
30.00 |
1/9/2030 |
— |
— |
|||||||
|
7/10/2020 |
111,250 |
— |
27.42 |
7/9/2030 |
— |
— |
||||||||
|
1/19/2021 |
197,791 |
4,209 |
19.82 |
1/18/2031 |
— |
— |
||||||||
|
1/03/2022 |
184,843 |
68,657 |
6.90 |
1/2/2032 |
— |
— |
||||||||
|
1/03/2022 |
— |
— |
— |
— |
14,099 |
74,443 |
||||||||
|
1/19/2023 |
147,343 |
160,157 |
3.02 |
1/18/2033 |
— |
— |
||||||||
|
1/19/2023 |
— |
— |
— |
— |
34,199 |
180,571 |
||||||||
|
1/19/2024 |
— |
357,000 |
1.91 |
1/18/2034 |
— |
— |
||||||||
|
1/19/2024 |
— |
— |
— |
— |
59,000 |
311,520 |
||||||||
|
Patrick Fabbio |
1/30/2023 |
143,750 |
156,250 |
3.14 |
1/29/2033 |
— |
— |
|||||||
|
1/19/2024 |
— |
131,000 |
1.91 |
1/18/2034 |
— |
— |
||||||||
|
1/19/2024 |
— |
— |
— |
— |
22,000 |
116,160 |
||||||||
38
|
Name |
Grant |
Option Awards(1) |
Stock Awards(1) |
|||||||||||
|
Number of |
Number of |
Option |
Option |
Number of |
Market Value |
|||||||||
|
Jacqueline Zummo, Ph.D. |
(6) |
19,075 |
— |
9.18 |
7/11/2028 |
— |
— |
|||||||
|
(7) |
9,537 |
— |
9.18 |
12/3/2028 |
— |
— |
||||||||
|
(8) |
9,537 |
— |
9.18 |
9/16/2029 |
— |
— |
||||||||
|
1/19/2021 |
73,437 |
1,563 |
19.82 |
1/18/2031 |
— |
— |
||||||||
|
1/3/2022 |
61,833 |
22,967 |
6.90 |
1/2/2032 |
— |
— |
||||||||
|
1/3/2022 |
— |
— |
— |
— |
4,699 |
24,811 |
||||||||
|
1/19/2023 |
57,164 |
62,136 |
3.02 |
1/18/2033 |
— |
— |
||||||||
|
1/19/2023 |
— |
— |
— |
— |
13,266 |
70,044 |
||||||||
|
1/19/2024 |
— |
137,000 |
1.91 |
1/18/2034 |
— |
— |
||||||||
|
1/19/2024 |
— |
— |
— |
— |
23,000 |
121,440 |
||||||||
|
Jathin Bandari, M.D.(9) |
— |
— |
— |
— |
— |
— |
||||||||
____________
(1) Option awards and RSU awards granted before the Merger were granted under the Private ArTara Plan. The remaining option awards and RSU awards were granted under the 2014 Plan with the exception of Mr. Fabbio’s granted on January 30, 2023, which was granted under the 2020 Inducement Plan. The terms of such plans and the related award agreements are described below under “— Equity Benefit Plans.”
(2) This column represents the number of shares under the option awards that have vested. Unless otherwise noted, all of the option awards vest as follows: 25% of the shares vest on the one-year anniversary of the grant date, and 1/48th of the shares vest monthly thereafter, subject to the holder’s continuous service with us as of each such date.
(3) This column represents the number of shares under the option awards that have not vested.
(4) Unless otherwise noted, all of the RSU awards vest as follows: 33.3% of the shares vest on the first, second and third anniversaries of the grant date, respectively, subject to the awardee’s continuous service with us as of each such date.
(5) The market value of stock awards that have not yet vested is calculated based on the closing price of our common stock on December 31, 2024, the last trading day of 2024, of $5.28.
(6) The share numbers and exercise prices reflected are those of options deemed to have been issued to the executive upon completion of the Merger in January 2020. These options were deemed to have been issued upon completion of the Merger in exchange for options to purchase 100,000 shares of Private ArTara common stock, which would have vested monthly over four years following August 1, 2018, at an exercise price of $1.75 per share awarded to the executive by Private ArTara in 2018.
(7) The share numbers and exercise prices reflected in this column are those underlying options deemed to have been issued to Dr. Zummo upon completion of the Merger in January 2020 in exchange for options to purchase 50,000 shares of Private ArTara common stock, which would have vested monthly over four years following January 1, 2019, at an exercise price of $1.75 per share awarded to Dr. Zummo by Private ArTara in 2018.
(8) The share numbers and exercise prices reflected in this column are those of options deemed to have been issued to Dr. Zummo upon completion of the Merger in January 2020. These options were deemed to have been issued upon completion of the Merger in exchange for options to purchase 50,000 shares of Private ArTara common stock, of which 22,000 (44%) of the shares vested immediately upon the date of grant, with the remaining 28,000 shares which would have vested monthly in 27 approximately equal monthly increments following September 17, 2019, at an exercise price of $1.75 per share awarded to the executive by Private ArTara in 2019.
(9) Pursuant to the Separation Agreement, following Dr. Bandari’s departure from the Company effective April 11, 2024, certain outstanding options and restricted stock unit award grants (representing 11,993 options and 5,886 restricted stock units, respectively) vested pro rata. For more information on the terms of the Separation Agreement, see “— Potential Payments Upon Termination or Change in Control”.
39
Agreements with our Named Executive Officers
Below are descriptions of our employment agreements with our named executive officers. Each of our executive officers’ employment is at will and may be terminated by us at any time. Any potential payments and benefits due upon a qualifying termination of employment or a change in control are also described below under “— Potential Payments Upon Termination or Change in Control.”
Jesse Shefferman
On November 5, 2019, we entered into, and subsequently amended on December 4, 2019, an employment agreement with Mr. Shefferman, pursuant to which Mr. Shefferman was appointed our President and Chief Executive Officers effective upon the closing of the Merger on January 9, 2020. Under the terms of the employment agreement, as amended, supplemented or modified from time to time, Mr. Shefferman was initially entitled to an annual base salary of $365,000 per year and an annual discretionary bonus equal to 35% of his annual base salary for the period of employment prior to the closing of the Merger. After the closing of the Merger, Mr. Shefferman was entitled to an annual base salary of $510,000 per year (most recently increased to $654,888 for 2025), an annual discretionary bonus equal to 50% of his annual base salary (subsequently increased to 55% of his annual base salary beginning in 2022), a grant of options equal to the greater of 225,000 shares or the number of shares equal to 9.0% of the Company’s fully-diluted, pro-forma shares as of the closing date, that will vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remainder vesting monthly over the remainder of the 36 month vesting period, and a special bonus of $100,000 upon successful close of a capital raise totaling $20,000,000 in the Company. Mr. Shefferman is also eligible to participate in our benefits program (as defined below under “— Perquisites Health, Welfare and Retirement Benefits”) including our 401(k) plan (as described below under “— 401(k) Plan) and to receive equity awards under the plans in effect from time to time.
Patrick Fabbio
On January 5, 2023, we entered into, and subsequently amended and restated on June 1, 2023, an employment agreement with Mr. Fabbio. Under the terms of the employment agreement, as amended, supplemented or modified from time to time, Mr. Fabbio is entitled to a base salary of $445,000 (most recently increased to $481,312 for 2025), an annual discretionary bonus equal to 45% of his annual base salary, a one-time signing bonus of $25,000 and a grant of options to purchase 300,000 shares of common stock that will vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remainder vesting monthly over the remaining 36 months of the vesting period. Mr. Fabbio is also eligible to participate in our benefit programs and to receive equity awards (beginning in 2024) under the plans in effect from time to time.
Jacqueline Zummo, Ph.D.
On December 17, 2019, we entered into an employment agreement with Dr. Zummo. Under the terms of the employment agreement, as amended, supplemented or modified from time to time, Dr. Zummo was initially entitled to an annual base salary of $305,000 per year and an annual discretionary bonus equal to 25% of her annual base salary for the period of employment prior to the closing of the Merger. After the closing of the Merger, Dr. Zummo was entitled to an annual base salary of $325,000 per year (most recently increased to $494,000 for 2025), a discretionary bonus equal to 30% of her annual base salary (subsequently increased to 45% of her annual base salary beginning in 2022) and a grant of options equal to the greater of 45,500 or the number of shares equal to 1.0% of the Company’s fully-diluted, pro-forma shares as of the closing date, that will vest over four years, with the first 25% vesting on the first anniversary of the grant date and vesting monthly over the remainder of the 36 month vesting period. Dr. Zummo is also eligible to participate in our benefit programs and to receive equity awards under the plans in effect from time to time. Dr. Zummo and the Company also entered into a letter agreement effective as of January 25, 2024 pursuant to which Dr. Zummo received a cash retention award of $150,000, which she is required to repay to the Company in the event of her voluntary termination of her employment with the Company or her termination for cause (as such term is defined in her employment agreement) on or before April 30, 2025, net of taxes withheld, within 30 days of such termination.
40
Jathin Bandari, M.D.
On January 10, 2022, we entered into an employment agreement with Dr. Bandari. Under the terms of the employment agreement, as amended, supplemented or modified from time to time, Dr. Bandari was entitled to a base salary of $415,000 (most recently increased to $482,760 for 2024), a discretionary bonus equal to 40% of his annual base salary (subsequently increased to 45% of his annual base salary beginning in 2022). Under such agreement, Dr. Bandari had also been eligible to participate in our benefit programs and to receive equity awards under the plans in effect from time to time. On March 18, 2024, we entered into the Separation Agreement with Dr. Bandari in connection with his termination of employment, the terms of which are described below under “— Potential Payments Upon Termination or Change in Control”.
Potential Payments Upon Termination or Change in Control
Under the terms of the employment agreements with each of our named executive officers described above, either we or the executive may terminate the executive’s employment at any time. Each of our named executive officers is eligible, under the terms of his or her employment agreement to receive, in exchange for a release of claims, severance benefits upon termination of employment whether by us, without cause, or by the executive for good reason, with additional severance benefits provided in the event the termination is in connection with a change in control. In addition, the terms of equity awards granted to our named executive officers are subject to the terms of our equity plan and award agreements thereunder, which include accelerated vesting provisions upon certain change in control transactions. We do not provide any excise tax gross-ups or change-in-control benefits.
Jesse Shefferman
Mr. Shefferman’s employment agreement provides that upon written notice, either party may terminate the employment arrangement with or without cause (as defined in his employment agreement). The agreement provides that if we terminate Mr. Shefferman’s employment without cause or if Mr. Shefferman resigns for good reason (as defined in his employment agreement), then Mr. Shefferman will be eligible to receive (i) any unpaid base salary through the effective date of termination, (ii) his base salary for a period of 18 months paid in a lump sum, (iii) a one-time lump sum payment equal to 12 months of his bonus at 100% of target, (iv) reimbursement of all unpaid business expenses for which he is entitled, (v) reimbursement of premium costs under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for the same level of coverage he had during employment for 12 months, (vi) pro-rata vesting of any outstanding equity awards to the extent Mr. Shefferman is not employed through the one-year anniversary of the applicable grant date of such outstanding equity awards and (vii) any unused and accrued vacation. The severance benefits described in the foregoing sentence are, in each case, subject to Mr. Shefferman’s compliance with continuing obligations to the Company and his execution of a general release in favor of the Company. In addition to the foregoing, if Mr. Shefferman is terminated for other than cause, death or disability during the twelve months following a change in control of the Company, Mr. Shefferman will be entitled to acceleration of 100% of his then unvested outstanding equity awards.
Patrick Fabbio
Mr. Fabbio’s employment agreement provides that upon written notice, either party may terminate the employment arrangement with or without cause (as defined in his employment agreement). The agreement provides that if we terminate Mr. Fabbio’s employment without cause or if Mr. Fabbio resigns for good reason (as defined in his employment agreement), then Mr. Fabbio will be eligible to receive (i) any unpaid base salary through the effective date of termination, (ii) his base salary for a period of nine months paid in a lump sum, (iii) a one-time lump sum payment equal to his annual bonus at target, (iv) reimbursement of all unpaid business expenses for which he is entitled, (v) reimbursement of any healthcare premium costs for nine months, at the same level of coverage as he had during employment and (vii) any unused and accrued vacation. The severance benefits described in the foregoing sentence are, in each case, subject to Mr. Fabbio’s compliance with continuing obligations to the Company and his execution of a general release in favor of the Company. In addition to the foregoing, if Mr. Fabbio is terminated for other than cause, death or disability during the twelve months following a change in control of the Company, Mr. Fabbio will be entitled to acceleration of 100% of his then unvested outstanding equity awards and a lump sum severance payment equal to twelve months of his base salary (in lieu of (ii) above).
41
Jacqueline Zummo, Ph.D.
Dr. Zummo’s employment agreement provides that upon written notice, either party may terminate the employment arrangement with or without cause (as defined in her employment agreement). The agreement provides that if we terminate Dr. Zummo’s employment without cause or if Dr. Zummo resigns for good reason (as defined in her employment agreement), then Dr. Zummo will be eligible to receive (i) any unpaid base salary through the effective date of termination, (ii) her base salary for a period of nine months paid in a lump sum, (iii) a one-time lump sum payment equal to nine months of her bonus at target, (iv) reimbursement of all business expenses for which she is entitled, (v) reimbursement of any healthcare premium costs for nine months, at the same level of coverage as she had during employment, (vi) pro-rata vesting of any outstanding equity awards to the extent Dr. Zummo is not employed through the one-year anniversary of the applicable grant date of such outstanding equity awards and (vii) any unused and accrued vacation. The severance benefits described in the foregoing sentence are, in each case, subject to Dr. Zummo’s compliance with continuing obligations to the Company and her execution of a general release in favor of the Company. In addition to the foregoing, if Dr. Zummo is terminated for other than cause, death or disability during the eighteen months following a change in control of the Company, Dr. Zummo will be entitled to acceleration of 100% of her then unvested outstanding equity awards.
Jathin Bandari, M.D.
Pursuant to the terms of the Separation Agreement entered into by the Company and Dr. Bandari on March 18, 2024, Dr. Bandari’s employment with the Company ended effective April 11, 2024. In consideration for a release of claims in favor of the Company and subject to the other terms of the Separation Agreement, Dr. Bandari received (i) his base salary for a period of nine months paid in a lump sum for a total of $365,385.75; (ii) a one-time lump sum payment of nine months of his bonus at target equal to $164,423.59; (iii) reimbursement of all business expenses to which he was entitled; (iv) reimbursement of COBRA premium costs for nine months; (v) pro rata vesting of certain outstanding options and restricted stock unit award grants (representing 11,993 options and 5,886 restricted stock units, respectively). The Company also agreed that Dr. Bandari is not responsible for repayment of a cash retention award of $150,000 paid earlier in 2024, which Dr. Bandari was required to repay in the event of his voluntary termination of his employment with the Company or his termination for cause (as such term is defined in his employment agreement) on or before April 30, 2025, net of taxes withheld, within 30 days of such termination.
Perquisites Health, Welfare and Retirement Benefits
All of our current named executive officers are eligible to participate in our employee benefit plans, including our medical, dental, vision, life, disability and accidental death and dismemberment insurance plans and vacation benefits (our “benefits program”), in each case on the same basis as all of our other employees. We pay the premiums for the life, disability, accidental death and dismemberment insurance for all of our employees, including our named executive officers. In addition, we provide a 401(k) plan to our employees, including our named executive officers, as discussed in the section below entitled “401(k) Plan.”
401(k) Plan
In February 2020, we established a safe harbor 401(k) plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible compensation up to certain Code limits, which are updated annually. We have the ability to make matching contributions, up to a maximum of 4% of each employee’s annual salary, to the 401(k) plan. The 401(k) plan is intended to be qualified under Section 401(a) of the Code, with the related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan are deductible by us when made, and contributions and earnings on those amounts are not generally taxable to the employees until withdrawn or distributed from the 401(k) plan.
Nonqualified Deferred Compensation
None of our named executive officers participate in or have account balances in nonqualified defined contribution plans or other nonqualified deferred compensation plans maintained by us. Our board of directors may elect to provide our officers and other employees with nonqualified defined contribution or other nonqualified deferred compensation benefits in the future if it determines that doing so is in our best interests.
42
Clawback Policy
On October 30, 2023, the Company adopted a clawback policy (the “Clawback Policy”) that was established in accordance with the listing requirement of Nasdaq to provide for the recovery or “clawback” of certain erroneously awarded incentive-based compensation in the event that the Company is required to prepare an accounting restatement. The clawback policy became effective December 1, 2023 and applies to incentive-based compensation received by current and former executive officers of the Company during the three fiscal years preceding an accounting restatement and after the effective date of the Nasdaq listing requirement, which was October 2, 2023.
Equity Benefit Plans
The principal features of our equity plans are summarized below. These summaries are qualified in their entirety by reference to the actual text of the plans, which are filed as exhibits to the Annual Report and incorporated herein by reference. If the amendment to the 2024 Plan is approved, the amended plan will take effect as of the date of stockholder approval. For more information on the 2024 Plan, see “Proposal 4 — Approval of an Amendment to the 2024 Equity Incentive Plan.”
2020 Inducement Plan
The compensation committee of our board of directors adopted the Inducement Plan in March 2020 and adopted an amendment to the Inducement Plan in March 2025. The Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c) of the Nasdaq listing rules. The Inducement Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, and restricted stock unit awards.
Stock awards granted under the Inducement Plan may only be made to individuals who did not previously serve as employees or non-employee directors of the Company or an affiliate of the Company (or following such individuals’ bona fide period of non-employment with the Company or an affiliate of the Company), as an inducement material to the individuals’ entering into employment with the Company or an affiliate of the Company or in a manner otherwise permitted by Rule 5635(c) of the Nasdaq listing rules. In addition, stock awards must be approved by either a majority of the Company’s “independent directors” (as such term is defined in Rule 5605(a)(2) of the Nasdaq listing rules) or the compensation committee, provided such committee comprises solely independent directors. The terms of the Inducement Plan are otherwise substantially similar to our 2024 Plan (including with respect to the treatment of stock awards upon corporate transactions involving us or certain changes in our capitalization), except stock awards granted under the Inducement Plan may not be repriced without stockholder approval.
The maximum number of shares of our common stock that may be issued under the Inducement Plan is 1,200,000 shares. Shares subject to stock awards granted under the Inducement Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, do not reduce the number of shares available for issuance under the Inducement Plan. Additionally, shares become available for future grant under the Inducement Plan if they were issued under stock awards granted under the Inducement Plan and we repurchase or reacquire them or they are forfeited. This includes shares used to pay the exercise price of a stock award or to satisfy the tax withholding obligations related to a stock award.
2014 Equity Incentive Plan
The following is a summary of the material terms of the 2014 Plan, which first became effective on August 21, 2014 and was amended as of January 1, 2020. Following the approval of the 2024 Plan by stockholders at the 2024 annual meeting, no additional awards have been or will be made under the 2014 Plan.
The 2014 Plan provides for the grant of incentive stock options and nonstatutory stock options, stock appreciation rights, restricted stock and restricted stock unit awards, performance units, stock grants and performance-based awards to our directors, officers and other employees as well as others performing consulting or advisory services for us (incentive stock options may only be awarded to employees).
43
Administration
Under its terms, the 2014 Plan is administered by the compensation committee of the board of directors, which is made up of independent outside non-employee directors for the purposes of applicable securities and tax laws. The board of directors itself may also exercise any of the powers and responsibilities under the 2014 Plan. Subject to the terms of the 2014 Plan, the plan administrator (the board or its compensation committee) will select the recipients of awards and determine, among other things, the:
• number of shares of common stock covered by the awards and the dates upon which such awards become exercisable or any restrictions lapse, as applicable;
• type of award and the exercise or purchase price and method of payment for each such award;
• vesting period for awards, risks of forfeiture and any potential acceleration of vesting or lapses in risks of forfeiture; and
• duration of awards.
Stock options are generally granted with an exercise price equal to the fair market value of our common stock on the date of grant, vest at the rate specified by the plan administrator (often over a four-year period) and may have a term up to a maximum of 10 years. The exercise price for a stock option generally cannot be less than 100% of the fair market value of our common stock on the date of grant. Unless the terms of an optionee’s stock option agreement provides otherwise, if an optionee’s service relationship with us, or any of our affiliates, ceases for any reason other than disability, death or cause, the optionee may generally exercise any vested options for a period of 90 days following the cessation of service. In no event may an option be exercised beyond the expiration of its term.
Restricted stock unit awards vest at the rate specified by the plan administrator (often over a three-year period). Unless the terms of an awardee’s restricted stock unit award agreement provides otherwise, if such awardee’s service relationship with us, or any of our affiliates, ceases for any reason, such award shall be forfeited.
Transactions
In the event of a transaction, including (i) any merger or consolidation, (ii) any sale or exchange of all of the common stock, (iii) any sale, transfer or other disposition of all or substantially all of our assets, or (iv) any liquidation or dissolution, the compensation committee may, with respect to all or any outstanding stock awards, (1) provide that such awards will be assumed, or substantially equivalent rights shall be provided in substitution therefore, (2) provide that the recipient’s unexercised awards will terminate immediately prior to the consummation of such transaction unless exercised within a specified period following written notice to the recipient, (3) provide that all or any awards that are subject to a “risk of forfeiture” (as defined in the 2014 Plan) will terminate immediately prior to the consummation of a transaction, (4) provide that outstanding awards shall accelerate and become exercisable in whole or in part prior to or upon the transaction, (5) provide that any awards subject to a risk of forfeiture will accelerate such that the risk of forfeiture otherwise applicable to the options will expire prior to or upon the transaction, (6) provide for cash payments, net of applicable tax withholdings, to be made to the recipients, (7) provide that, in connection with a liquidation or dissolution, awards shall convert into the right to receive liquidation proceeds net of the exercise price of the awards and any applicable tax withholdings, or (8) any combination of the foregoing. With respect to outstanding awards other than stock options or stock appreciation rights that are not terminated prior to or upon the transaction, upon the occurrence of a transaction other than a liquidation or dissolution of the Company which is not part of another form of transaction, the repurchase and other rights under each such award will transfer to our successor. Any determinations required to carry out any of the foregoing will be made by the compensation committee in its sole discretion.
Change of Control
Upon the occurrence of a change of control, to the extent that the surviving entity declines to continue, convert, assume or replace outstanding awards, then all outstanding stock options will accelerate with respect to such percentage of the shares not then exercisable as is determined by the compensation committee, the risk of forfeiture applicable to all outstanding restricted stock and restricted stock units not based on achievement of performance goals will lapse with respect to such percentage of the restricted stock and restricted stock units still subject to such risk of forfeiture as is determined by the compensation committee, and such percentage of any outstanding awards of performance units will be deemed to have been satisfied as is determined by the compensation committee. In each case, a pro rata portion of each unvested award will be vested.
44
A change of control is defined as the occurrence of any of the following: (1) a transaction, as described above, unless securities possessing more than 50% of the total combined voting power of the resulting entity or ultimate parent entity are held by a person who held securities possessing more than 50% of our total combined voting power immediately prior to the transaction; (2) any person or group of persons, excluding and certain other related entities, directly or indirectly acquires beneficial ownership of securities possessing more than 50% of our total combined voting power, unless pursuant to a tender or exchange offer that our board of directors recommends stockholders accept; (3) over a period of 36 consecutive months or less, there is a change in the composition of our board such that a majority of the board members ceases to be composed of individuals who either (i) have been board members continuously since the beginning of that period, or (ii) have been elected or nominated for election as board members during such period by at least a majority of the remaining board members who have been board members continuously since the beginning of that period; (4) a majority of the Board votes in favor of a decision that a Change of Control has occurred.
Amendment and Termination
Our board of directors may at any time amend any or all of the provisions of the 2014 Equity Incentive Plan, or suspend or terminate it entirely, retroactively or otherwise. Unless otherwise required by law or specifically provided in the 2014 Equity Incentive Plan, the rights of a participant under awards granted prior to any amendment, suspension or termination may not be adversely affected without the consent of the participant.
ArTara Subsidiary, Inc. 2017 Equity Incentive Plan
In connection with the Merger, we assumed all of the outstanding equity awards of Private ArTara. The Private ArTara board of directors and their stockholders approved the Private ArTara Plan in August 2017. The Private ArTara Plan was subsequently amended by the Private ArTara board of directors and stockholders, most recently in November 2017. Our board of directors, or a duly authorized committee thereof, has the authority to administer the Private ArTara Plan. The plan administrator has the authority to modify or amend outstanding awards under our Private ArTara Plan. No additional awards will be made under the Private ArTara Plan.
Stock Options
Stock options were granted pursuant to stock option agreements adopted by the plan administrator. The board determined the material terms of the stock options granted under the Private ArTara Plan, including the exercise price for a stock option (provided that the exercise price of a stock option generally could not be less than 100% of the fair market value of our common stock on the date of grant), the vesting and exercisability of the stock options and the term of stock options (up to a maximum of 10 years). Unless the terms of a holder’s stock option agreement provide otherwise or as specified by the board after grant, if a holder’s service relationship with us, or any of our affiliates, ceases for any reason other than disability, death or cause, the holder may generally exercise any vested stock options for a period of three months following the cessation of service. If a holder’s service relationship with us or any of our affiliates ceases due to disability or death, or a holder dies within a certain period following cessation of service, unless specified by the board after grant, the holder or a beneficiary may generally exercise any vested stock options for a period of 12 months. In the event of a termination for cause, stock options generally terminate immediately upon the termination of the individual for cause. In no event may an option be exercised beyond the expiration of its term.
Restricted Stock Units
Restricted stock units generally stop vesting upon the holder’s termination of service with us and any unvested restricted stock units are forfeited, unless otherwise provided in an agreement with the holder.
Change in Control
Unless otherwise provided in a stock award agreement or other written agreement between us and a participant, in the event of a change in control, the plan administrator has the discretion to take any of the following actions with respect to stock awards:
• cause any or all outstanding awards to become vested and immediately exercisable (as applicable), in whole or in part;
45
• cause any outstanding option to become fully vested and immediately exercisable for a reasonable period in advance of the change in control and, to the extent not exercised prior to that change in control, cancel that option upon closing of the change in control;
• cancel any unvested award or unvested portion thereof, with or without consideration;
• cancel any option in exchange for a substitute award;
• cancel any restricted stock, restricted stock unit or stock appreciation right in exchange for restricted shares, restricted stock units or stock appreciation rights with respect to the capital stock of any successor corporation or its parent;
• redeem any restricted stock or restricted stock unit for cash and/or other substitute consideration with value equal to the fair market value on the date of the change in control;
• cancel any SAR in exchange for cash and/or other substitute consideration, or without any payment of consideration therefor; and
• cancel any option in exchange for cash and/or other substitute consideration, or without any payment of consideration therefor.
Under the Private ArTara Plan, a change of control is generally defined as the occurrence of any of the following, in one transaction or a series of related transactions: (i) any person or entity acquiring securities of the Company representing more than 50% of the voting power of the company’s then outstanding securities; (ii) a consolidation, share exchange, reorganization or merger of the company resulting in the stockholders of the company immediately prior to such event not owning at least a majority of the voting power of the resulting entity’s securities outstanding immediately following such event; (iii) the sale or other disposition of all or substantially all the assets of the company; (iv) a liquidation or dissolution of the company; or (v) any similar event deemed by the Board to constitute a change in control for purposes of the Private ArTara Plan.
2024 Employee Stock Purchase Plan
In June 2024, we adopted our 2024 Employee Stock Purchase Plan (the “2024 ESPP”). The 2024 ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Under the 2024 ESPP, our employees, including our named executive officers, have the opportunity to purchase shares of our common stock at a discount to market value. Pursuant to the 2024 ESPP, each eligible employee, including each eligible named executive officer, may allocate up to 15% of the participant’s earnings to purchase our stock at a price per share that is 85% of the fair market value of a share of our common stock on the date of purchase, subject to the terms of the 2024 ESPP and to the Code.
Pay Versus Performance
In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Act, we are providing the following disclosure regarding the relationship between executive compensation and certain financial performance measures of the Company. As we are permitted to report as a “smaller reporting company” as defined under the U.S. federal securities laws, we have not included a tabular list of financial performance measures, and the table below does not include a column for a “Company — Selected Measure” as defined in Item 402(v) of Regulation S-K.
Pay Versus Performance Table
The following table shows the past three fiscal years’ total compensation for our named executive officers as set forth in the Summary Compensation Table, the compensation actually paid to our named executive officers (as determined under SEC rules, “Compensation Actually Paid”), our total shareholder return (“TSR”) and our net income.
46
SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine Compensation Actually Paid as reported in the Pay Versus Performance Table. Compensation Actually Paid does not necessarily represent compensation actually earned, realized or received by the applicable named executive officer, but rather is a valuation calculated under applicable SEC rules by adjusting the Summary Compensation Table totals for the applicable year as described in the footnotes to the Pay Versus Performance Table.
| Year | Summary | Compensation | Average | Average | Value of | Net | |||||||
| 2024 | | | | | | ( | ) | ||||||
| 2023 | | | | | | ( | ) | ||||||
| 2022 | | | | | | ( | ) | ||||||
____________
(1)
(2)
| Year | Reported | Less: | Equity Award Adjustments | Compensation | |||||||||||||||||
| Plus: Year | Plus: Year | Plus: Fair | Plus: Year | Less: Year End | Plus: Value of | ||||||||||||||||
| 2024 | | ( | ) | | |
|
| |
|
|
| | |||||||||
| 2023 | | ( | ) | | ( | ) |
| ( | ) |
|
| | |||||||||
| 2022 | | ( | ) | | ( | ) |
| ( | ) |
|
| | |||||||||
__________
(a)
(3)
| Year | Average | Less: | Equity Award Adjustments(a) | Average | ||||||||||||||||||
| Plus: Year | Plus: Year | Plus: Fair | Plus: Year | Less: Year End | Plus: Value of | |||||||||||||||||
| 2024 | | ( | ) | | |
| | |
| ( | ) |
| | |||||||||
| 2023 | | ( | ) | | ( | ) |
| ( | ) |
|
|
| | |||||||||
| 2022 | | ( | ) | | ( | ) | | ( | ) | ( | ) |
| | |||||||||
__________
(a)
47
(b)
(4)
(5)
Relationships Between Executive Compensation Actually Paid and the Company’s Financial Performance Measures
Relationship Between Compensation Actually Paid and Net Income (Loss)
We are a clinical-stage biopharmaceutical company with a limited operating history. As a pre-commercial company, our expenses and results of operations have fluctuated from year to year and we expect to incur significant expenses and increasing operating losses as we continue to develop and seek approvals for our product candidates and begin the commercialization for any approved products. Consequently, we did not have any revenue during the periods presented and as a result, our Company has not historically used net income (loss) as a performance measure for our executive compensation program.
As displayed in our Pay Versus Performance Table, from 2022 to 2023, our net loss decreased and the Compensation Actually Paid our PEO and Non-PEO NEOs increased between those years. From 2023 to 2024, our net loss increased while the compensation actually paid increased. This does not reflect a change in our compensation practices but is rather a function of a changes in the value of our stock price in 2022, 2023, and 2024. A portion of the Compensation Actually Paid to our PEO and Non-PEO NEOs are performance-based awards, as described under “— Bonus Opportunity” which is based on achievement against pre-established metrics relating to the development of our non-clinical programs, ongoing studies and development path of our product candidates. Therefore, though our PEO and Non-PEO NEOs successfully achieved the corporate goals, resulting in a higher Compensation Actually Paid each consecutive year from 2022 through 2024, our net loss fluctuated, decreasing from 2022 to 2023, resultant of a one-time non-cash goodwill impairment charge in 2022, and then subsequently increasing from 2023 to 2024, resultant of increasing research and development spend for ongoing clinical trials.
Additionally, we award grants of options and time-based RSUs to our employees, including our PEO and non-PEO NEOs. Due to the changes in our stock price, the value of our option and stock awards also fluctuated over the three year period resulting in increases in Compensation Actually Paid in each consecutive year. Although our stock price declined from 2022 to 2023 (from $2.68 on December 30, 2022 to $1.88 on December 29, 2023), the decrease in value was less significant compared to the change in value from 2021 to 2022 (from $6.75 on December 31, 2021 to $2.68 on December 30, 2022) and therefore the Compensation Actually Paid for 2023 increased compared to 2022. From 2023 to 2024, our stock price increased significantly (from $1.88 on December 29, 2023 to $5.28 on December 31, 2024), resulting in a large increase of the Compensation Actually Paid in 2024 when compared to 2023.
Relationship Between Compensation Actually Paid and Company Total Shareholder Return (“TSR”)
As outlined in the Pay Versus Performance Table, the increases in the compensation values for our PEO and non-PEO NEOs over the three-year period 2022 through 2024 differ from the changes in the Company’s TSR over this same period. The fluctuations of the Compensation Actually Paid to the NEOs with our TSR is due primarily to an emphasis in the design of the Company’s compensation programs on structuring of short-term and long-term compensation for the NEOs. A large component of our executive compensation is equity-based to align compensation with performance. We believe the equity-based compensation strongly aligns our PEO and Non-PEO NEOs’ interests with those of our stockholders to maximize long-term value and encourages long-term employment. In particular, we view stock options, which are an integral part of our executive compensation program, as related to Company performance although not directly tied to TSR, because they provide value only if the market price of our common stock increases above the option exercise price and if the executive officer continues in our employment over the vesting period. The ultimate value of these equity awards, and the resulting impact on compensation actually paid, aligns with the Company’s TSR performance and the increases in each of the three years is primarily a result of
48
the grant date fair value deduction in the compensation actually paid. As our stock price decreased from 2022 to 2023, there was a corresponding decrease in the grant date fair value. While our stock price began to increase in the beginning of 2024, it remained lower than in the beginning of 2022 and 2023, resulting in a lower grant date fair value deduction in 2024 compared to 2022 and 2023.
All information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference in any filing of our company under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Limitations on Liability and Indemnification Matters
Our sixth amended and restated certificate of incorporation contains provisions that limit the liability of our current and former directors for monetary damages to the fullest extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for any breach of fiduciary duties as directors, except liability for:
• any breach of the director’s duty of loyalty to the corporation or its stockholders;
• any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
• unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or
• any transaction from which the director derived an improper personal benefit.
This limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.
Our sixth amended and restated certificate of incorporation also provides that we are authorized to indemnify our directors and officers to the fullest extent permitted by Delaware law. Our amended and restated bylaws provide that we are required to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. Our amended and restated bylaws also provide that, upon satisfaction of certain conditions, we are required to advance expenses incurred by a director or executive officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. Our amended and restated bylaws also provide our board of directors with discretion to indemnify our other officers and employees when determined appropriate by our board of directors. We have entered, and expect to continue to enter into, agreements to indemnify our directors, executive officers and other employees as determined by the board of directors. With certain exceptions, these agreements provide for indemnification for related expenses, including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain customary directors’ and officers’ liability insurance.
The limitation of liability and indemnification provisions in our sixth amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
Rule 10b5-1 Sales Plans
Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from them. The director or executive officer may
49
plan in some circumstances in accordance with Rule 10b5-1. Our directors and executive officers also may buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material nonpublic information subject to compliance with the terms of our insider trading policy, which is available on our website at http://www.protaratx.com under the Corporate Governance section of our Investors page. Such insider trading policy governs the purchase, sale and/or other dispositions of our securities by us and by our directors, officers and employees, and we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable exchange listing standards. The information on our website is not incorporated by reference into this proxy statement or the Annual Report.
Hedging Prohibition*
As part of our
____________
* The disclosure under the caption “Hedging Prohibition” is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Policies and Practices for Granting Certain Equity Awards
Our policies and practices regarding the granting of equity awards are carefully designed to ensure compliance with applicable securities laws and to maintain the integrity of our compensation program. The compensation committee is responsible for the timing and terms of equity awards to executives and other eligible employees. The Company periodically reviews its policies and practices related to equity awards to ensure they meet the evolving standards of corporate governance and continue to serve the best interests of the Company and its stockholders.
When deciding whether to grant stock options to executive officers, the Company generally considers whether it possesses material non-public information and, if so, when that material
During fiscal year 2024, the Company did not grant stock options (or similar awards) to any named executive officer during any period beginning four business days before and ending one day after the filing of any Company periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of any Company Form 8-K that disclosed any material non-public information.
50
Non-Employee Director Compensation
2024 Non-Employee Director Compensation Table
The following table sets forth the compensation (cash and equity) received by our non-employee directors during the year ended December 31, 2024.
|
Name |
Fees Earned or |
Option |
Stock |
Total |
||||
|
Luke Beshar |
171,500 |
20,598 |
— |
192,098 |
||||
|
Barry Flannelly, Pharm.D. |
46,000 |
20,598 |
— |
66,598 |
||||
|
Roger Garceau, M.D. |
71,000 |
20,598 |
— |
91,598 |
||||
|
Jane Huang, M.D. |
65,000 |
20,598 |
— |
85,598 |
||||
|
Richard Levy, M.D. |
91,875 |
20,598 |
— |
112,473 |
||||
|
Gregory Sargen |
55,000 |
20,598 |
— |
75,598 |
||||
|
Cynthia Smith |
52,000 |
20,598 |
— |
72,598 |
||||
|
Michael Solomon, Ph.D. |
52,125 |
20,598 |
— |
72,723 |
____________
(1) Amounts reported represents the aggregate grant date fair value of stock options granted to our directors during 2024 under the 2014 Plan, computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock options reported in this column are set forth in the notes to our audited consolidated financial statements included in the Annual Report. This amount does not reflect the actual economic value that may be realized by the non-employee director. As of December 31, 2024, the aggregate number of shares outstanding under all options to purchase our common stock held by our non-employee directors were: Mr. Beshar: 78,566; Dr. Flannelly: 66,250; Dr. Garceau: 71,890; Dr. Huang: 60,000; Dr. Levy: 49,000; Mr. Sargen: 49,000; Ms. Smith: 61,750; and Dr. Solomon: 78,565.
(2) Amounts reported represents the aggregate grant date fair value of RSUs granted to our directors during 2024, computed in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the RSUs reported in this column are set forth in the notes to our audited consolidated financial statements included in the Annual Report. This amount does not reflect the actual economic value that may be realized by the non-employee director. As of December 31, 2024, there are no unvested RSUs; the aggregate number of vested but not settled RSUs, consistent with the applicable RSU agreements, held by our non-employee directors were: Mr. Beshar: 168,000; Dr. Flannelly: 0; Dr. Garceau: 33,000; Dr. Huang: 0; Dr. Levy: 31,000; Mr. Sargen: 31,000; Ms. Smith: 0; and Dr. Solomon: 26,500.
Mr. Shefferman, our Chief Executive Officer, is also a member of our board of directors but does not receive any additional compensation for his service as a director. See the section titled “Executive Compensation” for more information regarding the compensation earned by Mr. Shefferman and our other named executive officers.
Non-Employee Director Compensation Policy
Our compensation committee reviews the compensation program for our non-employee directors on an annual basis, with the assistance of its independent compensation consultant, who prepares a comprehensive assessment of our non-employee director compensation program. Such assessment includes comparing our current non-employee director compensation against competitive market practices using the same compensation peer group used for executive compensation purposes and an update on recent trends in director compensation. Following such review, the compensation committee recommends, and our board of directors approves, updates, if any, to our Non-Employee Director Compensation policy.
Under our Non-Employee Director Compensation Policy, each of our non-employee directors is eligible to receive compensation for service on our board of directors and committees of our board of directors, with cash compensation (as described below) deemed effective as of April 1, 2025.
The Non-Employee Director Compensation Policy provides our non-employee directors with the following compensation for their services:
• an annual cash retainer of $40,000 for all non-employee directors;
• an annual cash retainer of $115,000 for the chair of our board of directors (in addition to the annual cash retainer above);
51
• an additional annual cash retainer of $7,500, $6,000, $5,000 and $25,000 for service as a member of the audit committee, the compensation committee, the nominating and corporate governance committee and the scientific advisory committee, respectively;
• an additional annual cash retainer of $15,000, $12,000, $9,000 and $50,000 for service as chair of the audit committee, the compensation committee, the nominating and corporate governance committee and the scientific advisory committee, respectively (in lieu of the committee member retainer above);
• an initial option grant, for new non-employee directors, to purchase 48,000 shares of our common stock, with one-third of the shares subject to the grant vesting on the first anniversary of the grant date and the rest vesting in 24 equal monthly installments; and
• an annual option grant to purchase 24,000 shares of our common stock, vesting in full on the first anniversary of the grant date, which annual option grant shall be made on the date following the date of each of our annual stockholder meetings.
Our board of directors also adopted a provision in the Non-Employee Director Compensation Policy pursuant to which no non-employee director may be granted (in any calendar year) compensation with a value greater than $750,000 (or $1,000,000 solely with respect to the calendar year in which such director is first appointment or elected to the board), with the value of any initial option grant or any annual grant based on the accounting grant date value of such grant.
All vesting of the equity awards granted under our Non-Employee Director Compensation Policy is subject to the director’s continuous service as of each applicable vesting date. Notwithstanding the foregoing, in the event of a “change in control” (as defined in the 2024 Plan), all shares subject to any then-outstanding and unvested equity awards granted pursuant to the Non-Employee Director Compensation Policy will become fully vested upon such change in control.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of our common stock as of the Record Date by:
• each person or entity known by us to be beneficial owners of more than five percent of our common stock;
• each of our directors, including the nominees named herein;
• each of our named executive officers; and
• all of our executive officers and directors as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Under these rules, beneficial ownership includes any shares of common stock as to which the individual or entity has sole or shared voting power or investment power. In computing the number of shares beneficially owned by an individual or entity and the percentage ownership of that person, shares of common stock subject to options held by such person that are currently exercisable or will become exercisable within 60 days of the Record Date are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person.
Unless noted otherwise, the address of all listed stockholders is c/o Protara Therapeutics, Inc., 345 Park Avenue South, Third Floor, New York, New York 10010.
Each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable.
|
Beneficial Ownership(1) |
|||||
|
Beneficial Owner |
Number of |
Percent of |
|||
|
Greater than 5% Stockholders |
|
||||
|
RA Capital Funds(2) |
3,431,713 |
9.9 |
% |
||
|
Janus Henderson(3) |
3,788,176 |
9.8 |
% |
||
|
Adage Capital(4) |
2,250,000 |
5.8 |
% |
||
|
Velan Capital(5) |
2,059,000 |
5.3 |
% |
||
|
|
|||||
|
Directors and Named Executive Officers |
|
||||
|
Jesse Shefferman(6) |
1,796,528 |
4.5 |
% |
||
|
Patrick Fabbio(7) |
222,939 |
* |
|
||
|
Jacqueline Zummo, Ph.D.(8) |
353,234 |
* |
|
||
|
Luke Beshar(9) |
276,566 |
* |
|
||
|
Barry Flannelly, Pharm.D.(10) |
66,250 |
* |
|
||
|
Roger Garceau, M.D.(11) |
104,890 |
* |
|
||
|
Jane Huang, M.D.(12) |
60,000 |
* |
|
||
|
Richard Levy, M.D.(13) |
80,000 |
* |
|
||
|
Gregory Sargen(14) |
80,000 |
* |
|
||
|
Cynthia Smith(15) |
61,750 |
* |
|
||
|
Michael Solomon, Ph.D.(16) |
105,065 |
* |
|
||
|
All executive officers and directors as a group (13 persons)(17) |
3,279,067 |
8.4 |
% |
||
____________
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G and Forms 3 and 4 filed with the SEC. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 38,579,021 shares outstanding on April 16, 2025, adjusted as required by rules promulgated by the SEC and rounded to the nearest tenth of a percent.
(2) Based on a Schedule 13G/A filed with the SEC on February 14, 2025, RA Capital Management, L.P. (“RA Capital”), Peter Kolchinsky, Rajeev Shah and RA Capital Healthcare Fund, L.P. (the “Fund”) (collectively, “RA Capital Funds”) had as of such date shared dispositive and voting power in respect of (i) 3,400,000 shares of common stock held by the Fund and (ii) 31,713 shares of common stock issuable upon the exercise of certain pre-funded and common warrants. The Fund
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directly holds (i) 3,400,000 shares of common stock, (ii) two series of pre-funded warrants (the “Pre-Funded Warrants”) exercisable for an aggregate of up to 1,400,144 shares of common stock, and (iii) common warrants (the “Common Warrants” and together with the Pre-Funded Warrants, the “Warrants”) exercisable for up to 2,400,000 shares of common stock. One series of Pre-Funded Warrants, exercisable for up to 500,000 shares of common stock, and the Common Warrants contain provisions precluding the exercise of such Warrants to the extent that, following exercise, the Fund, together with its affiliates and other attribution parties, would own more than 9.99% of the common stock outstanding. The other series of Pre-Funded Warrants, exercisable for up to 900,144 shares of common stock, contain a provision precluding the exercise of such Warrants to the extent that, following exercise, the Fund, together with its affiliates and other attribution parties, would own more than 4.99% of the common stock outstanding. The number of common shares deemed to be beneficially owned by the Fund and its affiliates pursuant to applicable law may therefore change from time to time based on the number of shares of common stock of the Company then deemed outstanding. RA Capital Healthcare Fund GP, LLC is the general partner of the Fund. The general partner of RA Capital is RA Capital Management GP, LLC, of which Dr. Kolchinsky and Mr. Shah are the controlling persons. RA Capital serves as investment adviser for the Fund and the Fund has delegated to RA Capital the sole power to vote and the sole power to dispose of all such shares of common stock held by the Fund. The address of the principal business office of each of such reporting persons is c/o RA Capital Management, 200 Berkeley St., 18th Fl., Boston, Massachusetts 02116.
(3) Based on a Schedule 13G/A filed with the SEC on March 7, 2025, Janus Henderson Group plc and Janus Henderson Biotech Innovation Master Fund Ltd (together, “Janus Henderson”) had as of such date shared dispositive and voting power in respect of 3,788,176 shares of common stock. The address of the principal business office of each of such reporting persons is 201 Bishopsgate EC2M 3AE, United Kingdom.
(4) Based on a Schedule 13G filed with the SEC on February 12, 2025, Adage Capital Management, L.P. (“ACM”), Robert Atchinson and Phillip Gross (collectively, “Adage Capital”) had as of such date shared dispositive and voting power in respect of 2,250,000 shares of common stock held directly by Adage Capital Partners, L.P. (“ACP”). ACM serves as investment manager of ACP. Mr. Atchison is the (1) managing member of Adage Capital Advisors, L.L.C. (“ACA”), managing member of Adage Capital Partners GP, L.L.C. (“ACPGP”), general partner of ACP, and (2) managing member of Adage Capital Partners LLC (“ACPLLC”), general partner of ACM, with respect to the shares of common stock directly held by ACP. Mr. Gross is the (1) managing member of ACA, managing member of ACPGP and (2) managing member of ACPLLC, general partner of ACM, with respect to the shares of common stock directly held by ACP. The address of the principal business office of each of the reporting persons is 200 Clarendon Street, 52nd Floor, Boston, Massachusetts 02116.
(5) Based on a Schedule 13G/A filed with the SEC on December 17, 2024, Velan Capital Master Fund LP (“Velan Master”), Velan Horizon Fund LP (“Velan Horizon”), Velan Horizon GP LLC (“Velan Horizon GP”), Velan Capital Holdings LLC (“Velan GP”), Velan Capital Investment Management LP (“Velan Capital”), Velan Capital Management LLC (“Velan IM GP”), Adam Morgan and Balaji Venkataraman (collectively, “Velan Capital”) had as of such date shared dispositive and voting power in respect of 2,054,000 shares of common stock directly beneficially owned by Velan Master, including 480,000 shares of common stock issuable upon the exercise of certain warrants subject to a 9.99% beneficial ownership blocker provision, and 5,000 shares of common stock directly beneficially owned by Velan Horizon. Velan Horizon GP is the general partner of Velan Horizon, Velan GP is general partner of Velan Master, Velan Capital is investment manager of Velan Master and Velan Horizon, Velan IM GP is general partner of Velan Capital and Mr. Morgan and Mr. Venkataraman are each a managing member of Velan Horizon GP, Velan GP and Velan IM GP. The address of the principal business office of Velan Master is 89 Nexus Way, Camana Bay, Grand Cayman KY1-9009, Cayman Islands. The address of the principal business office of each of Velan Horizon, Velan Horizon GP, Velan GP, Velan Capital, Velan IM GP and Messrs. Morgan and Venkataraman is 100 North Main Street, Suite 301, Alpharetta, Georgia 30009.
(6) Includes (i) 872,591 shares of common stock and (ii) 939,406 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(7) Includes (i) 4,273 shares of common stock and (ii) 218,666 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(8) Includes (i) 52,395 shares of common stock and (ii) 300,839 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(9) Includes (i) 30,000 shares of common stock, (ii) 168,000 shares of restricted stock that are vested or will vest within 60 days of April 16, 2025, (iii) 78,566 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(10) Includes (i) 66,250 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(11) Includes (i) 33,000 shares of RSUs that are vested or will vest within 60 days of April 16, 2025 and (ii) 71,890 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(12) Includes (i) 60,000 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
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(13) Includes (i) 31,000 shares of RSUs that are vested or will vest within 60 days of April 16, 2025 and (ii) 49,000 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(14) Includes (i) 31,000 shares of RSUs that are vested or will vest within 60 days of April 16, 2025 and (ii) 49,000 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(15) Includes (i) 61,750 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(16) Includes (i) 26,500 shares of RSUs that are vested or will vest within 60 days of April 16, 2025 and (ii) 78,565 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025.
(17) Consists of (i) the shares described in footnote (6) through (16) above, and (ii) 2,181 shares of common stock held by Dr. Nicacio and (iii) (a) 20,013 shares of common stock and (b) 49,651 shares subject to stock options that are currently exercisable or will be exercisable within 60 days of April 16, 2025 held by Ms. Fry.
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Transactions With Related Persons
The following is a summary of transactions since January 1, 2024 to which we have been a participant in which the amount involved in the transaction exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our then directors, executive officers or beneficial owners of more than 5% of any class of our voting securities at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest.
Employment Arrangements and Separation Agreement
We have entered into employment agreements with our executive officers and a separation agreement and release with Dr. Bandari, our former chief medical officer. For more information regarding these agreements, see “Executive Compensation.”
Indemnification Agreements
We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements and our amended and restated bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. For more information regarding these agreements, see “Executive Compensation — Limitations on Liability and Indemnification Matters.”
Related Person Transaction Policy
We have adopted a written related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will be participants and in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons.
Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another independent body of our board of directors, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant stockholder to enable us to identify any existing or potential related person transactions and to effectuate the terms of the policy.
In addition, under our Code of Business Conduct and Ethics, our employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.
In considering related person transactions, our audit committee, or other independent body of our board of directors, will take into account the relevant available facts and circumstances including, but not limited to:
• the risks, costs and benefits to us;
• the impact on a director’s independence in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
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• the terms of the transaction;
• the availability of other sources for comparable services or products; and
• the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.
The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our board of directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our stockholders, as our audit committee, or other independent body of our board of directors, determines in the good faith exercise of its discretion.
To the extent that any of the transactions described above were entered into prior to the adoption of the written policy, they were approved by our board of directors considering similar factors to those described above.
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Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability of Proxy Materials or other Annual Meeting materials with respect to two or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are our stockholders will be “householding” our proxy materials. A single Notice of Internet Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials or, alternatively, if you received multiple copies of our proxy materials and would like to receive combined mailings in the future, please notify your broker or us. Direct your written request to Protara Therapeutics, Inc., 345 Park Avenue South, Third Floor, New York, New York 10010, Attn: Corporate Secretary or call us at (646) 844-0337 or via email at info@protaratx.com. Stockholders who currently receive multiple copies of the Notices of Internet Availability of Proxy Materials at their addresses and would like to request “householding” of their communications should contact their brokers.
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Other Matters
The Board of Directors 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 such matters in accordance with their best judgment.
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By Order of the Board of Directors |
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Mary J. Grendell |
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Corporate Secretary |
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April 25, 2025 |
We have filed our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 with the SEC. It is available free of charge at the SEC’s web site at www.sec.gov. Stockholders can also access this proxy statement and our Annual Report on Form 10-K at ir.protaratx.com. A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 is also available without charge upon written request to our Corporate Secretary at 345 Park Avenue South, Third Floor, New York, New York 10010, Attn: Corporate Secretary or via email at info@protaratx.com.
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Appendix A
ProtARA Therapeutics, Inc.
2024 Equity Incentive Plan, AS AMENDED
1. Purpose
This Plan is intended to provide incentives that will attract, retain and motivate highly competent officers, directors, employees, consultants and advisors to promote the success of the Company’s business and align employees’ interests with stockholders’ interests. The Plan is intended to be an incentive stock option plan within the meaning of Section 422 of the Code, but not all Awards are required to be Incentive Options.
2. Definitions
As used in this Plan, the following terms shall have the respective meanings set out below, unless the context clearly requires otherwise:
2.1 Accelerate, Accelerated, and Acceleration, means: (a) when used with respect to an Option or Stock Appreciation Right, that as of the time of reference such Option or Stock Appreciation Right will become exercisable with respect to some or all of the shares of Stock for which it was not then otherwise exercisable by its terms; (b) when used with respect to Restricted Stock or Restricted Stock Units, that the Risk of Forfeiture otherwise applicable to such Restricted Stock or Restricted Stock Units shall expire with respect to some or all of such shares of Restricted Stock or such Restricted Stock Units then still otherwise subject to the Risk of Forfeiture; and (c) when used with respect to Performance Units, that the applicable Performance Goals or other business objectives shall be deemed to have been met as to some or all of such Performance Units.
2.2 Affiliate means any corporation, partnership, limited liability company, business trust, or other entity controlling, controlled by or under common control with the Company.
2.3 Award means any grant or sale pursuant to the Plan of Options, Stock Appreciation Rights, Performance Units, Restricted Stock, Restricted Stock Units, Other Stock-Based or Cash-Based Awards, Stock Grants or any of the foregoing intended to constitute Performance-Based Awards.
2.4 Award Agreement means an agreement between the Company and the recipient of an Award, or other notice of grant of an Award, setting forth the terms and conditions of the Award.
2.5 Board means the Company’s Board of Directors.
2.6 Cause shall have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events:
(a) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof, or
(b) such Participant’s attempted commission of, or participation in, a fraud or act of dishonesty against the Company, or
(c) such Participant’s intentional, material violation of any contract or agreement between the Participant and the Company or of any statutory duty owed to the Company, or
(d) such Participant’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; or
(e) such Participant’s gross misconduct.
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2.7 Change of Control means the occurrence of any of the following after the date of the approval of the Plan by the Board:
(a) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the Company’s stockholders (a “Business Combination”), unless, with respect to each of the foregoing events, securities possessing more than 50% of the total combined voting power of the survivor’s or acquiror’s outstanding securities (or the securities of any parent thereof) are held by a person or persons who held securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities immediately prior to the Business Combination, or
(b) any person or group of persons (within the meaning of Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) that, directly or indirectly, acquires, including but not limited to by means of a Business Combination, beneficial ownership (determined pursuant to Securities and Exchange Commission Rule 13d-3 promulgated under the Exchange Act) of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities unless pursuant to a tender or exchange offer made directly to the Company’s stockholders that the Board recommends such stockholders accept, other than (i) the Company or any of its Affiliates, (ii) an employee benefit plan of the Company or any of its Affiliates, (iii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, or (iv) an underwriter temporarily holding securities pursuant to an offering of such securities, or
(c) over a period of thirty-six (36) consecutive months or less, there is a change in the composition of the Board such that a majority of the Board members (rounded up to the next whole number, if a fraction) ceases, by reason of one or more proxy contests for the election of Board members, to be composed of individuals who either (i) have been Board members continuously since the beginning of that period, or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in the preceding clause (i) who were still in office at the time that election or nomination was approved by the Board;
(d) the consummation of a sale of all or substantially all of the Company’s assets (other than to an affiliate of the Company); or
(e) the Company’s stockholders approve a plan of complete liquidation or dissolution of the Company.
2.8 Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto, and any regulations issued from time to time thereunder.
2.9 Committee means the Compensation Committee of the Board, which in general is responsible for the administration of the Plan, as provided in Section 5 of this Plan. For any period during which no such committee is in existence “Committee” shall mean the Board and all authority and responsibility assigned to the Committee under the Plan shall be exercised, if at all, by the Board.
2.10 Company means Protara Therapeutics, Inc., a corporation organized under the laws of the State of Delaware.
2.11 Convertible Security means any security that the Company may issue that is convertible into or exchangeable for Stock, including, but not limited to, preferred stock or warrants.
2.12 Exchange Act means the Securities Exchange Act of 1934, as amended and in effect from time to time.
2.13 Effective Date means the date on which the Plan is approved by the stockholders of the Company.
2.14 Forfeiture, forfeit, and derivations thereof, when used in respect of Restricted Stock purchased by a Participant, includes the Company’s repurchase of such Restricted Stock at less than its then Market Value as a means intended to effect a forfeiture of value.
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2.15 Good Reason shall have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events in the absence of the Participant’s written consent:
(a) any material and adverse change in the Participant’s position or authority with the Company as in effect immediately before a Change of Control, other than an isolated and insubstantial action not taken in bad faith and which is remedied by the Company within 30 days after receipt of notice thereof given by the Participant, or
(b) the transfer of the Participant’s primary work site to a new primary work site that is more than 50 miles from the Participant’s primary work site in effect immediately before a Change of Control; or
(c) a diminution of the Participant’s base salary in effect immediately before a Change of Control by more than 10%, unless such diminution applies to all similarly situated employees.
If the Participant does not deliver to the Company a written notice of termination within 60 days after the Participant has knowledge that an event constituting Good Reason has occurred, the event will no longer constitute Good Reason. In addition, the Participant must give the Company 30 days to cure the event constituting Good Reason.
2.16 Grant Date means the date as of which an Option is granted, as determined under Section 7.1(a).
2.17 Incentive Option means an Option which by its terms is to be treated as an “incentive stock option” within the meaning of Section 422 of the Code.
2.18 Market Value means the value of a share of Stock on a particular date determined by such methods or procedures as may be established by the Committee. Unless otherwise determined by the Committee, the Market Value of Stock as of any date is the closing price for the Stock as reported on The NASDAQ Global Market (or on any other national securities exchange on which the Stock is then listed) for that date or, if no closing price is reported for that date, the closing price on the first following date for which a closing price is reported.
2.19 Nonstatutory Option means any Option that is not an Incentive Option.
2.20 Option means an option to purchase shares of Stock.
2.21 Optionee means an eligible individual to whom an Option shall have been granted under the Plan.
2.22 Participant means any holder of an outstanding Award under the Plan.
2.23 Performance-Based Awards means Awards granted to a Participant under Section 7.7, to receive cash, Stock or other Awards, the payment of which is contingent on achieving Performance Goals or other business objectives established by the Committee.
2.24 Performance Criteria and Performance Goals have the meanings given such terms in Section 7.7(f).
2.25 Performance Period means the one or more periods of time, which may be of varying and overlapping durations, selected by the Committee, over which the attainment of one or more Performance Goals or other business objectives will be measured for purposes of determining a Participant’s right to, and the payment of, an Award.
2.26 Performance Unit means a right granted to a Participant under Section 7.5, to receive cash, Stock or other Awards, the payment of which is contingent on achieving Performance Goals or other business objectives established by the Committee.
2.27 Plan means this 2024 Equity Incentive Plan of the Company, as amended from time to time, and including any attachments or addenda hereto.
2.28 Restricted Stock means a grant or sale of shares of Stock to a Participant subject to a Risk of Forfeiture.
2.29 Restricted Stock Units means rights to receive shares of Stock on or after the close of a Restriction Period, subject to a Risk of Forfeiture.
2.30 Restriction Period means the period of time, established by the Committee in connection with an Award of Restricted Stock or Restricted Stock Units, during which the shares of Restricted Stock or Restricted Stock Units are subject to a Risk of Forfeiture described in the applicable Award Agreement.
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2.31 Risk of Forfeiture means a limitation on the right of the Participant to retain Restricted Stock or Restricted Stock Units, including a right of the Company to reacquire shares of Restricted Stock at less than their then Market Value, arising because of the occurrence or non-occurrence of specified events or conditions.
2.32 Stock means common stock, par value $0.001 per share, of the Company, and such other securities as may be substituted for such common stock pursuant to Section 8.
2.33 Stock Appreciation Right means a right to receive any excess in the Market Value of shares of Stock (except as otherwise provided in Section 7.2(c)) over a specified exercise price.
2.34 Stock Grant means the grant of shares of Stock not subject to restrictions or other forfeiture conditions.
2.35. Ten Percent Owner means a person who owns, or is deemed within the meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (or any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code). Whether a person is a Ten Percent Owner shall be determined with respect to an Option based on the facts existing immediately prior to the Grant Date of the Option.
3. Term of the Plan
Unless the Plan shall have been earlier terminated by the Board, Awards may be granted under this Plan at any time in the period commencing on the date of approval of the Plan by the Board and ending immediately prior to the tenth anniversary of the Effective Date. Awards granted pursuant to the Plan within that period shall not expire solely by reason of the termination of the Plan.
4. Stock Subject to the Plan
4.1 Plan Share Limitations.
(a) Limitation. At no time shall the number of shares of Stock issued pursuant to or subject to outstanding Awards granted under the Plan (including pursuant to Incentive Options), nor the number of shares of Stock issued pursuant to Incentive Options, exceed 4,300,000 shares of Stock. Shares of Stock subject to awards that are assumed, converted or substituted under the Plan as a result of the Company’s acquisition of another company (including by way of merger, combination or similar transaction) will not count against the number of shares that may be granted under the Plan.
(b) Application. For purposes of applying the foregoing limitation of Section 4.1(a), if any Option or Stock Appreciation Right expires, terminates, or is cancelled for any reason without having been exercised in full, if any other Award is forfeited, or if the Award is settled for cash (in whole or in part) the shares of Stock not purchased by the holder, which are forfeited or which are settled in cash, as the case may be, shall again be available for Awards to be granted under the Plan. Shares of Stock issued pursuant to the Plan may be either authorized but unissued shares or shares held by the Company in its treasury.
4.2 Adjustment of Limitations. Each of the share limitations of this Section 4 shall be subject to adjustment pursuant to Section 8 of the Plan.
5. Administration
5.1 Administration of the Plan. The Plan shall be administered by the Committee; provided, however, that at any time and on any one or more occasions the Board may itself exercise any of the powers and responsibilities assigned the Committee under the Plan and when so acting shall have the benefit of all of the provisions of the Plan pertaining to the Committee’s exercise of its authorities hereunder; and provided further, however, that the Committee may delegate to an executive officer or officers the authority to grant Awards hereunder to employees who are not officers, and to consultants, up to such maximum number and in accordance with such other guidelines as the Committee shall specify by resolution at any time or from time to time. Any such delegation may not include the authority to grant Restricted Stock, unless the delegate is a committee of the Board, including a committee consisting solely of an executive officer who is a Board member.
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5.2 Powers of the Committee. Subject to the provisions of the Plan, the Committee shall have complete authority, in its discretion, to make or to select the manner of making all determinations with respect to each Award to be granted by the Company under the Plan including the officer, employee, consultant, advisor or director to receive the Award and the form of Award. In making such determinations, the Committee may take into account the nature of the services rendered by the respective officers, employees, consultants, advisors and directors, their present and potential contributions to the success of the Company and its Affiliates, and such other factors as the Committee in its discretion shall deem relevant. Subject to the provisions of the Plan, the Committee shall also have, in its sole and absolute discretion, complete authority to construe and interpret the Plan, to determine disputed facts related thereto, to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of the respective Award Agreements (which need not be identical), and to make all other determinations necessary or advisable for the administration of the Plan; provided, however, that, with respect to all claims or disputes arising out of any determination of the Committee that materially adversely affects a Participant’s Award, (i) the affected Participant shall file a written claim with the Committee for review, explaining the reasons for such claim, and (ii) the Committee’s decision must be written and must explain the decision. The Committee may delegate (either generally or specifically) the powers, authorities and discretions conferred on it under this Section 5 as it deems appropriate in its sole discretion in accordance with applicable law.
5.3 Effect of the Committee’s Decisions. The Committee’s determinations made in good faith on matters referred to in the Plan shall be entitled to the maximum deference permitted by law and will be final, binding and conclusive on all participants, beneficiaries, heirs, assigns or other persons having or claiming any interest under the Plan or an Award made pursuant hereto.
6. Authorization of Grants
6.1 Eligibility. The Committee may grant from time to time and at any time prior to the termination of the Plan one or more Awards, either alone or in combination with any other Awards, to any officer or employee of or consultant or advisor to one or more of the Company and its Affiliates or to any non-employee member of the Board or of any board of directors (or similar governing authority) of any Affiliate; provided, however, that no non-employee member of the Board may be granted (in any calendar year) compensation with a value in excess of $750,000 (or $1,000,000 solely with respect to the calendar year in which any member is first appointed or elected to the Board) with the value of any Awards based on the accounting grant date value of such Award. However, only employees of the Company, and of any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code, shall be eligible for the grant of an Incentive Option.
6.2 General Terms of Awards. Each grant of an Award shall be subject to all applicable terms and conditions of the Plan (including but not limited to any specific terms and conditions applicable to that type of Award set out in the following Section), and such other terms and conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No prospective Participant shall have any rights with respect to an Award, unless and until such Participant shall have complied with the applicable terms and conditions of such Award (including if applicable delivering a fully executed copy of any agreement evidencing an Award to the Company).
6.3 Minimum Vesting. All Awards shall be subject a minimum vesting schedule of at least twelve (12) months following the date of grant of the Award, provided, however, that vesting may accelerate in connection with death, disability, a change of control, retirement, or other involuntary termination. Notwithstanding the foregoing, up to 5% of the Shares available for grant under the Plan may be granted with a minimum vesting schedule that is shorter than that mandated in this Section 6.3.
6.4 Effect of Termination of Employment, Etc. Unless the Committee shall provide otherwise with respect to any Award (including, but not limited to, in a Participant’s Award Agreement), if the Participant’s employment or other association with the Company and its Affiliates ends for any reason, including because of the Participant’s employer ceasing to be an Affiliate, (a) any outstanding Option or Stock Appreciation Right of the Participant shall cease to be exercisable in any respect not later than ninety (90) days following that event and, for the period it remains exercisable following that event, shall be exercisable only to the extent exercisable at the date of that event, and (b) any other outstanding Award of the Participant to the extent that it is then still subject to Risk of Forfeiture shall be forfeited or otherwise subject to return to or repurchase by the Company on the terms specified in the applicable Award Agreement. Cessation of the performance of services in one capacity, for example, as an employee, shall not result in termination of an Award while the Participant continues to perform services in another capacity, for example as a director. Military
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or sick leave or other bona fide leave shall not be deemed a termination of employment or other association, provided, however, that it does not exceed the longer of ninety (90) days or the period during which the absent Participant’s reemployment rights, if any, are guaranteed by statute or by contract. To the extent consistent with applicable law, the Committee may provide that Awards continue to vest for some or all of the period of any such leave, or that their vesting shall be tolled during any such leave and only recommence upon the Participant’s return from leave, if ever.
6.5 Non-Transferability of Awards. Except as otherwise provided in this Section 6.5, Awards shall not be transferable, and no Award or interest therein may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. The provisions of the immediately preceding sentence shall not be applicable to Stock Grants which shall not be subject to any transfer restrictions under this Section 6.5. All of a Participant’s rights in any Award may be exercised during the life of the Participant only by the Participant or the Participant’s legal representative. However, the Committee may, at or after the grant of an Award of a Nonstatutory Option, or shares of Restricted Stock, provide that such Award may be transferred by the recipient to a family member; provided, however, that any such transfer is without payment of any consideration whatsoever and that no transfer shall be valid unless first approved by the Committee, acting in its sole discretion. For this purpose, “family member” means any child, stepchild, grandchild, parent, grandparent, stepparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the employee’s household (other than a tenant or employee), a trust in which the foregoing persons have more than fifty (50) percent of the beneficial interests, a foundation in which the foregoing persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty (50) percent of the voting interests.
7. Specific Terms of Awards
7.1 Options.
(a) Date of Grant. The granting of an Option shall take place at the time specified in the Award Agreement.
(b) Exercise Price. The price at which shares of Stock may be acquired under each Incentive Option shall be not less than 100% of the Market Value of Stock on the Grant Date, or not less than 110% of the Market Value of Stock on the Grant Date if the Optionee is a Ten Percent Owner. The price at which shares of Stock may be acquired under each Nonstatutory Option shall not be so limited solely by reason of this Section.
(c) Option Period. No Incentive Option may be exercised on or after the tenth anniversary of the Grant Date, or on or after the fifth anniversary of the Grant Date if the Optionee is a Ten Percent Owner. The Option period under each Nonstatutory Option shall not be so limited solely by reason of this Section.
(d) Exercisability. An Option may become vested and exercisable in such installments, cumulative or non-cumulative, as the Committee may determine.
(e) Method of Exercise. An Option may be exercised by the Optionee giving written notice, in the manner provided in Section 17, specifying the number of shares of Stock with respect to which the Option is then being exercised. The notice shall be accompanied by payment in the form of cash or check payable to the order of the Company in an amount equal to the exercise price of the shares of Stock to be purchased or, subject in each instance to the Committee’s approval, acting in its sole discretion, and to such conditions, if any, as the Committee may deem necessary to avoid adverse accounting effects to the Company,
(i) by delivery to the Company of shares of Stock having a Market Value equal to the exercise price of the shares to be purchased, or
(ii) by surrender of the Option as to all or part of the shares of Stock for which the Option is then exercisable in exchange for shares of Stock having an aggregate Market Value equal to the difference between (1) the aggregate Market Value of the surrendered portion of the Option, and (2) the aggregate exercise price under the Option for the surrendered portion of the Option, or
(iii) unless prohibited by applicable law, by delivery to the Company of the Optionee’s executed promissory note in the principal amount equal to the exercise price of the shares of Stock to be purchased and otherwise in such form as the Committee shall have approved.
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If the Stock is traded on an established market, payment of any exercise price may also be made through and under the terms and conditions of any formal cashless exercise program authorized by the Company entailing the sale of the Stock subject to an Option in a brokered transaction (other than to the Company). Receipt by the Company of such notice and payment in any authorized or combination of authorized means shall constitute the exercise of the Option. Within thirty (30) days thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or cause to be delivered to the Optionee or his agent a certificate or certificates or shall cause the Stock to be held in book-entry position through the direct registration system of the Company’s transfer agent for the number of shares then being purchased. Such shares of Stock shall be fully paid and nonassessable.
(f) Limit on Incentive Option Characterization. An Incentive Option shall be considered to be an Incentive Option only to the extent that the number of shares of Stock for which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value (as of the date of the grant of the Option) in excess of the “current limit”. The current limit for any Optionee for any calendar year shall be $100,000 minus the aggregate Market Value at the date of grant of the number of shares of Stock available for purchase for the first time in the same year under each other Incentive Option previously granted to the Optionee under the Plan, and under each other incentive stock option previously granted to the Optionee under any other incentive stock option plan of the Company and its Affiliates, after December 31, 1986. Any shares of Stock which would cause the foregoing limit to be violated shall be deemed to have been granted under a separate Nonstatutory Option, otherwise identical in its terms to those of the Incentive Option.
(g) Notification of Disposition. Each person exercising any Incentive Option granted under the Plan shall be deemed to have covenanted with the Company to report to the Company any disposition of the shares of Stock issued upon such exercise prior to the expiration of the holding periods specified by Section 422(a)(1) of the Code and, if and to the extent that the realization of income in such a disposition imposes upon the Company federal, state, local or other withholding tax requirements, or any such withholding is required to secure for the Company an otherwise available tax deduction, to remit to the Company an amount in cash sufficient to satisfy those requirements.
7.2 Stock Appreciation Rights.
(a) Tandem or Stand-Alone. Stock Appreciation Rights may be granted in tandem with an Option (at or, in the case of a Nonstatutory Option, after, the award of the Option), or alone and unrelated to an Option. Stock Appreciation Rights in tandem with an Option shall terminate to the extent that the related Option is exercised, and the related Option shall terminate to the extent that the tandem Stock Appreciation Rights are exercised.
(b) Exercise Price. Stock Appreciation Rights shall have an exercise price of not less than one hundred percent (100%) of the Market Value of the Stock on the date of award, or in the case of Stock Appreciation Rights in tandem with Options, the exercise price of the related Option.
(c) Other Terms. Except as the Committee may deem inappropriate or inapplicable in the circumstances, Stock Appreciation Rights shall be subject to terms and conditions substantially similar to those applicable to a Nonstatutory Option. In addition, a Stock Appreciation Right related to an Option which can only be exercised during limited periods following a Change of Control may entitle the Participant to receive an amount based upon the highest price paid or offered for Stock in any transaction relating to the Change of Control or paid during the thirty (30) day period immediately preceding the occurrence of the Change of Control in any transaction reported in the stock market in which the Stock is normally traded.
7.3 Restricted Stock.
(a) Purchase Price. Shares of Restricted Stock shall be issued under the Plan for such consideration, if any, in cash, other property or services, or any combination thereof, as is determined by the Committee.
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(b) Issuance of Stock. Each Participant receiving a Restricted Stock Award, subject to subsection (c) below, shall be issued a stock certificate in respect of such shares of Restricted Stock or the shares shall be held in book-entry position through the direct registration system of the Company’s transfer agent. If a certificate is issued, such certificate shall be registered in the name of such Participant, and, if applicable, shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award substantially in the following form:
The shares evidenced by this certificate are subject to the terms and conditions of Protara Therapeutics, Inc.’s 2024 Equity Incentive Plan and an Award Agreement entered into by the registered owner and Protara Therapeutics, Inc., copies of which will be furnished by the Company to the holder of the shares evidenced by this certificate upon written request and without charge.
If the Stock is in book-entry position through the direct registration system of the Company’s transfer agent, the restrictions will be appropriately noted.
(c) Escrow of Shares. The Committee may require that any stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Participant deliver a stock power, endorsed in blank, relating to the Stock covered by such Award.
(d) Restrictions and Restriction Period. During the Restriction Period applicable to shares of Restricted Stock, such shares shall be subject to limitations on transferability and a Risk of Forfeiture arising on the basis of such conditions related to the performance of services, Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.
(e) Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award. Except as otherwise provided in the Plan or the applicable Award Agreement, the Participant shall have all of the rights of a stockholder of the Company with respect to any outstanding shares of Restricted Stock, including the right to vote the shares of Restricted Stock, and all (i) ordinary cash dividends or other ordinary cash distributions paid upon any Restricted Stock will be retained by the Company and will be paid to the relevant Participant when the Restricted Stock vests and will revert back to the Company if for any reason the Restricted Stock upon which such dividends or other distributions were paid reverts back to the Company and (ii) ordinary Stock dividends or other distributions payable in shares of Stock or other securities of the Company shall constitute additional Restricted Stock, subject to the same Risk of Forfeiture as the shares of Restricted Stock in respect of which such shares of Stock or other securities are paid, and any extraordinary dividends or other extraordinary distributions will be treated in accordance with Section 8. The Committee, as determined at the time of Award, may permit or require the payment of cash dividends to be reinvested in additional Restricted Stock to the extent shares of Stock are available under Section 4.
(f) Lapse of Restrictions. If and when the Restriction Period expires without a prior forfeiture, any certificates for such shares shall be delivered to the Participant promptly if not theretofore so delivered.
7.4 Restricted Stock Units.
(a) Character. Each Restricted Stock Unit shall entitle the recipient to a share of Stock at a close of such Restriction Period as the Committee may establish and subject to a Risk of Forfeiture arising on the basis of such conditions relating to the performance of services, Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.
(b) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be made promptly following the close of the applicable Restriction Period. At the discretion of the Committee, Participants may be entitled to receive payments equivalent to any ordinary cash or Stock dividends declared with respect to Stock referenced in grants of Restricted Stock Units but only following the close of the applicable Restriction Period and then only if the underlying Stock shall have vested. Unless the Committee shall provide otherwise, any such dividend equivalents shall be paid, if at all, without interest or other earnings.
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7.5 Performance Units.
(a) Character. Each Performance Unit shall entitle the recipient to the value of a specified number of shares of Stock, over the initial value for such number of shares, if any, established by the Committee at the time of grant, at the close of a specified Performance Period to the extent specified business objectives, including but not limited to Performance Goals, shall have been achieved.
(b) Earning of Performance Units. The Committee shall set Performance Goals or other business objectives in its discretion which, depending on the extent to which they are met within the applicable Performance Period, will determine the number and value of Performance Units that will be paid out to the Participant. After the applicable Performance Period has ended, the holder of Performance Units shall be entitled to receive payout on the number and value of Performance Units earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals or other business objectives have been achieved.
(c) Form and Timing of Payment. Payment of earned Performance Units shall be made in a single lump sum following the close of the applicable Performance Period. At the discretion of the Committee, Participants may be entitled to receive any ordinary cash or Stock dividends declared with respect to Stock which have been earned in connection with grants of Performance Units which have been earned and vested, but not yet distributed to Participants. The Committee may permit or, if it so provides at grant require, a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Stock that would otherwise be due to such Participant by virtue of the satisfaction of any requirements or goals with respect to Performance Units. If any such deferral election is required or permitted, the Committee shall establish rules and procedures for such payment deferrals.
7.6 Other Stock-Based or Cash-Based Awards. The Committee may grant other types of equity-based, equity-related or cash-based Awards in such amounts and subject to such terms and conditions as the Committee may determine (“Other Stock-Based or Cash-Based Awards”).
7.7 Stock Grants. Stock Grants shall be awarded solely in recognition of significant prior or expected contributions to the success of the Company or its Affiliates, as an inducement to employment, in lieu of compensation otherwise already due and in such other limited circumstances as the Committee deems appropriate. Stock Grants shall be made without forfeiture conditions of any kind.
7.8 Performance-Based Awards.
(a) Discretion of Committee with Respect to Performance-Based Awards. Any form of Award permitted under the Plan, other than a Stock Grant, may be granted as a Performance-Based Award and shall be subject to satisfaction of one or more Performance Goals. The Committee will have full discretion to select the length of any applicable Restriction Period or Performance Period, the kind and/or level of the applicable Performance Goal, and whether the Performance Goal is to applied to the Company, a subsidiary of the Company or any division or business unit or to the individual.
(b) Definition of Performance Criteria. “Definitions. For purposes of the Plan:
(i) Performance Criteria means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period. The Performance Criteria used to establish Performance Goals include, but are not limited to: (i) net earnings (either before or after one or more of (A) interest, (B) taxes, (C) depreciation and (D) amortization), (ii) gross or net sales or revenue, (iii) net income (either before or after taxes), (iv) adjusted net income, (v) operating earnings or profit, (vi) cash flow (including, but not limited to, operating cash flow and free cash flow, (vii) return on assets, (viii) return on capital, (ix) return on stockholders’ equity, (x) total stockholder return, (xi) return on sales, (xii) gross or net profit or operating margin, (xiii) costs, (xiv) expenses, (xv) working capital, (xvi) earnings per share, (xvii) adjusted earnings per share, (xviii) price per share, (xix) regulatory body approval for commercialization of a product, (xx) implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; (xxi) market share, (xxii) economic value, (xxiii) revenue, (xxiv) revenue growth and (xxv) operational and organizational metrics.
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(ii) Performance Goals means, for a Performance Period, the goal or goals established by the Committee for the Performance Period based upon one or more of the Performance Criteria. The Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, subsidiary, or an individual, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Affiliate, either individually, alternatively or in any combination, and measured either quarterly, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or as otherwise determined by the Committee.
(c) Committee Discretion. The Committee shall have the sole discretion to determine the extent to which the applicable Performance Goals or Performance Criteria are achieved and the amount, if any, earned pursuant to a Performance-Based Award. The Committee, in its sole discretion, may make adjustments to the Performance Goals or Performance Criteria applicable to Performance-Based Awards and to the amounts payable in respect of the applicable Performance Criteria, to the extent consistent with the terms of the applicable Award Agreement. The amount of the Performance-Based Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the Committee in its sole discretion.
7.9 Awards to Participants Outside the United States. The Committee may modify the terms of any Award under the Plan granted to a Participant who is, at the time of grant or during the term of the Award, resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that the Award shall conform to laws, regulations, procedures, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of the Participant’s residence or employment abroad, shall be as comparable as practicable to the value of such an Award to a Participant who is resident or primarily employed in the United States. The Committee may establish supplements or sub-plans to, or amendments, restatements, or alternative versions of, the Plan for the purpose of granting and administrating any such modified Award. No such modification, supplement, sub-plan, amendment, restatement or alternative version may increase the share limit of Section 4 without approval of the Company’s stockholders.
8. Adjustment Provisions
8.1 Adjustment for Corporate Actions. If the outstanding shares of Stock (or any other securities covered by the Plan by reason of the prior application of this Section) are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to shares of Stock, as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar distribution with respect to such shares of Stock, an appropriate and proportionate adjustment will be made in (i) the maximum numbers and kinds of shares provided in Section 4, (ii) the numbers and kinds of shares or other securities subject to the then outstanding Awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding Options and Stock Appreciation Rights (without change in the aggregate purchase price as to which such Options or Rights remain exercisable), and (iv) the repurchase price of each share of Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase right.
8.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. In the event of any corporate action not specifically covered by the preceding Section, including but not limited to an extraordinary cash distribution on Stock, a corporate separation or other reorganization or liquidation, the Committee may make such adjustment of outstanding Awards and their terms, if any, as it, in its sole discretion, may deem equitable and appropriate in the circumstances. The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in this Section) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.
8.3 Related Matters. Any adjustment in Awards made pursuant to Section 8.1 or 8.2 shall be determined and made, if at all, by the Committee, acting in its sole discretion, and shall include any correlative modification of terms, including of Option exercise prices, rates of vesting or exercisability, Risks of Forfeiture, applicable repurchase
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prices for Restricted Stock, and Performance Goals and other business objectives which the Committee may deem necessary or appropriate so as to ensure the rights of the Participants in their respective Awards are not substantially diminished nor enlarged as a result of the adjustment and corporate action other than as expressly contemplated in this Section 8. The Committee, in its discretion, may determine that no fraction of a share of Stock shall be purchasable or deliverable upon exercise, and in that event if any adjustment hereunder of the number of shares of Stock covered by an Award would cause such number to include a fraction of a share of Stock, such number of shares of Stock shall be adjusted to the nearest smaller whole number of shares. No adjustment of an Option exercise price per share pursuant to Sections 8.1 or 8.2 shall result in an exercise price which is less than the par value of the Stock.
8.4 Treatment of Awards upon a Change of Control.
(a) Treatment of Awards. Upon a Change of Control, the Committee may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards, subject to the provisions of Section 9 of this Plan.
(1) Provide that any Awards shall be assumed, or substantially equivalent rights shall be provided in substitution therefor, by the acquiring or succeeding entity (or an affiliate thereof).
(2) Upon written notice to the holders, provide that all or any of the holders’ unexercised outstanding Options and Stock Appreciation Rights (collectively, “Rights”) will terminate immediately prior to the consummation of such Change of Control unless exercised within a specified period following the date of such notice.
(3) Provide that all or any Awards that are subject to Risk of Forfeiture will terminate immediately prior to the consummation of such Change of Control.
(4) Provide that all or any outstanding Rights shall Accelerate so as to become exercisable prior to or upon such Change of Control with respect to some or all of the shares of Stock for which any such Rights would not then otherwise be exercisable by their terms.
(5) Provide that outstanding all or any Awards that are subject to Risk of Forfeiture shall Accelerate so that the Risk of Forfeiture otherwise applicable to such Awards shall expire prior to or upon such Change of Control with respect to any such Awards that would then still otherwise be subject to the Risk of Forfeiture.
(6) Provide for cash payments, net of applicable tax withholdings, to be made to holders equal to the excess, if any, of (A) the acquisition price times the number of shares of Stock subject to an Option (to the extent the exercise price does not exceed the acquisition price) over (B) the aggregate exercise price for all such shares of Stock subject to the Option, in exchange for the termination of such Option; provided, however, that if the acquisition price does not exceed the exercise price of any such Option, the Committee may cancel that Option without the payment of any consideration therefore prior to or upon the Change of Control. For purposes of this paragraph 6 and paragraph 7 below, “acquisition price” means the amount of cash, and market value of any other consideration, received in payment for a share of Stock surrendered in a Change of Control but need not take into account any deferred consideration unless and until received.
(7) Provide for cash payments, net of applicable tax withholdings, to be made to holder or holders of all or any Awards (other than Options) equal to the acquisition price times the number of shares of Stock subject to any such Awards, in exchange for the termination of any such Awards; provided, however, that the Committee may cancel, pursuant to paragraph 3 above, any such Award that is subject to a Risk of Forfeiture at the time of the consummation of such Change of Control without the payment of any consideration therefor prior to or upon the Change of Control.
(8) Provide that, in connection with a liquidation or dissolution of the Company, all or any Awards (other than Restricted Stock or Stock Grants) shall convert into the right to receive liquidation proceeds net of the exercise price thereof and any applicable tax withholdings.
(9) Any combination of the foregoing.
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In the event that the Committee determines in its discretion to take the actions contemplated under paragraph (1) above of this Section 8.4(a) with respect to all or any Awards, the Committee shall ensure that, upon consummation of the Change of Control, any such Awards are assumed and/or exchanged or replaced with another similar award issued by the acquiring or succeeding entity (or an affiliate thereof) and that, as a result of such assumption and/or exchange or replacement, the holder of such assumed Award and/or such exchanged or replaced similar award has the right to purchase or receive the value of, for each share of Stock subject to such Award immediately prior to the consummation of the Change of Control, the consideration (whether cash, securities or other property) received as a result of the Change of Control by holders of Stock for each share of Stock held immediately prior to the consummation of the Change of Control (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration received as a result of the Change of Control is not solely common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate thereof), the Committee may, with the consent of the acquiring or succeeding entity (or an affiliate thereof), provide for the consideration to be received with respect to such assumed Award and/or such exchanged or replaced similar award to consist of or be based solely on common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate thereof) equivalent in value to the per share consideration received by holders of outstanding shares of Stock as a result of the Change of Control; and provided, further, that if such Award is an Option, the holder of such Option must exercise the Option and make payment of the applicable exercise price in connection therewith in order to receive such consideration.
(b) Treatment of Other Awards. Upon the occurrence of a Change of Control other than a liquidation or dissolution of the Company which is not part of another form of a Change of Control, then, subject to the provisions of Section 9 below, with respect to all outstanding Awards (other than Options and Share Appreciation Rights) that are not terminated prior to or upon such Change of Control, the repurchase and other rights of the Company under each such Award shall inure to the benefit of the Company’s successor and shall, unless the Committee determines otherwise, apply to the cash, securities or other property which the Stock was converted into or exchanged for pursuant to such Change of Control in the same manner and to the same extent as they applied to the Award.
(c) Related Matters. In taking any of the actions permitted under this Section 8.4, the Committee shall not be obligated to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically. Any determinations required to carry out the foregoing provisions of this Section 8.4, including but not limited to the market value of other consideration received by holders of Stock in a Change of Control and whether substantially equivalent Rights have been substituted, shall be made by the Committee acting in its sole discretion. In connection with any action or actions taken by the Committee in respect of Awards and in connection with a Change of Control, the Committee may require such acknowledgements of satisfaction and releases from Participants as it may determine.
9. Treatment of Awards Following a Change of Control
Except as otherwise provided below, if a Participant’s employment is terminated by the Company or any successor entity thereto without Cause, or the Participant resigns his or her employment for Good Reason, in either case, on or within two (2) years after a Change of Control, then, notwithstanding anything express or implied to the contrary in Section 8.4 above:
(a) any and all Options and Stock Appreciation Rights not already exercisable in full shall Accelerate with respect to 100% of the shares for which such Options or Stock Appreciation Rights are not then exercisable;
(b) any Risk of Forfeiture applicable to Restricted Stock and Restricted Stock Units which is not based on achievement of Performance Goals or other business objectives shall lapse with respect to 100% of the Restricted Stock and Restricted Stock Units still subject to such Risk of Forfeiture immediately prior to the Change of Control; and
(c) all outstanding Awards of Restricted Stock and Restricted Stock Units conditioned on the achievement of Performance Goals or other business objectives and the payouts attainable under outstanding Performance Units shall be deemed to have been satisfied based on the greater of target and actual performance as of the effective date of the Change of Control, except if and to the extent otherwise determined by the Committee in its sole discretion at any time prior to, or upon, such Change of Control.
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10. Settlement of Awards
10.1 In General. Options and Restricted Stock shall be settled in accordance with their terms. All other Awards may be settled in cash, Stock, or other Awards, or a combination thereof, as determined by the Committee at or after grant and subject to any contrary Award Agreement. The Committee may not require settlement of any Award in Stock pursuant to the immediately preceding sentence to the extent issuance of such Stock would be prohibited or unreasonably delayed by reason of any other provision of the Plan.
10.2 Violation of Law. Notwithstanding any other provision of the Plan or the relevant Award Agreement, if, at any time, in the reasonable opinion of the Company, the issuance of shares of Stock covered by an Award may constitute a violation of law, then the Company may delay such issuance until (i) approval shall have been obtained from such governmental agencies, other than the Securities and Exchange Commission, as may be required under any applicable law, rule, or regulation and (ii) in the case where such issuance would constitute a violation of a law administered by or a regulation of the Securities and Exchange Commission, one of the following conditions shall have been satisfied:
(a) the shares of Stock are at the time of the issue of such shares effectively registered under the Securities Act of 1933, as amended; or
(b) the Company shall have determined, on such basis as it deems appropriate (including an opinion of counsel in form and substance satisfactory to the Company) that the sale, transfer, assignment, pledge, encumbrance or other disposition of such shares does not require registration under the Securities Act of 1933, as amended or any applicable State securities laws.
Furthermore, the inability of the Company to obtain or maintain, or the impracticability of it obtaining or maintaining, authority from any governmental agency having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance of any Stock hereunder, shall relieve the Company of any liability in respect of the failure to issue such Stock as to which such requisite authority shall not have been obtained, and shall constitute circumstances in which the Committee may determine to amend or cancel Awards pertaining to such Stock, with or without consideration to the affected Participants.
10.3 Corporate Restrictions on Rights in Stock. Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the Company.
10.4 Investment Representations. The Company shall be under no obligation to issue any shares of Stock covered by any Award unless the shares to be issued pursuant to Awards granted under the Plan have been effectively registered under the Securities Act of 1933, as amended, or the Participant shall have made such written representations to the Company (upon which the Company believes it may reasonably rely) as the Company may deem necessary or appropriate for purposes of confirming that the issuance of such shares will be exempt from the registration requirements of that Act and any applicable state securities laws and otherwise in compliance with all applicable laws, rules and regulations of any jurisdiction in which Participants may reside or primarily work, including but not limited to that the Participant is acquiring the shares for his or her own account for the purpose of investment and not with a view to, or for sale in connection with, the distribution of any such shares.
10.5 Registration. If the Company shall deem it necessary or desirable to register under the Securities Act of 1933, as amended, or other applicable statutes any shares of Stock issued or to be issued pursuant to Awards granted under the Plan, or to qualify any such shares of Stock for exemption from the Securities Act of 1933, as amended or other applicable statutes, then the Company shall take such action at its own expense. The Company may require from each recipient of an Award, or each holder of shares of Stock acquired pursuant to the Plan, such information in writing for use in any registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for that purpose and may require reasonable indemnity to the Company and its officers and directors from that holder against all losses, claims, damage and liabilities arising from use of the information so furnished and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made.
10.6 Placement of Legends; Stop Orders; etc. Each share of Stock to be issued pursuant to Awards granted under the Plan may bear a reference to the investment representations made in accordance with Section 10.4 in addition to any other applicable restrictions under the Plan and, if applicable, to the fact that no registration statement has been
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filed with the Securities and Exchange Commission in respect to such shares of Stock. All shares of Stock or other securities issued under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of any stock exchange upon which the Stock is then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions, or, if the Stock will be held in book-entry position through the direct registration system of the Company’s transfer agent, the restrictions will be appropriately noted.
10.7 Tax Withholding. Whenever shares of Stock are issued or to be issued pursuant to Awards granted under the Plan, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy federal, state, local, foreign or other withholding tax requirements if, when, and to the extent required by law (whether so required to secure for the Company an otherwise available tax deduction or otherwise) prior to the delivery of any certificate or certificates, held in book-entry position through the direct registration system of the Company’s transfer agent, for such shares. The obligations of the Company under the Plan shall be conditional on satisfaction of all such withholding obligations and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to a Participant or to utilize any other withholding method prescribed by the Committee from time to time. However, in such cases Participants may elect, subject to the approval of the Committee, acting in its sole discretion, to satisfy an applicable withholding requirement, in whole or in part, by having the Company withhold shares of Stock to satisfy their tax obligations. All elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee deems appropriate.
10.8 Company Charter and By-Laws; Other Company Policies. This Plan and all Awards granted hereunder are subject to the charter and By-Laws of the Company, as they may be amended from time to time, and all other Company policies duly adopted by the Board, the Committee or any other committee of the Board and as in effect from time to time regarding the acquisition, ownership or sale of Stock by officers, employees, directors, consultants, advisors and other service providers, including, without limitation, policies intended to limit the potential for insider trading and to avoid or recover compensation payable or paid on the basis of inaccurate financial results or statements, employee conduct, and other similar events.
11. Reservation of Stock
The Company shall at all times during the term of the Plan and any outstanding Awards granted hereunder reserve or otherwise keep available such number of shares of Stock as will be sufficient to satisfy the requirements of the Plan (if then in effect) and the Awards and shall pay all fees and expenses necessarily incurred by the Company in connection therewith.
12. Limitation of Rights in Stock; No Special Service Rights
A Participant shall not be deemed for any purpose to be a stockholder of the Company with respect to any of the shares of Stock subject to an Award, unless and until a certificate shall have been issued therefor and delivered to the Participant or his agent, or the Stock shall be issued through the direct registration system of the Company’s transfer agent. Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the certificate or articles of incorporation and the by-laws of the Company. Nothing contained in the Plan or in any Award Agreement shall confer upon any recipient of an Award any right with respect to the continuation of his or her employment or other association with the Company (or any Affiliate), or interfere in any way with the right of the Company (or any Affiliate), subject to the terms of any separate employment or consulting agreement or provision of law or corporate articles or by-laws to the contrary, at any time to terminate such employment or consulting agreement or to increase or decrease, or otherwise adjust, the other terms and conditions of the recipient’s employment or other association with the Company and its Affiliates.
13. Unfunded Status of Plan
The Plan is intended to constitute an “unfunded” plan for incentive compensation, and the Plan is not intended to constitute a plan subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the
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Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Stock or payments with respect to Awards hereunder, provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.
14. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board nor any action taken in connection with the adoption or operation of the Plan shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of stock options and restricted stock other than under the Plan, and such arrangements may be either applicable generally or only in specific cases.
15. No Guarantee of Tax Consequences
It is intended that all Awards shall be granted and maintained on a basis which ensures they are exempt from, or otherwise compliant with, the requirements of Section 409A of the Code, pertaining non-qualified plans of deferred compensation, and the Plan shall be governed, interpreted and enforced consistent with such intent. However, neither the Company nor any Affiliate, nor any director, officer, agent, representative or employee of either, guarantees to the Participant or any other person any particular tax consequences as a result of the grant of, exercise of rights under, or payment in respect of an Award, including but not limited to that an Option granted as an Incentive Option has or will qualify as an “incentive stock option” within the meaning of Section 422 of the Code or that the provisions and penalties of Section 409A of the Code will or will not apply and no person shall have any liability to a Participant or any other party if a payment under an Award that is intended to benefit from favorable tax treatment or avoid adverse tax treatment fails to realize such intention or for any action taken by the Board or the Committee with respect to the Award.
16. Termination and Amendment of the Plan
16.1 Termination or Amendment of the Plan. Subject to the limitations contained in Section 16.3 below, including specifically the requirement of stockholder approval, if applicable, the Board may at any time suspend or terminate the Plan or make such modifications of the Plan as it shall deem advisable. Unless the Board otherwise expressly provides, no amendment of the Plan shall affect the terms of any Award outstanding on the date of such amendment.
16.2 Termination or Amendment of Outstanding Awards; Assumptions. Subject to the limitations contained in Section 16.3 below, including specifically the requirement of stockholder approval, if applicable, the Committee may at any time:
(a) amend the terms of any Award theretofore granted, prospectively or retroactively, provided, however, that the Award as amended is consistent with the terms of the Plan;
(b) within the limitations of the Plan, modify, extend or assume outstanding Awards or accept the cancellation of outstanding Awards or of outstanding stock options or other equity-based compensation awards granted by another issuer in return for the grant of new Awards for the same or a different number of shares of Stock and on the same or different terms and conditions (including but not limited to the exercise price of any Option); and
(c) offer to buy out for a payment in cash or cash equivalents an Award previously granted or authorize the recipient of an Award to elect to cash out an Award previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.
16.3 Limitations on Amendments, Etc.
(a) Without the approval of the Company’s stockholders, no amendment or modification of the Plan by the Board may (i) materially increase the number of shares of Stock which may be issued under the Plan (other than to reflect a reorganization, stock split, merger, spinoff or similar transaction), (ii) materially increase benefits to Participants, (ii) materially expand the class of persons eligible for Awards, (iv) expand the types of options or awards provided under the Plan, or (v) effect any other change for which stockholder approval is required by law or the rules of any relevant stock exchange.
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(b) No action by the Board or the Committee pursuant to this Section 16 shall impair the rights of the recipient of any Award outstanding on the date of such amendment or modification of such Award, as the case may be, without the Participant’s consent; provided, however, that no such consent shall be required (A) in the case of any amendment or termination of any outstanding Award that is permitted by any provision of this Plan that is set forth in Section 8, Section 9 or in any other section of this Plan that is not Section 16.2 or (B) if the Board or Committee, as the case may be, (i) determines in its sole discretion and prior to the date of any Change of Control that such amendment or alteration either is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Code, or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, (ii) determines in its sole discretion and prior to the date of any Change of Control that such amendment or alteration is not reasonably likely to significantly diminish the benefits provided under the Award, or that any such diminution has been adequately compensated, or (iii) reasonably determines on or after the date of Change of Control that such amendment or alteration either is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Code.
16.4 No Repricing. Except as otherwise permitted in the Plan, reducing the exercise price of Options or Stock Appreciation Rights issued and outstanding under the Plan, including through amendment, cancellation in exchange for the grant of a substitute Award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), shall require approval of the stockholders of the Company. The Company shall not grant any Options or Stock Appreciation Rights with automatic reload features.
17. Notices and Other Communications
Any communication or notice required or permitted to be given under the Plan shall be in such form as the Committee may determine from time to time. If a notice, demand, request or other communication is required or permitted to be given in writing, then any such notice, demand, request or other communication hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person, sent by electronic mail or any other form of electronic transfer approved by the Committee, or duly sent by first class registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular, certified or overnight mail, addressed or telecopied, as the case may be, (i) if to the recipient of an Award, at his or her residence address last filed with the Company and (ii) if to the Company, at its principal place of business, addressed to the attention of its Treasurer, or to such other address or telecopier number, as the case may be, as the addressee may have designated by notice to the addressor. All such notices, requests, demands and other communications shall be deemed to have been received: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of electronic mail or any other form of electronic transfer approved by the Committee, upon confirmation of receipt; (iii) in the case of mailing, when received by the addressee; and (iv) in the case of facsimile transmission, when confirmed by facsimile machine report.
18. Governing Law
The Plan and all Award Agreements and actions taken hereunder and thereunder shall be governed, interpreted and enforced in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.
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ENDORSEMENT LINE SACKPACK C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000001 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Your vote matters – here’s how to vote You may vote online or by phone instead of mailing this card. Online Go to www.envisionreports.com/TARA or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Save paper, time and money Sign up for electronic delivery at www.envisionreports.com/TARA 2025 Annual Meeting Proxy Card 1234 5678 9012 345 IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of A Directors recommends you vote “FOR” all of the director nominees listed: 1. Election of three Class II directors to the Board of Directors of Protara Therapeutics, Inc., each to hold office until the Annual Meeting of Stockholders in 2028 For Withhold For Withhold For Withhold 01 - Luke Beshar 02 - Roger Garceau, M.D. 03 - Gregory Sargen The Board of Directors recommends you vote “FOR” Proposals 2, 3, and 4. 2. Ratification of the selection of Ernst & Young LLP as Protara Therapeutics, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2025 For Against Abstain 3. Approval, on an advisory basis, of the compensation of Protara Therapeutics, Inc.’s named executive officers, as disclosed in the proxy statement 4. Approval of an Amendment to the Protara Therapeutics, Inc. 2024 Equity Incentive Plan B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. If a corporation or partnership, please sign in the full corporate or partnership name by an authorized signatory. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 1 U P X 6 4 4 0 6 6 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
2025 Annual Meeting of Protara Therapeutics, Inc. Stockholders Wednesday, June 11, 2025 at 12:00 P.M. Eastern Time Virtually via the Internet at meetnow.global/M5F9229. The 2025 Annual Meeting of Stockholders of Protara Therapeutics, Inc. will be held on Wednesday, June 11, 2025 at 12:00 P.M. Eastern Time, virtually via the Internet at meetnow.global/M5F9229. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.envisionreports.com/TARA Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/TARA IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Protara Therapeutics, Inc. Notice of 2025 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — Wednesday, June 11, 2025 at 12:00 P.M. Eastern Time Jesse Shefferman and Patrick Fabbio, and each of them, as proxies, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Protara Therapeutics, Inc. to be held on Wednesday, June 11, 2025 at 12:00 P.M. Eastern Time or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as indicated by the stockholder. If no such directions are indicated, the proxies will have authority to vote FOR the nominees for director listed under Proposal 1, and FOR Proposals 2, 3, and 4. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any postponement or adjournment thereof. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below.