King gets salary, options AND 60% of base salary cash bonuses. In addition last year they received retention bonuses as well. See the compensation information in last year's 10Q:
The following table sets forth the target bonus percentage, based upon the “Factors for Determining Compensation”, as noted below, of our Named Executive Officers approved by the Committee for fiscal year 2013 and their respective fiscal year 2013 cash bonuses as approved by the Committee:
Named Executive Officer Fiscal Year 2013 Target
Fiscal Year 2013 Bonus ($) (1)
Steven W. King 60 % 313,706
Paul J. Lytle 40 % 158,833
Shelley P.M. Fussey, Ph.D. 35 % 95,721
Jeffrey L. Masten 35 % 97,256
Joseph S. Shan 35 % 88,725
Mark R. Ziebell 35 % 111,501
(1) Bonuses for Mr. King, Mr. Lytle and Mr. Ziebell were based on a corporate factor of 1.25. Bonuses for Mr. Masten, Dr. Fussey and Mr. Shan were based on a corporate factor of 1.
Retention Bonus Awards
As a result of the uncertainty created within our corporate organization due to discovery of major discrepancies in connection with our Phase IIb second-line NSCLC trial caused by a third party vendor, in order to ensure stability within our organization, the continued employment of our NEOs and their continued efforts in pursuing our corporate goals and objectives, as well as the completion of the detailed review of the Phase IIb trial (which ultimately led to promising final data), on December 27, 2012, the Committee approved the opportunity for each of our NEOs to earn a retention bonus equal to twenty-five percent (25%) of his or her fiscal year 2013 base salary provided such NEO is continuously employed by us through December 31, 2013. In the event that an NEO’s employment with us is terminated prior to December 31, 2013, by the NEO for good reason, by us without cause, or within six months following a change-in-control, all as further described below under “Overview of Employment Agreements and Potential Payments Upon Termination or Change-in-Control”, then such NEO would still be entitled to receive his or her retention bonus. Earned retention bonuses are payable in connection with the first pay period following December 31, 2013.
Equity Awards
Stock Option Awards and Grant Practices. Based on market practice and our objective to align executives’ interest with those of our stockholders, we currently use stock options awards as the primary form of long-term incentive compensation for executives and other employees. In fiscal year 2012, the Committee implemented a policy of a routine annual broad-based grant of stock option awards to our executive officers and other employees, with the grant typically occurring during the first week of May, the first month of our fiscal year. The grant date of such annual award and of other grants (i.e., for new hires) is either on the date the Committee approves the grants or on a pre-selected later date, such as a future hire date. In determining the size and types of equity grants to executive officers, the Committee considers, among other things, comparative industry data provided by the Company’s compensation consultant, our outstanding shares at the time of grant, the number and type of equity awards granted to such individuals in prior years, the equity available under our long-term incentive plan and desirable run rate and aggregate estimated equity usage in the future, each executive officer’s ownership in our Company, our corporate performance, and each executive officer’s individual performance, role and responsibilities.
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The Committee exercises discretion in determining the information it considers, as well as any weighting of particular information, in determining the equity awards. The determination of equity awards is made by the Compensation Committee after evaluating the information and areas of consideration described above in their totality. For fiscal year 2013, our annual broad-based stock option grant was approved by the Compensation Committee on May 4, 2012.
In addition to the annual broad-based grant, following our discovery of major discrepancies in connection with our Phase IIb second-line NSCLC trial with bavituximab caused by a third party vendor, the Committee authorized in December 2012 a non-routine broad-based grant of stock options, which the Committee deemed necessary for the purposes of promoting employee retention and in the best interest of the Company and its stockholders given the Company’s immediate need to (i) complete the Company’s detailed internal review of its Phase IIb second-line NSCLC trial with bavituximab as well as develop a plan to move bavituximab forward into a pivotal Phase III trial for second-line NSCLC (ii) meet its existing customer obligations for its biomanufacturing subsidiary, Avid Bioservices, and (iii) meet other corporate goals and objectives, all of which are necessary to continue to maintain and enhance stockholder value.
Stock option grant information for the fiscal year ended April 30, 2013, is set forth below under “Grants of Plan-Based Awards For Fiscal Year 2013.”
Stock Awards and Award Practices. In addition to stock options, we sometimes also use stock awards as a form of long-term incentive compensation for executives and other employees. Stock awards are shares of common stock that vest in accordance with the terms established by the Committee. Usually, the awards will be subject to vesting upon the Company’s timely attainment of certain predetermined clinical, financial or operational milestones with specific targeted attainment dates or vest over a specific predetermined period of performance. However, the Committee, at its discretion, may issue discretionary stock awards that are not subject to any future vesting requirements. There were no discretionary stock award grants to our Named Executive Officers during the fiscal year ended April 30, 2013.
Employment Agreements, Severance and Change-in-Control Benefits
We have employment agreements with all of our Named Executive Officers providing for severance payments and accelerated vesting benefits triggered by various termination events. For a description of these agreements and our potential payment obligations, please see "Overview of Employment Agreements and Potential Payments Upon Termination or Change-in-Control" and the related tabular disclosure below.
When entering into employment agreements which provide for post-termination compensation for our Named Executive Officers, the Committee considers, among multiple factors, peer company practice, retention needs and consistency of post-termination compensation among our executives. Gains from prior equity awards are not a material consideration in setting the level of such compensation. In particular, we believe such employment agreements benefit us and our stockholders by attracting and retaining executives in a marketplace where such protections are commonly offered by our peer companies. We also believe that severance protection triggered by a change-in-control allows our executives to assess a potential change-in-control objectively, from the perspective of what is best for our stockholders, without regard to the potential impact of the transaction on their own job security. We use a "double trigger" with respect to benefits that are to be provided in connection with a change-in-control. A change-in-control does not itself trigger benefits; rather, benefits are paid only if the employment of the executive is terminated by us other than for cause or due to the executive’s death or disability during a specified period before or after a change of control. We believe a "double trigger" benefit maximizes shareholder value because it prevents a windfall to executives in the event of a change of control in which the executive retains significant responsibility as defined in his or her individual agreement, while still providing our executives appropriate incentives to cooperate in negotiating any change of control that may put their jobs at risk. Further, we believe the severance protection offered under the employment agreements is balanced with the interests of Peregrine and its stockholders, as the executives are bound by non-disclosure, non-competition, and non-solicitation arrangements and must execute a general release in favor of Peregrine as a condition to receiving benefits under these agreements. All of the Named Executive Officers are “at will” employees.
These employment agreements are subject to automatic one-year extensions annually and, as part of the Committee's review of all of our executive compensation practices, will be reviewed to ensure that they continue to serve our interests in retaining these key executives, remain consistent with packages offered by our peers, and provide reasonable levels of severance protection and compensation.
Perquisites and Other Benefits
We maintain broad-based benefits that are provided to all employees, including health, dental, and vision insurance, life and disability insurance, a 401(k) plan, and an Employee Stock Purchase Plan.
