SpringWorks Therapeutics (SWTX) DEF 14ADefinitive proxy

Our Board of Directors, or the Board of Directors or the Board, is soliciting your vote for the Annual Meeting for the purposes discussed in this proxy statement and the accompanying Notice of 2022 Annual Meeting of Stockholders.

We have made these proxy materials available to you to provide you with information regarding the proposals on which you may vote at the Annual Meeting. These proxy materials are available on the Internet, and we will, upon your request, deliver print versions of these proxy materials to you by mail, each as described in the following questions and answers. You are invited to attend the virtual Annual Meeting and we are requesting you to vote on the proposals described in this proxy statement.

Yes, stockholders may access this proxy statement, our Annual Report to Stockholders for the year ended December 31, 2021, or the Annual Report, and the Notice of Internet Availability of Proxy Materials, or the Notice, via the Internet at www.investorvote.com/SWTX. We are furnishing the proxy materials to our stockholders on the Internet in lieu of mailing a printed copy of our proxy materials. You will not receive a printed copy of the proxy materials unless you request one. If you would like to receive a printed or electronic copy of the proxy materials, free of charge, you should follow the instructions for requesting such materials in the Notice. The Notice instructs you as to how you may access and review all of the important information contained in the proxy materials on the Internet or request a printed copy of those materials. The Notice also instructs you as to how you may vote your proxy.

The record date for determination of stockholders entitled to vote at the Annual Meeting is the close of business on March 24, 2022.

There were 49,424,793 shares of our common stock, par value $0.0001 per share, outstanding on March 24, 2022, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting. Each stockholder of record is entitled to one vote for each share of our common stock held by such stockholder.

The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on the voting processes of the organization that holds your shares. Therefore, we urge you to carefully review and follow the voting instruction card and any other materials that you receive from that organization. If you hold your shares of SpringWorks Therapeutics common stock in multiple accounts, you should vote your shares as described in each set of proxy materials you receive.

You may revoke your proxy by (i) following the instructions on the Notice and entering a new vote by mail that we receive before the start of the virtual Annual Meeting or over the Internet by the cutoff time of the closing of polls at the virtual Annual Meeting, (ii) attending and voting at the Annual Meeting (although attendance at the Annual Meeting will not in and of itself revoke a proxy), or (iii) by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with our Corporate Secretary. Any written notice of revocation or subsequent proxy card must be received by our Corporate Secretary prior to the taking of the vote at the Annual Meeting. Such written notice of revocation or subsequent proxy card should be hand delivered to our Corporate Secretary or sent to our principal executive offices at SpringWorks Therapeutics, Inc., 100 Washington Blvd, Stamford, Connecticut 06902, Attention: Corporate Secretary.

If a broker, bank, or other nominee holds your shares, you must contact such broker, bank, or nominee in order to find out how to change your vote.

Our Amended and Restated Bylaws, as amended, or bylaws, provide that a majority of the shares entitled to vote, present in person (including virtually at the Annual Meeting) or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.

Under the General Corporation Law of the State of Delaware, shares that are voted “abstain” or “withheld” and broker “non-votes” are counted as present for purposes of determining whether a quorum is present at the Annual Meeting. If a quorum is not present, the meeting may be adjourned until a quorum is obtained.

Under our bylaws, any proposal other than an election of directors is decided by a majority of the votes properly cast for and against such proposal, except where a larger vote is required by law or by our Amended and Restated Certificate of Incorporation, or certificate of incorporation, or bylaws. Abstentions and broker “non-votes” are not included in the tabulation of the voting results on any such proposal and, therefore, do not have an impact on such proposals. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item, and has not received instructions from the beneficial owner.

If your shares are held in “street name” by a brokerage firm, your brokerage firm is required to vote your shares according to your instructions. If you do not give instructions to your brokerage firm, the brokerage firm will still be able to vote your shares with respect to certain “discretionary” items, but will not be allowed to vote your shares with respect to “non-discretionary” items. Proposal No. 1 is a “non-discretionary” item. If you do not instruct your broker how to vote with respect to this proposal, your broker may not vote for this proposal, and those votes will be counted as broker “non-votes.” Each of Proposal No. 2 and Proposal No. 3 is considered a discretionary item, and your brokerage firm will be able to vote on each of these proposals even if it does not receive instructions from you.

To be elected, the directors nominated via Proposal No. 1 must receive a plurality of the votes cast and entitled to vote on the proposal, meaning that the director nominees receiving the most votes will be elected. Shares voting “against” or “abstain” have no effect on the election of directors.

Our Board of Directors currently consists of seven members. In accordance with the terms of our certificate of incorporation and bylaws, our Board of Directors is divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms. The members of the classes are divided as follows:

Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.

Our certificate of incorporation and bylaws provide that the authorized number of directors may be changed only by resolution of our Board of Directors. Our certificate of incorporation also provides that our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares then entitled to vote in an annual election of directors, and that any vacancy on our Board of Directors, including a vacancy resulting from an enlargement of our Board of Directors, may be filled only by vote of a majority of our directors then in office.

Our Board of Directors has nominated Alan Fuhrman, Julie Hambleton, M.D., and Daniel S. Lynch, M.B.A. for election as the Class III directors at the Annual Meeting. The nominees are presently directors and have indicated a willingness to continue to serve as directors, if elected. If the nominees become unable or unwilling to serve, however, the proxies may be voted for a substitute nominee selected by our Board of Directors.

Our Board selection process places emphasis on identifying members who will further the interests of our stockholders through their established record of professional accomplishment, their ability to contribute positively to the collaborative culture among Board members, and their knowledge of our business and understanding of the competitive landscape. While we have no formal policy regarding Board diversity, the overall diversity of our Board is an important consideration in the director nomination and selection process. Our nominating and corporate governance committee assesses diversity in connection with the annual nomination process as well as in new director searches. Our seven directors range in age from 43 to 67 and include two women and two ethnically diverse persons.

The following table and below summaries identify our Class III directors and set forth their principal occupation and business experience during the last five years and their ages as of March 24, 2022.

There are no material legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or our subsidiaries.

Our nominating and corporate governance committee is responsible for identifying individuals qualified to serve as directors, consistent with criteria approved by our Board of Directors, and recommending such persons to be nominated for election as directors, except where we are legally required by contract, law or otherwise to provide third parties with the right to nominate.

The process followed by our nominating and corporate governance committee to identify and evaluate director candidates includes requests for recommendations from members of the Board of Directors, our executive officers, third-party search firms and other sources deemed appropriate by the committee, meetings from time to time to evaluate biographical information and background material relating to potential candidates, and interviews of selected candidates by management, members of the committee and our Board of Directors. The minimum qualifications, qualities and skills that a committee-recommended nominee for a position on our Board of Directors must satisfy are set forth in our corporate governance guidelines, including experience at a strategic or policymaking level, accomplishments in his or her field, being well-regarded in the community, having integrity, having sufficient time and availability to devote to the affairs of SpringWorks Therapeutics, and to the extent such nominee serves or has previously served on other boards, contributions to such boards. In addition, while we have no formal policy regarding Board diversity, the overall diversity of our Board is an important consideration in the director nomination and selection process. Our nominating and corporate governance committee assesses diversity in connection with the annual nomination process as well as in new director searches.

Daniel S. Lynch and Jeffrey Schwartz serve on the compensation committee, which is chaired by Mr. Lynch. Our Board of Directors has determined that each of Messrs. Lynch and Schwartz is “independent” as defined in the applicable Nasdaq rules for purposes of serving on the compensation committee. During the fiscal year ended December 31, 2021, the compensation committee met four (4) times. The compensation committee’s responsibilities include:

Each year, when establishing the appropriate level of compensation for our non-employee directors, our compensation committee considers relevant market data received from our independent compensation for companies in our peer group.

From and after our initial public offering through February 23, 2021, each of our non-employee directors participated in our Non-Employee Director Compensation Policy that had been adopted by the Company’s Board of Directors in connection with our initial public offering. Pursuant to such policy, each of our non-employee directors was entitled to an annual cash fee of $35,000. The non-executive chairperson of our Board of Directors was entitled to receive an additional annual fee of $30,000. In addition, members of our committees of the Board were entitled to receive additional compensation as follows: (i) each non-chairperson member of the audit committee was entitled to receive an annual fee of $7,500, while the chairperson of the audit committee was entitled to receive an annual fee $15,000, (ii) each non-chairperson member of the compensation committee was entitled to receive an annual fee of $5,000, while the chairperson of the compensation committee was entitled to receive an annual fee of $10,000 and (iii) each non-chairperson member of the nominating and corporate governance committee was entitled to receive an annual fee of $4,000, while the chairperson of the nominating and corporate governance committee was entitled to receive an annual fee of $8,000. In addition, each non-employee director serving on our Board of Directors upon completion of our initial public offering received a one-time equity grant of an option to purchase that number of shares of the Company’s common stock value equivalent to $336,819 (calculated using the Black-Scholes option pricing model), vesting in equal monthly installments over three years following the grant date, subject to continued service on the Board of Directors through each vesting date. Further, immediately following each annual meeting of the Company’s stockholders through 2020, each continuing non-employee director serving on our Board of Directors received an annual equity grant of an option to purchase that number of shares of the Company’s common stock that had a value equivalent to $168,410 (calculated using the Black-Scholes option pricing model), vesting on the earlier of the one-year anniversary of the grant date and the Company’s next annual meeting of stockholders following such grant, subject to continued service on the Board through such date. All of the foregoing equity grants become immediately exercisable upon the death or permanent disability of a non-employee director or upon a “sale event” ​(as defined in the Company’s Amended and Restated 2019 Stock Option and Incentive Plan).

From and after February 23, 2021 through February 22, 2022, each of our non-employee directors participated in our then-current Amended and Restated Non-Employee Director Compensation Policy, or Director Plan. Only our non-employee directors are eligible to participate in the Director Plan. The 2021 compensation for our non-employee directors was recommended by the compensation committee following the review of a report from our independent compensation consultant, Aon’s Human Capital Solutions practice, a division of Aon plc, or Aon. The report contained an analysis of prevailing market practices regarding levels and types of non-employee director compensation, including the non-employee director compensation practices of our 2021 peer group, and a comparative assessment of our non-employee director compensation to such peers and market practices. On at least an annual basis, qualified experts deliver a presentation to the compensation committee about recent developments and best practices related to non-employee director compensation. On February 23, 2021, the Company’s Board of Directors amended the Director Plan which was used for determining director compensation from and after such date. For 2021, pursuant to our Director Plan, each of our non-employee directors was entitled to an annual cash fee of $40,000. The non-executive chairperson of our Board of Directors was entitled to receive an additional annual fee of $30,000. In addition, members of the committees of the Board were entitled to receive additional compensation as follows: (i) each non-chairperson member of the audit committee was entitled to receive an annual fee of $7,500 and the chairperson of the audit committee was entitled to receive an annual fee $15,000, (ii) each non-chairperson member of the compensation committee was entitled to receive an annual fee of $5,000 and the chairperson of the compensation committee was entitled to receive an annual fee of

In 2021, our compensation committee retained Aon as its compensation consultant to advise on, among other things, director compensation matters. On February 22, 2022, based on a review of a peer group analysis prepared by Aon to benchmark our director compensation levels, the compensation committee recommended and the Board further amended the Director Plan, effective immediately as of such date, to make certain adjustments to our non-employee director compensation to align it with the competitive market and be used for determining director compensation from and after such date. These adjustments include the following:

All of the foregoing equity grants become immediately vested or exercisable, as the case may be, upon the death or permanent disability of a non-employee director or upon a “sale event” ​(as defined in the Company’s Amended and Restated 2019 Stock Option and Incentive Plan).

Under our Director Plan, effective as February 22, 2022, the fees paid to non-employee directors for service on the Board of Directors and for service on each committee of the Board of Directors on which the director is a member are as follows:

SpringWorks Therapeutics’ stockholders are being asked to ratify the appointment by the audit committee of the Board of Directors of Ernst & Young LLP as SpringWorks Therapeutics’ independent registered public accounting firm for the fiscal year ending December 31, 2022. Ernst & Young LLP has audited the Company’s financial statements for each fiscal year since our inception in 2017.

Stockholder approval is not required to appoint Ernst & Young LLP as SpringWorks Therapeutics’ independent registered public accounting firm. However, the Board of Directors believes that submitting the appointment of Ernst & Young LLP to the stockholders for ratification is good corporate governance. If the stockholders do not ratify this appointment, the audit committee will reconsider whether to retain Ernst & Young LLP. Even if the selection of Ernst & Young LLP is ratified, the audit committee may, at its discretion, direct the appointment of a different independent registered public accounting firm at any time it decides that such a change would be in the best interest of SpringWorks Therapeutics and its stockholders.

A representative of Ernst & Young LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so and to respond to appropriate questions from our stockholders.

SpringWorks Therapeutics incurred the following fees from Ernst & Young LLP for the audit of the consolidated financial statements and for other services provided during the years ended December 31, 2021 and 2020.

Our audit committee has adopted a policy relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm, which policy became effective as of August 7, 2019. This policy provides that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by our audit committee or the engagement is entered into pursuant to the pre-approval procedure described below.

From time to time, our audit committee may pre-approve specified types of services that are expected to be provided to us by our independent registered public accounting firm during the next 12 months. Any such pre-approval details the particular service or type of services to be provided and is also generally subject to a maximum dollar amount.

Prior to the adoption of this policy, our Board of Directors pre-approved all audit and non-audit services to be performed by our independent registered public accounting firm.

Based on this philosophy, our performance-driven compensation program primarily consists of three components: base salary, short-term cash incentive compensation, and long-term incentive compensation in the form of equity awards. Our compensation committee has determined that these three components, with a portion of target total direct compensation allocated to “at-risk” performance-based incentives through the use of short-term and long-term incentive compensation, best align the interests of our executive officers with those of our stockholders. While it does not have any formal policies for allocating compensation among the three components, our compensation committee reviews relevant competitive market data and uses its judgment to determine the appropriate level and mix of compensation on an annual basis to ensure that compensation levels and opportunities are competitive and that we are able to attract and retain capable executive officers to work for our long-term prosperity and stockholder value, without taking unnecessary or excessive risks.

We seek to foster a performance-oriented culture, where individual performance is aligned with organizational objectives. To achieve this, we evaluate and reward our executive officers based on their contributions to the achievement of annual goals and objectives set early in the year. Performance is reviewed at least annually through processes discussed further below, with a focus on our achievement of our corporate goals, and in view of economic and financial conditions affecting the performance period.

Our compensation committee reviews and approves our executive compensation philosophy, objectives and methods, evaluates our performance and the performance of our executive officers, and approves executive compensation, other than with respect to our Chief Executive Officer, and makes recommendations to our Board regarding our Chief Executive Officer’s compensation. The compensation committee also determines the Company’s achievement of its corporate goals, subject to a maximum level of 150%.

Please see “Corporate Governance — Board Committees — Compensation Committee” for additional information.

Awards of performance-based compensation for the previous year are typically made at the last-scheduled compensation committee meeting of the year. Adjustments to the base salaries of our named executive officers, if any, and reviews of annual equity awards are also typically made at the last-scheduled compensation committee meeting of the year.

For each year, annual Company goals are proposed by our senior management team and reviewed and approved by our Board of Directors and compensation committee. Our Chief Executive Officer’s cash incentive award is based entirely on performance relative to Company goals (to drive maximum stockholder value), and the cash incentive awards for our other named executive officers are based 80% on Company goals and 20% on individual objectives. Individual objectives for our senior management team other than our Chief Executive Officer are focused on leadership development objectives as well as individual contributions that are intended to drive achievement of the Company goals and are proposed by each member of senior management, with review and input from the Chief Executive Officer. Any merit increases in base salary and any annual cash awards under our annual short-term incentive plan are based on the achievement of these Company goals and individual performance goals and objectives, as applicable.

During the last quarter of each year, our senior management team evaluates our company performance and each executive officer’s individual performance, as compared to the Company goals and, as applicable, the individual objectives for that year. Based on this evaluation, our Chief Executive Officer recommends to our compensation committee any increases in base salary and any annual equity awards and/or cash awards under our annual cash incentive program for members of the senior management team other than himself. Our compensation committee then meets in executive session (that is, without the presence of employee directors) to consider such recommendations and any recommendations made by the committee concerning our Chief Executive Officer’s own base salary or annual equity awards. Our Chief Executive Officer recuses himself from all discussions and recommendations regarding his own compensation.

Our compensation committee is authorized to engage a compensation consultant or other advisors to review our executive officers’ compensation, including an analysis against the compensation of executive officers at comparable companies, to ensure that our compensation is market competitive, with the goal of retaining and adequately motivating our senior management. During 2021, our compensation committee engaged Aon’s Human Capital Solutions practice, a division of Aon plc, or Aon, as its independent compensation consultant to make recommendations for updating our compensation peer group, and to review and make recommendations regarding our executive and director compensation for 2021. Aon was invited to attend a compensation committee meeting where they presented and discussed their analysis and findings. For 2021, with the assistance of Aon, our compensation committee updated our compensation peer group, described below in the section entitled “Peer Group and Market Compensation Data.”

Before engaging Aon, our compensation committee analyzed whether Aon’s work as a compensation consultant would raise any conflict of interest, taking into consideration the following factors: (i) the

The base salaries of our named executive officers are designed to compensate them for day-to-day services rendered during the fiscal year. Appropriate base salaries are used to recognize the experience, skills, knowledge and responsibilities required of each executive officer and to allow us to attract and retain individuals capable of leading us to achieve our business goals in competitive market conditions.

Our named executive officers are eligible to receive annual performance-based cash incentives, sometimes referred to as bonuses, as part of our annual short-term incentive plan, which are designed to provide appropriate short-term incentives to our executive officers to achieve pre-established annual corporate goals and to reward them for individual performance towards these goals. The annual bonus each current named executive officer is eligible to receive under our annual short-term incentive plan is based on an individual bonus opportunity, which is a percentage of such named executive officer’s annual base salary established by our compensation committee, or in the case of Mr. Islam, by the Board, and is generally adjusted based on the extent to which we achieve the corporate goals that the Board establishes each year and (except for Mr. Islam whose performance under the annual short-term incentive plan is measured solely against our achievement of our annual corporate goals) such named executive officer’s individual performance. At the end of the year, the Board and compensation committee review our performance and approve the extent to which we achieved each of these corporate goals. Generally, the Board and compensation committee, as applicable, will assess each named executive officer’s individual contributions towards reaching our annual corporate goals and our Chief Executive Officer’s recommendations based on one-on-one assessments reviewing individualized performance achievements for our named executive officers (other than himself). Our Board and compensation committee may grant above-target bonuses, for extraordinary performance against the pre-established goals, as well as taking into account other corporate and individual achievements.

The annual short-term incentive plan bonus opportunity targets as a percentage of base salaries for our named executive officers were as follows:

The corporate goals used in our annual short-term incentive plan were proposed by management and reviewed and approved by our compensation committee and our Board. The Board considered and assigned a percentage weighting to each of our corporate goals with an overall focus on enhancing stockholder value.

Our corporate goals for 2021 and the percentage weighting assigned to each goal are summarized as follows:

In December 2021, our compensation committee and our Board reviewed our 2021 corporate goals, taking into account the weighting for each goal and its determination of an achievement rating with respect to each such goal, as well as additional organizational accomplishments in 2021, and approved payout of bonuses at the 150% level for the corporate component of the bonus. In addition, our compensation committee and our Board considered and accepted our Chief Executive Officer’s recommendations as to the achievement of individual goals by our named executive officers (other than himself).

In recognition of their efforts towards our successful achievement of such goals and milestones, our compensation committee approved awarding Mr. Perier, Mr. Ashar, Dr. Burgess and Dr. Edris their respective individual bonuses for 2021, taking into account the Board’s determination that the Company achieved its corporate goals at the 150% level with respect to 80% of the bonus calculation, with the remaining 20% of such calculation based on the named executive officer’s individual performance in accordance with the recommendations of our Chief Executive Officer, and recommended, and the Board approved, awarding Mr. Islam 150% of his individual bonus opportunity for 2021. The 2021 annual bonus payments, which were paid in February 2022, are summarized in the table below.

We provide long-term incentive compensation to our named executive officers through the grant of equity awards. We believe that equity awards create incentives for our named executive officers to further our long-term strategic plan to create long-term stockholder value. We also believe equity awards create an ownership culture. In addition, the vesting requirements of our equity awards contributes to executive retention by providing an incentive to our named executive officers to remain employed by us during the vesting period.

Generally, significant equity awards are granted at the time a named executive officer commences employment. Thereafter, equity awards may be granted at varying times and in varying amounts in the

All of our full-time employees, including our named executive officers, are eligible to participate in certain medical, disability and life insurance benefit programs offered by us. We pay the premiums for term life insurance and long-term disability for all of our employees, including our named executive officers. We also provide all employees, including named executive officers, with a flexible spending account plan, and paid time-off benefits including vacation, sick time and holidays. We do not sponsor any qualified or non-qualified defined benefit plans for any of our employees or executives.

We maintain a tax-qualified retirement plan, or the 401(k) Plan, that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible compensation subject to applicable annual limits provided for in the Internal Revenue Code, or the Code. We make 50% matching contributions into the 401(k) plan on behalf of participants, for up to the first 5% of eligible compensation. Employees’ pre-tax or Roth contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employees are immediately and fully vested in their contributions. Our 401(k) Plan is intended to be qualified under Section 401(a) of the Code with our 401(k) Plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to our 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from our 401(k) Plan.

Given the industry in which we participate and the range of strategic initiatives that we may explore, we believe these arrangements are an essential element of our executive compensation package and assist us in recruiting and retaining talented individuals. In addition, since we believe it may be difficult for our executive officers to find comparable employment following an involuntary termination of employment in connection with or following a change of control of the Company, these payments and benefits are intended to ease the consequences to an executive officer of an unexpected termination of employment. By establishing these payments and benefits, we believe we can mitigate the distraction and loss of executive officers that may occur in connection with rumored or actual fundamental corporate changes and thereby protect stockholder interests while a transaction is under consideration or pending.

Under Financial Accounting Standard Board ASC Topic 718, or ASC Topic 718, we are required to estimate and record an expense for each share-based payment award (including stock options) over the vesting period of the award. We record share-based compensation expense on an ongoing basis according to ASC Topic 718. Our compensation committee has considered, and may in the future consider, the grant of performance-based or other types of stock awards to our executive officers in lieu of or in addition to stock options in light of the accounting impact of ASC Topic 718 and other considerations.

Under Section 162(m) of the Internal Revenue Code, or Section 162(m), compensation paid to any publicly held corporation’s “covered employees” that exceeds $1 million per taxable year for any covered employee is generally non-deductible. However, Section 162(m) provides a reliance period exception for corporations that became publicly held before December 20, 2019, pursuant to which the deduction limit under Section 162(m) does not apply to certain compensation paid (or in some cases, granted) pursuant to a plan or agreement that existed during the period in which the corporation was not publicly held, subject to certain requirements and limitations. Under Section 162(m), this reliance period ends upon the earliest of the following: (i) the expiration of the plan or agreement; (ii) the material modification of the plan or agreement; (iii) the issuance of all employer stock and other compensation that has been allocated under the plan; or (iv) the first meeting of stockholders at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which the corporation’s initial public offering occurs. However, the reliance period exception under Section 162(m) may be repealed or modified in the future as a result of certain changes that were made to Section 162(m) pursuant to the Tax Cuts and Jobs Act of 2017.

Compensation paid to each of the Company’s “covered employees” in excess of $1 million per taxable year generally will not be deductible unless it qualifies for the reliance period exception under Section 162(m). Because of certain ambiguities and uncertainties as to the application and interpretation of Section 162(m), as well as other factors beyond the control of the compensation committee, no assurance can be given that any compensation paid by the Company will qualify for the reliance period exception under Section 162(m) and be deductible by the Company in the future. Although the compensation committee will continue to consider tax implications as one factor in determining executive compensation, the compensation committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of the Company’s executive compensation program and the best interests of the Company and its stockholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m). The compensation committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with the Company’s business needs.

Dr. Burgess entered into an amended and restated employment agreement with us on July 30, 2021, pursuant to which Dr. Burgess is entitled to receive an annual base salary for each year of the term, subject to review and adjustment by the Board of Directors or the compensation committee of the Board of Directors from time to time. Dr. Burgess is also eligible for an annual cash incentive bonus expressed as a target percentage of Dr. Burgess’ base salary, subject to the achievement of performance targets and goals established by the Board of Directors or the compensation committee. The employment agreement provides that if Dr. Burgess is terminated by us without “cause” or if he resigns for “good reason” ​(each, as defined in the employment agreement), subject to the timely execution and effectiveness of a separation agreement, including a general release of claims in favor of the Company, he will be entitled to the following severance benefits: (i) the continued payment of his then-current base salary for 12 months following termination, (ii) a pro-rated portion of his target bonus for the year of termination (based on the number of days of the applicable fiscal year he was employed prior to termination), and (iii) if Dr. Burgess is participating in our group health plan immediately prior to his termination, a monthly payment in an amount equal to the monthly employer contribution that we would have made to provide him health insurance if he had remained employed by us for up to 12 months following termination. The employment agreement further provides that if Dr. Burgess is terminated by us without cause or if he resigns for good reason, in each case within three months prior to a “change in control” ​(as defined in the employment agreement) or within 18 months following a change in control, subject to the timely execution and effectiveness of a separation agreement, including a general release of claims in favor of the Company, Dr. Burgess will be entitled to receive: (i) a lump sum cash amount equal to the sum of (A) 12 months of his current base salary (or his base salary in effect prior to the change in control, if higher) plus (B) one times his target annual cash incentive compensation for the year of termination (or his target annual cash compensation in effect immediately prior to the change in control, if higher), (ii) if Dr. Burgess is participating in our group health plan immediately prior to his termination, a monthly payment in an amount equal to the monthly employer contribution that we would have made to provide him health insurance if he had remained employed by us for up to 12 months following termination, and (iii) notwithstanding anything to the contrary in any applicable award agreement, accelerated vesting of 100% of all stock options and other stock-based awards held by Dr. Burgess, with any performance criteria applicable to such options or awards deemed satisfied at a level of 100%. The employment agreement further provides that in the event of Dr. Burgess’ death or if Dr. Burgess incurs a “separation from service” ​(within the meaning of Section 409A of the Code) in connection with a “disability” (as defined in the employment agreement), notwithstanding anything to the contrary in any applicable award agreement, all stock options and other stock-based awards held by Dr. Burgess that would have vested over the 12-month period following his death or such a separation from service shall immediately accelerate and become fully exercisable or nonforfeitable as of the date of his death or such separation from service, as applicable, and any performance criteria applicable to such options or awards shall be deemed satisfied at a level of 100%. The payments and benefits provided under Dr. Burgess’ employment agreement in connection with a change in control may not be eligible for a federal income tax deduction by us pursuant to Section 280G of the Code. These payments and benefits may also subject Dr. Burgess to an excise tax under Section 4999 of the Code. If the payments or benefits payable to Dr. Burgess in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to him.

Dr. Edris entered into an amended and restated employment agreement with us on July 30, 2021, pursuant to which Dr. Edris is entitled to receive an annual base salary for each year of the term, subject to review and adjustment by the Board of Directors or the compensation committee of the Board of Directors from time to time. Dr. Edris is also eligible for an annual cash incentive bonus expressed as a target percentage of Dr. Edris’ base salary, subject to the achievement of performance targets and goals established by the Board of Directors or the compensation committee. The employment agreement provides that if Dr. Edris is terminated by us without “cause” or if he resigns for “good reason” ​(each, as defined in the employment agreement), subject to the timely execution and effectiveness of a separation agreement, including a general release of claims in favor of the Company, he will be entitled to the following severance benefits: (i) the continued payment of his then-current base salary for 12 months following termination, (ii) a pro-rated portion of his target bonus for the year of termination (based on the number of days of the applicable