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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14AINFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
Filed by theRegistrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to (s)
240.14a-12
XBiotech Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box)
No fee required.
Fee paid previously with preliminary materials.
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and
0-11.
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XBiotech Inc.
5217 Winnebago Lane
Austin, Texas 78744
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 20, 2024
DearShareholder:
You are cordially invited to attend the 2024 Annual Meeting of Shareholders
(the "Meeting") of XBiotech Inc., aBritish Colombia corporation (the
"Company"). The meeting will be held on Thursday, June 20, 2024 at 10:00 a.m.
central time in a virtual meeting format only, via the Internet, with no
physical in-person meeting,
for the following purposes:
1. To elect the five (5) nominees for director named herein to serve until the
next annual meeting andtheir successors are duly elected and qualified.
2. To ratify the selection by the Audit Committee of the Board of Directors of Whitley Penn LLP as
theindependent registered public accounting firm of the Company for its fiscal year ending December 31, 2024.
3. To approve, on an advisory basis, the compensation of the Company's named executive officers.
4. To conduct any other business properly brought before the meeting.
These items of business are more fully described in the Proxy Statement
accompanying this notice.
To participate in the Annual Meeting virtually via the Internet, please visit
www.proxydocs.com/xbit. In order to attend, you must register inadvance at
www.proxydocs.com/xbit prior to the deadline of June 19, 2024 at 5:00 p.m.
central time. Upon completing your registration, you will receive further
instructions via email, including your unique links that will allow you access
tothe meeting. You will not be able to attend the Annual Meeting in person.
Our Board unanimously recommends that you vote "For"the election of all five
nominees for director, "For" ratification of the selection by the Audit
Committee of the Board of Whitley Penn LLP as the independent registered
public accounting firm of the Company for its fiscal year endingDecember 31,
2024, and "For" approval of the compensation of the Company's executive
officers.
The record date forthe annual meeting is April 22, 2024. Only shareholders of
record at the close of business on that date may vote at the meeting or any
adjournment thereof. Your vote is very important. We urge you to access and
review the proxy materials beforevoting and vote as soon as possible, whether
or not you plan to attend the Meeting. This Notice is not a form for voting
and presents only an overview of the more complete proxy materials, which
contain important information
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and are available on the Internet or by mail. We intend to mail a Notice of
Annual Meeting of Shareholders (the "Notice"), proxy materials and our 2023
Annual Report (which includes our2023 Annual Report on Form
10-K),
how to vote, and how to obtain a paper copy of the proxy materials. We expect
our 2023 Annual Report and proxy materials to be available on or about May 1,
2024. You willneed the control number printed on your Notice, proxy card or
voting instruction card in order to vote and you will not otherwise receive a
paper or email copy. A list of shareholders of record will be available during
the Meeting for inspection byshareholders for any legally valid purpose
relating to the Meeting.
Important Notice Regarding the Availability of Proxy Materials for the
Shareholders' Meeting to Be Held onJune 20, 2024 at 10:00 a.m. central time
virtually at www.proxydocs.com/xbit:
This Notice, the proxystatement and annual report to shareholders are
available at www.proxydocs.com/xbit.
By Order of the Board of Directors
John Simard
President, CEO and Chairman
Austin, Texas
May 1,2024
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS 1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT 7
PROPOSAL 1 2
ELECTION OF DIRECTORS 2
PROPOSAL 2 12
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 12
PROPOSAL 3 14
ADVISORY VOTE ON THE EXECUTIVE COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS 14
EXECUTIVE OFFICERS 16
EXECUTIVE COMPENSATION 16
Equity Compensation Plans and Other Benefits Plans 20
DIRECTOR COMPENSATION 29
OTHER MATTERS 32
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PROXY STATEMENT
FOR THE 2024 ANNUAL MEETING OF SHAREHOLDERS
To be held on June 20, 2024
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why did I receive a notice regarding the availability of proxy materials on
the internet, rather than a full set of proxy materials?
Pursuant to rules adopted by the Securities and Exchange Commission (the
"SEC"), we have elected to provide access to ourproxy materials over the
internet rather than mailing printed copies of those materials. Accordingly,
we have sent you a Notice of Internet Availability of Proxy Materials (a
"Notice") because the Board of Directors (sometimes referred toas the "Board")
of XBiotech Inc. (sometimes referred to as "we," "us," the "Company" or
"XBiotech") is soliciting your proxy to vote at our 2023 Annual Meeting of
Shareholders, including at anyadjournments or postponements of the meeting.
All shareholders will have the ability to access the proxy materials on the
website referred to in the Notice or request to receive a printed set of the
proxy materials. Instructions on how to access theproxy materials over the
internet or to request a printed copy may be found in the Notice. The Notice
was first mailed to our Shareholders of record entitled to vote at the annual
meeting on or about May 8, 2024.
How do I attend the annual meeting?
The meeting will be held on Thursday, June 20, 2024 at 10:00 a.m. central time
virtually at www.proxydocs.com/xbit. In order toattend, you must register in
advance at www.proxydocs.com/xbit prior to the deadline of June 19, 2024 at
5:00 p.m. central time. Upon completing your registration, you will receive
further instructions via email, including your unique linksthat will allow you
access to the meeting.
Who can vote at the annual meeting?
Only shareholders of record at the close of business on April 22, 2024 will be
entitled to vote at the annual meeting. On this recorddate, there were
30,455,031 shares of common stock outstanding and entitled to vote.
Shareholders of Record: Shares Registered in YourName
If on April 22, 2024 your shares were registered directly in your name with
the Company's transfer agent, EquinitiTrust Company, then you are a
shareholder of record. As a shareholder of record, you may vote virtually at
www.proxydocs.com/xbit at the meeting or vote by proxy. Whether or not you
plan to attend the meeting, we urge you to vote by proxy to ensureyour vote is
counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If on April 22, 2024 your shares were not held in your name, but rather in an
account at a brokerage firm, bank, dealer or other similarorganization, then
you are the beneficial owner of shares held in "street name" and will have
received a Notice from that organization. The organization holding your
account is considered to be the shareholder of record for purposes ofvoting at
the annual meeting. As a beneficial owner, you have the right to direct your
broker or other agent regarding how to vote the shares in your account. You
are also invited to attend the annual meeting. However, since you are not
theshareholder of record, you may not vote your shares through the internet at
the meeting unless you request and obtain a valid proxy from your broker or
other agent.
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What am I voting on?
There are four matters scheduled for a vote:
. Election of the five (5) nominees for director named herein for a
one-year
term;
. Ratification of the selection by the Audit Committee of the Board of Directors of Whitley Penn LLP as
theindependent registered public accounting firm of the Company for its fiscal year ending December 31, 2024; and
. Approval, on an advisory basis, of the compensation of the Company's named executive officers for fiscalyear 2023.
What if another matter is properly brought before the meeting?
The Board of Directors knows of no other matters that will be presented for
consideration at the annual meeting. If any other matters areproperly brought
before the meeting, it is the intention of the persons named in the proxy to
vote on those matters in accordance with their best judgment.
How do I vote?
For Proposal 1, you may eithervote "For" all the nominees to the Board of
Directors or you may "Withhold" your vote for any nominee you specify. For
each of Proposals 2 and 3, you may vote "For" or "Against" or abstain from
voting. OurBoard unanimously recommends that you vote "For" the election of
all five nominees for director, "For" ratification of the selection by the
Audit Committee of the Board of Whitley Penn LLP as the independent registered
publicaccounting firm of the Company for its fiscal year ending December 31,
2024, and "For" approval of the compensation of the Company's executive
officers.
The procedures for voting are fairly simple:
Shareholders of Record: Shares Registered in Your Name
If you are a shareholder of record, you may vote in person at the annual
meeting, by proxy over the telephone, by proxy through the internet,or by
proxy using a proxy card that you may request. Whether or not you plan to
attend the meeting, we urge you to vote by proxy to ensure your vote is
counted. You may still attend the meeting and vote through the internet even
if you have alreadyvoted by proxy.
. To vote using a proxy card that may be delivered to you at a later time,
simply complete, sign and date the proxycard and return it promptly
in the envelope provided. If you return your signed proxy card to us
before the annual meeting, we will vote your shares as you direct.
. To vote over the
telephone, dial toll-free
1-866-243-5061
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. Your vote must be received by the startof the meeting to be counted.
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. To vote through the internet, go to www.proxydocs.com/xbit to complete an electronic proxy card. You will beasked to
provide the control number from the Notice. Your vote must be received by the start of the meeting to be counted.
Beneficial Owners: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker,
bank or other agent, you should have received a Notice containing
votinginstructions from that organization rather than from XBiotech. Simply
follow the instructions in the Notice to ensure that your vote is counted. To
vote during the meeting, you must submit a valid legal proxy via email to
dsmsupport@betanxt.com withthe subject line "Legal Proxy" by 5:00 p.m.,
Central Time, on June 15, 2024, and must also register to attend the Annual
Meeting, as described above. If you have a valid legal proxy, you may submit
your vote via the Internet or bytelephone, as instructed by your broker, bank,
or other agent, at any time prior to the closing of the polls during the
Annual Meeting.
How many votes doI have?
On each matter to be voted upon, you have one vote for each share of common
stock you own as of April 22, 2024, with noshares having cumulative voting
rights.
What happens if I do not vote?
Shareholders of Record: Shares Registered in Your Name
If you are a shareholder of record and do not vote by completing a proxy card,
by telephone, or through the internet at the annual meeting,your shares will
not be voted.
Beneficial Owners: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner and do not instruct your broker, bank or other
agent how to vote your shares, the question of whether your brokeror nominee
will still be able to vote your shares depends on whether the particular
proposal is considered to be a routine matter under applicable rules. Brokers
and nominees can use their discretion to vote uninstructed shares with respect
tomatters that are considered to be routine under applicable rules, 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
shareholders, such as mergers, shareholder proposals, elections of directors
(even if not contested), executive compensation and certain corporate
governance proposals,even if management-supported. Routine matters, on which a
broker or other nominee is generally empowered to vote, include ratification
of the appointment of an independent registered public accounting firm.
Accordingly, your broker or nominee maynot vote your shares on Proposals 1 and
3 without your instructions, but may vote your shares on Proposal 2.
What if I return a proxy card or otherwisevote but do not make specific choices?
If you return a signed and dated proxy card or otherwise vote without marking
voting selections,your shares will be voted, as applicable, "For" the election
of all five nominees for director, "For" ratification of the selection by the
Audit Committee of the Board of Whitley Penn LLP as the independent registered
publicaccounting firm of the Company for its fiscal year ending December 31,
2024, and "For" approval on advisory basis of the compensation of the
Company's executive officers. If any other matter is properly presented at the
meeting,your proxyholder (one of the individuals named on your proxy card)
will vote your shares using his or her best judgment.
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Who is paying for this proxy solicitation?
The Company anticipates first mailing definitive copies of this proxy
statement on or about May 8, 2024. We are asking for your proxy andwill pay
all of the costs associated with asking for shareholders' proxies for the 2024
Annual Meeting. In addition to the use of the mail, proxies may be solicited
by the Directors, officers and employees of XBiotech by personal interview,telep
hone or otherwise. Directors, officers and employees will not be additionally
compensated, but may be reimbursed for
out-of-pocket
expenses in connection withsolicitation. Arrangements also will be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to beneficial owners holding our shares in
street name, and we will reimburse custodians,nominees and fiduciaries for
reasonable
out-of-pocket
expenses in connection with the forwarding of solicitation material.
What does it mean if I receive more than one set of proxy materials?
If you receive more than one set of proxy materials, your shares may be
registered in more than one name or in different accounts. Pleasefollow the
voting instructions on each of the proxy cards in the proxy materials to
ensure that all of your shares are voted.
Can I change my vote aftersubmitting my proxy?
Yes. You can revoke your proxy at any time before the final vote at the meeting.
Shareholders of Record: Shares Registered in Your Name
If you are the record holder of your shares, you may revoke your proxy in any
one of the following ways:
. You may submit a properly completed proxy card with a later date.
. You may grant a subsequent proxy by telephone or through the internet.
. You may send a timely written notice that you are revoking your proxy
to XBiotech's Secretary at 5217Winnebago Lane, Austin, TX 78744.
Your most current proxy card or telephone or internet proxy is the one that
iscounted.
Beneficial Owners: Shares Registered in the Name of Broker or Bank
If your shares are held by your broker or bank as a nominee or agent, you
should follow the instructions provided by your broker or bank inorder to
change your vote.
When are shareholder proposals and director nominations due for next year's
annual meeting?
To be considered for inclusion in the Company's proxy materials for next
year's annual meeting of shareholders, your proposal must bedelivered in
writing by December 30, 2024, to the attention of the Secretary of XBiotech
Inc. at 5217 Winnebago Lane, Austin, TX 78744. The deadline after which date
the notice of a shareholder proposal submitted is considered untimely isMarch
24, 2025. The deadline for submitting nominees for inclusion in the Company's
proxy statement and form of proxy pursuant to
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the Company's governing documents as they relate to the inclusion of
shareholder director nominees in the Company's proxy materials for the
Company's next annual meeting of theshareholders to be held in 2025 is April
22, 2025; provided, however, that if the annual meeting is to be held on a
date that is less than 50 days after the date on which the first public
announcement of the date of the annual meeting was made,notice may be made not
later than the close of business on the 10th day following such public
announcement. If you wish to submit a solicitation of proxies in support of
director nominees other than the Company's nominees pursuant to Rule
14a-19
for the Company's next annual meeting, notice to us must be made no later than
March 24, 2025. Any dissenting shareholder should comply with the additional
requirements of a proper notice under Rule
14a-19,
which includes the statement that a dissident using the universal proxy rule
intends to solicit 67% of the outstanding voting shares entitled to vote on
the election of directors. You are also advisedto review the Company's
Articles, which contain additional requirements about advance notice of
shareholder proposals and director nominations.
Howare votes counted?
Votes will be counted by the inspector of election appointed for the meeting,
who will separately count, for theproposal to elect directors, votes "For" and
"Withhold" ; and for the proposal to ratify the Audit Committee's selection of
Whitley Penn LLP as our independent public accounting firm, votes
"For""Against," broker
non-votes
and abstentions. Abstentions and broker
non-votes
will be counted towards the vote totals for Proposal 2 and will have the
sameeffect as "Against" votes. Abstentions will have the same effect as
"Against" on the outcome of Proposals 3. Broker
non-votes
have no effect and will not be counted towards the vote totalfor Proposals 1
and 3.
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 nomineeholding the shares as to
how to vote on matters deemed to be
non-routine
under applicable rules, the broker or nominee may not vote the shares. These
unvoted shares are counted as "broker
non-votes."
Proposals 1 and 3 are considered
non-routine,
so a broker or nominee holding shares may not vote those shares on those
proposals without specific instructionsfrom the beneficial owner. Proposal 2,
the proposal to ratify our independent public accounting firm is considered
routine.
How many votes are needed toapprove each proposal?
. For Proposal 1, the election of directors, the five nominees receiving more
"For" votes than"Withhold" votes from the holders of shares present in person
or represented by proxy and entitled to vote on the election of directors
will be elected. Only votes "For" or "Withhold" will affect the outcome.
. To be approved, Proposal 2 ratifying the selection by the Audit Committee of the Board of Directors of WhitleyPenn
LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2024
must receive "For" votes from the holders of a majority of shares present and entitled to vote either in personor
represented by proxy. If you mark your proxy to "Abstain" from voting, it will have the same effect as an "Against" vote.
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. To be approved, Proposal 3, the advisory approval of the Company's executive
compensation must receive"For" votes from the holders of a majority of shares present
and entitled to vote either in person or represented by proxy. If you mark your
proxy to "Abstain" from voting, it will have the same effect as an "Against"vote.
What is the quorum requirement?
A quorum of shareholders is necessary to hold a valid meeting. A quorum will
be present if shareholders holding at least
one-third
of the outstanding shares entitled to vote are present at the meeting in
person or represented by proxy. On the record date, there were 30,455,031
shares outstanding and entitled to vote. Thus, the holdersof 10,151,677 shares
must be present in person or represented by proxy at the meeting to have a
quorum.
Your shares will be countedtowards the quorum only if you submit a valid proxy
(or one is submitted on your behalf by your broker, bank or other nominee) or
if you vote through the internet at the 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 present at the meeting in person or
represented by proxy may adjourn the meeting to anotherdate.
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 onForm
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
withinfour business days after the 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.
What proxy materials are available on the internet?
The proxy statement, Form
10-K
and annual report to shareholders are available atwww.proxydocs.com/xbit.
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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 forNotices of Internet
Availability of Proxy Materials or other annual meeting materials with respect
to two or more shareholders sharing the same address by delivering a single
set of Notice of Internet Availability of Proxy Materials or other
annualmeeting materials to those shareholders. This process, which is commonly
referred to as "householding," potentially means extra convenience for
shareholders and cost savings for companies.
This year, a number of brokers with account holders who are XBiotech Inc.
shareholders will be "householding" theCompany's proxy materials. A single
Notice will be delivered to multiple shareholders sharing an address unless
contrary instructions have been received from the affected shareholders. Once
you have received notice from your broker that theywill 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 or set of annual meeting materials, please notify your broker
or XBiotech Inc. Direct your written request to XBiotech Inc., Attn: Corporate
Relations, 5217 Winnebago Lane, Austin, TX 78744, or contactour Director of
Corporate Relations at XBiotech Inc. by telephone at (512)
386-2930.
shareholders who currently receive multiple Notices at their addresses and
would like to request "householding" oftheir communications should contact
their brokers.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT
The following table sets forth certain information regarding the ownership of
the Company's commonstock as of April 1, 2024 by (i) each of our directors;
(ii) each of our Named Executive Officers as defined below under the heading
"Executive Compensation"; (iii) each person known by us to beneficially own
more than 5% ofour outstanding common stock and (iv) all of our current
executive officers and directors as a group.
Beneficialownership is determined in accordance with the rules of the SEC and
includes voting and investment power with respect to the securities. This
table is based upon information supplied by officers, directors and principal
shareholders and Schedules13D and 13G filed with the SEC. Except as indicated
by footnote, and subject to applicable community property laws, we believe the
persons named in the table have sole voting and investment power with respect
to all shares of common stock shown asbeneficially owned by them. The number
of shares of common stock used to calculate the percentage ownership of each
listed person includes the shares of common stock underlying options held by
such persons that are exercisable as of May 30,2024, which is 60 days after
April 1, 2024.
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Percentage of beneficial ownership is based on 30,450,881 shares of common
stock outstanding as ofApril 1, 2024.
Beneficial Owner Number of Percent
Shares of
Total
Name and address of Greater than 5% Shareholders
Thomas Gut 3,914,111 12.9 %
(1)
Lindenberg Family Office Ltd.
Laternengasse 5
8001 Zurich, Switzerland
Named Executive Officers and Directors
(2)
John Simard 6,615,375 19.9 %
(3)
Jan-Paul 350,243 1.1 %
Waldin
W. Thorpe McKenzie 2,971,259 9.7 %
(4)
Donald MacAdam 150,000 *
Peter Libby 112,500 *
Sushma Shivaswamy 495,000 1.6 %
Angela Hu 70,000 *
All named executive officers and directors as a group (7 persons) 10,764,377 33.1 %
(5)
* Less than one percent.
(1) Based on information set forth in a Form13/G filed with the SEC on February 7, 2024.
(2) These figures include shares of common stock underlying stock options held by
our Chief Executive Officer anddirectors that are immediately exercisable or
scheduled to become immediately exercisable within 60 days of April 1, 2024.
Underlying stock options include the following amounts: John Simard - 870,381;
Jan-Paul
Waldin
- 150,000; Thorpe
McKenzie-
267,500; Donald MacAdam
-140,000;
Peter Libby--87,500; Sushma
Shivaswamy--495,000 and Angela Hu--44,500.
(3) Includes 1,921,828 shares of common stock issuable upon conversion
of a convertible loan provided byMr. Simard to the Issuer under
a convertible loan agreement between Mr. Simard and the Issuer
dated January 3, 2024 (the "Loan Agreement"). At Mr. Simard's
election, the balance may be converted to the common stockat any
time the loan balance is outstanding at a fixed conversion price
equal to the average Nasdaq Official Closing Price of the common
stock (as reflected on Nasdaq.com) for the five trading days
immediately preceding the signing of the LoanAgreement, which was
$4.048 per share, subject to a 19.9% cap limiting the number of
shares that could be converted under the Loan Agreement based on
Mr. Simard's total stock ownership in the Company at the time of
conversion. This amountof 1,921,828 shares is calculated based
on the formula to cap Mr. Simard's total stock ownership in the
Company not to exceed 19.9% of the Company's issued and outstanding
common stock on the date such loan conversion is consummated.
(4) Includes 66,748 shares held by the McKenzie Foundation, 31,864 shares held by Mr.
McKenzie's spouseand 7,676 shares held in a Trust for Mr. McKenzie's stepchildren.
(5) Includes 2,054,881 shares of common stock underlying stock options held by our
executive officers and directors(7 persons total) that are immediately exercisable
or are scheduled to become exercisable within 60 days of April 1, 2024 and
1,921,828 shares of common stock issuable to Mr. Simard upon the Loan Agreement.
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PROPOSAL 1
ELECTION OF DIRECTORS
Our Board of Directors currently consists of five directors. There are five
nominees for director, which consist of allincumbent directors. Proxies may
not be voted for a greater number of persons than the number of nominees named
in this proxy statement. Each director to be elected and qualified will hold
office until the next annual meeting of shareholders anduntil his or her
successor is elected, or, if sooner, until the director's death, resignation
or removal. All of the nominees listed below are currently directors of the
Company. Notwithstanding the foregoing, directors are elected by aplurality of
the votes of the holders of shares present in person or represented by proxy
and entitled to vote on the election of directors if the number of eligible
nominees standing for election at any meeting of the shareholders exceeds
thenumber of directors to be elected. The five nominees receiving the highest
number of affirmative votes will be elected.
The Company invites and encourages all directors and nominees for director to
attend the annual meeting of shareholders. All ofthe Company's directors at
the time of the 2023 Annual General Meeting were in attendance either in
person or via teleconference.
Current Board andNominees
The Nominating and Corporate Governance Committee seeks to assemble a Board
that, as a whole, possesses the appropriate balanceof professional and
industry knowledge, financial expertise and high-level management experience
necessary to oversee and direct the Company's business. To that end, the
Nominating and Corporate Governance Committee has identified and evaluatednomine
es 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
otherqualities that the Nominating and Corporate Governance Committee views as
critical to effective functioning of the Board. The brief biographies below
include information, as of the date of this proxy statement, regarding the
specific and particularexperience, qualifications, attributes or skills of
each director or nominee that led the Nominating and Corporate Governance
Committee to conclude that the person should serve as a director as of the
date of this proxy statement. However, each ofthe members of the Nominating
and Corporate Governance Committee may have a variety of reasons why he
believes a particular person would be an appropriate nominee or director for
the Board, and these views may differ from the views of other members.
Name Age Position Held With the Company
John Simard 62 Founder, President, Chief Executive Officer & Chairman
W. Thorpe McKenzie 76 Director
Jan-Paul 75 Lead Director
Waldin, Esq.
Donald H. MacAdam 77 Director
Peter Libby, M.D. 77 Director
John Simard,
Chairman of the Board, founded XBiotech Inc. in 2005 and has served as
itsPresident and Chief Executive Officer and Chairman of the Board since that
time. Prior to XBiotech, he was founder and Chief Executive Officer of CTL
ImmunoTherapies Corp., a developer of therapeutic vaccines to treat cancer and
chronic infectiousdisease; he also founded AlleCure Corp., of Valencia,
California, a developer of allergy treatments and immune modulating therapies.
In 2001, AlleCure and CTL ImmunoTherapies merged to form MannKind Corp., where
Mr. Simard served as CorporateVice President and a board member. Mr. Simard
holds a degree in Biochemistry from the University of Saskatchewan and
attended graduate studies in Medical Biophysics/Immunology at the University
of Toronto. He has over 240 issued and pendingpatents related to cancer
therapy, therapeutic vaccines and therapeutic antibodies, as well as a
substantial number of peer-reviewed scientific publications and the textbook
"Immune Response Genes."
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Our Board of Directors believes that Mr. Simard's qualificationsto serve as a
director include his extensive executive leadership experience, his role as
founder of the company, his many years of service on our Board of Directors
and as our Chief Executive Officer, and extensive knowledge of our company
andindustry.
Donald H. MacAdam
has served on our Board of Directors since March 2018. Mr. MacAdam is a
technologyexecutive with extensive public and private company experience. He
was formerly a director of Hammond Power Solutions (TSE:HPS.A), CEO of MBVax
Bioscience, director of CTL Immunotherapies, CEO of Tm Bioscience (TSE),
president of CRS Robotics (TSE),and CEO of L. A. Varah Ltd. (TSE). He is the
inventor under several patents and the author of four books: Startup to IPO,
Spontaneous Regression Cancer and the Immune System, The Resonance Model, and
The Reinvention of Coley'sToxins.
Mr. MacAdam was selected to serve on our Board of Directors based on his
extensive experience in thepharmaceutical industry and scientific knowledge.
Mr. MacAdam brings to the board his core business and leadership skills as
well as his public company director experience. Mr. MacAdam was elected to
serve as Chairman of the CompensationCommittee.
W. Thorpe McKenzie
has served on our Board of Directors since February 2009. Mr. McKenzie served
asManaging Director of Pointer Management Company, Chattanooga, Tennessee,
since its inception in July 1990 until December 31, 2015, and as of January 1,
2016, serves as its Senior Advisor. Mr. McKenzie
co-founded
Pointer Management Company in July 1990 to invest in hedge funds and similar
types of partnerships utilizing a fund of funds approach. From August 1982
until June 1990, he was a private investor inNew York City, and a director of
several public and private companies. From May 1980 until July 1982, he was
founding general partner at TIGER, a global hedge fund. From May 1971 until
January 1980, he was a Vice President of Kidder,Peabody & Co., Inc. in New
York. Mr. McKenzie is a graduate of the University of North Carolina in Chapel
Hill and the Wharton Graduate division of the University of Pennsylvania in
Philadelphia.
Mr. McKenzie was selected to serve on our Board of Directors based on his
experience with corporate financings and hisrole as an investor in XBiotech.
His extensive financial background qualifies him to serve as Chairman of our
Audit Committee and as our "audit committee financial expert."
Jan-Paul
Waldin, Esq.
has served on our Board of Directors since February 2018and was appointed Lead
Director in 2019. Mr. Waldin is a lawyer in Ontario, Canada and is a member of
the Law Society of Upper Canada. He has been the principal of Waldin
Barristers, a boutique civil litigation and advisory firm in Toronto,Canada,
since January, 1981. Mr. Waldin practices trial and appellate advocacy
principally in the area of complex corporate commercial litigation. He has
acted as lead counsel in all levels of court in Ontario and Canada, including
the SupremeCourt of Canada, the Federal Court of Canada, the Ontario Court of
Appeal, the Ontario Superior Court of Justice and before Canadian federal and
provincial administrative tribunals. Mr. Waldin's counsel and strategic advice
is regularlysought by both publicly traded and closely held companies based in
Canada, the European Union and the United States in connection with regulatory
and administrative law matters, structuring shareholder relations and
contentious corporatetransactions. He has held directorships in private and
multinational companies, principally in the manufacturing, aviation and
pharmaceutical industries. A graduate of the University of Toronto and Osgoode
Hall Law School, Mr. Waldin was calledto the Ontario bar in 1976 and served
his articles of clerkship under the late Mr. Justice Archie Campbell at the
Policy Development Branch of the Ministry of the Attorney General for Ontario.
He was Law Clerk to the Honourable Willard Z.Estey, then Chief Justice of the
High Court of Justice of Ontario.
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Mr. Waldin was selected to serve on our Board of Directors based on
hisknowledge and experience with publicly traded companies and corporate law.
Due to these qualifications, the Board has elected him to serve as Chairman of
the Corporate Governance and Nominating Committee.
Peter Libby, M.D.,
has served on our Board of Directors since July 2019. Dr. Libby has been a
cardiovascularmedicine specialist at Brigham and Women's Hospital (BWH) Since
October 1990. He became a full professor in March 1996 and since December 1998
has been the Mallinckrodt Professor of Medicine at Harvard Medical School
(HMS). Dr. Libbyreceived his medical degree from the University of California,
San Diego School of Medicine. He completed a residency in internal medicine
and a fellowship in cardiovascular disease at Peter Bent Brigham Hospital (now
BWH). He also completed aresearch fellowship in cellular physiology at HMS.
Dr. Libby is board certified in internal medicine and cardiovascular disease.
The author of over 500 original peer-reviewed publications, over 580 reviews,
chapters and other publications,Dr. Libby also serves as an editor of the
leading textbook of cardiovascular medicine. Dr. Libby's clinical and research
interests include vascular biology, atherosclerosis and preventive cardiology.
The research laboratory thatDr. Libby directs studies the messengers created
by the body that may produce arterial plaque and blockages, as well as normal
and abnormal function of smooth muscle and endothelial cells. Dr. Libby is
perennially named a top cardiologist.His research has received funding from
the American Heart Association and National Institutes of Health. Dr. Libby
has received research recognitions on four continents including the highest
research awards from the American Heart Associationand American College of
Cardiology, the Gold Medal of the European Society of Cardiology, the
Anitchkow award from the European Atherosclerosis Society, The Ernst Jung Gold
Medal for Medicine, and the Earl Benditt award for vascular biology.
Mr. Libby was selected to serve on our Board based on his extensive knowledge
and experience in cardiovascular medicine, afield in which he is regarded as
one of the top key opinion leaders. He has also pioneered groundbreaking
research, published in 2018, that demonstrates that a crucial mechanism behind
heart attacks and stroke may involve inflammation of the typethat is targeted
by certain of the Company's key drug discovery, development and commercializatio
n activities.
T
HE
B
OARD
OF
D
IRECTORS
R
ECOMMENDS
A V
OTE
FOR
E
ACH
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AMED
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OMINEES
Independence of the Board of Directors
As required under the NASDAQ Stock Market ("NASDAQ") listing standards, a
majority of the members of a listedcompany's Board of Directors must qualify
as "independent," as affirmatively determined by the Board of Directors. The
Board consults with the Company's counsel to ensure that the Board's
determinations are consistent withrelevant 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.
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Consistent with these considerations, after review of all relevantidentified
transactions or relationships between each director, or any of his family
members, and the Company, its senior management and its independent auditors,
the Board has affirmatively determined that the following four directors
areindependent within the meaning of the applicable NASDAQ listing standards:
Mr. Jan-Paul
Waldin, Mr. W. Thorpe McKenzie, Mr. Donald MacAdam and Dr. Peter Libby. In
making this determination,the Board found that none of these directors had a
material or other disqualifying relationship with the Company.
Board Leadership Structure
Our Board of Directors is currently chaired by John Simard, our Chief
Executive Officer.
Jan-Paul
Waldin has been appointed as the Company's independent lead director. Our
Board of Directors believes that, given the perspective, experience, and
expertise that Mr. Simard brings as thefounder of the Company, he is the most
equipped individual to serve as both CEO and Chairman of the Board and his
service in these capacities is appropriate and in the best interests of our
Board of Directors, our company and our shareholders.
Jan-Paul
Waldin serves on our Board of Directors as lead director, is chairman of the
corporate governance and nominating committee and a member of the audit
committee and Compensation Committee. W. Thorpe McKenzieserves on our Board of
Directors, is chairman of the audit committee and a member of the Compensation
Committee and nominating and corporate governance committee. Donald MacAdam
serves on our Board of Directors, is chairman of the CompensationCommittee and
a member of the audit committee and corporate governance and nominating
committee.
Role of the Board in Risk Oversight
One of the key functions of our Board of Directors is informed oversight of
our risk management process. The Board of Directorsdoes 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 risksinherent 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
financialrisk 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. The Audit
Committee also monitors compliancewith legal and regulatory requirements. Our
Nominating and Corporate Governance Committee monitors the effectiveness of
our corporate governance practices, including whether they are successful in
preventing illegal or improper liability-creatingconduct. Our Compensation
Committee assesses and monitors whether any of our compensation policies and
programs has the potential to encourage excessive risk-taking.
Meetings of the Board of Directors
The Board of Directors met four times during 2023, the Company's last fiscal
year. All directors who served in 2023attended all of the meetings of the
Board and of the committees on which they served.
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Information Regarding Committees of the Board of Directors
The Board has three standing committees: an Audit Committee, a Compensation
Committee and a Nominating and Corporate GovernanceCommittee. The following
table provides membership and meeting information in 2023 for each of the
Board committees:
Name Audit Compensation Nominating and Corporate
Governance
Jan-Paul X X X *
Waldin
W. Thorpe McKenzie X * X X
Donald H. MacAdam X X * X
Peter Libby
Total meetings in 2023 4 1 1
* Committee Chairperson
Below is a description of each committee of the Board of Directors. Each of
the committees has authority to engage legalcounsel or other experts or
consultants, as it deems appropriate to carry out its responsibilities.
Audit Committee
The Audit Committee of our Board of Directors was established by our Board of
Directors in February 2015 in accordance withSection 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to oversee
the Company's corporate accounting and financial reporting processes and
audits of its financial statements. For thispurpose, our Audit Committee
performs several functions. Our Audit Committee evaluates the performance of
and assesses the qualifications of the independent auditors; determines and
approves the engagement of the independent auditors; determineswhether to
retain or terminate the existing independent auditors or to appoint and engage
new independent auditors; reviews and approves the retention of the
independent auditors to perform any proposed permissible
non-audit
services; monitors the rotation of partners of the independent auditors on the
Company's audit engagement team as required by law; reviews and approves or
rejects transactions between theCompany and any related persons; confers with
management and the independent auditors regarding the effectiveness of
internal controls over financial reporting; establishes procedures, as
required under applicable law, for the receipt, retention andtreatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters and the confidential and anonymous submission by
employees of concerns regarding questionable accounting or auditing matters;
andmeets to review the Company's annual audited financial statements and
quarterly financial statements with management and the independent auditor.
Our Audit Committee is currently composed of three directors: Mr. W. Thorpe
McKenzie (Chair),
Mr. Jan-Paul
Waldin and Mr. Donald H. MacAdam. Our Board of Directors has adopted a written
charter of the Audit Committee that is available to shareholders on the
Company's website atwww.xbiotech.com. Our Board of Directors reviews the
NASDAQ listing standards definition of independence for Audit Committee
members on an annual basis and has determined that all members of our Audit
Committee are independent as defined underNASDAQ listing standards, including
the heightened standards applicable to audit committee members.
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Our Board of Directors has determined that W. Thorpe McKenzie qualifies asan
"audit committee financial expert," as defined in applicable SEC rules. Our
Board of Directors has made a qualitative assessment of Mr. McKenzie's level
of knowledge and experience based on a number of factors, including beinga
graduate of the Wharton Graduate division of the University of Pennsylvania,
followed by a career in the finance industry spanning several decades,
including extensive executive experience overseeing the preparation of
financial statements andrelated matters. The Board also has determined that
each Audit Committee member is sufficiently proficient in reading and
understanding the company's financial statements to serve on the Audit
Committee.
Report of the Audit Committee of the Board of Directors*
The Audit Committee has reviewed and discussed with management of the Company
and the independent auditor the audited financialstatements for the fiscal
year ended December 31, 2023. The Audit Committee has reviewed and discussed
with the independent registered public accounting firm the matters required to
be discussed and all communications required to be discussedby the 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 the independent registered public accounting firmrequired by
applicable requirements of the PCAOB regarding the independent accountants'
communications with the Audit Committee concerning independence, and has
discussed with the independent registered public accounting firm the
accountingfirm's independence. Based on the foregoing, the Audit Committee has
recommended to the Board of Directors, and the Board subsequently approved the
recommended, that the audited financial statements be included in the
Company's AnnualReport on Form
10-K
for the fiscal year ended December 31, 2023, for filing with the SEC.
THE AUDIT COMMITTEE
Mr. W. Thorpe McKenzie (Chair)
Mr. Jan-Paul
Waldin
Mr. Donald MacAdam
* This material is not "soliciting material," is not deemed "filed" with the SEC and is
notto be incorporated by reference in any filing of the Company under the Exchange
Act or 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.
Compensation Committee
The Compensation Committee was established by our Board of Directors in
February 2015 and is currently composed of threedirectors: Mr. Donald MacAdam
(Chair), Mr. W. Thorpe McKenzie and
Mr. Jan-Paul
Waldin. The Board of Directors reviews the NASDAQ listing standards definition
of independence for CompensationCommittee members on an annual basis and has
determined that all members of the Company's Compensation Committee are
independent as defined under NASDAQ listing standards, including the
heightened standards applicable to Compensation Committeemembers, and are
"outside directors" for purposes of Section 162(m) of the Internal Revenue
Code of 1986, as amended. The Compensation Committee has adopted a written
charter that is available to shareholders on the Company'swebsite at
www.xbiotech.com.
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Compensation Committee Processes and Procedures
The Compensation Committee meets annually and with greater frequency if
necessary. Our Compensation Committee is responsiblefor the executive
compensation programs for our executive officers and reports to our Board of
Directors on its discussions, decisions and other actions. Our Compensation
Committee reviews and approves corporate goals and objectives relating to
thecompensation of our Chief Executive Officer, evaluates the performance of
our Chief Executive Officer in light of those goals and objectives, and
determines and approves the compensation of our Chief Executive Officer based
on such evaluation. OurCompensation Committee has the sole authority to
determine our Chief Executive Officer's compensation. In addition, our
Compensation Committee, in consultation with our Chief Executive Officer,
reviews and approves all compensation for otherofficers.
The charter of the Compensation Committee grants the Compensation Committee
sole authority and right, at theexpense of the Company, to retain or obtain
the advice of legal counsel, compensation and other consultants, accountants,
experts and advisers of its choice to assist the Committee in connection with
its functions, including any studies orinvestigations, but only after
conducting an independence assessment and taking into consideration all
factors relevant to any adviser's independence from management, including
those specified in Rule 6505(d)(3) of the Nasdaq Rules and thoseset forth in
SEC rules. In particular, the Compensation Committee has the sole authority to
retain compensation consultants to assist in its evaluation of executive and
director compensation, including the authority to approve the consultant'sreason
able fees and other retention terms. During the past fiscal year, the
Compensation Committee determined not to utilize a third party compensation
consultant. Due to the Company's current status as a smaller reporting
company, it does notfeel that the application of a compensation consultant is
an efficient use of funds at the present time.
Under itscharter, the Compensation Committee may form, and delegate authority
to, subcommittees as appropriate. In 2017, the Board determined that for the
sake of administrative convenience, it was desirable to delegate John Simard,
the President, CEO andChairman of the Board (the "Executive"), the authority
to grant certain options pursuant to the terms of the Company's 2015 Equity
Incentive Plan, as amended (the "2015 Plan"), subject to certain limitations
including(i) without the prior written approval of the Board, Executive shall
not in any one calendar year grant options to acquire more than 1,000,000
Shares in the aggregate or more than 100,000 options to any one individual,
provided that optionsgranted pursuant to any such written approval shall not
be counted toward the foregoing thresholds; (ii) without the prior written
approval of the Board, Executive shall not grant options to himself or to
certain other executive officers;(iii) the exercise price for options granted
by Executive shall be the closing price of the Shares on the date of grant and
term of any such options shall not be greater than 10 years; and (iv)
Executive shall make any and all optiongrants pursuant to the authority
delegated by the Board and specify the material terms of such options and
provide that such options will be subject to the terms and conditions of a
stock option agreement to be prepared by the Company promptlyfollowing the
date of grant. The purpose of this delegation of authority is to enhance the
flexibility of option administration within the Company and to facilitate the
timely grant of options to
non-management
employees, particularly new employees, within specified limits approved by the
Compensation Committee.
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The Compensation Committee will make adjustments, if any, to annualcompensation,
bonus and equity awards and establish new performance guidelines at one or
more meetings during 2024. Generally, the Compensation Committee's process
comprises two related elements: the determination of compensation levels and
theestablishment of performance objectives for the current year. For
executives other than the Chief Executive Officer, the Compensation Committee
solicits and considers evaluations and recommendations submitted to the
Committee by the Chief ExecutiveOfficer. In the case of the Chief Executive
Officer, the evaluation of his performance is conducted by the Compensation
Committee, which determines any adjustments to his compensation as well as
awards to be granted.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is currently composed of
three directors:
Mr. Jan-Paul
Waldin (Chair), Mr. W. Thorpe McKenzie and Mr. Donald MacAdam. All members of
the Nominating and Corporate Governance Committee are independent as defined
under NASDAQ listingstandards. The Nominating and Corporate Governance
Committee has adopted a written charter that is available to shareholders on
the Company's website at www.xbiotech.com.
The Nominating and Corporate Governance Committee was established by the Board
of Directors in February 2015 and is responsiblefor identifying, reviewing and
evaluating candidates to serve as directors of the Company (consistent with
criteria approved by the Board), reviewing and evaluating incumbent directors,
recommending to the Board for selection candidates for electionto the Board of
Directors, making recommendations to the Board regarding the membership of the
committees of the Board, assessing the performance of the Board, and
monitoring the Company's adherence to its Code of Business Conduct and Ethics.
The Nominating and Corporate Governance Committee believes that candidates for
director, both individually andcollectively, should provide the integrity,
experience, judgment, commitment (including having sufficient time to devote
to the Company and level of participation), skills, diversity and expertise
appropriate for the Company. In assessing thedirectors, both individually and
collectively, the Nominating and Corporate Governance Committee may consider
the current needs of the Board and the Company to maintain a balance of
knowledge, experience and capability in various areas. However, theNominating
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, the operating
requirements of theCompany and the long-term interests of shareholders. In
conducting this assessment, the Nominating and Corporate Governance Committee
typically considers diversity, age, skills and such other factors as it deems
appropriate, given the current needsof the Board and the Company, to maintain
a balance of knowledge, experience and capability on the Board. In the case of
incumbent directors whose terms of office are set to expire, the Nominating
and Corporate Governance Committee reviews thesedirectors' 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 standards,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
deemsappropriate, a professional search firm. The Nominating and Corporate
Governance Committee will also consider candidates recommended by
shareholders. In order to recommend a candidate for consideration,
shareholders must follow the proceduresdescribed below under the heading
"Advance Notice Provisions."
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The Nominating and Corporate Governance Committee conducts any appropriateand
necessary inquiries into the backgrounds and qualifications of possible
candidates after considering the function and needs of the Board. The
Nominating and Corporate Governance Committee meets to discuss and consider
the candidates'qualifications and then selects a nominee for recommendation to
the Board by majority vote.
Advance Notice Provisions
Our Articles contain provisions known as "Advance Notice Provisions", which
provide that advance notice to theCompany must be made and the procedures set
out in the Articles must be followed for persons to be eligible for election
to the Board of Directors. Nomination of persons for election to the Board of
Directors may only be made at an annual meeting ofshareholders or at a special
meeting of shareholders called for any purpose, which includes the election of
directors.
Among other things, the Advance Notice Provisions fix a deadline by which
holders of record of common shares must submitdirector nominations to us prior
to any annual or special meetings of shareholders and set forth the specific
information that a shareholder must include in the written notice to the
Company for an effective nomination to occur. No person will beeligible for
election as a director of the Company unless nominated in accordance with the
provisions of the Advance Notice Provisions.
In the case of an annual meeting of shareholders, notice to us must be made
not less than 30 or more than 65 days prior to thedate of the annual meeting;
provided, however, that if the annual meeting is to be held on a date that is
less than 50 days after the date on which the first public announcement of the
date of the annual meeting was made, notice may be made notlater than the
close of business on the 10th day following such public announcement. In the
case of a special meeting of shareholders (which is not also an annual
meeting), notice to us must be made not later than the close of business on
the 15thday following the day on which the first public announcement of the
date of the special meeting was made.
The Board ofDirectors may, in its sole discretion, waive any requirement of
the Advance Notice Provisions.
Board Diversity
The company's current Board is stable and effective. The members of our Board
are highly qualified, outstanding individuals. TheCompany's Nominating and
Corporate Governance Committee has a solitary objective: to identify board
members--irrespective of gender or race--that represent the greatest value to
our Company and shareholders. The Company'sNominating and Corporate Governance
Committee strives to assemble a board that has diversity of thought, with each
member offering unique insight and perspective, where individual members share
a common ability to work productively within thecontext of the Board and
management team.
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Board Diversity Matrix
As of May 1, 2024 As of April 28, 2023
Total Number of Directors 5 5
Part I: Gender Identity Female Male Non-Binary Did Not Female Male Non-Binary Did Not
Disclose Disclose
Gender Gender
Directors -- -- -- 5 -- -- -- 5
Part II: Demographic Background
African American or Black -- -- -- -- -- -- -- --
Alaskan Native or Native American -- -- -- -- -- -- -- --
Asian -- -- -- -- -- -- -- --
Hispanic or Latinx -- -- -- -- -- -- -- --
Native Hawaiian or Pacific Islander -- -- -- -- -- --
White -- -- -- -- -- -- -- --
Two or More Races or Ethnicities -- -- -- -- -- -- -- --
LGBTQ+
Did Not Disclose Demographic Background 5 5
Communications With the Board of Directors
The Company's Board has adopted a formal process by which shareholders and
other interested parties may communicate withthe Board or any of its
directors. Shareholders and other interested parties who wish to communicate
with the Board may do so by sending written communications addressed to the
Secretary of XBiotech Inc. at 5217 Winnebago Lane 100 Austin, TX 78744.Each
communication must set forth the name and address of the interested party or
the Company shareholder on whose behalf the communication is sent and the
number of Company shares that are owned beneficially by such shareholder as of
the date ofthe communication. Each communication will be reviewed by the
Company's Secretary to determine whether it is appropriate for presentation to
the Board or relevant directors. Communications determined by the Company's
Secretary to beappropriate for presentation to the Board or any relevant
directors are submitted to the Board or relevant directors on a periodic basis.
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to
all directors, officers and employees. TheCode of Business Conduct and Ethics
is available on the Company's website at www.xbiotech.com under the Corporate
Governance section of our Investor Relations page. If the Company makes any
substantive amendments to the Code of Business Conductand Ethics that applies
to our principal executive officer, principal financial officer, principal
accounting officer, controller or persons performing similar functions, or
grants any waiver from a provision of the Code of Business Conduct andEthics
to any of these specified individuals that is required to be disclosed
pursuant to SEC rules and regulations, the Company will promptly disclose the
nature of the amendment or waiver on its website.
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Employee, Officer and Director Hedging and Pledging
The Company has adopted an Insider Trading Policy that applies to all
directors, officers and employees. The Insider TradingPolicy provides that the
Company's directors, executive officers and their respective family members
and others in their households (1) may not enter into hedging or monetization
transactions or similar arrangements with respect to Companysecurities and (2)
may not hold Company securities in a margin account or pledge Company
securities as collateral for a loan. The Company does not have any practices
or policies regarding the ability of employees other than officers to
purchasefinancial instruments (including prepaid variable forward contracts,
equity swaps, collars, and exchange funds), or otherwise engage in
transactions, that hedge or offset, or are designed to hedge or offset, any
decrease in the market value of theCompany's common stock.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own morethan ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of the Company. Officers, directors andgreater than ten
percent shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the reports filed
electronically with the SEC and writtenrepresentations that no other reports
were required, during the fiscal year ended December 31, 2023, all Section
16(a) filing requirements applicable to its officers, directors and greater
than ten percent beneficial owners were compliedwith.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Whitley Penn LLP as the Company's independent
registered public accounting firm for thefiscal year ending December 31, 2024
and has further directed that management submit the selection of independent
registered public accounting firm for ratification by the shareholders at the
annual meeting. Whitley Penn has audited theCompany's financial statements for
the fiscal year ending December 31, 2023. Representatives of Whitley Penn are
not expected to be present at the annual meeting and will not have an
opportunity to make a statement or to respond toquestions from the
shareholders.
Whitley Penn is the 35th largest firm in the nation based on 2024 rankings in
Accounting Today and oneof the fastest growing firms in the nation. They have
an extensive team of experienced audit, tax, consulting and valuation
professionals. For more than 20 years, Whitley Penn has been named to the
"Best of the Best" listing by INSIDEPublic Accounting, the publication's
report of the top 25 accounting firms in the country. INSIDE Public Accounting
is a national monthly publication that reports on the accounting industry.
Neither the Company's Articles nor other governing documents or law require
shareholder ratification of the selection ofWhitley Penn as the Company's
independent registered public accounting
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firm. However, the Audit Committee is submitting the selection of Whitley Penn
to the shareholders for ratification as a matter of good corporate practice.
If the shareholders fail to ratify theselection, 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 ifthey determine
that such a change would be in the best interests of the Company and its
shareholders.
The affirmative vote of the holdersof a majority of the shares present in
person or represented by proxy and entitled to vote at the annual meeting will
be required to ratify the selection of Whitley Penn. Abstentions and broker
non-votes
willbe counted toward the tabulation of votes on proposals presented to the
shareholders and will have the same effect as negative votes. Because this is
a routine proposal on which brokers can vote shares in the absence of express
instructions from thebeneficial owner, if you do not give instructions to your
bank, brokerage firm or other agent, the bank, brokerage firm or other agent
will nevertheless be entitled to vote your shares of common stock in its
discretion on this routine matter and maygive or authorize the giving of a
proxy to vote the shares of common stock in its discretion on this proposal.
Principal Accountant Fees and Services
The following table represents aggregate fees billed to the Company during the
fiscal years ended December 31, 2023 andDecember 31, 2022, by Whitley Penn,
the Company's principal accountant. All fees described below were
pre-approved
by the Audit Committee.
Fiscal Year Ended
2023 2022
(in thousands)
Audit Fees $ 290 $ 307
(1)
Audit-Related Fees -- --
(2)
Tax Fees -- --
(3)
All Other Fees -- 5
(4)
Total Fees $ 290 $ 312
(1) Audit fees consist of fees billed for professional services by Whitley Penn for audit and quarterly review ofour financial
statements and related services that are normally provided in connection with statutory and regulatory filings or engagements.
(2) Audit-related fees consist of fees billed for assurance and related services that are reasonably related to
theperformance of the audit or review of our consolidated financial statements and are not reported under "Audit Fees."
(3) Tax fees consist of fees billed for tax consultation services for professional
services relating to taxcompliance, tax planning, and tax advice.
(4) All other fees consist of fees billed for publications provided by Whitley Penn.
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In connection with the audit of the 2023 and 2022 financial statements, the
Company enteredinto an engagement agreement with Whitley Penn which sets forth
the terms by which Whitley Penn will perform audit services for the Company.
Such agreements are subject to alternative dispute resolution procedures.
During the fiscal years ended December 31, 2023 and December 31, 2022, none of
the total hours expended on the Company'sfinancial audit by Whitley Penn was
provided by persons other than the full-time permanent employees.
None of Whitley Penn's reportson the Company's financial statements for the
fiscal year ended December 31, 2023 and December 31, 2022 contained an adverse
opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accountingprinciples. During the fiscal year ended
December 31, 2023 and December 31, 2022, there were (i) no disagreements
between the Company and Whitley Penn on any matter of accounting principles or
practices, financial statement disclosure orauditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Whitley Penn, would have
caused Whitley Penn to make reference to the subject matter of the
disagreement in their reports on the Company's consolidatedfinancial
statements for such years, and (ii) no "reportable events" as that term is
defined in Item 304(a)(1)(v) of Regulation
S-K.
Pre-Approval
Policies And Procedures
The Audit Committee's policy is to
pre-approve
the scope of all audit and
non-audit
services rendered by the Company's independent registered public accounting
firm. Audit services and permitted
non-audit
services must be
pre-approved
by the full Audit Committee.
T
HE
B
OARD
OF
D
IRECTORS
R
ECOMMENDS
A
VOTE
FOR
P
ROPOSAL
2
PROPOSAL 3
ADVISORY VOTE ON THE EXECUTIVE COMPENSATION
OF THE COMPANY'S NAMED EXECUTIVE OFFICERS
This proposal provides our shareholders with the opportunity to cast an
advisory vote on the Company's executive compensation program(commonly known as
"say-on-pay")
of our named executive officers as disclosed in this Proxy Statement pursuant
to Item 402 of Regulation
S-K
and in accordance with the SEC's rules. This proposal, which may be referred
to as a
"say-on-pay"
proposal, isrequired by Section 14A of the Exchange Act, which was put in
place by the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010. We must provide this opportunity to our shareholders at least once every
three years.
As described in this proxy statement under the heading "Executive
Compensation," our executive compensation program is designed toenable us to
attract and retain key executives who are critical to the Company's future
success and creation of shareholder value. Our executive compensation program
seeks enhance shareholder value by aligning the financial interests of
ourexecutive officers with those of our shareholders. We have also designed
our compensation program to motivate and reward
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executives whose knowledge, skills and performance are critical to our
success. We believe that both short-term and long-term incentive compensation
opportunities provided to our named executiveofficers are directly aligned
with our performance, and that our compensation program is structured to
ensure that a significant portion of executives' compensation opportunities is
directly related to achievement of financial and operationalgoals and other
factors that impact shareholder value.
We are asking our shareholders to indicate their support for the compensation
ofour named executive officers, as described in this proxy statement. This
proposal, commonly known as a
"say-on-pay"
proposal, gives our shareholders theopportunity to express their views on the
compensation of our named executive officers. This vote is not intended to
address any specific item of compensation, but rather the overall compensation
of our named executive officers and the philosophy,policies and practices
described in this proxy statement. Accordingly, we are asking our shareholders
to vote "FOR" the following resolution at the annual meeting:
"RESOLVED, that the Company's shareholders approve, on an advisory basis, the
compensation paid to the Company's namedexecutive officers, as disclosed
pursuant to the compensation disclosure rules of the Securities and Exchange
Commission, including the compensation tables and narrative discussion
included in the section of the proxy statement entitled ExecutiveCompensation."
While the vote does not bind the Board of Directors to any particular action,
the Board of Directors values the inputof the shareholders, and will take into
account the outcome of this vote in considering future compensation decisions.
T
HE
B
OARD
OF
D
IRECTORS
R
ECOMMENDS
A
VOTE
FOR
P
ROPOSAL
3
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EXECUTIVE OFFICERS
The following table sets forth our named executive officers for the fiscal
year ended December 31, 2023, their ages, andthe positions held by each such
person with the Company:
Name Age Position Held With the Company
John Simard 62 Founder, President, Chief Executive Officer Chairman
Dr. Sushma Shivaswamy, Ph.D. 46 Chief Scientific Officer
Angela Hu 41 Director of Finance
John Simard's biographical information is set forth above under Proposal 1.
Sushma Shivaswamy, Ph.D.
was appointed as the Company's Chief Scientific Officer in November 2017. As
CSO Dr. Shivaswamy overseesall scientific and technical operations with
respect to research and development and Good Manufacturing Practice production
of antibody. Dr. Shivaswamy has been with the Company since 2009 also holding
positions of Director of Research &Development (2011-2015) and Senior
Scientist (2009-2011). Prior to joining XBiotech, Dr. Shivaswamy was a
postdoctoral researcher at the Center for Systems and Synthetic Biology at the
University of Texas at Austin. She has a Ph.D. degree inMolecular Biology from
the Center for Cellular and Molecular Biology, India. Dr.
Angela Hu
joined XBiotech in April 2015,initially serving as the Financial Controller
before transitioning to the position of Director of Finance in February 2023.
Ms. Hu holds a Bachelor degree in finance and has previous experience as a
senior accountant at National Instruments andHoneywell prior to joining
XBiotech.
EXECUTIVE COMPENSATION
For the year ended December 31, 2023, our principal executive officer and our
two other executive officers (the "Named ExecutiveOfficers") were as follows:
. John Simard, Founder, President, Chief Executive Officer & Chairman;
. Sushma Shivaswamy, Ph.D., Chief Scientific Officer; and
. Angela Hu, Director of Finance
Processes and Procedures for Compensation Decisions
Our Compensation Committee has the sole authority to determine our Chief
Executive Officer's compensation and, in its discretion, mayaward cash bonus
payments in addition to the incentive cash payments set forth in the Chief
Executive Officer's employment agreement. In determining the Chief Executive
Officer's compensation, our Compensation Committee has discretion toconsider
any factors it deems important, including but not limited to our Chief
Executive Officer's performance and the performance of the Company. In
addition, our Compensation Committee, in consultation with our Chief Executive
Officer,reviews and approves all compensation for other officers.
In addition, our Compensation Committee, in consultation with our
ChiefExecutive Officer, reviews and approves all compensation for other
officers, including the directors. The Compensation Committee is authorized to
retain the services of one or more executive compensation and benefits
consultants or other outsideexperts or advisors as it sees fit, in connection
with the establishment of our compensation programs and related policies.
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Summary Compensation Table
The following table shows for the fiscal years ended December 31, 2023 and
December 31, 2022, compensation awardedto, paid to, or earned by, the Named
Executive Officers.
Summary Compensation Table for Fiscal Years 2023 and 2022
Name and Principal Position Year Salary ($) Option Bonus($) All Other Total ($)
Awards (2) Compensation($)
($) (3)
(1)
John Simard, President & Chief Executive Officer 2023 1,065,440 -- 4,480,000 11,041 5,556,481
2022 881,440 -- 3,780,000 9,494 4,670,934
Sushma Shivaswamy, Ph.D. Chief Scientific Officer 2023 445,190 270,509 -- 4,800 720,499
2022 376,440 -- -- 4,800 381,240
Angela Hu, Director of Finance 2023 193,333 81,153 -- 4,800 279,286
(1) In accordance with SEC rules, this column reflects the aggregate grant date fair value of the option
awardsgranted during 2023 and 2022, as applicable, computed in accordance with Financial Accounting Standard
Board ASC Topic 718 for stock-based compensation transactions, or ASC 718. Assumptions used in the
calculation of these amounts are included inNote 2 to the Financial Statements in our Annual Report on Form
10-K
for the year ended December 31, 2023. These amounts do not reflect the
actual economic value that will be realized by the NamedExecutive 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.
(2) Amounts shown represent performance bonuses earned for 2023 and 2022. Mr. Simard was granted a cash bonusof
$4,480,000 in 2023 and $3,780,000 in 2022, which was paid in the second quarter of 2023 and 2022, respectively.
(3) Amounts shown represent premiums for health and life insurance as well as short and long-term disabilityinsurance
paid by us on behalf of the Named Executive Officers. All of these benefits are provided to the Named Executive
Officers on the same terms as provided to all of our regular full-time employees in the United States. For more
informationregarding these benefits, see below under "Perquisites, Health, Welfare and Retirement Benefits."
Compensation CommitteeInterlocks and Insider Participation
As indicated above, the Compensation Committee currently consists of Donald
MacAdam (Chair), W.Thorpe McKenzie, and
Jan-Paul
Waldin. No member of the Compensation Committee has ever been an officer or
employee of ours and no member is party to a related party transaction with
us. None of our executiveofficers currently serves, or has served during the
last completed fiscal year, on the Compensation Committee or Board of
Directors of any other entity that has one or more executive officers serving
as a member of our Board of Directors orCompensation Committee.
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Outstanding Equity Awards at Fiscal Year End
The following table shows for the fiscal year ended December 31, 2023, certain
information regarding outstanding equity awards at fiscal
year-end
for the Named Executive Officers.
Outstanding Equity Awards at December 31, 2023
Option Awards
Name Grant Date Number of Number of Option Option
Securities Securities Exercise Expiration Date
Underlying Underlying Price ($)
Unexercised Unexercised
Options (#) Options (#)
Exercisable Unexercisable
John Simard 03/31/2014 (1) 500,000 $ 10.00 3/31/2024
03/31/2016 (2) 48,125 $ 9.45 3/30/2026
06/19/2017 (3) 61,516 $ 4.24 6/19/2027
06/19/2018 (4) 110,740 $ 4.44 6/18/2028
06/27/2019 (5) 150,000 $ 7.45 6/26/2029
12/06/2019 (6) 500,000 $ 11.12 12/5/2029
Sushma Shivaswamy 11/05/2014 (7) 30,000 $ 15.00 11/05/2024
6/19/2017 (8) 50,000 $ 4.24 06/19/2027
11/20/2017 (9) 150,000 $ 4.13 11/19/2027
01/04/2019 (10) 15,000 $ 5.26 01/03/2029
11/06/2019 (11) 100,000 $ 10.36 11/05/2029
11/19/2021 (12) 100,000 $ 12.67 11/18/2031
02/10/2023 (13) 25,000 75,000 $ 3.84 02/09/2033
Angela Hu 04/01/2015 (14) 4,500 $ 19.00 04/01/2025
01/04/2019 (15) 5,000 $ 5.26 01/03/2029
11/06/2019 (16) 10,000 $ 10.36 11/05/2029
11/19/2021 (17) 10,000 $ 12.64 11/18/2031
02/10/2023 (18) 7,500 22,500 $ 3.84 02/09/2033
(1) Fully vested as of July 31, 2016. Expired in accordance to its terms as of March 31, 2024.
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(2) Fully vested as of March 31, 2019.
(3) Fully vested as of June 19, 2020.
(4) Fully vested as of June 19, 2021.
(5) Fully vested as of June 27, 2022.
(6) Fully vested as of December 6, 2020.
(7) Fully vested as of November 5, 2016.
(8) Fully vested as of June 19, 2020.
(9) Fully vested as of November 20, 2020.
(10) Fully vested as of January 4, 2021.
(11) Fully vested as of November 6, 2022.
(12) Fully vested as of November 19, 2023.
(13) The options vest at the rate of
one-fourth
of the total number ofshares subject to the option over two years with the initial vesting event on August 10, 2023.
(14) Fully vested as of April 1, 2019.
(15) Fully vested as of January 4, 2021.
(16) Fully vested as of November 06, 2022.
(17) Fully vested as of November 19, 2023.
(18) The options vest at the rate of
one-fourth
of the total number ofshares subject to the option over two years with the initial vesting event on August 10, 2023.
Employment Agreements with NamedExecutive Officers
All of our Named Executive Officers have or had employment agreements and/or
offer letters with us that provide thattheir employment is at will and may be
terminated at any time by the executive or by us with or without cause and
without notice. The employment agreements provide for certain base salary,
target bonus and severance payments to our Named ExecutiveOfficers as follows:
Employment Agreement with John Simard.
We entered into an employment agreement and change of control agreementwith
John Simard, our Chief Executive Officer and President on March 22, 2005. The
employment agreement is for an indefinite term. Mr. Simard's current annual
base salary is $960,000 per year, and he is eligible for an annualincentive
cash payment of up to 35% of his base salary, subject to the achievement of
short-term and long-term business performance objectives as well as personal
performance objectives, as established from time to time by the board or
CompensationCommittee. The employment agreement contains customary
non-competition
and
non-solicitation
provisions which apply for a period of six months afterMr. Simard's employment
is terminated for any reason. In addition, Mr. Simard agrees that all
intellectual property developed by him during the term of his employment
agreement shall be our property. If Mr. Simard is terminatedwithout cause, if
he resigns for good reason or if there is a change in control, he is entitled
to certain severance benefits. Mr. Simard may voluntarily resign for any
reason by providing us with three months prior notice. We may elect towaive
all or a portion of such notice by paying to Mr. Simard his base salary that
he would have earned if he had remained employed by us for the full duration
of such notice period. If Mr. Simard terminates his employment within 12
monthsafter a "change of control" for "good reason" or if he is terminated
without cause, we will make a lump sum payment to him equal to twelve month of
his base salary, plus other sum owed to him for arrears of salary, vacation
payand, if awarded, his performance bonus, subject to his prior resignation as
a director. Additionally, if Mr. Simard terminates his
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employment within 12 months after a change of control or for good reason, all
unvested stock options held by him will immediately vest on such termination
and will survive and be exercisable byMr. Simard, along with his vested
options, in accordance with the terms of the option agreements. To the extent
permitted by applicable law, we will provide health, medical, dental and other
insurance benefits to Mr. Simard for a period ofone year after his termination
date.
Offer Letters with Other Named Executive Officers
. There are no employment agreements forDr. Shivaswamy or Ms. Hu. We entered
into an offer letter with Dr. Shivaswamy upon her hiring, which originally
provided that she was paid an annual base salary of $70,000 per year as well
as granted stock options.Dr. Shivaswamy's current base salary is $450,000 and
from time to time she receives option grants as approved by the Board of
Directors or Compensation Committee. We entered into a written employment
arrangement with Ms. Hu, pursuantto which she received a base salary of
USD$200,000 and from time to time she receives option grants as approved by
the Board of Directors or Compensation Committee.
None of the Named Executive Officers' employment agreements or offer letters
provide for the gross up of any excise taxes imposed bySection 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"). If any of the payments
under the employment agreements or offer letters would constitute a "parachute
payment" within the meaning ofSection 280G of the Code, subject to the excise
tax imposed by Section 4999 of the Code, the employment agreements and offer
letters provide for a best-after tax analysis with respect to such payments,
under which the executive willreceive whichever of the following two
alternative forms of payment would result in the executive officer's receipt,
on an
after-tax
basis, of the greater amount of the transaction payment notwithstandingthat
all or some portion of the transaction payment may be subject to the excise
tax: (i) payment in full of the entire amount of the transaction payment, or
(ii) payment of only a part of the transaction payment so that the
executivereceives the largest payment possible without the imposition of the
excise tax.
EQUITY COMPENSATION PLANS ANDOTHER BENEFITS PLANS
2005 Incentive Stock Option Plan.
Our Board of Directors adopted and our shareholders approved the 2005 Plan on
November 11, 2005 for eligible employees, directors andconsultants. Our Board
of Directors administers the 2005 Plan including, without limitation, the
selection of recipients of stock options under the 2005 Plan, the grant of
stock options, the determination of the terms and conditions of any
suchoptions, the interpretation of the 2005 Plan and any other action they
deem appropriate in connection with the administration of the 2005 Plan. The
exercise price of the incentive stock options must equal at least 100% of the
fair market value ofour common stock on the date of grant, as determined by
the Board of Directors, in its sole discretion, provided that such price may
not be less than the lowest price permitted under the applicable rules and
regulations of all regulatory authoritiesto which XBiotech is subject,
including the stock exchange on which XBiotech's shares are listed. The term
of the options is at the discretion of the Board of Directors, but may not
exceed ten years from the grant date. The options expire onthe earlier of the
expiration date or the date three months following the day on which the
participant ceases to be a director, officer or employee of, or consultant to,
XBiotech, or in the event of the termination of the participant with cause,
thedate of such termination, and in all cases, is subject to extension at the
discretion of the Board of Directors. All options are nontransferable and may
be exercised only by the participant, or in the event of the death of the
participant, a legalrepresentative
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until the earlier of the options' expiry date of the first anniversary of the
participants' death or such other date as may be specified by the Board of
Directors. Pursuant to the termsof the 2005 Plan, the 2005 Plan automatically
terminated on the tenth anniversary of its effective date, namely, November
11, 2015. Following this expiry, no additional awards have been or will be
granted under the 2005 Plan. However, all stockoptions granted under the 2005
Plan prior to the initial public offering continue to be governed by the terms
of the 2005 Plan.
2015 EquityIncentive Plan.
The 2015 Plan was adopted by the Board of Directors on April 1, 2015, and
approved by the Company'sshareholders on March 13, 2015. The 2015 Plan is not
subject to the provisions of the Employee Retirement Income Security Act of
1974 because it is not an "employee benefit plan" as defined in that Act. The
2015 Plan is not a pension,profit-sharing or stock bonus plan within the
meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"). The purpose of the 2015 Plan is to promote the interests of the
Company by (i) providingdirectors, officers, employees and consultants of the
Company or any of its subsidiaries or other persons as the Board may approve
("Eligible Persons") with greater incentive to further develop and promote the
business and financialsuccess of the Company; (ii) aligning the interests of
participants with those of Company shareholders and (iii) assisting the
Company in attracting, retaining and motivating its directors, officers and
employees. The 2015 Plan becameeffective March 13, 2015 and will continue in
effect for a term of ten years from the date adopted by the Board, unless
terminated earlier by the Board. Upon adoption, the 2015 Plan initially had
1,000,000 common shares of the Company availablefor issuance under the 2015
Plan. On May 13, 2016, the Board adopted an amendment to the 2015 Plan that
increased the number of shares reserved for issuance thereunder to 4,000,000,
which amendment was approved by the shareholders onJune 20, 2016. On December
18, 2019, the Board of Directors adopted a second amendment to the 2015 Plan
to increase the number of common shares that may be awarded under the plan by
an additional 2,500,000 shares, which amendment wasapproved by the
shareholders on June 26, 2020. On April 27, 2020, the Board of Directors
adopted a third amendment to the 2015 Plan to increase the number of common
shares that may be awarded under the plan by an additional 1,500,000shares,
which amendment was approved by the shareholders on June 26, 2020. If any
award (or portion thereof) expires or terminates without having been exercised
in full or is forfeited to or repurchased by the Company, the number of
CommonShares subject to such award will again be available for issuance under
the 2015 Plan. Common Shares used to pay the exercise price of an award or to
satisfy the tax withholding obligations related to an award will become
available for future grantunder the 2015 Plan. To the extent an award under
the 2015 Plan is paid out in cash rather than Common Shares, such cash payment
will not result in a reduction in the number of Common Shares available for
issuance under the 2015 Plan.
Adjustments.
In the event that any dividend or other distribution (whether in the form of
cash, Common Shares, other securities, orother property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up,
spin-off,
combination, repurchase, or exchange ofCommon Shares or other securities of
the Company, or other change in the corporate structure of the Company
affecting the Common Shares occurs, the Board, in order to prevent diminution
or enlargement of the benefits or potential benefits intendedto be made
available under the 2015 Plan, will adjust the number and class of Common
Shares that may be delivered under the 2015 Plan and/or the number, class, and
price of Common Shares covered by each outstanding award.
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Administration.
The 2015 Plan is administered by the Board, which pursuant to theterms of such
Plan has delegated certain of its administrative authority and functions to
the Company's Compensation Committee. The Board has also delegated the
authority to grant options (subject to certain limitations) to the
Company'schief executive officer, who is deemed to constitute a committee
under the terms of the 2015 Plan. The Board has retained the authority to
concurrently administer the 2015 Plan with any committee and may, at any time,
reassume some or all of thepowers previously delegated. The Board of Directors
has the authority to determine all questions arising out of the 2015 Plan and
any award granted pursuant to the 2015 Plan, which interpretations and
determinations will be conclusive and binding onthe Company and all other
affected persons.
To the extent that the Board determines it to be desirable to qualify awards
grantedhereunder as "performance-based compensation" within the meaning of
Section 162(m) of the Code, the 2015 Plan will be administered by a Committee
of two or more "outside directors" within the meaning of Section 162(m)of the
Code.
Recoupment.
All awards granted under the 2015 Plan shall be subject to recoupment in
accordance with any clawbackpolicy that the Company is required to adopt
pursuant to the listing standards of any stock exchange on which the Company's
securities are listed or as is otherwise required by other applicable law. In
addition, an Award Agreement may containsuch other clawback, recovery or
recoupment provisions as the Board determines necessary or appropriate,
including but not limited to a reacquisition right in respect of previously
acquired Common Shares.
Limitations on Transfer.
Unless the Board expressly provides otherwise in the Award Agreement, an award
may not be sold, pledged,assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or distribution and
may be exercised, during the lifetime of the participant, only by the
participant.
Merger or Change in Control
. In the event of a merger or change of control, as defined in the 2015 Plan,
an outstanding award may, atthe determination of the Board (i) be assumed or
substantially equivalent award substituted by the acquiring or succeeding
corporation; (ii) be terminated upon or immediately prior to the merger or
change of control (with or withoutpayment or receipt of any consideration);
(iii) vest and become exercisable, realizable or payable, or applicable
restrictions lapse prior to or upon consummation of the merger or change of
control; or (iv) any combination of the foregoing. Ifa successor corporation
does not assume or provide a substitute for an outstanding award, such award
shall fully vest and the participant shall have the right to exercise all of
his or her outstanding Options and SARs and all restrictions onRestricted
Share Awards and RSU Awards will lapse, and, with respect to awards subject to
performance-based vesting, all performance goals or other vesting criteria
will be deemed achieved at 100% of target levels and all other terms and
conditionsmet.
Suspension, Termination or Amendment.
Subject to any limitations imposed by the 2015 Plan, the Board has the right
at anytime and from time to time to suspend, amend or terminate the 2015 Plan
in any manner without consent or approval from participants or shareholders.
No such suspension, amendment or termination shall materially prejudice the
rights of anyparticipant under any outstanding award without the participant's
consent. The full powers of the Board as provided for in the 2015 Plan will
survive the termination of the 2015 Plan until all awards have been exercised
or settled in full orhave otherwise expired.
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Stock Options.
Options under the 2015 Plan can take the form of both incentivestock options
("ISOs"), under which favorable tax treatment will be afforded the holder if
certain conditions are met, and options not intended to qualify as ISOs
("NQSOs"). The exercise price under both ISOs and NQSOs shall beat least 100%
(or 110% in the case of an ISO granted to a participant who owns 10% or more
of the total voting power of all classes of the Company's shares) of the fair
market value of the Common Share on the date of grant. An option does
notconvey any rights of a shareholder to the participant until the underlying
shares have been issued. Only Eligible Persons who are employees of the
Company or its parent or subsidiaries may be granted ISOs.
The Board may impose such limitations or conditions on the exercise or vesting
of any option as it deems appropriate. Each Award Agreementwill provide that
the Option granted thereunder may be exercised by notice signed by the
participant and accompanied by full payment for the Common Shares being
purchased or by other means, including without limitation electronic means via
on-line
arrangements, as the Board may from time to time approve and allow. Acceptable
form of consideration for payment of the exercise price may include: (i) cash
or check (ii) tendering to the CompanyCommon Shares already owned by the
participant, and registered in his or her name, having a fair market value
equal to the option price, (iii) a broker-assisted cashless exercise
arrangement; (iv) net exercise; (v) such otherconsideration and method of
payment permissible under applicable law; or (vi) by any combination of any of
the foregoing payment methods.
Except as otherwise specified in the Award Agreement, (i) an option will
remain exercisable for 90 days after the date the participantceases to be an
Eligible Person due to his or her termination without cause or resignation (or
180 days in the case of the participant's retirement); (ii) if a participant
ceases to be an Eligible Person due a termination of employment orservice on
account of disability, the option may be exercised by the participant or a
representative within 365 days after such termination; (iii) in the event of
death of the participant while an Eligible Person or within 90 days after
ceasingto be an Eligible Person, the option shall be exercisable within 365
days after the date of the participant's death; and (iv) an option shall
immediately terminate and cease to be exercisable upon a participant's
termination forcause. However, in no event may an option be exercised more
than ten years (five years in the case of a participant who owns Common Shares
possessing more than 10% of the total combined voting power of class of shares
of the Company) after the grantdate or after the expiration of the option.
Stock Appreciation Rights.
Awards under the 2015 Plan may also be in the formof stock appreciation rights
("SARs"), which are generally intended to give a participant the right to
receive the difference between the fair market value per Common Share on the
date of exercise over the exercise price, subject to theterms, conditions and
vesting requirements imposed by the Board and set forth in the Award Agreement
evidencing the SAR award. The exercise under each SAR will be determined by
the Board by reference to the fair market price(s) of the Common Shareson the
primary Stock Exchange for which most trading of the Common Shares occurs,
generally by reference to the closing market price of the Common Shares,
provided that such price may not be less than 100% of the Fair Market Value
Price per CommonShare on the date of grant. To exercise a SAR, the participant
must provide written notice of exercise to the Company in compliance with the
provisions of the Award Agreement. No SAR shall be exercisable after the
expiration of ten years from thedate of its grant or such shorter period
specified in the Award Agreement. The appreciation distribution in respect of
a SAR shall be paid in Common Shares, in cash, in any combination of the two
or in any other form of consideration, as determinedby the Board and set forth
in the Award Agreement.
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Restricted Share Awards.
The Board may grant Common Shares which are subjectto restrictions on
transferability as established by the Board and set forth in the Award
Agreement evidencing such Restricted Share Award. A Restricted Share Award may
be awarded in consideration for (i) cash, check, bank draft or money
orderpayable to the Company; (ii) past services actually rendered to the
Company or an Affiliate; or (iii) any other form of legal consideration that
may be acceptable to the Board, in its sole discretion, and permissible under
applicable law.Common Shares subject to a Restricted Share Award may be
subject to forfeiture to or repurchase by the Company in accordance with a
vesting schedule or other restrictions to be determined by the Board as
specified in the Award Agreement. The Board,in its discretion, may accelerate
the time at which any vesting conditions or other restrictions will lapse or
be removed. Except as otherwise provided in the Award Agreement, a participant
holding a Restricted Share Award may exercise full votingrights and be
entitled to receive all dividends and distributions paid with respect to such
Common Shares prior to the vesting of the award. If any such dividends or
distributions are paid in Common Shares, the Common Shares will be subject to
thesame restrictions on transferability and forfeitability as the Common
Shares subject to the Restricted Share Award with respect to which they were
paid. Except as otherwise provided in the 2015 Plan, Common Shares subject to
the Restricted ShareAward will be held in escrow and released after such
Common Shares vest or the restrictions lapse or at such other time as
determined by the Board.
Restricted Share Unit Awards
.
Awards under the 2015 Plan may be in the form of a Restricted Share Unit (RSU)
Award, whichrepresent the right to receive Common Shares (or its cash
equivalent or combination thereof) at a designated time in the future, subject
to participant's satisfaction of the restrictions and conditions to vesting
established by the Board andset forth in the Award Agreement evidencing the
RSU Award. At the time of grant of a RSU Award, the Board will determine the
consideration, if any, to be paid by the participant upon delivery of each
Common Share subject to the RSU Award. Theconsideration to be paid (if any) by
the participant for each Common Share subject to a Restricted Share Unit Award
may be paid in any form of legal consideration that may be acceptable to the
Board of Directors in its sole discretion andpermissible under applicable law.
A participant may be credited with dividend equivalents, which at the
discretion of the Board, may be converted into additional common shares
covered by the RSU Award. Since RSUs are not actual ownership interestsin the
underlying Common Shares, a participant holding an RSU Award is not entitled
to voting, dividend or other shareholder rights unless or until the RSUs vest
and the Common Shares thereunder are transferred to the participant. Except
asotherwise provided in the Award Agreement, the RSU Award (or vested portion
thereof) shall be settled upon the participant's satisfaction of the
applicable vesting criteria.
Performance Share Awards
.
The Board shall determine the terms and conditions applicable to a Performance
Share Award, includingthe performance period, the performance objectives or
other vesting provisions (including, without limitation, continued status as
an Eligible Person). Performance objectives may be based upon the achievement
of Company-wide, divisional, businessunit or individual goals. After the
applicable performance period has ended, a participant will be entitled to
receive a payout of the number of Common Shares subject to the Performance
Share Award earned over the performance period, to bedetermined as a function
of the extent to which the corresponding performance objectives or other
vesting provisions have been achieved. The Board, in its sole discretion, may
reduce or waive any performance objectives or other vesting provisionsfor such
Common Shares subject to the Performance Share Award. A vested Performance
Share Award may be settled in Common Shares, its cash equivalent, or in any
combination thereof, as determined by the Board and contained in the Award
Agreement.
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401(k) Plan
All of our full-time employees in the United States, including our Named
Executive Officers, are eligible to participate in our 401(k) plan,which is a
retirement savings defined contribution plan established in accordance with
Section 401(a) of the Code. Pursuant to our 401(k) plan, employees may elect
to defer their eligible compensation into the plan on a
pre-tax
basis, up to the statutorily prescribed annual limit of $22,500 in 2023
(additional salary deferrals not to exceed $7,500 are available to those
employees 50 years of age or older) and to have the amount ofthis reduction
contributed to our 401(k) plan. In general, eligible compensation for purposes
of the 401(k) plan includes an employee's wages, salaries, fees for
professional services and other amounts received for personal services
actuallyrendered in the course of employment with us to the extent the amounts
are includible in gross income, and subject to certain adjustments and
exclusions required under the Code. The 401(k) plan currently does not offer
the ability to invest in oursecurities.
Potential Payments Upon Termination or Change in Control
Pursuant to his employment agreement, Mr. Simard is eligible to receive
severance and change in control benefits under the terms of hisemployment
agreement described above under "--Employment Agreements with Named Executive
Officers." Additionally, stock options granted to our Named Executive Officers
are subject to the change in control provisions set forth in the2005 Plan and
the 2015 Plan, as applicable, and as further described above under "--Equity
Compensation Plans and Other Benefit Plans."
Compensation Committee Report*
TheCompensation Committee has reviewed and discussed the section titled
"Executive Compensation" with management. Based on such review and discussion,
the Compensation Committee has recommended to the Board of Directors that the
sectiontitled "Executive Compensation" be included in this proxy statement.
Respectfully submitted by the members of the CompensationCommittee of the
Board of Directors:
Donald MacAdam (Chair)
W. Thorpe McKenzie
Jan-Paul
Waldin
* This material is not "soliciting material," is not deemed "filed" with the SEC and is
notto be incorporated by reference in any filing of the Company under the Exchange
Act or 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.
Equity Compensation Plan Information
The following table provides information as of December 31, 2023, with respect
to shares of our common stock that may be issued under ourexisting equity
compensation plans:
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Plan Category (a) (b) (c)
Number of Weighted-average Number of securities
securities exercise remaining
to be price of available for
issued upon outstanding future issuance
exercise of options, under equity
outstanding warrants compensation
options, and rights plans
warrants (excludingsecurities
and rights reflected in
column (a))
Equity compensation plans
approved by shareholders:
2005 Incentive 821,333 (1) $ 11.93 -- (2)
Stock Option Plan
2015 Equity 4,218,185 (1) $ 8.98 2,120,801
Incentive Plan
Equity compensation plans not
approved by shareholders:
None
(1) All shares issuable upon exercise of options.
(2) The 2005 Incentive Stock Option Plan expired in November 2015.
CEO PAY RATIO PERFORMANCE
Item 402(u) of the SEC's Regulation
S-K
requires disclosure of the ratio of the annual totalcompensation of the
Company's CEO to the Company's median employee's annual total compensation.
The ratio disclosed below is a reasonable estimate calculated in a manner
consistent with Item 402(u).
Methodology and Determined Ratio
The payratio disclosure rule permits companies to identify the median employee
only once every three years, provided that there has not been a change in
employee population or employee compensation arrangements that would
significantly change the pay ratiodisclosure. However, the total compensation
amounts for both the median employee and the CEO to calculate the CEO pay
ratio are required to be updated and disclosed on an annual basis.
In 2023, we determined the median employee by analyzing base salary and wages
(including overtime, stock option, etc.) for all activeemployees (annualized
based on full-time or part-time hourly or salaried status for 2020 if employed
for less than the full year) in and outside the United States as of December
31, 2023. We calculated the median employee's totalcompensation for 2023 in
accordance with the rules applicable to disclosure of compensation in the
summary compensation table. The total compensation of the median employee
based on this methodology and criteria for 2023 was $100,548.
Mr. Simard's total compensation for 2023, as reported in the Summary
Compensation Table, was $5,556,481. Therefore, the annual CEOtotal
compensation was approximately 55 times that of the median annual total
compensation of all other employees in 2023.
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PAY VERSUS PERFORMANCE
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act and Item 402(v) of Regulation
S-K,
we are providing the following information about the relationship between
executive compensation actually paid and certain financial performance of our
company.
Year Summary Compensation Average Average Value of Net Income
Compensation Actually Paid to Summary Compensation Initial Fixed (Loss)
Table Total for PEO Compensation Actually Paid to $100 (millions)
Principal Table Total for Non-PEO Investment (5)
Executive Non-PEO NEOs Based On
Officer Named (3) Total
("PEO") Executive Shareholder
(1) Officers Return
("NEOs") ("TSR")
(2) (4)
(a) (b) (c) (d) (e) (f) (g)
2023 5,556,481 5,556,481 499,893 324,062 13.96 (24.56 )
2022 4,670,934 4,670,934 356,748 356,748 (68.64 ) (32.90 )
2021 7,785,554 7,785,554 1,119,996 529,317 (12.91 ) (17.41 )
(1) The dollar amounts reported in column (b) are the amounts of total
compensation reported forMr. Simard (our Chief Executive Officer) for each
corresponding year in the "Total" column of the Summary Compensation
Table. Refer to "Executive Compensation--Summary Compensation Table."
(2) The dollar amounts reported in column (d) represent the average of the amounts reported for ourcompany's named executive
officers as a group (excluding Mr. Simard) in the "Total" column of the Summary Compensation Table in each applicable year. The
names of each of the named executive officers (excluding Mr. Simard)included for purposes of calculating the average amounts
in each applicable year are as follows: for 2023 Dr. Shivaswamy and Ms. Hu and for 2022, Dr. Shivaswamy and Ms. Queena Han.
(3) The dollar amounts reported in column (e) represent the average amount of "compensation actuallypaid" to the named
executive officers as a group (excluding Mr. Simard), as computed in accordance with Item 402(v) of Regulation
S-K.
The dollar amounts do not reflect the actual average amount ofcompensation earned by or paid to the named executive officers
as a group (excluding Mr. Simard) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation
S-K,
thefollowing adjustments were made to average total compensation for the named executive officers
as a group (excluding Mr. Simard) for each year to determine the compensation actually paid:
Year Average Reported Average Reported Average Compensation
Summary Value of Equity Actually Paid to Non-
Compensation Table Awards ($) PEO NEOs ($)
Total for
Non-PEO
NEOs ($)
2023 499,893 (175,831 ) 324,062
2022 356,748 -- 356,748
2021 1,119,996 (590,679 ) 529,317
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(4) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends
for the measurementperiod, assuming dividend reinvestment, and the difference
between our company's share price at the end and the beginning of the measurement
period by our company's share price at the beginning of the measurement period.
(5) The dollar amounts reported represent the amount of net income (loss) reflected
in our consolidated auditedfinancial statements for the applicable year.
Analysis of the Information Presented in the Pay Versus Performance Table
We generally seek to incentivize long-term performance, and therefore do not
specifically align our performance measures with"compensation actually paid"
(as computed in accordance with Item 402(v) of Regulation
S-K)
for a particular year. In accordance with Item 402(v) of Regulation
S-K,
we are providing the following descriptions of the relationships between
information presented in the Pay Versus Performance table.
Compensation Actually Paid and Net Income (Loss)
Our business model includes discovery and development of drug candidates for
potential sale prior to marketing authorization. Revenues are thusperiodic
(However, during the current reporting there was ongoing revenue associated
with Janssen agreement related to our sale of bermekimab in 2019.). Our
company has historically looked to value creation of is pipeline of assets
rather than tonet income (loss) as a performance measure for our executive
compensation program. In 2023 and 2022, our net loss increased due to
declining revenues from the winding down of manufacturing commitments with the
Janssen agreement. Compensation paidfor both our principal executive officer
and
non-PEO
named executive officers increased between 2023 and 2022.
Compensation Actually Paid and Cumulative TSR
The compensation actually paid to Mr. Simard and the average amount of
compensation actually paid to our named executive officers as agroup
(excluding Mr. Simard) during the periods presented are related to performance
measures with respect to the potential transactional value and market
potential with our pipeline of drug candidates. To align executive
compensation withperformance, we employ several measures, but they are
generally not financial performance measures, such as TSR. For compensation we
consider both stock options and cash awards as an essential part of our
executive incentive andretention program. Stock options only generate value if
the market price of our common stock increases and the executive officer
remains employed with us during the vesting period and align our executive
officers' interests with those ofour shareholders. Cash bonus provides strong
incentive and retention value and is generally less costly to the Company in
the long term than stock based compensation.
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DIRECTOR COMPENSATION
We compensate
non-employee
members of the Board of Directors through both cash fees and annual
equitygrants under our 2015 Plan, which grants are made at the fair market
value of our common stock at the time of grant. Directors who are also
employees do not receive cash or equity compensation in addition to
compensation they receive for theirservice as our employees. Both
non-employee
and employee members of the Board of Directors are reimbursed as necessary for
travel, lodging and other reasonable expenses incurred while attending Board
ofDirectors or committee meetings.
The following table shows for the fiscal year ended December 31, 2023 certain
information withrespect to the compensation of all
non-employee
directors of the Company. Because John Simard serves as Chief Executive
Officer of XBiotech Inc., he does not receive compensation for his services as
Chairmanof the Board.
Director Compensation for Fiscal Year 2023
Name Fees Earned or Option Awards All Other Compensation Total ($)
Paid in Cash ($) ($)(1)(2)(3) ($)
W. Thorpe McKenzie 87,000 103,938 -- 190,938
Jan-Paul 93,000 103,938 -- 196,938
Waldin
Peter Libby 60,000 103,938 -- 163,938
Donald H. MacAdam 84,000 103,938 -- 187,938
(1) Amounts listed represent the aggregate grant date fair value amount computed
as of the grant date of eachoption awarded during 2023 in accordance
with ASC 718. Assumptions used in the calculation of these amounts are
included in Note 2 to the Financial Statements in our Annual Report on Form
10-K
for the yearended December 31, 2023. As required by SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. Our directors will only realize compensation to the extent
the trading price of ourcommon stock is greater than the exercise price of such stock options. As required by SEC
rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.
(2) Pursuant to the terms of their Board Member Agreements or other agreements with the Company. McKenzie, MacAdam,Waldin, and
Libby were each granted 25,000 nonstatutory stock options under the Company's 2015 Equity Incentive Plan, which options
were granted at the closing sales price per share of the Company's Common Stock on the date of issuance.All such options
vest in two equal portions at six months and one year from the Grant Date and expire ten years from the Grant Date.
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(3) The aggregate number of outstanding options held by McKenzie, MacAdam, Waldin, and
Libby as ofDecember 31, 2023 was 267,500, 140,000, 150,000 and 87,500, respectively.
Transactions with Related Parties
Policies and Procedures for Related Party Transactions
. As set forth in our audit committee charter, our audit committee is
responsiblefor reviewing and approving, in accordance with the Company's
Related Party Transaction Policy, any proposed transaction between the Company
and any related party as defined by applicable law, the SEC rules and the
Nasdaq Rules, which consistof all transactions and series of similar
transactions to which we were a party or will be a party and in which any of
our directors, executive officers and holders of more than 5% of our voting
securities and their respective affiliates has adirect or indirect material
interest. As used in this section, the terms "related person" and
"transaction" have the meanings set forth in Item 404(a) of Regulation
S-K
under the SecuritiesAct. In the course of its review and approval of
transactions with related persons, the audit committee considers:
. the nature of the related person's interest in the transaction;
. the material terms of the transaction, including the amount involved and the type of the transaction;
. the importance of the transaction to the related person and to XBiotech;
. whether the transaction would impair the judgment of a director or executive
officer to act in our best interestand the best interest of our shareholders; and
. any other matters the audit committee deems appropriate.
Any member of the audit committee who is a related person with respect to a
transaction under review will not be able to participate in thediscussions or
vote on the approval or ratification of the transaction, other than to provide
all material information regarding the transaction, including information
regarding the extent of the member's interest in the transaction, to theaudit
committee. However, such a director may be counted in determining the presence
of a quorum at a meeting of the committee that considers the transaction. Any
material changes to the terms of, or any renewal of, any of these transactions
willalso require the same approval. If a related party transaction will be
ongoing, the audit committee may establish guidelines or other parameters or
conditions relating to our participation in the transaction. The audit
committee may from time totime
pre-approve
types or categories of transactions by related persons but we have no such
pre-approved
types or categories of transactions at this time.
Related Transactions.
During the last two completed fiscal years, we have not been a party to any
transaction or series of transactionsin which the amount involved exceeds
$120,000, in which any of our directors, executive officers, or holders of
more than 5% of our shares, or an affiliate or immediate family member
thereof, had or will have a direct or indirect material interest,other than
compensation arrangements which are described under the sections of this proxy
captioned "Director Compensation" and "Executive Compensation" and the
previously disclosed Convertible Loan Agreement (the"Loan") dated January 3,
2024 between the Company and Mr. Simard, our Chief Executive Officer and
chairman of the Board of Directors. The Loan provides $10 million in funding
for the construction of a new,
state-of-the-art
research and development facility at 5217 Winnebago Lane in Austin, Texas. The
Loan is secured by the real estate andcash holdings of the Company, with
interest to accrue at a simple rate equal to eight percent per year and
interest-only payments to be made at
six-month
intervals after the
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Loan is funded. The largest amount of principal outstanding under the Loan was
$10 million on January 4, 2024. The current amount of principal outstanding,
as of April 24, 2024, is$10 million. We have paid approximately $0 in
principal and $0 in interest under the Loan. At Mr. Simard's election, the
balance may be converted to XBiotech stock at any time the Loan balance is
outstanding at a fixed conversionprice equal to the average Nasdaq Official
Closing Price of the common stock (as reflected on Nasdaq.com) for the five
trading days immediately preceding the signing of this Loan, which is $4.048
per share. The conversion feature is subject to a caplimiting the number of
shares that could be converted under the Loan based on Mr. Simard's total
stock ownership in the Company at the time of conversion. The Loan also allows
Mr. Simard to obtain immediate cash repayment of the Loanbalance at his
election one year after the Loan is funded or upon certain other conditions
set forth in the Loan.
Related PersonTransaction Policy.
We adopted a formal, written policy, which became effective as of February
2015, that our executive officers, directors (including director nominees),
holders of more than 5% of any class of our voting securities, and anymember
of the immediate family of or any entities affiliated with any of the
foregoing persons, are not permitted to enter into a related party transaction
with us without the prior approval or, in the case of pending or ongoing
related partytransactions, ratification of our audit committee. For purposes
of our policy, a related party transaction is a transaction, arrangement or
relationship where we were, are or will be involved and in which a related
party had, has or will have adirect or indirect material interest, other than
transactions available to all of our employees.
Indemnification Agreements.
Wehave entered into indemnification agreements with our directors in addition
to the indemnification provided for under the British Columbia Business
Corporations Act (the "BCBCA") and in our Articles. These agreements, among
other things,require us to indemnify our directors for certain expenses,
including attorneys' fees, judgments, fines and settlement amounts incurred by
a director in any action or proceeding arising out of their services as one of
our directors or any othercompany or enterprise to which the person provides
services at our request. We believe that these indemnification agreements are
necessary to attract and retain qualified persons as directors.
Requirements under the British Columbia Business Corporations Act.
Pursuant to the BCBCA, directors and officers are required to acthonestly and
in good faith with a view to the best interests of the company. Under the
BCBCA, subject to certain limited exceptions, a director who holds a
disclosable interest in a material contract or transaction is not entitled to
vote on anydirector's resolution approving such contract or transaction. A
director or senior officer, with certain exceptions, has a disclosable
interest in a contract or transaction if:
(a) the contract or transaction is material to the company;
(b) the company has entered, or proposes to enter, into the contract or
transaction;
(c) either of the following applies to the director or senior officer:
(i) the director or senior officer has a material interest in the contract or
transaction;
(ii) the director or senior officer is a director or senior officer of, or has
a material interest in, a person who has a material interest inthe contract or
transaction.
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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 areproperly brought
before the meeting, it is the intention of the persons named in the proxy to
vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
John Simard
President & CEO
May 1, 2024
A copyof the Company's Annual Report to the Securities and Exchange Commission
on Form
10-K
for the fiscal year ended December 31, 2023 is available without charge upon
written request to: CorporateSecretary, XBiotech Inc., 5217 Winnebago Lane
Austin, TX 78744. This Annual Report is enclosed herewith. This report does
not form any part of the material for solicitation of proxies.
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Biotech Biotech YOUR YOUR VOTE VOTE IS IS IMPORT IMPORTANT! ANTI PLEASE PLEASE
VOTE VOTE BY: BY: 10:00 10:00 AM, AM, Cen Central tralTime, Time, June June
20, 20, 2024. 2024. This proxy is being solicited on behalfof the Board of
Directors The The undersigned undersigned hereby hereby appoints appoints John
John Simard Simard a and nd! Angela Angela Hu Hu (the (the"'Named "Named
Proxies1. Proxies"), and and each each Of or either eitherof o f them. them,
as as the the tue true and and lawful lawful att:lmeys atiomeys of of the the
unders-igned. undersigned, v. with ith full full powerpower of of substilution
substitution and and revocation, rewocation, and and authorizes authorizes
them. them, and and each each o of f them. them, t1 tp vote wote all all the
the s shares hares of of capital capital stick stock of XBioledl ofXBiotech
lnc. Inc. w which hich the the undersigned undersigned is is entitJed entitled
to to vote vote at at said said meeting meeting a and nd anyadjourrment any
adjoumment or or poslponement postponement thereof thereof upon upon the the
mattersmatters specified specified a and nd upon upon s such uch other other
matlersas matters as may may be be property properly brought brought before
before the the meeting meeting or or a any rryadjourrmento adjournment orr
postponement postponementthereof, thereof. oonferring conferring a authority
uthority upon upon s such uch t true ue and and lawfut lawful a attorneys
tlorneys t1 to vote vote in in their their discretion discretion on on s such
udl o other ther matters matters as asmaypropertyc:orre may properly come
before before the the meeting meeting and and revolting revoking any any proxy
proxy heretofore heretofore giwn. given. THE THE SHARES SHARES REPRESENTED
REPRESENTED BY BY THIS THIS PROXY PROXY W WILL IU BE BEVOTED VOTED AS AS
DIRECTED DIRECTED OR. OR, IF IF NO NO DIRECTION DIRECTION IS IS GIVEN. GIVEN,
SHARES SHARES WILL WILL BE BE VOTED VOTED IDENTICAL IDENTICAL TO TO THE THE
BOARD BOARD OF OF DIRECTORS DIRECTORS R8COMMENDATION. RECOMMENDATION. ThisThis
proxy, proxy, when when property properly executed. executed, will will be be
voted voted in in the the rrenner manner directed directed herein. herein. In
In their their disctetion, discretion, the the Named Named Proxies Proxies are
areauthorized authorized rto to vote vote upon upon such such other other
matters matters that that maypropertycome may properly come before before the
the meeting meeting or or a any ny adjournment adjoumment o orr postponement
postponement thereof.thereof. You You are are encouraged encouraged to to
specify specifyyour your choice choice by by marking marking the the a
appropriate ppropriate box box (SEE (SEE REVERSE REVERSE SIDE) SIDE) but but
you you need need not not maril. mark a any rrybox box ifif you you w wish
is-h to to \Ole vote in in aocorda:r. accordance oa witt with the the Board
Board of of Oiroot:. Directors' rs' t&OOI'NMI'Idation. recommendation. The The
Na!Md Named ProxiM Proxies eenr.cannototvote vote your your shares shares
unless unless you you sign sign (on (on tte the l'G\Ietse reverse side) side)
Md and retum return this this card. card. PLEASE PLEASE BE BE SURE SURE TO TO
SIGN SIGN AND AND DATE DATE THIS THIS PROXYPROXY CARD CARD AND AND MARK MARK
ON ON THE THE REVERSE REVERSE SIDE SIDE Copyright~ Copyright (c) 2024 2024
B:etaNXT. BetaNxtT, In<. Inc. o orr its its affiliates. affiliates. All All
Rights Rights Reserved Reserved
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Please make your marks like this: THE BOARD OF DIRECTORS RECOMMENDS A VOTE:
FOR ON PROPOSALS 1, 2 AND 3 PROPOSAL YOUR VOTE 1. To electthe five (5)
nominees for director named herein to serve until the next annual meeting and
their successorsare duly elected and qualified. 1.01 FOR = WITHHOLD John
Simard 1.02 W. Thome McKenzie O O 1.03 Jan-Paul Wakdin, Esq. 1.04 Donald H.
MacAdam OO 1.05 Peter Libby, M.D. FOR AGAINST ABSTAIN 2. To ratify the
selection by the Audit Committee of the Board of Directors of Whitey Penn LLP
as the independent registered public accounting firm of the Companyfor its
fiscal year ending December 31,2024. 3. To approve, on an advisory basis, the
compensation of the Company's named executive officers. ([] oO oO To conduct
any other business properly brought before the meeting. You must register to
attend the meeting online and/orparticipate at www.proxyd ocs.com/XBIT
Authorized Signatures - Must be completed for your instructions to be
executed. Please sign exactly as your name{s) appears on your account. If held
in joint tenancy, all persons should sign. Trustees,administrators, etc.,
should indude title and authority. Corporations should provide full name of
corporation and title of authorized officer signing the Proxy/Vote Form.
Signature (and Title if applicable) Date Signature (if held jointly) Date
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