DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.                )

 

 

Filed by the Registrant  ☒                             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 under §240.14a-12

ORCHARD THERAPEUTICS PLC

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO

Orchard Therapeutics plc

108 Cannon Street

London EC4N 6EU

United Kingdom

Registered Company No. 11494381

April 29, 2020

Dear Shareholder:

2020 Annual General Meeting of Orchard Therapeutics plc (the “AGM”)

This letter, the notice of the AGM set out in this document (the “ Notice ”) and associated materials for the AGM are being sent to you because, as of April 22, 2020 (being the latest practicable date before the circulation of this document), you are registered as a holder of ordinary shares in the register of members of Orchard Therapeutics plc (the “ Company ”). However, this letter, the Notice and associated materials will also be available to holders of American Depositary Shares (“ ADS ”) and contain information relevant to holders of ADSs.

Our AGM will take place at 1:30  p.m. London time (8:30  a.m. Eastern Time) on Wednesday, June  17, 2020 at Goodwin Procter (UK) LLP, 100  Cheapside, London EC2V 6DY. The Notice is set out in this document, and it contains the resolutions to be proposed at the AGM (the “ Resolutions ”).

Impact of COVID-19

On March 23, 2020, the UK Government published compulsory measures (the “ Stay at Home Measures ”) to address the spread of the coronavirus (COVID-19). The Stay at Home Measures became law in England on March 26, 2020. Among other things, the Stay at Home Measures prohibit public gatherings of more than two people. The Stay at Home Measures are subject to review by the UK Government on a periodic basis, and while they remain in force, the Company and its shareholders are required to comply with these measures in the holding of the AGM.

The only permitted exception for the AGM is for two persons to attend in order to form the quorum so that the AGM can proceed. For the purposes of the AGM, a quorate meeting will be formed by two persons being present and between them holding (or being the proxy or corporative representative of the holders of) at least 33 1 3  percent in number of the issued ordinary shares of the Company entitled to vote at the AGM. Should the Stay at Home Measures remain in force, the Company will arrange for the presence of two persons at the AGM and the required social distancing measures will be in place at the AGM venue (the offices of Goodwin Procter (UK) LLP) to ensure the health and safety of those persons.

This means that, as things currently stand, ordinary shareholders are not allowed to attend the AGM in person, and all shareholders should appoint a proxy to ensure that the AGM is quorate and to vote on the proposed resolutions. If the Stay at Home Measures are continuing at the time of the AGM, any ordinary shareholder seeking to attend the AGM in person will be refused entry. We strongly encourage you to vote by proxy as described in the proxy statement so that your vote can be counted.

The situation with respect to COVID-19 is rapidly evolving, and we are actively monitoring the situation as part of our effort to maintain a healthy and safe environment at the AGM. If the arrangements for our AGM need to change materially, we will issue a further communication via a Form 8-K filing with the U.S. Securities and Exchange Commission and on the Investors & Media section of our website at www.orchard-tx.com.


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Action to be taken by holders of ordinary shares in the Company

If you are a holder of ADSs, please ignore this section and refer instead to the section below—“ Holders of American Depositary Shares ”.

If you are a holder of ordinary shares in the Company, please vote on the Resolutions by appointing a proxy. A form of proxy for use at the AGM is enclosed. You are encouraged to appoint the Chairman of the AGM as your proxy. If you appoint any person other than the Chairman of the AGM as your proxy, that person may not be allowed to attend the AGM.

You are advised to complete and return the form of proxy in accordance with the instructions printed on it and so as to arrive at the Company’s registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, England as soon as possible but in any event by no later than 1:30  p .m. London time ( 8:30  a.m. Eastern Time) on Monday, June  15, 2020 .

In order to attend and vote at the AGM as an ordinary shareholder, you must continue to be registered as a holder of ordinary shares in the Company’s register of members as of 6:30 p.m. London time (1:30 p.m. Eastern Time) on Monday, June 15, 2020.

Therefore, if you sell or transfer your ordinary shares in the Company on or prior to June 15, 2020, your form of proxy can no longer be used and if submitted (whether before or after you sell or transfer your ordinary shares) will be treated as invalid. Please pass this document to the person who arranged the sale or transfer for delivery to the purchaser or transferee. The purchaser or transferee should contact John Ilett, Company Secretary, by telephone at +44 (0) 203 808 8286, to request a new form of proxy for its use.

Should you elect to convert your holding of ordinary shares in the capital of the Company into an interest in the capital of the Company represented by ADSs before the AGM, you will cease to be a holder of ordinary shares in your own name and will not be entitled to vote at the AGM as an ordinary shareholder. You will also not be able to use the enclosed form of proxy. However, you may be able to exercise your vote as a holder of an interest in the capital of the Company represented by American Depositary Shares—please refer to the next section—“ Holders of American Depositary Shares ”.

Holders of American Depositary Shares

In order to exercise your vote as a holder of an interest in the capital of the Company represented by ADSs, you or your bank, broker or nominee must be registered as a holder of ADSs in the ADS register maintained by our depositary, Citibank, N.A., by 5:00  p.m. Eastern Time on Wednesday, April  29, 2020 (the record date for ADS holders).

If you hold ADSs through a bank, broker or nominee on April 29, 2020, the AGM documentation, including the ADS proxy card, will be sent to your broker who should forward the materials to you. Please reach out to your broker to provide your voting instructions.

Please note that ADS proxy cards submitted by ADS holders must be received by Citibank, N.A. no later than 10:00  a.m. Eastern Time on Wednesday, June  10, 2020 .

Contacts for ADS holders

If you have queries about how you can deliver voting instructions, please contact Citibank, N.A. —ADR Shareholder Services by telephone: +1-877-248-4237 (toll free within the United States) or +1-781-575-4555 (for international callers) or by email: citibank@shareholders-online.com or at Citibank, N.A. — Shareholder Services, P.O. Box 505050, Louisville, KY 40233-9724.


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If at any point you require guidance, please contact John Ilett, Company Secretary, by telephone at +44 (0) 203 808 8286.

Recommendation

You will find an explanatory note in relation to each of the Resolutions in the attached proxy statement. Your Directors consider that each Resolution is in the best interests of the Company and its shareholders as a whole and is likely to promote the success of the Company. Accordingly, your Directors unanimously recommend that you vote in favor of the Resolutions as each of the Directors with personal holdings of equity interests in the Company intends to do in respect of their own beneficial holdings.

Thank you for your ongoing support of Orchard Therapeutics.

Yours sincerely,

 

/s/ JAMES GERAGHTY

James Geraghty

Chairman, Orchard Therapeutics plc


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LOGO

Orchard Therapeutics plc

108 Cannon Street

London EC4N 6EU

United Kingdom

Registered Company No. 11494381

NOTICE OF 2020 ANNUAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD ON WEDNESDAY, JUNE 17, 2020

NOTICE is hereby given that the Annual General Meeting of Orchard Therapeutics plc, a public limited company incorporated under the laws of England and Wales (referred to herein as the “Company,” “we,” “us” and “our”), will be held on Wednesday, June 17, 2020, at 1:30 p.m. London time (8:30 a.m. Eastern Time), at Goodwin Procter (UK) LLP, 100 Cheapside, London EC2V 6DY, for transaction of the following business:

Ordinary resolutions

1. To re-elect as a director Steven M. Altschuler, who retires by rotation in accordance with the Company’s Articles of Association.

2. To re-elect as a director Marc Dunoyer, who retires by rotation in accordance with the Company’s Articles of Association.

3. To re-elect as a director James Geraghty, who retires by rotation in accordance with the Company’s Articles of Association.

4. To re-appoint PricewaterhouseCoopers LLP, a United Kingdom entity, as U.K. statutory auditors of the Company, to hold office until the conclusion of the next annual general meeting of shareholders.

5. To ratify the appointment of PricewaterhouseCoopers LLP, a Delaware limited liability partnership, as the Company’s independent registered public accounting firm, for the fiscal year ending December 31, 2020.

6. To authorize the Audit Committee to determine the Company’s auditors’ remuneration for the fiscal year ending December 31, 2020.

7. To receive the U.K. statutory annual accounts and reports for the fiscal year ended December 31, 2019 and to note that the Company’s directors do not recommend the payment of any dividend for the year ended December 31, 2019.

8. To approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers for the year ended December 31, 2019.

9. To indicate, on a non-binding, advisory basis, the preferred frequency of future shareholder advisory votes on the compensation of the Company’s named executive officers.

10. To receive and approve the Company’s U.K. statutory directors’ remuneration report for the year ended December 31, 2019, which is set forth as Annex  A to the attached proxy statement.


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11. To authorize the Board of Directors, generally and unconditionally for the purpose of s551 of the U.K. Companies Act 2006 to allot shares in the Company or to grant rights to subscribe for or to convert any security into shares in the Company (“Rights”) up to a maximum aggregate nominal amount of £13,023,851.50. This authority shall expire (unless previously renewed, varied or revoked) on June 16, 2025, but the Company may at any time before the expiration of this authority make an offer or agreement which would or might require shares to be allotted, or Rights to be granted, pursuant to this authority after its expiration, and the Board of Directors may allot shares or grant Rights in pursuance of that offer or agreement as if the authority conferred by this resolution had not expired.

The authority referred to in this resolution is in substitution for the authority conferred on the Board of Directors under s551 of the U.K. Companies Act 2006 at the Company’s annual general meeting held on June 26, 2019, but the Board of Directors may allot shares or grant Rights pursuant to an offer made or agreement entered into by the Company before the expiry of the authority pursuant to which that offer was made or agreement entered into.

Special resolutions

12. Subject to the passing of Resolution 11, to empower the Board of Directors generally pursuant to s570(1) of the U.K. Companies Act 2006 to allot equity securities (as defined in s560 of the U.K. Companies Act 2006) for cash pursuant to the general authority conferred on them by Resolution 11 as if s561(1) of the U.K. Companies Act 2006 did not apply to that allotment. This power:

(a) shall be limited to the allotment of equity securities up to a maximum aggregate nominal amount of £13,023,851.50;

(b) expires (unless previously renewed, varied or revoked) on June 16, 2025, but the Company may at any time before the expiration of this authority make an offer or agreement which would or might require equity securities to be allotted after that expiry and the Board of Directors may allot equity securities pursuant to any of those offers or agreements as if this power had not expired; and

(c) applies in relation to a sale of shares which is an allotment of equity securities by virtue of s560(3) of the U.K. Companies Act 2006 as if in the first paragraph of this resolution the words “pursuant to the general authority conferred on them by Resolution 11” were omitted.

For the purposes of this resolution, references to the allotment of equity securities shall be interpreted in accordance with s560 of the U.K. Companies Act 2006.

13. To adopt the draft articles of association attached at Annex B to this proxy statement in substitution for and to the exclusion of the Company’s current Articles of Association in order to amend articles 12.3, 51 and 52 of the current Articles of Association relating to quorum requirements for meetings of the Company’s shareholders.

14. To adopt the draft articles of association attached at Annex B to this proxy statement in substitution for and to the exclusion of the Company’s current Articles of Association in order to amend provisions of the current Articles of Association to permit meetings of the Company’s shareholders to be hosted on an electronic platform.

Proposals 1 through 11 will be proposed as ordinary resolutions and under English law, assuming that a quorum is present, an ordinary resolution is passed on a show of hands if it is approved by a simple majority (more than 50%) of the votes cast by shareholders present (in person or by proxy) at the meeting and entitled to vote. If a poll is demanded, an ordinary resolution is passed if it is approved by holders representing a simple majority of the total voting rights of shareholders present (in person or by proxy) who (being entitled to vote) vote on the resolution. Proposals 12, 13 and 14 will be proposed as special resolutions. Special resolutions require the affirmative vote of not less than 75% of the votes cast by shareholders present (in person or by proxy) at the meeting and entitled to vote. On a poll, a special resolution is passed if it is approved by holders representing not less than 75% of the total voting rights of shareholders present (in person or by proxy) who (being entitled to vote) vote on the resolution.


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The result of the shareholder votes on the ordinary resolutions in proposals 4, 5, 7, 8, 9 and 10 regarding re-appointment of PricewaterhouseCoopers LLP, a United Kingdom entity, as our U.K. statutory auditors, ratification of the appointment of PricewaterhouseCoopers LLP, a Delaware limited liability partnership, as our independent registered public accounting firm for the fiscal year ending December 31, 2020, receipt of our U.K. statutory annual accounts and reports for the year ended December 31, 2019, approval of the compensation of our named executive officers for the year ended December 31, 2019, advisory votes on the preferred frequency of future votes on executive compensation and approval of our U.K. statutory directors’ annual report on remuneration for the year ended December 31, 2019 will not require our Board of Directors or any committee thereof to take any action. Our Board of Directors values the opinions of our shareholders as expressed through such votes and will carefully consider the outcome of the votes on proposals 4, 5, 7, 8, 9 and 10.

The results of any polls taken on the resolutions at the Annual General Meeting and any other information required by the U.K. Companies Act 2006 will be made available on our website (www.orchard-tx.com) as soon as reasonably practicable following the Annual General Meeting and for the required period thereafter.

 

BY ORDER OF THE BOARD    Registered Office

 

 

/s/ JOHN ILETT

  

108 Cannon Street

London

EC4N 6EU, United Kingdom

Registered in England and Wales

John Ilett

Company Secretary

April 29, 2020

   No. 11494381

Notes

(a) Only those members registered in the register of members of the Company at 6:30 p.m. London time (1:30 p.m. Eastern Time) on June 15, 2020 will be entitled to attend and vote at the Annual General Meeting (“ AGM ”) in respect of the number of ordinary shares registered in their name at the time. Changes to entries on the relevant register after that deadline will be disregarded in determining the rights of any person to attend and vote at the AGM. Should the AGM be adjourned to a time not more than 48 hours after the deadline, the same deadline will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purpose of determining the number of votes they may cast) at the adjourned AGM. Should the AGM be adjourned for a longer period, then to be so entitled, members must be entered on the Register at the time which is 48 hours before the time fixed for the adjourned AGM or, if the Company gives notice of the adjourned AGM, at the time specified in the notice.

(b) Any member may appoint a proxy to attend, speak and vote on his/her behalf. A member may appoint more than one proxy in relation to the AGM provided that each proxy is appointed to exercise the rights attached to a different share or shares of the member. A proxy need not be a member, but must attend the meeting in person. Proxy forms should be lodged with the Company’s Registrar (Equiniti Limited) not later than 1:30 p.m. London time (8:30 a.m. Eastern Time) on June 15, 2020. Completion and return of the appropriate proxy form does not prevent a member from attending and voting in person if he/she is entitled to do so and so wishes. The attached proxy statement explains proxy voting and the matters to be voted on in more detail. Please read the proxy statement carefully. For specific information regarding the voting of your ordinary shares, please refer to the proxy statement under the section entitled “ Questions and Answers About Voting .”

(c) Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.

(d) In the case of joint holders, the vote of the senior holder who tenders the vote whether in person or by proxy will be accepted to the exclusion of the votes of any other joint holders. For these purposes, seniority shall be determined by the order in which the names stand in the Company’s relevant register or members for the certificated or uncertificated shares of the Company (as the case may be) in respect of the joint holding.


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(e) Certificateless Registry for Electronic Share Transfer (“ CREST ”) members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the AGM and any adjournments of it by using the procedures described in the CREST Manual (available via www.euroclear.com). CREST personal members or other CREST sponsored members, and those CREST members who have appointed voting service providers, should refer to their sponsors or voting service providers, who will be able to take the appropriate action on their behalf.

For a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “ CREST Proxy Instruction ”) must be properly authenticated in accordance with Euroclear’s specifications and must contain the information required for those instructions as described in the CREST Manual (available via www.euroclear.com). The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to the previously appointed proxy, must, to be valid, be transmitted so as to be received by the Company’s agent (ID:RA19) by 1:30 p.m. London time (8:30 a.m. Eastern Time) on June 15, 2020. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed voting service providers, to procure that its CREST sponsors or voting service providers take) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

(f) As of April 22, 2020 (being the last practicable date before circulation of this Notice), the Company’s issued ordinary share capital consisted of 97,157,553 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as of that date are 97,157,553.

(g) Under s527 of the U.K. Companies Act 2006, members meeting the threshold requirement set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the AGM; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with s437 of the U.K. Companies Act 2006. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with ss527 or 528 of the U.K. Companies Act 2006. Where the Company is required to place a statement on a website under s527 of the U.K. Companies Act 2006, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes any statement that the Company has been required, under s527 of the U.K. Companies Act 2006, to publish on a website.

(h) Except as set out in the notes to this Notice, any communication with the Company in relation to the AGM, including in relation to proxies, should be sent to the Company’s Registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, England. No other means of communication will be accepted. In particular, you may not use any electronic address provided either in this notice or in any related documents to communicate with the Company for any purpose other than those expressly stated.


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(i) Copies of the service agreement for our executive director and of the letters of appointment for our non-executive directors will be available for inspection at the registered office of the Company during normal business hours on any week day (public holidays excepted) and at the place of the AGM for one hour before the meeting and at the meeting itself.

(j) Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if: (i) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (ii) the answer has already been given on a website in the form of an answer to a question; or (iii) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

(k) As a result of restrictions on movement and gatherings introduced by the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020, other than the presence of two persons to be arranged by the Company at the Meeting and notwithstanding the foregoing Notes, members may not be allowed to attend the Meeting in person. Members’ attention is drawn to the letter from the Chairman of the Company dated April 29 , 2020.


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INFORMATION CONCERNING PROXY SOLICITATION AND VOTING

     1  

QUESTIONS AND ANSWERS ABOUT VOTING

     2  

ELECTION OF DIRECTORS

     9  

PROPOSAL 1—RE-ELECTION OF STEVEN M. ALTSCHULER TO THE BOARD OF DIRECTORS

     10  

PROPOSAL 2—RE-ELECTION OF MARC DUNOYER TO THE BOARD OF DIRECTORS

     11  

PROPOSAL 3—RE-ELECTION OF JAMES GERAGHTY TO THE BOARD OF DIRECTORS

     12  

PROPOSAL 4—RE-APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S U.K. STATUTORY AUDITORS

     13  

PROPOSAL 5—RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     14  

PROPOSAL 6—AUTHORIZATION OF THE AUDIT COMMITTEE TO DETERMINE THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S REMUNERATION

     16  

PROPOSAL 7—RESOLUTION TO RECEIVE THE COMPANY’S U.K. STATUTORY ANNUAL ACCOUNTS AND REPORTS

     17  

PROPOSAL 8—APPROVAL OF EXECUTIVE COMPENSATION

     18  

PROPOSAL 9—APPROVAL OF FREQUENCY OF FUTURE VOTES ON EXECUTIVE COMPENSATION

     19  

PROPOSAL 10—APPROVAL OF THE COMPANY’S U.K. STATUTORY DIRECTORS’ ANNUAL REPORT ON REMUNERATION

     20  

PROPOSAL 11—AUTHORIZATION OF ALLOTMENT OF SHARES

     21  

PROPOSAL 12—AUTHORIZATION OF DISAPPLICATION OF PRE-EMPTION RIGHTS

     22  

PROPOSAL 13—ADOPTION OF NEW ARTICLES OF ASSOCIATION TO AMEND ARTICLES 12.3, 51 AND 52 OF THE COMPANY’S CURRENT ARTICLES OF ASSOCIATION RELATING TO QUORUM REQUIREMENTS FOR MEETINGS OF THE COMPANY’S SHAREHOLDERS

     23  

PROPOSAL 14—ADOPTION OF NEW ARTICLES OF ASSOCIATION TO AMEND PROVISIONS OF THE COMPANY’S CURRENT ARTICLES OF ASSOCIATION TO PERMIT MEETINGS OF THE COMPANY’S SHAREHOLDERS TO BE HOSTED ON AN ELECTRONIC PLATFORM.

     25  

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

     27  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     35  

CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PERSONS

     38  

DIRECTOR COMPENSATION

     39  

EXECUTIVE OFFICERS OF THE COMPANY

     42  

COMPENSATION DISCUSSION AND ANALYSIS

     43  

COMPENSATION COMMITTEE REPORT

     64  

AUDIT COMMITTEE REPORT

     65  

DELIVERY OF PROXY MATERIALS

     67  


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     Page  

ADDITIONAL INFORMATION

     68  

ANNEX A

     A-1  

ANNEX B

     B-1  

FORM OF PROXY FOR ORDINARY SHAREHOLDERS

     1  


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Orchard Therapeutics plc

108 Cannon Street

London EC4N 6EU

United Kingdom

Registered Company No. 11494381

PROXY STATEMENT FOR THE 2020 ANNUAL GENERAL MEETING OF

SHAREHOLDERS TO BE HELD ON JUNE 17, 2020

INFORMATION CONCERNING PROXY SOLICITATION AND VOTING

We have sent you this proxy statement and the enclosed form of proxy because the Board of Directors (the “Board” or “Board of Directors”) of Orchard Therapeutics plc (referred to herein as the “Company”, “we”, “us” or “our”) is soliciting your proxy to vote at our annual general meeting of shareholders (referred to herein as the “Meeting” or the “AGM”) to be held on Wednesday, June 17, 2020, at 1:30 p.m. London time (8:30 a.m. Eastern Time), at Goodwin Procter (UK) LLP, 100 Cheapside, London EC2V 6DY.

 

   

This proxy statement summarizes information about the proposals to be considered at the Meeting and other information you may find useful in determining how to vote.

 

   

The form of proxy is the means by which you actually authorize another person to vote your shares in accordance with your instructions.

In addition to solicitations by mail, our directors, officers and regular employees, without additional remuneration, may solicit proxies by telephone, e-mail and personal interviews. All costs of solicitation of proxies will be covered by us.

We are mailing the Notice of 2020 AGM, this proxy statement and the form of proxy to our ordinary shareholders of record as of April 22, 2020 (being the latest practicable date before the circulation of this document) for the first time on or about April 29, 2020. In this mailing, we are also including our U.K. statutory annual accounts and reports for the year ended December 31, 2019 (“2019 U.K. Annual Report”) and our annual report on Form 10-K for the year ended December 31, 2019 (“Annual Report on Form 10-K”). In addition, we have provided brokers, dealers, bankers, and their nominees, at our expense, with additional copies of our proxy materials, the 2019 U.K. Annual Report and the Annual Report on Form 10-K so that our record holders can supply these materials to the beneficial owners of our ordinary shares.

While this document is being sent to our ordinary shareholders of record, this document will also be sent to holders of American Depositary Shares (“ADSs”) and contains information relevant to holders of ADSs.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on June 17, 2020

Our Notice of the 2020 AGM, this proxy statement, the Annual Report on Form 10-K, the 2019 U.K. Annual Report and our form of proxy are available in the Investors & Media section of our website at www.orchard-tx.com.

 

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QUESTIONS AND ANSWERS ABOUT VOTING

Why am I receiving these materials?

We have sent you this proxy statement and the enclosed form of proxy because you are an ordinary shareholder of record and our Board of Directors is soliciting your proxy to vote at the Meeting, including at any adjournments or postponements of the Meeting. The Company and its shareholders are required to comply with the Stay at Home Measures introduced by the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020, which mean that ordinary shareholders may not be allowed to attend the Meeting in person. However, you do not need to attend the Meeting to vote your shares. Instead, please simply complete, sign and return the enclosed form of proxy. All proxies, however submitted, must be lodged with our registrar, Equiniti Limited, by no later than 1:30 p .m. London time ( 8:30  a.m. Eastern Time) on Monday, June  15, 2020. CREST members may appoint a proxy by using the CREST electronic proxy appointment service.

You are encouraged to appoint the Chairman of the Meeting as your proxy. If you appoint any person other than the Chairman of the Meeting as your proxy, that person may not be entitled to attend the Meeting.

We intend to mail this proxy statement and the accompanying form of proxy on or about April 29, 2020 to all ordinary shareholders of record entitled to vote at the Meeting.

Materials for ADS holders of record, including this proxy statement, the Annual Report on Form 10-K and an ADS proxy card, will be mailed on or about May 6, 2020 to all ADS holders, including banks, brokers and nominees, who are registered as holders of ADSs in the ADS register by 5:00 p.m. Eastern Time on April 29, 2020 (the record date for ADS holders).

Who can vote at the Meeting?

Ordinary shareholders

Only ordinary shareholders of record registered in the register of members at 6:30 p.m. London time (1:30 p.m. Eastern Time) on Monday, June 15, 2020 will be entitled to vote at the Meeting.

As of April 22, 2020 (being the last practicable date before the circulation of this proxy statement) there were 97,157,553 ordinary shares issued and outstanding and entitled to vote.

As a result of restrictions on movement and gatherings introduced by the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020, other than the presence of two persons to be arranged by the Company at the Meeting, ordinary shareholders may not be allowed to attend the Meeting in person.

Whether or not you plan to attend the Meeting, we urge you to fill out and return the enclosed form of proxy to ensure your vote is counted. All proxies, however submitted, must be lodged with our registrar, Equiniti Limited, by no later than 1:30 p .m. London time ( 8:30  a.m. Eastern Time) on Monday, June  15, 2020. CREST members may appoint a proxy by using the CREST electronic proxy appointment service.

You are encouraged to appoint the Chairman of the Meeting as your proxy. If you appoint any person other than the Chairman of the Meeting as your proxy, that person may not be entitled to attend the Meeting.

If you sell or transfer your ordinary shares in the Company on or prior to June 15, 2020, your form of proxy can no longer be used and if submitted (whether before or after you sell or transfer your ordinary shares) will be treated as invalid. Please pass this document to the person who arranged the sale or transfer for delivery to the purchaser or transferee. The purchaser or transferee should contact John Ilett, Company Secretary, to request a new form of proxy for its use.

 

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Beneficial owners of ordinary shares which are registered in the name of a broker, bank or other agent

If, on April 22, 2020, your ordinary shares were held in an account at a brokerage firm, bank or other similar organization and you are the beneficial owner of shares, these proxy materials should be forwarded to you by that organization. The organization holding your account is considered the shareholder of record for purposes of voting at the Meeting. You are encouraged to provide voting instructions to your broker or other agent so that they may submit a proxy.

Holders of American Depositary Shares

You are entitled to exercise your vote as a holder of an interest in the capital of the Company represented by ADSs if you or your brokerage firm, bank or nominee is registered as a holder of ADSs in the ADS register maintained by Citibank, N.A. by 5:00  p.m. Eastern Time on Wednesday, April  29, 2020 (the record date for ADS holders).

If you hold ADSs through a brokerage firm, bank or nominee on April 29, 2020, the materials for ADS holders, including the ADS proxy card, will be sent to that organization. The organization holding your account is considered the ADS holder of record. Please reach out to that organization to provide your voting instructions.

Please note that ADS proxy cards submitted by ADS holders must be received by Citibank, N.A. no later than 10:00  a.m. Eastern Time on Wednesday, June  10, 2020 .

Citibank, N.A. will collate all votes properly submitted by ADS holders and submit a vote on behalf of all ADS holders.

Contacts for ADS holders

If you have queries about how you can deliver voting instructions, please contact Citibank, N.A. —ADR Shareholder Services by telephone: +1-877-248-4237 (toll free within the United States) or +1-781-575-4555 (for international callers) or by email: citibank@shareholders-online.com or at Citibank, N.A. — Shareholder Services, P.O. Box 505050, Louisville, KY 40233-9724.

If at any point you require guidance, please contact John Ilett, Company Secretary, by telephone at +44 (0) 203 808 8286.

What are the requirements to elect the directors and approve each of the proposals?

You may cast your vote for or against proposals 1 through 14 or abstain from voting your shares on one or more of these proposals.

Proposals 1 through 11 will be proposed as ordinary resolutions. Proposals 12, 13 and 14 will be proposed as special resolutions. Under English law, assuming that a quorum is present, an ordinary resolution is passed on a show of hands if it is approved by a simple majority (more than 50%) of the votes cast by shareholders present (in person or by proxy) at the Meeting and entitled to vote. If a poll is demanded, an ordinary resolution is passed if it is approved by holders representing a simple majority of the total voting rights of shareholders present (in person or by proxy) who (being entitled to vote) vote on the resolution. Special resolutions require the affirmative vote of not less than 75% of the votes cast by shareholders present (in person or by proxy) at the Meeting and entitled to vote. On a poll, a special resolution is passed if it is approved by holders representing not less than 75% of the total voting rights of shareholders present (in person or by proxy) who (being entitled to vote) vote on the resolution.

The result of the shareholder votes on the ordinary resolutions in proposals 4, 5, 7, 8, 9 and 10 regarding re-appointment of PricewaterhouseCoopers LLP, a United Kingdom entity, as our U.K. statutory auditors,

 

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ratification of the appointment of PricewaterhouseCoopers LLP, a Delaware limited liability partnership, as our auditors for the fiscal year ending December 31, 2020, receipt of our U.K. statutory annual accounts and reports for the year ended December 31, 2019, approval of the compensation of our named executive officers for the year ended December 31, 2019, advisory votes on the preferred frequency of future votes on executive compensation and approval of our U.K. statutory directors’ annual report on remuneration for the year ended December 31, 2019 will not require our Board of Directors or any committee thereof to take any action. Nonetheless, our Board of Directors values the opinions of our shareholders as expressed through such votes and will carefully consider the outcome of the votes on proposals 4, 5, 7, 8, 9 and 10.

 

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What are the voting recommendations of our Board regarding the election of directors and other proposals?

The following table summarizes the items that will be brought for a vote of our shareholders at the Meeting, along with the Board’s voting recommendations.

Proposal   

Description of Proposal

  

Board’s
Recommendation

1   

Re-election of Steven M. Altschuler to the Board of Directors

   FOR
2   

Re-election of Marc Dunoyer to the Board of Directors

   FOR
3   

Re-election of James Geraghty to the Board of Directors

   FOR
4    Re-appointment of PricewaterhouseCoopers LLP, a United Kingdom entity, as U.K. statutory auditors of the Company, to hold office until the conclusion of the next annual general meeting of shareholders    FOR
5    Ratification of the appointment of PricewaterhouseCoopers LLP, a Delaware limited liability partnership, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020    FOR
6    Authorization for the Audit Committee to determine the Company’s auditors’ remuneration for the fiscal year ending December 31, 2020    FOR
7    To receive the U.K. statutory annual accounts and reports for the fiscal year ended December 31, 2019    FOR
8    Approval of the compensation of the Company’s named executive officers for the year ended December 31, 2019, which is set forth in this proxy statement    FOR
9    Advisory vote on the preferred frequency of future votes on executive compensation    ANNUALLY
10    Approval of the Company’s U.K. statutory directors’ annual report on remuneration for the year ended December 31, 2019, which is set forth in Annex A    FOR
11    Authorization for the Board of Directors to allot shares or to grant rights to subscribe for or convert any security into shares up to a maximum aggregate nominal amount of £13,023,851.50    FOR
12    Empowering the Board of Directors to allot equity securities for cash up to a maximum aggregate nominal amount of £13,023,851.50 pursuant to the authorization in Resolution 11 as if U.K. statutory pre-emption rights did not apply    FOR
13    Adoption of the draft articles of association attached at Annex B to this proxy statement in substitution for and to the exclusion of the Company’s current Articles of Association in order to amend 12.3, 51 and 52 of the current Articles of Association relating to quorum requirements for meetings of the Company’s shareholders.    FOR
14    Adoption of the draft articles of association attached at Annex B to this proxy statement in substitution for and to the exclusion of the Company’s current Articles of Association in order to amend provisions of the current Articles of Association to permit meetings of the Company’s shareholders to be hosted on an electronic platform.    FOR

 

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What constitutes a quorum?

Under our current Articles of Association, a quorum will be present if two shareholders of the Company entitled to vote are present in person or represented by proxy at the Meeting. In addition, we will require a quorum of at least 33 1 3  percent in number of the issued shares (excluding any shares held as treasury shares) entitled to vote on the business to be transacted at the Meeting, consistent with the Nasdaq Stock Market LLC (“Nasdaq”) rules applicable to us as a U.S. domestic registrant. As described in Proposal 13, we are recommending that the quorum requirement in our Articles of Association be amended to comply with such Nasdaq rules.

If you are an ordinary shareholder of record, your shares will be counted towards the quorum only if you are present in person or represented by proxy at the Meeting. If you are a beneficial owner of ordinary shares held in an account at a brokerage firm, bank or other similar organization your shares will be counted towards the quorum if your broker or nominee submits a proxy for those shares and the proxy represents the holder at the Meeting. A member represented by a proxy at the Meeting will be counted towards the quorum requirement even where the proxy abstains from voting. If a form of proxy does not instruct the proxy how to vote, the proxy may vote as he or she sees fit or abstain in relation to any business of the Meeting, but the member represented by that proxy at the Meeting will be counted towards the quorum requirement.

If there is no quorum, the Meeting will stand adjourned to such time, date and place as may be fixed by the chairperson of the Meeting (being not less than 10 days later). Under our current Articles of Association, if a quorum is not present at the adjourned meeting, one person entitled to vote on the business to be transacted, being a member or a proxy for a member or a duly authorized representative of a corporation which is a member, shall be a quorum and any notice of an adjourned meeting shall state this. However, we will require a quorum of at least 33 1 3  percent in number of the issued shares (excluding any shares held as treasury shares) entitled to vote on the business to be transacted if the Meeting is reconvened, consistent with the Nasdaq rules applicable to us as a U.S. domestic registrant. If such quorum is not present at the adjourned meeting within 15 minutes from the time appointed for holding the meeting, the meeting shall be dissolved. As described in Proposal 13, we are recommending that the quorum requirement in our Articles of Association be amended to comply with such rules.

How do I vote my shares?

If you are an ordinary shareholder of record ,” you may appoint a proxy to vote on your behalf by completing and signing the form of proxy and returning it in the envelope provided.

All proxies must be lodged with our registrar (Equiniti Limited) by no later than 1:30 p .m. London time ( 8:30  a.m. Eastern Time) on Monday, June  15, 2020.

You are encouraged to appoint the Chairman of the Meeting as your proxy. If you appoint any person other than the Chairman of the Meeting as your proxy, that person may not be entitled to attend the Meeting.

If you properly give instructions as to your proxy appointment by executing and returning a form of proxy and your proxy appointment is not subsequently revoked, your shares will be voted in accordance with your instructions.

If your ordinary shares are held in an account at a brokerage firm, bank or similar organization, you should follow directions provided by your broker, bank or other nominee.

How will my shares be voted if I do not specify how they should be voted?

If you sign and send your form of proxy but do not indicate how you want your shares to be voted, your shares may be voted by the person that you appoint as your proxy as he or she sees fit or such person may abstain in relation to any business of the Meeting.

 

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Can I change my vote or revoke a proxy?

A registered shareholder can revoke his or her proxy before the time of voting at the Meeting in several ways by:

(1) mailing a revised form of proxy dated later than the prior form of proxy; or

(2) notifying our Company Secretary in writing that you are revoking your proxy. Your revocation must be received at our registered office before the Meeting to be effective.

Ordinarily a shareholder would also be able to revoke his or her proxy by voting in person at the Meeting. However, as a result of restrictions on movement and gatherings introduced by the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020, ordinary shareholders may not be allowed to attend the Meeting in person.

If your ordinary shares are held in an account at a brokerage firm, bank or similar organization, you may change or revoke your voting instructions by contacting the broker, bank or other nominee holding the shares or by your broker, bank or other nominee validly appointing you as proxy to attend at the Meeting. See also “What if I plan to attend the Meeting?”

Who counts the votes?

Equiniti Limited (“Equiniti”) has been engaged as our independent agent to tabulate shareholder votes. If you are an ordinary shareholder of record, you can return your executed form of proxy to Equiniti for tabulation (see instructions on the form of proxy). If you hold your ordinary shares through a broker, your broker will return the form of proxy to Equiniti.

If you are a holder of record of ADSs, you can return your executed ADS proxy card to Citibank, N.A. for tabulation. If you hold your ADSs through a broker, bank or other organization, that organization can return the ADS proxy card to Citibank, N.A. following your instruction. Citibank, N.A. will submit your votes to Equiniti for tabulation.

How are votes counted?

Votes will be counted by Equiniti, who will separately count “for” and “against” votes, and “votes withheld” or abstentions.

How many votes do I have?

On a show of hands, each ordinary shareholder of record present in person, and each duly authorized representative present in person of a shareholder that is a corporation, has one vote. On a show of hands, each proxy present in person who has been duly appointed by one or more shareholders has one vote, but a proxy has one vote for and one vote against a resolution if, in certain circumstances, the proxy is instructed by more than one shareholder to vote in different ways on a resolution. On a poll, each shareholder present in person or by proxy or, in the case of a corporation, by a duly authorized representative has one vote for each share held by the shareholder.

What if I plan to attend the Meeting?

In normal circumstances, attendance at the Meeting would be limited to ordinary shareholders of record as of 6:30 p.m. London time (1:30 p.m. Eastern Standard Time) on Wednesday, June 15, 2020. However, as a result of restrictions on movement and gatherings introduced by the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020, other than the presence of two persons to be arranged by the Company at the Meeting, ordinary shareholders may not be allowed to attend the Meeting in person.

 

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The situation with respect to COVID-19 is rapidly evolving, and we are actively monitoring the situation as part of our effort to maintain a healthy and safe environment at the Meeting. If the arrangements for our AGM need to change materially, we will issue a further communication via a Form 8-K filing with the U.S Securities and Exchange Commission and on the Investors & Media section of our website at www.orchard-tx.com.

If it is possible and advisable for ordinary shareholders to attend the Meeting, attendance will be limited to ordinary shareholders of record as of 6:30 p.m. London time (1:30 p.m. Eastern Time) on Monday, June 15, 2020. In order to obtain admittance to the Meeting each shareholder may be asked to present valid picture identification, such as a driver’s license or passport. If your ordinary shares are held through brokerage accounts or by a bank or other nominee you may be able to attend at the discretion of the Chairman.

How do you solicit proxies?

We will solicit proxies and will bear the entire cost of this solicitation. The initial solicitation of proxies may be supplemented by additional mail communications and by telephone, fax, e-mail, internet and personal solicitation by our directors, officers or other employees. No additional compensation for soliciting proxies will be paid to our directors, officers or other employees for their proxy solicitation efforts. We also reimburse Citibank, N.A. for their expenses in sending materials, including ADS proxy cards, to ADS holders of record.

What do I do if I receive more than one notice or form of proxy?

If you hold your ordinary shares in more than one account, you will receive a form of proxy for each account. To ensure that all of your shares are voted, please sign, date and return all forms of proxy. Please be sure to vote all of your shares.

Will there be any other business conducted at the Meeting?

No. In accordance with our Articles of Association, no matters other than proposals 1 through 14 may be presented at this Meeting. We have not been notified of, and our Board is not aware of, any other matters to be presented for action at the Meeting.

What is Equiniti’s role?

Equiniti is our registrar. All communications concerning ordinary shareholder of record accounts, including address changes, name changes, ordinary share transfer requirements and similar issues can be handled by contacting Equiniti by telephone: 0371-384-2030 or +44 (0) 121-415-7047 (overseas) or by writing to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, England.

Communications concerning ADS holder of record accounts can be handled by contacting Citibank, N.A. —ADR Shareholder Services by telephone: +1-877-248-4237 (toll free within the United States) or +1-781-575-4555 (for international callers) or by email: citibank@shareholders-online.com or at Citibank, N.A. — Shareholder Services, P.O. Box 505050, Louisville, KY 40233-9724.

How can I find out the results of the voting at the Meeting?

Voting results will be announced by the filing of a current report on Form 8-K with the SEC within four business days after the Meeting. If final voting results are unavailable at that time, we will file an amended current report on Form 8-K within four business days of the day the final results are available.

Directions to Meeting

Directions to our Meeting, which is to be held at Goodwin Procter (UK) LLP, 100 Cheapside, London EC2V 6DY, are available at: www.orchard-tx.com.

 

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ELECTION OF DIRECTORS

Our Board of Directors currently consists of nine members. In accordance with the terms of our Articles of Association, 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:

 

   

the Class I directors are John T. Curnutte, Bobby Gaspar and Alicia Secor and their terms will expire at the annual general meeting to be held in 2022;

 

   

the Class II directors are Steven M. Altschuler, Marc Dunoyer and James Geraghty, and their terms will expire at the Meeting; and

 

   

the Class III directors are Joanne T. Beck, Jon Ellis and Charles A. Rowland Jr., and their terms will expire at the annual general meeting to be held in 2021.

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 general meeting in the year in which their term expires.

Our Board of Directors has nominated Steven M. Altschuler, James Geraghty and Marc Dunoyer for election as the Class II directors at the 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.

In connection with proposals 1 through 3, we set forth the biographical information for the nominees to our Board of Directors. For biographical information for the other directors see Board of Directors and Corporate Governance .

 

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PROPOSAL 1—RE-ELECTION OF STEVEN M. ALTSCHULER TO THE BOARD OF DIRECTORS

Steven M. Altschuler is currently a member of our Board of Directors and has been nominated for re-election as a director. If elected, he will hold office from the date of his election until the 2023 annual general meeting of shareholders where he must retire by rotation and offer himself for re-election, or until his earlier death, resignation or removal. Dr. Altschuler has agreed to serve if elected, and we have no reason to believe that he will be unable to serve.

Steven M. Altschuler, M.D. has been a member of our Board of Directors since January 2020. Dr. Altschuler has served as a Managing Director at Ziff Capital Partners since May 2018 and as an academic healthcare consultant working with multiple health systems since October 2017. He previously served as the Executive Vice President of Health Affairs at the University of Miami and Chief Executive Officer of UHealth-University of Miami Health System from January 2016 to October 2017. From April 2000 to November 2015, he was Chief Executive Officer of Children’s Hospital of Philadelphia (“CHOP”) and The Children’s Hospital of Philadelphia Foundation. Prior to serving as the Chief Executive Officer of CHOP, Dr. Altschuler served in many leadership roles at CHOP including: Division Chief of Gastroenterology, Physician-in-Chief, inaugural holder of the Leonard and Madlyn Abramson Endowed Chair in Pediatrics, and Professor and Chair of the Department of Pediatrics at the Perelman School of Medicine at the University of Pennsylvania, where he was a faculty member from 1985 to 2000. Dr. Altschuler previously served on the board of directors for Mead Johnson Nutrition Company from 2009 through 2017, and on the board of directors of Spark Therapeutics, Inc. from March 2013 until its acquisition by Roche Holding AG in December 2019. Dr. Altschuler has served on the boards of directors of WW International, Inc. since 2012 and is currently a member of its audit committee and compensation and benefits committee, Adtalem Global Education Inc. since May 2018 and is a member of its external relations committee and chair of its academic quality committee, and 89bio, Inc. since March 2020 as its chairman. Dr. Altschuler holds a B.A. in mathematics and an M.D., both from Case Western Reserve University. He completed his pediatric internship and residency at Children’s Hospital Medical Center-Boston and fellowship training in gastroenterology and nutrition at CHOP and the University of Pennsylvania School of Medicine. We believe that Dr. Altschuler is qualified to serve on our Board because of his extensive experience in the medical industry, his service on the boards of directors of other life sciences companies and his extensive leadership experience.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE RE-ELECTION OF STEVEN M. ALTSCHULER TO THE BOARD OF DIRECTORS

 

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PROPOSAL 2—RE-ELECTION OF MARC DUNOYER TO THE BOARD OF DIRECTORS

Marc Dunoyer is currently a member of our Board of Directors and has been nominated for re-election as a director. If elected, he will hold office from the date of his election until the 2023 annual general meeting of shareholders where he must retire by rotation and offer himself for re-election, or until his earlier death, resignation or removal. Mr. Dunoyer has agreed to serve if elected, and we have no reason to believe that he will be unable to serve.

Marc Dunoyer has been a member of our Board of Directors since June 2018. Since November 2013, Mr. Dunoyer has served as the Chief Financial Officer at AstraZeneca plc, a publicly traded pharmaceutical company. At AstraZeneca, Mr. Dunoyer also held the role of Executive Vice President, Global Portfolio & Product Strategy from June 2013 to October 2013. Additionally, Mr. Dunoyer serves on the board of directors of AstraZeneca. Prior to joining AstraZeneca, from February 2010 to March 2013, Mr. Dunoyer served as the Foundational Global Head of the Rare Diseases unit at GlaxoSmithKline plc, a publicly traded pharmaceutical company. At GSK, Mr. Dunoyer also served on the company’s corporate executive team and previously held the position of President for Asia-Pacific and Japan. Mr. Dunoyer has previously held international positions in operations and general management at Hoechst Marion Roussel, a wholly owned subsidiary of Sanofi S.A., a publicly traded pharmaceutical company, and holds an M.B.A. degree from the Hautes Etudes Commerciales and a Bachelor of Law degree from Paris University. We believe Mr. Dunoyer is qualified to serve on our Board because of his executive experience in our industry.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE RE-ELECTION OF MARC DUNOYER TO THE BOARD OF DIRECTORS

 

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PROPOSAL 3—RE-ELECTION OF JAMES GERAGHTY TO THE BOARD OF DIRECTORS

James Geraghty is currently a member of our Board of Directors and has been nominated for re-election as a director. If elected, he will hold office from the date of his election until the 2023 annual general meeting of shareholders where he must retire by rotation and offer himself for re-election, or until his earlier death, resignation or removal. Mr. Geraghty has agreed to serve if elected, and we have no reason to believe that he will be unable to serve.

James A. Geraghty has been chairman of our Board of Directors since May 2018. He also serves as chairman of the boards of directors of publicly traded biopharmaceutical companies Idera Pharmaceuticals and Pieris Pharmaceuticals, and as a member of the boards of directors of publicly traded Voyager Therapeutics and Fulcrum Therapeutics. He served as an Entrepreneur in Residence at Third Rock Ventures, a venture capital firm, from May 2013 to October 2016. Prior to that, Mr. Geraghty served as Senior Vice President, North America Strategy and Business Development at Sanofi S.A., a publicly traded pharmaceutical company, from February 2011 to October 2013. Earlier, he held many roles at Genzyme Corporation from 1992 to 2011, most recently as Senior Vice President of International Development. While at Genzyme, his roles included President of Genzyme Europe and General Manager of Genzyme’s cardiovascular business. Mr. Geraghty was formerly chairman of the board of Juniper Pharmaceuticals, Inc. from June 2015 to August 2018, when it was acquired by Catalent. Mr. Geraghty holds a B.A. from Georgetown University, an M.S. from the University of Pennsylvania, and a J.D. from Yale Law School. We believe Mr. Geraghty’s experience as a senior executive and on the boards of other life sciences companies qualifies him to serve on our Board.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE RE-ELECTION OF JAMES GERAGHTY TO THE BOARD OF DIRECTORS

 

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PROPOSAL 4—RE-APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, A UNITED KINGDOM ENTITY, AS U.K. STATUTORY AUDITORS OF THE COMPANY, TO HOLD OFFICE UNTIL THE CONCLUSION OF THE NEXT ANNUAL GENERAL MEETING OF SHAREHOLDERS

At each meeting at which the accounts are laid before shareholders, the Company is required to appoint U.K. statutory auditors to serve until the next such meeting. Proposal 4 seeks your approval of the re-appointment of PricewaterhouseCoopers LLP, a United Kingdom entity (“PwC UK”), to serve as our U.K. statutory auditor, to hold office until the conclusion of the next annual general meeting of shareholders. In the event this proposal does not receive the affirmative vote of the holders of a majority of the shares entitled to vote and who are present in person or represented by proxy at the Meeting, the Board of Directors may appoint an auditor to fill the vacancy. If the re-appointment of PwC UK is approved, the Audit Committee, at its discretion, may nonetheless direct the appointment of a different U.K. statutory auditor at any time it decides that such a change would be in the best interest of the Company and its shareholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE RE-APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, A UNITED KINGDOM ENTITY, AS U.K. STATUTORY AUDITORS OF THE COMPANY, TO HOLD OFFICE UNTIL THE CONCLUSION OF THE NEXT ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

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PROPOSAL 5—RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, A DELAWARE LIMITED LIABILITY PARTNERSHIP, AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020

Proposal 5 seeks your ratification of the appointment of PricewaterhouseCoopers LLP, a Delaware limited liability partnership (“PwC USA”), as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.

Background to Proposal 5

The Audit Committee is solely responsible for selecting the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. Our Audit Committee has selected PwC USA as our independent registered public accounting firm for the fiscal year ending December 31, 2020, and has further directed that we submit the selection of PwC USA for ratification by our shareholders at the Meeting. In the event this proposal does not receive the affirmative vote of the holders of a majority of the shares entitled to vote and who are present in person or represented by proxy at the Meeting, the Board of Directors may appoint an auditor to fill the vacancy. If the appointment of PwC USA is ratified, the Audit Committee, at its discretion, may nonetheless 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 the Company and its shareholders.

PwC USA has indicated its willingness to act as the Company’s auditors. A representative of PwC USA is expected to be present at the 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 shareholders.

PwC USA commenced auditing our annual financial statements with the fiscal year 2019. When the Company reported as a foreign private issuer, PwC UK served as principal auditor for the Company’s consolidated financial statements as reported on Form 20-F.

Fees for Independent Registered Public Accounting Firm—PwC USA and PwC UK

The table below sets forth a summary of the fees billed to the Company by PwC USA and PwC UK for professional services rendered during the fiscal years ended December 31, 2019 and December 31, 2018, respectively. All such services and fees were pre-approved by the Audit Committee, which concluded that the provision of such services was compatible with the maintenance of each firm’s independence in the conduct of its auditing functions.

 

Fees    December 31,
2019
($)
     December 31,
2018

($)
 

Audit Fees(1)

     1,680        2,970  

Audit-related fees

             

Tax fees

             

All Other Fees(2)

     3        50  

Total

     1,683        3,020  

 

(1)

“Audit Fees” consist of fees billed for the audit of our annual consolidated financial statements, statutory audits, review of interim condensed consolidated financial statements included in quarterly reports, assistance with review of documents filed with the SEC, fees normally provided in connection with registration statements, and services that are normally provided by PwC in connection with statutory and regulatory filings or engagements, attest services.

(2)

“All Other Fees” consist of non-audit fees paid to PwC USA and PwC UK for access to its proprietary accounting research database and financial statement disclosure checklist, and in 2018 fees paid to PwC UK for services in connection with our corporate reorganization.

 

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Change in Independent Registered Public Accounting Firm

On June 26, 2019, the Audit Committee dismissed PwC UK as the Company’s independent registered public accounting firm and separately approved the engagement of PwC USA as the Company’s new independent registered public accounting firm effective immediately. This decision was made by the Audit Committee in connection with the Company’s centralization of its accounting and finance functions to the Company’s Boston, Massachusetts office.

The reports of PwC UK on the Company’s consolidated financial statements for each of the fiscal years ended December 31, 2018 and 2017 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the Company’s two most recent fiscal years ended December 31, 2018 and 2017, and the subsequent interim period through June 26, 2019, there were:

 

   

no “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the instructions to Item 304) between the Company and PwC UK on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to PwC UK’s satisfaction would have caused PwC UK to make reference to the subject matter of the disagreement(s) in connection with its report, and

 

   

no “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K), except for: (i) the material weakness in the Company’s internal control over financial reporting related to the recognition and accrual of research and development related expenses and reimbursements, and (ii) the restatement of the Company’s interim condensed consolidated financial statements as of June 30, 2018 and the six month period then ended for an error in accounting for contingent assets and the related material weakness in internal control over financial reporting which has since been remediated, each as disclosed in the Company’s prior filings with the U.S. Securities and Exchange Commission (“SEC”).

During the Company’s two most recent fiscal years ended December 31, 2018 and 2017 and the subsequent interim period through June 26, 2019, neither the Company nor anyone on the Company’s behalf consulted with PwC USA regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

We have furnished the foregoing disclosure to PwC UK and PwC USA.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, A DELAWARE LIMITED LIABILITY PARTNERSHIP, AS OUR AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020

 

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PROPOSAL 6—AUTHORIZATION FOR THE AUDIT COMMITTEE TO DETERMINE THE AUDITORS’ REMUNERATION FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020

Proposal 6 authorizes the Audit Committee to determine our auditors’ remuneration for the fiscal year ending December 31, 2020. Fees for PwC USA, our independent registered public accounting firm, and PwC UK, our statutory auditor, in respect of the years ended December 31, 2019 and December 31, 2018, are set forth in Proposal 6 above.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE AUTHORIZATION OF OUR AUDIT COMMITTEE TO DETERMINE OUR AUDITORS’

REMUNERATION FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020

 

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PROPOSAL 7—RESOLUTION TO RECEIVE THE COMPANY’S U.K. STATUTORY ANNUAL

ACCOUNTS AND REPORTS

At the Meeting, our Board of Directors will present our U.K. statutory annual accounts and reports for the period January 1, 2019 through December 31, 2019, which includes the audited portion of the directors’ annual report on remuneration. We will provide our shareholders with an opportunity to receive the U.K. statutory annual accounts and reports and to raise questions in relation to them.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE RESOLUTION TO RECEIVE THE COMPANY’S U.K. STATUTORY ANNUAL ACCOUNTS AND REPORTS

 

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PROPOSAL 8—ADVISORY (NON-BINDING) VOTE TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) enable our shareholders to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed under the “Compensation Discussion and Analysis” section, the 2019 Summary Compensation Table and the related compensation tables, notes, and narrative in this proxy statement.

This proposal, known as a “Say-on-Pay” proposal, gives our shareholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the philosophy, policies and practices described in this proxy statement.

Our compensation programs are designed to support our business goals and promote our long-term profitable growth. We urge shareholders to read the “Compensation Discussion and Analysis” in this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives. We also encourage you to review the 2019 Summary Compensation Table and other related compensation tables and narratives, which provide detailed information on the compensation of our named executive officers. The Board and the Compensation Committee believe that the policies and procedures described and explained in the “Compensation Discussion & Analysis” are effective in achieving our goals.

The vote under this Proposal 8 is advisory, and therefore not binding on the Company, the Board or our Compensation Committee. However, our Board of Directors and Compensation Committee values the opinions of our shareholders and will review and consider the voting results when making future decisions regarding our executive compensation program.

Shareholders will be asked at the Meeting to approve the following resolution pursuant to this Proposal 8:

“RESOLVED , that the shareholders of the Company approve, on a non-binding, advisory basis, the compensation of the Company’s “named executive officers,” as disclosed in this proxy statement under the “Compensation Discussion and Analysis” section, the compensation tables and the narrative disclosures that accompany the compensation tables.”

THE BOARD RECOMMENDS YOU VOTE

FOR APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

SET FORTH IN THIS PROXY STATEMENT

 

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PROPOSAL 9—ADVISORY VOTE ON THE FREQUENCY OF FUTURE VOTES ON EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, enables our shareholders to indicate, at least once every six years, how frequently we should seek a non-binding vote on the compensation of our named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules. By voting on this Proposal 9, shareholders may indicate whether they would prefer a non-binding vote on named executive officer compensation once every one, two, or three years.

Our Board believes that it is appropriate to give our shareholders the opportunity to provide regular input on our executive compensation program though an advisory vote. Accordingly, our Board recommends that you vote to hold an advisory vote on executive compensation every year.

We understand that our shareholders may have different views as to what is the best approach for the Company, and we look forward to hearing from our shareholders on this Proposal.

You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years, or abstain from voting when you vote in response to the resolution set forth below:

RESOLVED , that the option of once every one year, two years, or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a shareholder vote to approve the compensation of the named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and the other related disclosure.”

The option of one year, two years, or three years that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation that has been selected by shareholders. However, because this vote is advisory and not binding on the Company, our Compensation Committee, or our Board in any way, we may decide that it is in the best interests of our shareholders and the Company to hold an advisory vote on executive compensation more or less frequently than the vote frequency approved by our shareholders.

THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE

FOR THE PROPOSAL THAT THE ADVISORY VOTE ON COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS OCCUR ANNUALLY

 

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PROPOSAL 10—APPROVAL OF OUR U.K. STATUTORY DIRECTORS’ ANNUAL REPORT ON REMUNERATION

Our U.K. statutory directors’ remuneration report is set forth as Annex A to this proxy statement. The directors’ remuneration report includes the annual report on remuneration. This document describes in detail our remuneration policies and procedures and explains how these policies and procedures help to achieve our compensation objectives with regard to our directors and the retention of high-quality directors. Our Board of Directors and the Compensation Committee believe that the policies and procedures as articulated in the directors’ remuneration report are effective and that as a result of these policies and procedures we have and will continue to have high-quality directors. Our Board of Directors has approved and signed the report in accordance with English law.

At the Meeting, the shareholders will vote on the annual report on remuneration. This vote is advisory and non-binding. Although non-binding, our Board of Directors and Compensation Committee will review and consider the voting results when making future decisions regarding our director remuneration program. Following the Meeting, and as required under English law, the directors’ annual report on remuneration will be delivered to the U.K. Registrar of Companies.

THE BOARD RECOMMENDS YOU VOTE

FOR APPROVAL OF OUR U.K. STATUTORY DIRECTORS’ ANNUAL REPORT ON REMUNERATION

SET FORTH IN ANNEX A

BACKGROUND TO PROPOSALS 11 AND 12

Pursuant to the U.K. Companies Act 2006, our Board of Directors may only allot shares or grant rights over shares if authorized to do so by our shareholders. If so authorized, the U.K. Companies Act 2006 requires us, where the allotment is for cash, to offer them in the first instance to our existing shareholders in proportion to their holdings, unless the shareholders have sanctioned the disapplication of their statutory rights of pre-emption in respect of such allotment or grant of rights.

Our Board of Directors anticipates that there may be occasions when they need flexibility to finance business opportunities and growth, or otherwise act in the best interests of the Company, by the issuance of shares or grant of rights over shares without a pre-emptive offer to existing shareholders. To ensure our continued ability to respond to market conditions and address business needs, our Board of Directors considers it appropriate that they be authorized to allot shares up to an aggregate nominal amount of £13,023,851.50 and within this amount be empowered to allot shares or grant rights over shares up to an aggregate nominal amount of £13,023,851.50 on a non-pre-emptive basis. This authority to allot shares and power to allot shares on a non-pre-emptive basis will replace all of the existing authorities and powers granted by our shareholders.

These proposals are fully compliant with U.K. company law, consistent with U.S. capital markets practice and governance standards, and if approved, will keep us on an equal footing with our peer companies who are incorporated in the United States. We are asking you to approve these proposals to allow us to continue to execute on our business and growth strategy in a timely and competitive manner.

The full details of the proposals are set forth below.

 

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PROPOSAL 11—AUTHORIZATION OF ALLOTMENT OF SHARES

Under the U.K. Companies Act 2006, our Board of Directors cannot allot shares in the Company (other than pursuant to an employee share scheme) unless they are authorized to do so by the Company in general meeting. The Board of Directors currently have an existing authority to allot shares in the Company and to grant rights to subscribe for or convert securities into shares in the Company. This authority was granted to the Board of Directors on June 26, 2019 and was in respect of a maximum aggregate nominal amount of £13,023,851.50. This Proposal 11 is an ordinary resolution to seek a new authority, which will replace the existing authority.

Proposal 11 proposes that the Board of Directors are granted authority to allot new shares or to grant rights to subscribe for or to convert any security into shares in the Company up to a maximum aggregate nominal amount of £13,023,851.50. This proposal is consistent with the authorization approved by our shareholders at a general meeting of the Company held June 26, 2019 and includes the same level of limitation as the proposal that was previously approved.

If approved by shareholders, this authority will run for five years and will expire on June 16, 2025.

The Board of Directors have no present intention of exercising this authority, except in relation to the Company’s share incentive schemes, but believe it is in the interests of shareholders for the Board of Directors to have this flexibility to allot shares otherwise than just in relation to the Company’s share incentive schemes should circumstances and their intentions change.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE APPROVAL OF PROPOSAL 11

 

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PROPOSAL 12—DISAPPLICATION OF PRE-EMPTION RIGHTS

Proposal 12 seeks a disapplication of pre-emption rights for cash issues of up to a certain proportion of the Company’s issued ordinary share capital. Our Board of Directors currently has a power to allot shares as if the rights of pre-emption applicable under the U.K. Companies Act did not apply for cash issues. This power was granted to the Directors pursuant to shareholder resolutions passed on June 26, 2019 and was in respect of a maximum aggregate nominal amount of £13,023,851.50.

The Directors have decided to seek a new disapplication of pre-emption rights for cash issues to replace the existing power. Proposal 12 will, if passed, give the Board of Directors power, pursuant to the authority to allot granted by Proposal 11, to allot shares for cash or to grant rights to subscribe for or to convert any security into shares without first offering them to existing shareholders in proportion to their existing holdings up to an aggregate maximum nominal amount of £13,023,851.50.

Proposal 12 will be required to be passed as a special resolution and, if passed, this authority will run for five years and will expire on June 16, 2025.

The Board of Directors have no present intention of exercising this power, except in relation to the Company’s share incentive schemes, but believe it is in the interests of shareholders for the Directors to have this flexibility to allot shares for cash otherwise than just in relation to the Company’s share incentive schemes should circumstances and their intentions change.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE APPROVAL OF PROPOSAL 12

 

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PROPOSAL 13—ADOPTION OF NEW ARTICLES OF ASSOCIATION TO AMEND ARTICLES 12.3, 51 AND 52 OF THE COMPANY’S CURRENT ARTICLES OF ASSOCIATION RELATING TO QUORUM REQUIREMENTS FOR MEETINGS OF THE COMPANY’S SHAREHOLDERS

Our shareholders are asked to approve the adoption of new articles of association in order to amend the definition of quorum for purposes of shareholder actions at general meetings and meetings of holders of classes of shares to conform with the listing standards of Nasdaq. Consistent with English law, our current Articles of Association provide that two shareholders present in person or by proxy and entitled to vote on the matter presented shall constitute a quorum at general meetings and class meetings. Nasdaq Listing Rule 5620(c), however, defines a quorum as no less than 33 1 3  percent of the outstanding shares of a company’s common voting stock. Until January 1, 2020, we were a foreign private issuer within the meaning of the Exchange Act, and were thus permitted, pursuant to Nasdaq’s listing standards, to follow our home country practice with respect to quorum requirements in lieu of Nasdaq Listing Rule 5620(c). However, since we are no longer a foreign private issuer and therefore no longer subject to this exemption, the definition of quorum in our current Articles of Association should be amended so that it conforms to Nasdaq Listing Rule 5620(c).

Therefore, it is proposed that articles 12.3, 51 and 52 of our current Articles of Association be amended so that the quorum requirements for general meetings and meetings of holders of classes of shares conform with Nasdaq Listing Rule 5620(c) which defines a quorum as no less than 33 1 3  percent of the outstanding shares of a company’s common voting stock. Accordingly, Proposal 13 is submitted for a shareholder vote at the Annual General Meeting to adopt new articles of association in order to replace articles 12.3, 51 and 52 of the current Articles of Association with the following new articles (the “Proposed Quorum Amendment”):

12.3 All the provisions in these Articles as to general meetings shall apply, with any necessary modifications, to every class meeting except that the necessary quorum at every such meeting shall be one or more persons present and between them holding at least 33 1 3  percent in number of the issued shares of the class (excluding any shares of that class held as treasury shares) provided that where a person is present by proxy or proxies, he is treated as holding only the shares in respect of those proxies which are authorised to exercise voting rights.

 

  51

Quorum at General Meeting

No business shall be transacted at any general meeting unless a quorum is present. If a quorum is not present a chairman of the meeting can still be chosen and this will not be treated as part of the business of the meeting. One or more qualifying persons present at a meeting and between them holding (or being the proxy or corporate representative of the holders of) at least 33 1 3  percent in number of the issued shares (excluding any shares held as treasury shares) entitled to attend and vote on the business to be transacted shall constitute a quorum.

For the purposes of this Article 51:

 

  (a)

a “ qualifying person ” is an individual who is a member, a person authorised to act as the representative of a member (being a corporation) in relation to the meeting or a person appointed as proxy of a member in relation to the meeting; and

 

  (b)

where a qualifying person is present as proxy of a member in relation to the meeting, he is treated as holding only the shares in respect of which he is authorised to exercise voting rights.

 

  52

Procedure if quorum is not present

If a quorum is not present within 15 minutes (or such longer interval as the chairman in his absolute discretion thinks fit) from the time appointed for holding a general meeting, or if a quorum ceases to be present during a meeting, the meeting shall be dissolved if convened on the requisition of members. In any other case, the meeting shall stand adjourned to another day, (not being less than ten clear days after the date of the original meeting), and at such time and place as the chairman (or, in default, the Board) may determine. If at such adjourned meeting a quorum is not present within 15 minutes from the time appointed for holding the meeting, the meeting shall be dissolved.

 

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This description of the Proposed Quorum Amendment is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the Articles as they are proposed to be adopted included as Annex B to this proxy statement, in which we have shown the proposed amendments colored in red, with deletions indicated by strikeouts and additions indicated by underlining. The approval of this Proposal 13 is not conditioned on the approval of Proposal 14.

Proposal 13 will be required to be passed as a special resolution. If our shareholders approve Proposal 13, the Proposed Quorum Amendment would be implemented in the new articles of association and would become effective from the date on which Proposal 13 is passed by the shareholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE ADOPTION OF THE NEW ARTICLES OF ASSOCIATION TO AMEND ARTICLES 12.3, 51 AND 52 OF THE COMPANY’S CURRENT ARTICLES OF ASSOCIATION RELATING TO QUORUM REQUIREMENTS FOR MEETINGS OF THE COMPANY’S SHAREHOLDERS

 

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PROPOSAL 14—ADOPTION OF NEW ARTICLES OF ASSOCIATION TO AMEND PROVISIONS OF THE CURRENT ARTICLES OF ASSOCIATION TO PERMIT MEETINGS OF THE COMPANY’S SHAREHOLDERS TO BE HOSTED ON AN ELECTRONIC PLATFORM

In addition to the Proposed Quorum Amendment, our shareholders are also being asked to approve the adoption of new articles of association in order to permit meetings of the Company’s shareholders to be hosted on an electronic platform with no member required to be in physical attendance at such electronic general meeting. Our current Articles of Association contemplate that meetings be held at a physical location only. The proposed changes would provide the ability for the Company to choose to hold electronic general meetings by means of remote communication in parallel with any physical general meeting. Any such meetings to be held by means of remote communication would afford shareholders the same opportunity and ability to participate as if they were physically attending the meeting, including the ability to ask questions, provide feedback to the company and present shareholder proposals.

Proposal 14 is submitted for a shareholder vote at the Annual General Meeting to adopt new articles of association in order to, among other related changes throughout the current Articles of Association, add the following articles 61 and 62 to the current Articles of Association (collectively, the “Proposed Electronic Platform Amendment”):

 

  61

Electronic General Meetings

 

  61.1

Without prejudice to Article 60, the Board may resolve to enable persons entitled to attend a general meeting hosted on an electronic platform (such meeting being an electronic general meeting) to do so by simultaneous attendance by electronic means with no member necessarily in physical attendance at the electronic general meeting. The members or their proxies present shall be counted in the quorum for, and entitled to vote at, the general meeting in question, and that meeting shall be duly constituted and its proceedings valid if the chairman of the meeting is satisfied that adequate facilities are available throughout the electronic general meeting to ensure that members attending the electronic general meeting who are not present together at the same place may, by electronic means, attend, speak and vote at it.

 

  61.2

If there is a failure of communication equipment, electronic platform, facilities, security or any other failure in the arrangements for participation in the electronic general meeting, the chairman may, without the consent of the meeting, interrupt or adjourn the meeting in accordance with Article 55. Such adjournment will not affect the validity of such meeting, or any business conducted at such meeting up to the point of adjournment, or any action taken pursuant to such meeting.

 

  61.3

Nothing in these Articles prevents a general meeting being held both physically and electronically.

 

  62

Meaning of Participate

 

  62.1

For the purposes of Articles 50, 59 and 60 in relation to physical general meetings, the right of a member to participate in the business of any general meeting shall include without limitation the right to speak, vote on a show of hands, vote on a poll, be represented by a proxy and have access to all documents which are required by the Companies Acts or these Articles to be made available at the meeting.

 

  62.2

For the purposes of Articles 50, 59, 61 in relation to electronic general meetings, the right of a member to participate in the business of any general meetings shall include without limitation the right to speak, vote on a poll, be represented by a proxy and have access (including electronic access) to all documents which are required by the Companies Acts or these Articles to be made available at the meeting.

This description of the Proposed Electronic Platform Amendment is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the Articles as they are proposed to be adopted included as

 

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Annex B to this proxy statement, in which we have shown the proposed amendments colored in blue, with deletions indicated by strikeouts and additions indicated by underlining. Other immaterial conforming edits (e.g. updates to section references) are also included on Annex B. The approval of this Proposal 14 is not conditioned on the approval of Proposal 13.

Proposal 14 will be required to be passed as a special resolution. If our shareholders approve Proposal 14, the Proposed Electronic Platform Amendment would be implemented in the new articles of association and would become effective from the date on which Proposal 14 is passed by the shareholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR THE ADOPTION OF THE NEW ARTICLES OF ASSOCIATION TO AMEND PROVISIONS OF THE CURRENT ARTICLES OF ASSOCIATION TO PERMIT MEETINGS OF THE COMPANY’S SHAREHOLDERS TO BE HOSTED ON AN ELECTRONIC PLATFORM

 

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

BOARD OF DIRECTORS

Directors

Below is a list of our Directors and their positions and ages as of the date of this proxy statement.

 

Name   Age   Position

James Geraghty

  65  

Chairman of the Board of Directors

Steven M. Altschuler, M.D.

  66  

Non-Executive Director

Joanne T. Beck, Ph.D.

  59  

Non-Executive Director

John T. Curnutte, M.D., Ph.D.

  68  

Non-Executive Director

Marc Dunoyer

  67  

Non-Executive Director

Jon Ellis, Ph.D.

  53  

Non-Executive Director

Bobby Gaspar, M.D., Ph.D.

  56  

Chief Executive Officer and Director

Charles A. Rowland, Jr.

  61  

Non-Executive Director

Alicia Secor

  57  

Non-Executive Director

During the year ended December 31, 2019, there were four full meetings of our Board of Directors. All of our then Directors attended a minimum of 75% of the aggregate of the meetings of the Board of Directors and meetings of the committees of which he or she was a member during 2019. Effective June 26, 2019, Hong Fang Song resigned as a member of the Board of Directors. During her service as a director in 2019, Ms. Song did not attend over 75% of the meetings of the Board of Directors prior to June 26, 2019.

The biographical information for Steven M. Altschuler, James Geraghty and Marc Dunoyer, the nominees to our Board of Directors, is provided in “Proposal 1—Re-Election of Steven M. Altschuler to the Board of Directors,” “Proposal 2—Re-Election of Marc Dunoyer to the Board of Directors” and “Proposal 3—Re-Election of James Geraghty to the Board of Directors,” respectively.

Below is biographical information for those directors who are not standing for re-election at this Meeting and who will remain seated following the Meeting.

Joanne T. Beck, Ph.D. has been a member of our Board of Directors since July 2018. Since December 2019, Dr. Beck has served as the Chief Operating Officer at Boston Pharmaceuticals, Inc. Previously, Dr. Beck served as the Executive Vice President, Pharmaceutical Development & Operations at Celgene from April 2016 to December 2019. Prior to joining Celgene, Dr. Beck was the Senior Vice President, Pharmaceutical Development at Shire from January 2012 to April 2016. From May 2004 to January 2012, Dr. Beck held leadership roles in both pharmaceutical and vascular operations at Abbott, most recently as Head of Global Business Excellence and Strategic Program Management. Earlier in her career she had technical leadership roles at Amgen and Genentech. From January to December 2019, Dr. Beck served on the board of directors of Alliance for Regenerative Medicine, an international multi-stakeholder advocacy organization. Additionally, since February 2019, Dr. Beck has served on the board of directors for Catabasis Pharmaceuticals, Inc., a public pharmaceutical company. Dr. Beck holds a B.A. in chemistry from Lewis and Clark College and a Ph.D. in biochemistry and molecular biology from Oregon Health and Science University. We believe Dr. Beck is qualified to serve on our Board because of her executive experience in our industry.

John T. Curnutte, M.D., Ph.D. has been a member of our Board of Directors since August 2019. Dr. Curnutte previously served as Executive Vice President of Research and Development at Portola Pharmaceuticals, Inc., a publicly traded biotechnology company, from February 2011 to May 2019, as Interim Co-President of Portola from June 2018 to August 2018, and has been engaged by Portola as a consultant since May 2019. Since August 2017, Dr. Curnutte has served as a member of the board of directors of Pliant Therapeutics, Inc., a clinical stage biopharmaceutical company. From February 2015 to June 2016, Dr. Curnutte

 

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served as a member of the board of directors of Diadexus, Inc., a medical diagnostics company. Previously, Dr. Curnutte served as an independent consultant from April 2010 to January 2011, and as the Chief Executive Officer of 3-V Biosciences, Inc., a biotechnology company, from May 2008 to March 2010. From September 2000 to May 2008, he served as President of Schering-Plough Biopharma, a biopharmaceutical subsidiary of Schering-Plough Corporation, and Senior Vice President of Discovery Research at Schering Plough Research Institute, a pharmaceutical and healthcare company. From August 1993 to September 2000, Dr. Curnutte held various senior management positions at Genentech, Inc. Dr. Curnutte was an adjunct clinical professor of pediatrics at the Stanford University School of Medicine and a member of the medical staff from 1994 to 2013. Dr. Curnutte holds an A.B. in biochemistry and molecular biology from Harvard University and an M.D. and a Ph.D. in biological chemistry from Harvard Medical School. We believe Dr. Curnutte’s extensive experience as a clinician, researcher, and drug development executive in the biotechnology and pharmaceutical industries qualifies him to serve as a member of our Board of Directors.

Jon Ellis, Ph.D . has been a member of our Board of Directors since July 2018. Since March 2019, Dr. Ellis has served as the Vice President and Head of Technology Business Development for Pharmaceuticals R&D at GlaxoSmithKline plc, a publicly traded pharmaceutical company. At GSK, Dr. Ellis previously held the roles of Vice President & Head of Science & Technology Licensing for Pharmaceuticals R&D, Vice President & Head of Platforms BD & Academic, Vice President & Head of Platforms BD, Vice President & Head of Biopharmaceuticals BD, as well as the Head of Antibody Engineering and Biopharm Licensing. Prior to joining GSK in 2001, Dr. Ellis worked as a group leader at GlaxoWellcome plc, a former publicly traded pharmaceutical company, from November 1995 to January 2001. Prior to joining GlaxoWellcome in 1995, Dr. Ellis was a Senior Molecular Biologist at Wellcome Foundation Ltd, a former publicly traded pharmaceutical company, from November 1993 to November 1995. Prior to joining Wellcome Foundation in 1993, Dr. Ellis was a staff scientist at Quantum Biosystems Ltd from October 1992 to November 1993. Dr. Ellis holds a B.A. and M.A. from Magdalene College, University of Cambridge, a Ph.D. from the University of Cambridge, and an M.B.A. from Henley Management College. We believe Dr. Ellis is qualified to serve on our board because of his extensive experience in our industry.

Bobby Gaspar, M.D., Ph.D. has served as our Chief Executive Officer since March 2020 and as a member of our Board of Directors since February 2016. Prior to serving as our Chief Executive Officer, Dr. Gaspar served as our President of Research, Chief Scientific Officer from January 2020 to March 2020 and as our Chief Scientific Officer since February 2016. Since October 2007, he has been professor of pediatrics and immunology at the UCL Great Ormond Street Institute of Child Health and Honorary Consultant in pediatric immunology at Great Ormond Street Hospital. Dr. Gaspar holds an M.B.B.S. from Kings College London and a Ph.D. from UCL. We believe Dr. Gaspar is qualified to serve on our Board of Directors because of his scientific and industry experience in the field in which we operate.

Charles A. Rowland, Jr. has been a member of our Board of Directors since July 2018. From April 2016 to February 2017, Mr. Rowland served as President and Chief Executive Officer of Aurinia Pharmaceuticals Inc., and as a member of the board of directors of Aurinia from July 2014 to February 2017. Mr. Rowland previously served as Vice President and Chief Financial Officer of ViroPharma Incorporated, an international biopharmaceutical company, from October 2008 until it was acquired by Shire plc, in January 2014. Mr. Rowland previously held positions of increasing responsibility at the following companies: Biovail Pharmaceuticals, Inc., Breakaway Technologies, Inc., Endo Pharmaceuticals Inc., Pharmacia Corporation, Novartis AG, and Bristol-Myers Squibb Co. Mr. Rowland has served as a member of the board of directors and chairman of the audit committee of Generation Bio since July 2018. Since July 2017, he has served as a member of the board of directors and chairman of the compensation committee and member of the audit committee of Viking Therapeutics, Inc. Since January 2015, he has served as a member of the board of directors and audit committee and chairman of the compensation committee of Nabriva Therapeutics, AG, based in Dublin, Ireland. Since March 2015, Mr. Rowland has served as a member of the board of directors and compensation committee and as chairman of the audit committee of Blueprint Medicines Corporation, a publicly traded biopharmaceutical company. Mr. Rowland served as a member of the board of directors and audit committee of Idenix

 

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Pharmaceuticals, Inc., a biopharmaceutical company, from June 2013, until it was acquired by Merck & Co., Inc. in August 2014. Mr. Rowland served as a member of the board of directors and chairman of the audit committee of Vitae Pharmaceuticals, Inc., from September 2014 until it was acquired by Allergan Inc., in September 2016. Mr. Rowland served as a member of the board of directors and chairman of the audit committee of BIND Therapeutics, Inc., from May 2014 to July 2016. Mr. Rowland holds a B.S. in accounting from Saint Joseph’s University and an M.B.A. with a finance concentration from Rutgers University. We believe that Mr. Rowland’s extensive professional experience as a chief financial executive in the biotechnology and pharmaceutical industries and his experience serving as a director of various publicly traded biotechnology companies qualifies him to serve as a member of our Board of Directors.

Alicia Secor has been a member of our Board of Directors since November 2018. Ms. Secor currently serves as President, Chief Executive Officer and a member of the board of directors of Atalanta Therapeutics, Inc. Previously, from August 2016 until its sale to Catalent in August 2018, Ms. Secor served as President and Chief Executive Officer at Juniper Pharmaceuticals, Inc., a diversified public healthcare company. Prior to her role at Juniper, Ms. Secor held several leadership positions in the life sciences industry, including Chief Commercial Officer at Zafgen Inc. from January 2014 to July 2016, Senior Vice President and Chief Operating Officer at Synageva BioPharma Corp, and roles of increasing responsibility at Genzyme, including serving as Vice President and General Manager of the metabolic disease division. Ms. Secor is also a member of the board of directors at GW Pharmaceuticals, plc. and a board member of the Foundation for Prader-Willi Research. She received her B.S. in health administration from the University of New Hampshire and an M.B.A. from Northeastern University. We believe Ms. Secor is qualified to serve on our board because of her experience serving as an officer and director of various publicly traded biotechnology companies.

CORPORATE GOVERNANCE

Structure of our Board of Directors

The leadership structure of our Board of Directors separates the positions of Chief Executive Officer and Chairman of the Board in order to ensure independent leadership of the Board. Our Board believes that this separation is appropriate for the Company at this time because it allows for a division of responsibilities, with our Chief Executive Officer focused on leading the Company while the Chairman can focus on leading the Board in overseeing management, and for a sharing of ideas between individuals having different perspectives.

Independence of our Board of Directors

Our Board of Directors has determined that all of our directors, other than Bobby Gaspar, our Chief Executive Officer, qualify as “independent” directors in accordance with the independence requirements under the applicable Nasdaq rules as well as applicable rules promulgated by the SEC. Dr. Gaspar is not considered independent because he is an employee of the Company.

Our Board of Directors has made a subjective determination as to each independent director that no relationships exist that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our Board of Directors reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.

Our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. All of the committees of our Board of Directors are comprised entirely of directors determined by the Board of Directors to be independent.

Board Oversight of Risk Management

Our management is primarily responsible for assessing and managing risk, while our Board of Directors is responsible for overseeing management’s execution of its responsibilities. Our Board of Directors is supported

 

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by its committees in fulfillment of this responsibility. For example, our Audit Committee focuses on our overall financial risk by evaluating our internal controls and disclosure policies as well as ensuring the integrity of our financial statements and periodic reports. The Audit Committee also monitors compliance with legal and regulatory requirements. Our Compensation Committee strives to create incentives that encourage an appropriate level of risk-taking consistent with our business strategy. Finally, our Nominating and Corporate Governance Committee ensures that our governance policies and procedures are appropriate in light of the risks we face.

COMMITTEES OF OUR BOARD OF DIRECTORS

Our Board of Directors has four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Science and Technology Committee. The charters for each of these committees can be found on our website at www.orchard-tx.com. Each such committee reviews its respective charter at least annually.

 

Name    Audit    Compensation    Nominating and
Corporate
Governance
   Science and
Technology

Steven M. Altschuler, M.D.

            X

Joanne T. Beck, Ph.D.

      X       X

John T. Curnutte, M.D., Ph.D.

         X    Chair

Marc Dunoyer

   X       X   

Jon Ellis, Ph.D.

   X          X

James Geraghty

         Chair   

Charles A. Rowland, Jr.

   Chair    Chair      

Alicia Secor

      X    X   

Audit Committee

Our Audit Committee is currently composed of Mr. Dunoyer, Dr. Ellis and Mr. Rowland, with Mr. Rowland serving as chairman of the committee. Our Board of Directors has determined that each member of the Audit Committee meets the independence requirements of Rule 10A-3 under the Exchange Act and the applicable Nasdaq rules. Our Board of Directors has determined that Mr. Rowland is an “audit committee financial expert” within the meaning of SEC regulations and the applicable Nasdaq rules. The Audit Committee held five meetings during 2019. The Audit Committee’s responsibilities include:

 

   

recommending the appointment of the independent registered public accounting firm to the general meeting of shareholders;

 

   

the appointment, compensation, retention and oversight of any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit services;

 

   

pre-approving the audit services and non-audit services to be provided by our independent auditor before the auditor is engaged to render such services;

 

   

evaluating the independent auditor’s qualifications, performance and independence, and presenting its conclusions to the full Board of Directors on at least an annual basis;

 

   

reviewing the adequacy of our internal controls with management and any remediation plan associated with any significant control deficiencies or material weaknesses;

 

   

reviewing and discussing with management and our independent registered public accounting firm our financial statements and our financial reporting process; and

 

   

reviewing, approving or ratifying any related party transactions.

 

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Compensation Committee

Our Compensation Committee is currently composed of Dr. Beck, Mr. Rowland and Ms. Secor, with Mr. Rowland serving as chairman of the committee. Our Board of Directors has determined that each member of the Compensation Committee is “independent” as defined under the applicable Nasdaq rules. The Compensation Committee held seven meetings during 2019. The Compensation Committee’s responsibilities include:

 

   

identifying, reviewing and proposing policies relevant to the compensation and benefits of our directors and executive officers;

 

   

evaluating each executive officer’s performance in light of such policies and reporting to the board; and

 

   

overseeing and administering our employee share option scheme or equity incentive plans in operation from time to time.

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee has at any time during the prior three years been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of our Compensation Committee or the compensation committee of any entity that has one or more executive officers serving on our Board of Directors.

Our Board of Directors has delegated to the Compensation Committee the authority to determine the compensation for our executive officers. Non-executive director compensation is recommended by our Compensation Committee to the Board of Directors for approval. Our Chief Executive Officer may participate in general discussions with our Compensation Committee and Board of Directors about these compensation matters but he does not participate in discussions during which his individual compensation is being considered and approved.

In 2019, the Compensation Committee retained the services of Radford, which is part of the Rewards Solutions practice at Aon plc, and independent compensation consultant, to assist the Compensation Committee with respect to compensation actions in 2019 with the goal of ensuring that our compensation arrangements for our Chief Executive Officer, our other senior executive officers and our non-executive directors were competitive. Radford provided data from comparable publicly traded biopharmaceutical companies and otherwise assisted the Compensation Committee in its design of competitive compensation for our Chief Executive Officer, senior executives and non-executive directors. The Compensation Committee expects to continue to use compensation consultants to assist the Compensation Committee in determining competitive levels of executive and non-executive compensation and specific design elements of our executive compensation program and non-executive directors’ compensation program. The Compensation Committee continued to retain Radford through 2019 and 2020 in order to ensure that our compensation arrangements are competitive for 2020. After review and consultation with Radford, the Compensation Committee determined that Radford is independent and that there is no conflict of interest resulting from retaining Radford in 2019 or in 2020. In reaching these conclusions, our Compensation Committee considered the factors set forth in the SEC rules and the applicable Nasdaq rules.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee is composed of Dr. Curnutte, Mr. Dunoyer, Mr. Geraghty and Ms. Secor, with Mr. Geraghty serving as chairman of the committee. Our Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is “independent” as defined under the applicable Nasdaq rules. The Nominating and Corporate Governance Committee held three meetings during 2019. The Nominating and Corporate Governance Committee’s responsibilities include:

 

   

drawing up selection criteria and appointment procedures for directors;

 

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recommending nominees for election to our Board of Directors and its corresponding committees;

 

   

assessing the functioning of individual members of our Board of Directors and executive officers and reporting the results of such assessment to the Board of Directors; and

 

   

developing corporate governance guidelines.

The Nominating and Corporate Governance Committee considers candidates for Board of Director membership suggested by its members and the Chief Executive Officer. Additionally, in selecting nominees for directors, the Nominating and Corporate Governance Committee will review candidates recommended by shareholders in the same manner and using the same general criteria as candidates recruited by the committee and/or recommended by our Board of Directors. Any shareholder who wishes to recommend a candidate for consideration by the committee as a nominee for director should follow the procedures described later in this proxy statement under the heading “Additional Information—Shareholder Proposals for 2021 Annual General Meeting.”

Our Board of Directors is responsible for filling vacancies on our Board of Directors and for nominating candidates for election by our shareholders each year in the class of directors whose term expires at the relevant annual general meeting. The Board of Directors delegates the selection and nomination process to the Nominating and Corporate Governance Committee, with the expectation that other members of the Board of Directors, and of management, will be requested to take part in the process as appropriate.

Director Nomination Process

The process followed by our Nominating and Corporate Governance Committee to identify and evaluate director candidates includes requests to board members and others for recommendations, including through the use of search firms or other advisors, meetings from time to time to evaluate biographical information and background material relating to potential candidates, and interviews of selected candidates by management, recruiters, members of the committee and our board.

Once candidates have been identified, the Nominating and Corporate Governance Committee confirms that the candidates meet all of the minimum qualifications for director nominees established by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the Nominating and Corporate Governance Committee deems to be appropriate in the evaluation process. The Nominating and Corporate Governance Committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of our Board of Directors. Based on the results of the evaluation process, the Nominating and Corporate Governance Committee recommends candidates for the Board of Directors’ approval to fill a vacancy or as director nominees for election to the Board of Directors by our shareholders each year in the class of directors whose term expires at the relevant annual general meeting.

The qualifications, qualities and skills that our Nominating and Corporate Governance Committee believes must be met by a committee-recommended nominee for a position on our Board of Directors are as follows:

 

   

The nominee shall have experience at a strategic or policymaking level in a business, government, non-profit or academic organization of high standing.

 

   

The nominee shall be highly accomplished in his or her respective field, with superior credentials and recognition.

 

   

The nominee shall be well regarded in the community and shall have a long-term reputation for the high ethical and moral standards.

 

   

The nominee shall have sufficient time and availability to devote to the affairs of the Company, particularly in light of the number of boards of directors on which such nominee may serve.

 

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To the extent such nominee serves or has previously served on other boards, the nominee shall have a demonstrated history of actively contributing at board meetings.

We have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will further the interests of our shareholders through consideration of a number of facts and circumstances, including among other things, the skills of the prospective director candidate, his or her depth and breadth of business experience or other background characteristics, his or her independence and the needs of the Board of Directors.

Shareholder Recommendations and Nominees

Our Nominating and Corporate Governance Committee considers both recommendations and nominations for candidates to the Board from shareholders so long as such recommendations and nominations comply with our Articles of Association and applicable laws, including the rules and regulations of the SEC. Shareholders may recommend director nominees for consideration by the Nominating and Corporate Governance Committee by writing to our Company Secretary at the address below, or the Company’s registered office address from time to time, and providing evidence of the shareholder’s ownership of our ordinary shares and/or ADSs, the nominee’s name, home and business address, as well as the nominee’s detailed biographical data and qualifications for board membership, and information regarding any arrangements or understandings between the shareholder and the recommended candidate.

Following verification of the shareholder status of the person submitting the recommendation, all properly submitted recommendations will be promptly brought to the attention of the Nominating and Corporate Governance Committee. Shareholders who desire to nominate persons directly for election to the Board at an annual general meeting of shareholders must meet the deadlines and other requirements set forth under “Additional Information—Shareholder Proposals for 2021 Annual General Meeting.” Any vacancies on the Board of Directors occurring between our annual general meetings of shareholders may be filled by persons selected by a majority of the directors then in office, in which case any director so elected will serve until the next annual general meeting of shareholders when such director will offer himself/herself for re-election, or by persons elected by an ordinary resolution of the shareholders of the Company.

You may write to the Nominating and Corporate Governance Committee at:

c/o John Ilett

Company Secretary

Orchard Therapeutics plc

108 Cannon Street

London EC4N 6EU

United Kingdom

Science and Technology Committee

Our Science and Technology Committee is composed of Dr. Altschuler, Dr. Beck, Dr. Curnutte and Dr. Ellis, with Dr. Curnutte serving as chairman of the committee. Our Board of Directors has determined that each member of the Science and Technology Committee is “independent” as defined under the applicable Nasdaq rules. The Science and Technology Committee held one meeting during 2019. The Science and Technology Committee’s responsibilities include:

 

   

Reviewing, evaluating, and advising the Board of Directors and management regarding our long-term strategic goals and objectives;

 

   

Regularly reviewing our research and development pipeline;

 

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Reviewing, evaluating, and advising the Board of Directors on the quality and direction of our research and development programs;

 

   

Monitoring and evaluating trends in research and development, and recommending to the Board of Directors and management emerging technologies for building our technological strength;

 

   

Recommending approaches to acquiring and maintaining technology positions and advising the Board of Directors and management on the scientific aspects of business development transactions;

 

   

Assisting the Board of Directors with its oversight responsibility for enterprise risk management in areas affecting our research and development; and

 

   

Reviewing such other topics as delegated to the Science and Technology Committee from time to time by the Board of Directors.

Director Attendance at Annual General Meeting of Shareholders

Directors are expected to try to attend our annual general meeting of shareholders to the extent practicable.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics applicable to all of our directors, officers, employees and certain designated agents. The Code of Business Conduct and Ethics is available on our website at www.orchard-tx.com. We expect that any amendments to this code or any waivers of its requirements will be disclosed on our website.

Shareholder Communication with the Board of Directors

Any interested party with concerns about our Company may report such concerns to the Board of Directors or the chairman of our Board of Directors and Nominating and Corporate Governance Committee. Communications may be addressed to the entire Board or to any individual director. All such communications will initially be received and processed by our Company Secretary. Spam, junk mail, advertisements and threatening, hostile, illegal and similar unsuitable communications will not be delivered to the Board. Shareholders can contact members of the Board Directors by writing care of our Company Secretary at the Company’s registered office address.

A copy of any such written communication may also be forwarded to our legal counsel and a copy of such communication may be retained for a reasonable period of time. The director may discuss the matter with our legal counsel, with independent advisors, with non-management directors, or with our management, or may take other action or no action as the director determines in good faith, using reasonable judgment, and applying his or her own discretion.

Communications may be forwarded to other directors if they relate to important substantive matters and include suggestions or comments that may be important for other directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances, and matters as to which we tend to receive repetitive or duplicative communications.

The Audit Committee oversees the procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or audit matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting, internal accounting controls or auditing matters. We have also established a toll-free telephone number for the reporting of such activity, which is +1 866-254-3199.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table and related footnotes set forth information with respect to the beneficial ownership of our ordinary shares, as of April 10, 2020, by:

 

   

each beneficial owner of more than 5% of our ordinary shares

 

   

each of our named executive officers and directors;

 

   

all of our executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power. In computing the number of ordinary shares beneficially owned by a person and the percentage ownership of that person, ordinary shares subject to options, or other rights held by such person that are currently exercisable or will become exercisable within 60 days of April 10, 2020 are considered outstanding. These ordinary shares, however, are not included in the computation of the percentage ownership of any other person. Applicable percentage ownership is based on 97,154,565 ordinary shares outstanding as of April 10, 2020.

Unless otherwise indicated, the address for each of the shareholders listed in the table below is c/o Orchard Therapeutics plc, 108 Cannon Street, London EC4N 6EU United Kingdom.

 

     Ordinary Shares
Beneficially Owned
 
Name of Beneficial Owner    Number      Percent  

Greater than 5% Shareholders

     

Glaxo Group Limited(1)

     12,445,252        12.8

Entities affiliated with F-Prime(2)

     12,244,590        12.6

Entities affiliated with RA Capital Management(3)

     10,364,658        10.7

Entities affiliated with Deerfield Management Company(4)

     8,862,247        9.1

T. Rowe Price Associates, Inc.(5)

     5,469,458        5.6

Named Executive Officers and Directors

     

Mark Rothera(6)

     2,269,502        2.3

Frank Thomas(7)

     391,742        *  

Bobby Gaspar, M.D., Ph.D.(8)

     1,063,572        1.1

James A. Geraghty(9)

     266,206        *  

Steven M. Altschuler, M.D.(10)

     5,555        *  

Joanne T. Beck, Ph.D.(11)

     62,514        *  

John T. Curnutte, M.D., Ph.D.(12)

     12,500        *  

Marc Dunoyer(13)

     90,399        *  

Jon Ellis, Ph.D.

             

Charles A. Rowland, Jr.(14)

     65,514        *  

Alicia Secor(15)

     24,875        *  

All Executive Officers and Directors as a Group (10 persons )(16)

     4,252,379        4.2

 

*

Represents beneficial ownership of less than one percent.

(1)

Based solely on a Form 3 filed with the SEC by GlaxoSmithKline plc on January 2, 2020, consists of 12,445,252 of our ordinary shares. The board of directors of Glaxo Group Limited may be deemed to share voting and investment authority over the shares held by Glaxo Group Limited. The address of Glaxo Group Limited is 980 Great West Road, Brentford, Middlesex, London TW8 9GS, UK.

(2)

Based solely on a Form 4 filed with the SEC by FMR LLC on January 6, 2020, consists of (i) 6,122,295 of our ordinary shares held of record by F-Prime Capital Partners Healthcare Fund IV LP; and (ii) 6,122,295 of our ordinary shares held of record by F-Prime Capital Partners Healthcare Fund IV-A LP. F-Prime Capital

 

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  Partners Healthcare Advisors Fund IV LP is the general partner of F-Prime Capital Partners Healthcare Fund IV LP. F-Prime Capital Partners Healthcare Advisors Fund IV-A LP is the general partner of F-Prime Capital Partners Healthcare Fund IV-A LP. Each of F-Prime Capital Partners Healthcare Advisors Fund IV LP and F-Prime Capital Partners Healthcare Advisors Fund IV-A LP is solely managed by Impresa Management LLC, the managing member of its general partner and investment manager. Impresa Management LLC is owned, directly or indirectly, by various shareholders and employees of FMR LLC, including certain members of the Johnson family. Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. The address of these entities is 245 Summer Street, Boston, MA 02210.
(3)

Based solely on a Schedule 13G/A filed jointly filed with the SEC on April 9, 2020 by RA Capital Management, L.P., Peter Kolchinsky and Rajeev Shah, reflecting information as of March 31, 2020, consists of (i) 9,237,401 of our ADSs held by RA Capital Healthcare Fund, L.P. (the “Fund”) and (ii) 1,127,257 shares held in a separately managed account (the “Account”). RA Capital Healthcare Fund GP, LLC is the general partner of the Fund. The general partner of RA Capital is RA Capital Management GP, LLC, of which Dr. Kolchinsky and Mr. Shah are the controlling persons. RA Capital serves as investment adviser for the Fund and the Account and may be deemed a beneficial owner, for purposes of Section 13(d) of the Exchange Act, of our ADSs held by the Fund and the Account. The Fund has delegated to RA Capital the sole power to vote and the sole power to dispose of all securities held in the Fund’s portfolio, including the securities listed above. Because the Fund has divested voting and investment power over the reported securities it holds and may not revoke that delegation on less than 61 days’ notice, the Fund disclaims beneficial ownership of the securities it holds for purposes of Section 13(d) of the Exchange Act and therefore disclaim any obligation to report ownership of the reported securities under Section 13(d) of the Exchange Act. As managers of RA Capital, Dr. Kolchinsky and Mr. Shah may be deemed beneficial owners, for purposes of Section 13(d) of the Exchange Act, of any of our ADSs beneficially owned by RA Capital. RA Capital, Dr. Kolchinsky, and Mr. Shah disclaim beneficial ownership of the securities listed above other than for the purpose of determining their obligations under Section 13(d) of the Exchange Act, and the filing of such statement shall not be deemed an admission that either RA Capital, Dr. Kolchinsky, or Mr. Shah is the beneficial owner of such securities for any other purpose. The address of RA Capital Management, LLC is 20 Park Plaza, Suite 1200, Boston, MA 02116.

(4)

Based solely on a Schedule 13G/A filed jointly with the SEC on February 13, 2020 by Deerfield Mgmt, L.P., Deerfield Mgmt III, L.P.; Deerfield Mgmt IV, L.P.; Deerfield Management Company, L.P.; Deerfield Special Situations Fund, L.P.; Deerfield Partners, L.P.; Deerfield Private Design Fund III, L.P.; Deerfield Private Design Fund IV, L.P.; and James E. Flynn reflecting information as of December 31, 2019, consists of (i) 403,397 of our ADSs held by Deerfield Special Situations Fund, L.P.; (ii) 3,474,708 of our ADSs held by Deerfield Private Design Fund III, L.P.; (iii) 3,474,708 of our ordinary shares and ADSs held by Deerfield Private Design Fund IV, L.P.; and (iv) 1,509,434 of our ADSs held by Deerfield Partners, L.P. Deerfield Mgmt, L.P. is the general partner of Deerfield Special Situations Fund, L.P and Deerfield Partners, L.P. Deerfield Mgmt III, L.P. is the general partner of Deerfield Private Design Fund III, L.P. Deerfield Mgmt IV, L.P. is the general partner of Deerfield Private Design Fund IV, L.P. (collectively with Deerfield Special Situations Fund, L.P. and Deerfield Private Design Fund III, L.P., the “Deerfield Funds”). Deerfield Management Company, L.P. is the investment advisor of each of the Deerfield Funds. Mr. James E. Flynn is the sole member of the general partner of each of Deerfield Mgmt, L.P., Deerfield Mgmt III, L.P., Deerfield Mgmt. IV, L.P. and Deerfield Management Company, L.P. Deerfield Mgmt, L.P. may be deemed to beneficially own the shares held by Deerfield Special Situations Fund, L.P. and Deerfield Partners, L.P. Deerfield Mgmt III, L.P. may be deemed to beneficially own the shares held by Deerfield

 

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  Private Design III, L.P. Deerfield Mgmt IV, L.P. may be deemed to beneficially own the shares held by Deerfield Private Design Fund IV, L.P. Each of Deerfield Management Company, L.P. and Mr. James E. Flynn may be deemed to beneficially own the securities held by the Deerfield Funds. The address of the Deerfield Funds is 780 Third Avenue, 37th Floor, New York, NY 10017.
(5)

Based solely on a Schedule 13G filed with the SEC on February 14, 2020 by T. Rowe Price Associates, Inc., reflecting information as of December 31, 2019, T. Rowe Price Associates, Inc. had sole voting power with respect to 885,121 of our ADSs or ordinary shares and sole dispositive power with respect to 5,469,458 shares. T. Rowe reports its address as 100 E. Pratt Street, Baltimore, Maryland 21202.

(6)

Consists of (i) 93,796 of our ordinary shares and ADSs, (ii) 10,000 of our ordinary shares and ADSs held by Rothera Family Trust U/A dated 9/24/15 and (iii) 2,165,706 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020. Mr. Rothera’s spouse is the beneficiary and trustee of the Rothera Family Trust U/A dated 9/24/15, and Mr. Rothera may be deemed to have voting and investment power of the shares held by Rothera Family Trust U/A dated 9/24/15.

(7)

Consists of (i) 15,120 of our ordinary shares and ADSs and (ii) 376,622 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020.

(8)

Consists of (i) 348,189 of our ordinary shares, (ii) 2,000 of our ordinary shares held by Dr. Gaspar’s child, (iii) 2,000 of our ordinary shares held by another of Dr. Gaspar’s children and (iv) 711,383 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020. Dr. Gaspar may be deemed to have voting and investment power of shares held by his children.

(9)

Consists of (i) 44,391 of our ordinary shares and ADSs and (ii) 221,815 ordinary shares issuable upon exercise of options within 60 days of April 10, 2020.

(10)

Consists of 5,555 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020.

(11)

Consists of (i) 9,294 of our ordinary shares and ADSs and (ii) 53,220 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020.

(12)

Consists of 12,500 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020.

(13)

Consists of (i) 37,179 of our ordinary shares and ADSs and (ii) 53,220 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020.

(14)

Consists of (i) 12,294 of our ordinary shares and ADSs and (ii) 53,220 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020.

(15)

Consists of 24,875 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020.

(16)

Includes an aggregate of 3,678,116 of our ordinary shares issuable upon exercise of options within 60 days of April 10, 2020.

 

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CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PERSONS

Other than the compensation arrangements described below under the sections “Director Compensation” and “Compensation Discussion and Analysis” and the transactions described below, in the period from January 1, 2019 through the date of this proxy statement, we were not a party to any transactions between us and certain “related persons”, which are generally considered to be our executive officers, directors, director nominees or 5% shareholders, or their immediate family members.

Investment and Shareholders’ Agreement

We are party to an investment and shareholders’ agreement with certain of our shareholders, pursuant to which certain of our shareholders, including certain holders with beneficial ownership of five percent or more of our ordinary shares, have the right to demand that we file a registration statement for their ordinary shares or request that their ordinary shares be covered by a registration statement that we are otherwise filing.

Indemnification agreements

We have entered into a deed of indemnity with each of our directors and executive officers. These agreements and our Articles of Association require us to indemnify our directors and executive officers to the fullest extent permitted by law. We also maintain appropriate directors’ and officers’ liability insurance (including ensuring that premiums are properly paid) for their benefit for so long as any claims may lawfully be brought against them.

Related Person Transactions Policy

We have adopted a written related person transactions policy that such transactions must be approved by our Audit Committee. Pursuant to this policy, the Audit Committee has the primary responsibility for reviewing and approving or disapproving “related person transactions,” which are transactions between us and related persons in which the related person has a direct or indirect material interest. For purposes of this policy, a related person will be defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of any class of our voting securities, and their immediate family members.

 

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DIRECTOR COMPENSATION

Under our Directors’ Remuneration Policy, the Board has the discretion to pay our Non-Executive Directors for their Board and committee service in the form of cash fees or share options or a mixture of cash fees and share options. Our compensation arrangements for Non-Executive Directors during 2019, as set forth in our Non-Employee Director Compensation Policy, comprised an award of a fixed number of share options plus cash payment. The table below shows the compensation paid to our Non-Executive Directors during the year ended December 31, 2019. Other than as set forth in the table and described more fully below, we did not pay any compensation, make any equity awards or non-equity awards to, or pay any other compensation to any of our Non-Executive Directors in 2019.

Neither Dr. Gaspar, our Chief Executive Officer, nor Mr. Rothera, our former President and Chief Executive Officer, received any compensation for his service as a member of our Board of Directors in 2019. Each of Dr. Gaspar’s and Mr. Rothera’s compensation for service as an employee for fiscal year 2019 is presented in “Compensation Discussion and Analysis—Summary Compensation Table.”

 

Name

   Fees Earned or Paid
In Cash ($)
     Option Awards ($) (1)      Total
($)
 

Joanne Beck, Ph.D. (2)

   $ 41,333      $ 287,042      $ 328,375  

Marc Dunoyer (3)

   $ 46,500      $ 287,042      $ 333,542  

Hong Fang Song (4)

     —          —          —    

Jon Ellis (5)

     —          —          —    

Jim Geraghty (6)

   $ 83,000      $ 287,042      $ 370,042  

Charles Rowland, Jr. (7)

   $ 60,000      $ 287,042      $ 347,042  

Alicia Secor (8)

   $ 42,615      $ 287,042      $ 329,657  

John Curnutte, Ph.D. (9)

   $ 15,667      $ 449,120      $ 464,787  

 

(1)  

The amounts reported represent the aggregate grant date fair value of the option awards granted during 2019 as computed in accordance with FASB ASC 718. Such grant date fair values do not take into account any estimated forfeitures related to service-based vesting conditions. The assumptions used in calculating the grant date fair value are set forth in the notes to our consolidated financial statements included in Note 10 of our audited consolidated financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K, filed with the SEC on February 27, 2020. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by the directors.

(2)  

As of December 31, 2019, Dr. Beck held unexercised options to purchase 115,030 ordinary shares.

(3)  

As of December 31, 2019, Mr. Dunoyer held unexercised options to purchase 115,030 ordinary shares.

(4)  

Ms. Song resigned from our Board of Directors effective June 26, 2019. She did not hold any unvested shares or unexercised options as of December 31, 2019.

(5)  

In October 2018, we entered into a director nomination agreement with Glaxo Group Limited, or GSK, pursuant to which we agreed to nominate and appoint to our Board of Directors a designee of GSK, initially Dr. Ellis, during the period commencing upon our IPO until such time as we obtain marketing approval and commercially launch OTL-200 for metachromatic leukodystrophy (“MLD”). Dr. Ellis does not receive cash or equity compensation from us for his service on our Board of Directors.

(6)  

As of December 31, 2019, Mr. Geraghty held unexercised options to purchase 355,120 ordinary shares.

(7)  

As of December 31, 2019, Mr. Rowland held unexercised options to purchase 115,030 ordinary shares.

(8)  

As of December 31, 2019, Ms. Secor held unexercised options to purchase 85,000 ordinary shares.

(9)  

Dr. Curnutte was appointed to our Board of Directors in August 2019. As of December 31, 2019, Dr. Curnutte held unexercised options to purchase 50,000 ordinary shares.

We also reimburse all reasonable out-of-pocket expenses incurred by directors for their attendance at meetings of our Board of Directors or any committee thereof.

On June 26, 2019, all Non-Executive Directors were granted an annual award of share options, with the exception of John T. Curnutte, who was awarded share options on joining the Board of Directors effective

 

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August 30, 2019, Steven Altschuler, who was awarded share options on joining the Board of Directors effective February 3, 2020, Jon Ellis, who was not awarded any share options, and Hong Fang Song, who was not awarded any share options and who resigned from the Board of Directors effective June 26, 2019.

All options are granted with an exercise price that is no lower than the fair market value of an ordinary share on the date prior to the date of grant and are granted under the Orchard Therapeutics plc 2018 Share Option and Incentive Plan.

Non-Employee Director Compensation Policy

Our Board of Directors adopted a non-employee director compensation policy that is designed to enable us to attract and retain, on a long-term basis, highly qualified non-employee directors. In early 2020, upon recommendation and review performed by Radford of non-employee director compensation in comparison to our industry peer group, we increased the annual cash compensation to be paid to our Non-Executive Directors for service in 2020. The following table describes the annual cash compensation applicable to each role performed by Non-Executive Directors for the fiscal year ended December 31, 2019, and the changes to annual cash compensation applicable to each role effective January 1, 2020.

 

     2019 Cash
Compensation
     2020 Cash
Compensation
 

Board of Directors

   $ 35,000      $ 45,000  

Chairman (additional retainer)

   $ 40,000      $ 40,000  

Audit Committee Chair (additional retainer)

   $ 15,000      $ 18,000  

Compensation Committee Chair (additional retainer)

   $ 10,000      $ 15,000  

Nominating and Corporate Governance Committee Chair (additional retainer)

   $ 8,000      $ 10,000  

Science and Technology Committee Chair (additional retainer)

   $ 8,000      $ 10,000  

Audit Committee member/non-Chair (additional retainer)

   $ 7,500      $ 9,000  

Compensation Committee member/non-Chair (additional retainer)

   $ 5,000      $ 7,500  

Nominating and Corporate Governance Committee member/non-Chair (additional retainer)

   $ 4,000      $ 5,000  

Science and Technology Committee member/non-Chair (additional retainer)

   $ 4,000      $ 5,000  

All cash payments are payable monthly in arrears for any month in which such individual served as a director (with prorated payments for service during a portion of any such month). Non-Executive Directors are also entitled to receive reimbursement of reasonable travel and other expenses incurred in connection with attending meetings of the Board and reimbursement of up to $2,500 for tax preparation assistance if Board service requires a director to file a tax return in a jurisdiction that the director otherwise would not have been required to file.

In addition, each non-employee director will be granted an initial, one-time equity award of 50,000 share options upon his or her election to the Board of Directors, which vests in equal monthly installments over a three year period, subject to the director’s continued service through such vesting date(s). On the date of each annual general meeting of shareholders of the Company, each continuing non-employee director, other than a director receiving an initial award, will receive an annual equity award of 35,000 share options, which will vest in full upon the earlier to occur of the first anniversary of the date of grant or the date of our next annual general meeting of shareholders, subject to continued service as a director through such vesting date.

 

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Deeds of Indemnification

We do not have any third-party indemnification provisions in place for the benefit of one or more of our directors. However, we agree to use all reasonable endeavors to provide and maintain appropriate directors’ and officers’ liability insurance (including ensuring that premiums are properly paid) for their benefit for so long as any claims may lawfully be brought against them.

Non-Executive Director Appointment Letters

We have entered into letters of appointment with each of our Non-Executive Directors. These letters set forth the main terms on which each of our Non-Executive Directors serve on our Board of Directors. Continued appointment under the letter is contingent on continued satisfactory performance as a member of the Board of Directors and as a member of a committee, if applicable, as well as being re-elected at the annual general meetings in accordance with our Articles of Association. The appointment may be terminated by the Company or the Non-Executive Director with not less than three months’ prior written notice. Upon termination, the Non-Executive Director is only entitled to a pro-rata amount of the annual fee (if applicable) that is outstanding and payable up to the date of termination, and reimbursement in the normal way of any expenses properly incurred before that date.

 

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EXECUTIVE OFFICERS OF THE COMPANY

Below is a list of our executive officers and their positions and ages as of the date of this proxy statement. There are no family relationships between any of our executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected.

 

Name   

Age

  

Position

Bobby Gaspar, M.D., Ph.D.

   56    Chief Executive Officer

Frank Thomas

   50    President and Chief Operating Officer

Bobby Gaspar, M.D., Ph.D. For biographical information regarding Dr. Gaspar, please refer to “Board of Directors and Corporate Governance”.

Frank E. Thomas has served as our President and Chief Operating Officer since March 2020. He previously served as our Chief Financial Officer and Chief Operating Officer from January 2020 to March 2020 and as our Chief Financial Officer and Chief Business Officer from January 2018 through December 2019. Prior to Orchard, Mr. Thomas served as President and Chief Operating Officer of AMAG Pharmaceuticals, Inc., a publicly traded, specialty pharmaceutical company, from April 2015 to April 2017, as AMAG’s Executive Vice President and Chief Operating Officer from May 2012 through April 2015 and as Executive Vice President, Chief Financial Officer and Treasurer from August 2011 through May 2012. Prior to AMAG, he served as Senior Vice President, Chief Operating Officer and Chief Financial Officer for Molecular Biometrics, Inc., a commercial stage medical diagnostics company, from October 2008 to July 2011. Prior to Molecular Biometrics, Mr. Thomas spent four years at Critical Therapeutics, Inc., a public biopharmaceutical company, from April 2004 to March 2008, where he was promoted to President in June 2006 and Chief Executive Officer in December 2006 from the position of Senior Vice President and Chief Financial Officer. He also served on the board of directors of Critical Therapeutics from 2006 to 2008. Prior to 2004, Mr. Thomas served as the Chief Financial Officer and Vice President of Finance and Investor Relations at Esperion Therapeutics, Inc., a public biopharmaceutical company. Since June 2014, Mr. Thomas has served on the board of directors of Zafgen, Inc., a publicly traded biopharmaceutical company. Since July 2017, Mr. Thomas has served on the board of directors of Spero Therapeutics, Inc., a publicly traded, development-stage biotechnology company. Mr. Thomas was a member of the board of directors of the Massachusetts Biotechnology Council from 2007 to 2015. Mr. Thomas holds a B.B.A. from the University of Michigan, Ann Arbor.

 

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation program and the 2019 compensation for our named executive officers (“NEOs”). This CD&A should be read with the compensation tables and related disclosures for our NEOs.

Our NEOs for 2019* were as follows:

 

   

Bobby Gaspar, our Chief Executive Officer (former President of Research and Chief Scientific Officer);

 

   

Frank Thomas, our President and Chief Operating Officer (former Chief Financial Officer and Chief Operating Officer); and

 

   

Mark Rothera, our former President and Chief Executive Officer.

 

*

Effective March 2020, Mr. Rothera stepped down as our President and Chief Executive Officer, Dr. Gaspar was promoted to our Chief Executive Officer and Mr. Thomas was promoted to our President and Chief Operating Officer.

This CD&A describes the material elements of our executive compensation program during 2019. It also provides an overview of our executive compensation philosophy and objectives. Finally, it discusses how the Compensation Committee of our Board of Directors (our “Compensation Committee”) arrived at the specific compensation decisions for our executive officers, including our NEOs, for 2019, including the key factors that our Compensation Committee considered in determining their compensation.

Executive Summary

Business Overview

We are a commercial-stage, fully-integrated biopharmaceutical company dedicated to transforming the lives of patients with serious and life-threatening rare diseases through  ex vivo  autologous hematopoietic stem cell (“HSC”), based gene therapies. Our gene therapy approach seeks to transform a patient’s own, or autologous, HSCs into a gene-modified drug product to treat the patient’s disease through a single administration. We achieve this outcome by utilizing a viral vector to introduce a functional copy of a missing or faulty gene into the patient’s autologous HSCs through an  ex vivo  process, resulting in a drug product that can then be administered to the patient at the bedside.

We completed our initial public offering (“IPO”) in November 2018. From that time through December 31, 2019, we were a “foreign private issuer” within the meaning of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended. Effective January 1, 2020, we determined that we no longer meet those designations and are instead subject to the reporting and other requirements applicable to U.S. domestic issuers and “large accelerated filers” as defined in Rule 12b-2 of the Exchange Act. As a U.S. domestic issuer and large accelerated filer, we have increased U.S. disclosure obligations regarding executive compensation and are required to file for the first time a proxy statement pursuant to Section 14(a) of Exchange Act, including this CD&A, and hold for the first time a non-binding advisory vote on executive compensation.

Corporate Performance Highlights

Our executive compensation program seeks to incentivize and reward strong corporate performance. Highlights of our 2019 corporate performance are set forth below.

 

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Clinical and Regulatory

 

   

MLD European MAA submission:  The Marketing Authorization Application (“MAA”) for OTL-200 for the treatment of metachromatic leukodystrophy (“MLD”) was filed and accepted for review by the European Medicines Agency (“EMA”) in November 2019, ahead of previous guidance.

 

   

Cryopreserved gene therapy formulations:  Similar engraftment profiles were observed between the cryopreserved and fresh formulations of OTL-200 for MLD and OTL-101 for the treatment of adenosine deaminase severe combined immunodeficiency (“ADA-SCID”), which represents an important achievement toward the potential approvals of these investigational gene therapies and a key step toward global patient availability.

 

   

WAS registrational data set:  The registrational trial for OTL-103 for the treatment of Wiskott-Aldrich syndrome (“WAS”) met its key primary and secondary endpoints (n=8 at three years), including the elimination of severe bleeding episodes and a significant reduction in the frequency of severe infections.

 

   

MPS-I global license:  The Company signed an exclusive license with Fondazione Telethon and Ospedale San Raffaele in Milan, Italy, for a clinical-stage HSC gene therapy program—OTL-203, a treatment for mucopolysaccharidosis type I (“MPS-I”) that has shown promising early data in an ongoing proof-of-concept clinical trial.

Corporate Financings

 

   

Credit facility: In May 2019, we secured a five-year senior credit facility for up to $75 million with MidCap Financial.

 

   

Follow-on public offering: In June 2019, we completed a follow-on public offering for net proceeds of approximately $130 million, after deducting underwriting discounts and commission and offering expenses paid by us.

Overview of Executive Compensation Program

Executive Compensation Philosophy

Our executive compensation program is guided by our overarching philosophy of paying for performance. Consistent with this philosophy, we have designed our executive compensation program to achieve the following primary goals:

 

   

Develop and maintain a compensation framework anchored in the competitive market to ensure pay is managed fairly and efficiently;

 

   

Provide competitive compensation that enables us to attract and retain top performing talent who contribute to the company’s long-term success; and

Through linkage between pay and performance, motivate employees to focus on the achievement of annual and long-term performance goals and to drive superior performance.

Executive Compensation Program Design

Our executive compensation program is designed to be reasonable and competitive, and balance our goal of attracting, motivating, rewarding and retaining top-performing senior executives with our goal of aligning their interests with those of our shareholders. The Compensation Committee annually evaluates our executive compensation program to ensure that it is consistent with our short-term and long-term goals and market competitive practices.

 

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Our executive compensation program consists of a mix of compensation elements that balance achievement of our short-term goals with our long-term performance. We provide short-term incentive compensation opportunities in the form of annual cash bonuses, which focus on our achievement of annual goals. We also provide long-term incentive compensation opportunities in the form of equity awards, which have historically primarily been in the form of share options and which focus executive attention on our long-term performance. We believe that share options provide a strong reward for growth in the market price of our shares because their entire value depends on future share price appreciation. At the end of 2018, we introduced performance-based restricted share units (“PSUs”) by granting an award to Mr. Rothera. We granted PSUs with the same terms and conditions to our other NEOs in January 2019 in connection with our regular grant cycle. These awards were granted to further incentivize our executive team towards meeting longer-term performance milestones and in consideration of completing our IPO in 2018.

Our executive compensation program is also designed to incorporate sound practices for compensation governance. Below we summarize such practices.

What We Do:

 

 

Maintain an Independent Compensation Committee. The Compensation Committee consists solely of independent directors.

 

 

Retain an Independent Compensation Advisor. The Compensation Committee engages its own compensation advisor to provide information and analysis related to annual executive compensation decisions, including the 2019 executive compensation decisions, and other advice on executive compensation independent of management.

 

 

Review Executive Compensation Annually . The Compensation Committee annually reviews our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes.

 

 

Design Compensation At-Risk . Our executive compensation program is designed so that a significant portion of our executive officers’ compensation is “at risk” based on our corporate performance, as well as equity-based, to align the interests of our executive officers and shareholders.

 

 

Use a Pay-for-Performance Philosophy. The majority of our executive officers’ compensation is directly linked to corporate performance and includes a significant long-term equity component, thereby making a substantial portion of each executive officer’s total compensation dependent upon our share price.

What We Don’t Do:

 

 

No Executive Retirement Plans. We do not offer pension arrangements or retirement plans or arrangements to our executive officers that are different from or in addition to those offered to our other employees.

 

 

Limited Perquisites. We provide limited perquisites and other personal benefits to our executive officers.

 

 

No Special Health and Welfare Benefits. Our executive officers participate in our health and welfare benefits programs on the same basis as our other employees.

 

 

No Post-Employment Tax Payment Reimbursement. We do not provide any tax reimbursement payments (including “gross-ups”) on any change-in-control or severance payments or benefits.

 

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“Say-on-Pay” Vote on Executive Compensation

In prior years, we were both a “foreign private issuer” and an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended; therefore, we were not required to hold a non-binding, advisory vote on the compensation of our NEOs (a “Say-on-Pay” vote). At this AGM, we will hold our first Say-on-Pay vote. Our Board of Directors and Compensation Committee will consider the result of the Say-on-Pay vote, and the related “Say-on-Frequency” vote, as well as feedback received throughout the year, when making compensation decisions for our executive officers in the future because we value the opinions of our shareholders.

Governance of Executive Compensation Program

Role of the Compensation Committee and the Board of Directors

Our Compensation Committee, which is comprised entirely of independent directors, is responsible for discharging our Board of Directors’ responsibilities relating to compensation of our directors and executives, overseeing our overall compensation structure, policies and programs, and reviewing our processes and procedures for the consideration and determination of director and executive compensation. The primary objective of the Compensation Committee is to develop and implement compensation policies and plans to attract and retain key management personnel, motivate management to achieve our corporate goals and strategies, and align the interests of management with the long-term interests of our shareholders. Our Compensation Committee has the authority to retain, at our expense, one or more third-party compensation consultants to assist the Compensation Committee in performing its responsibilities. At the beginning of the year, the Compensation Committee reviews and approves the primary elements of compensation—base salary increases, cash bonus targets, and annual equity awards—for our NEOs, as authorized by the Board of Directors pursuant to the Compensation Committee charter. In addition, the Compensation Committee may deem it advisable to review and approve subsequent compensation opportunities for our executive officers, including our NEOs.

Compensation-Setting Factors

When reviewing and approving the amount of each compensation element and the target total compensation opportunity for our executive officers, the Compensation Committee considers the following factors:

 

   

the Company’s performance during the year, based on business and corporate goals and priorities established by the Chief Executive Officer (“CEO”) and the Board of Directors;

 

   

each executive officer’s skills, experience and qualifications relative to other similarly-situated executives at the companies in our compensation peer group;

 

   

the scope of each executive officer’s role compared to other similarly-situated executives at the companies in our compensation peer group;

 

   

the performance of each individual executive officer, based on an assessment of his or her contributions to our overall performance, ability to lead his or her department and work as part of a team, all of which reflect our values;

 

   

compensation parity among our executive officers;

 

   

the dilutive impact of equity awards;

 

   

our retention goals;

 

   

the compensation practices of our compensation peer group and the positioning of each executive officer’s compensation in a ranking of peer company compensation levels; and

 

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the recommendations provided by the CEO with respect to the compensation of our other executive officers.

These factors provide the framework for compensation decisions for each of our executive officers, including our NEOs. The Compensation Committee and the Board of Directors, as applicable, do not assign relative weights or rankings to these factors, and do not consider any single factor as determinative in the compensation of our executive officers. Rather, the Compensation Committee and the Board of Directors, as applicable, rely on their own knowledge and judgment in assessing these factors and making compensation decisions. Our CEO does not make recommendations to our Compensation Committee or participate in the Compensation Committee’s deliberations concerning his own compensation. In addition, the short-term incentive opportunities for our CEO are aligned solely with corporate performance, reflecting the unique role of the CEO.

Role of Management

In discharging its responsibilities, the Compensation Committee works with management, including our CEO. Our management assists the Compensation Committee by providing information on corporate and individual performance, market compensation data and management’s perspective on compensation matters.

In addition, at the beginning of each year, our CEO reviews the performance of our other executive officers, including our other NEOs, based on our achievement of our corporate goals and each executive officer’s overall performance during that year. The Compensation Committee solicits and reviews our CEO’s recommendations for base salary increases, annual cash bonuses, annual equity awards and any other compensation opportunities for our other executive officers, including our other NEOs, and considers our CEO’s recommendations in determining such compensation.

Role of Compensation Consultant

The Compensation Committee engages an external compensation consultant to assist it by providing information, analysis and other advice relating to our executive compensation program. For 2019, the Compensation Committee engaged Radford as its compensation consultant to advise on executive compensation matters including:

 

   

review and analysis of the compensation for our executive officers, including our NEOs;

 

   

research, development and review of our compensation peer group; and

 

   

support on other compensation matters as requested throughout the year.

Radford reports directly to the Compensation Committee and to the Compensation Committee chairman. Radford also coordinates with our management for data collection and job matching for our executive officers.

Role of Market Data

For purposes of comparing our executive compensation against the competitive market, the Compensation Committee reviews and considers the compensation levels and practices of a group of peer companies. This compensation peer group consists of public biotechnology companies that are similar to us in terms of market capitalization, stage of development and number of employees. Although we are organized and have operations in the United Kingdom, we primarily design our compensation programs to align with compensation practices of peers in the United States as our most senior executives reside in the United States. The Compensation Committee reviews our compensation peer group at least annually and makes adjustments to our peer group if necessary, taking into account changes in both our business and our peer companies’ businesses. The Compensation Committee also uses market data—from our compensation peer group and from the Radford Global Life Sciences Compensation survey—as one factor in evaluating whether the compensation for our executive officers is competitive in the market. The Compensation Committee and the Board of Directors, as applicable, also rely on their own knowledge and judgment in evaluating market data and making compensation decisions.

 

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To determine the composition of the peer group for 2019, the Compensation Committee considered the following criteria:

 

   

publicly-traded companies headquartered in the United States, with a preference towards companies with a recent IPO ( i.e ., within the past 3 years);

 

   

companies in the biotechnology sector, with preference towards gene/cell therapy and rare diseases;

 

   

similar market capitalization—within a range of approximately 0.33x to approximately 3.0x our then-current market capitalization;

 

   

the stage of development of each company’s development candidates; and

 

   

similar headcount—within a range of approximately 0.33x to approximately 3.0x our estimated year end headcount.

This analysis led to the selection of the following peer group which was used to make the relevant compensation assessments for 2019 for purposes of establishing 2019 annual base salary, target bonus and equity awards for our NEOs.

2019 Compensation Peer Group

 

Abeona Therapeutics

Acceleron Pharma

Adaptimmune Therapeutics

Akcea Therapeutics

Amicus Therapeutics

Audentes Therapeutics

AVROBIO

  

Blueprint Medicines

CRISPR Therapeutics

Insmed

Magenta Therapeutics

MyoKardia

PTC Therapeutics

REGENXBIO

  

Retrophin

Rhythm Pharmaceuticals

Rocket Pharmaceuticals

Sangamo Therapeutics

Solid Biosciences

Spark Therapeutics

Voyager Therapeutics

Primary Elements of Executive Compensation Program

The primary elements of our executive compensation program are:

 

   

base salary;

 

   

short-term incentive compensation in the form of annual cash bonuses; and

 

   

long-term incentive compensation in the form of annual equity awards.

Our executive officers, including our NEOs, are also eligible to participate in our standard employee benefit plans, such as our health and welfare benefits plans, our 2018 Employee Share Purchase Plan, and our U.K. defined contribution plan or our 401(k) plan on the same basis as our other employees. In addition, as described below, our executive officers, including our NEOs, are entitled to certain change-in-control severance payments and benefits pursuant to their employment agreements, described herein.

Base Salary

We pay base salaries to our executive officers, including our NEOs, as the fixed portion of their compensation to provide them with a reasonable degree of financial certainty, and to attract and retain top-performing individuals. At the time of hire, base salaries are determined for our executive officers, including our NEOs, based on the factors described in “Governance of Executive Compensation Program—Compensation-Setting Factors” above. Typically, at the beginning of each year, the Compensation Committee reviews base salaries for our executive officers, including our NEOs, based on such factors to determine if an increase is appropriate. In addition, base salaries may be adjusted in the event of a promotion or significant change in responsibilities.

 

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2019 Annual Base Salary

In November 2018, upon completion of our IPO, the Compensation Committee implemented market-based salary adjustments to reflect our status as a newly-public company. Effective as of January 1, 2019, the annual base salaries were increased to provide an across-the-board merit adjustment of approximately 3%, and for Dr. Gaspar, a percentage increase reflecting his change from 80% status to that of a full-time employee as reflected below.

 

NEO    2018 Post-
IPO Annual
Base Salary
     2019 Annual
Base Salary
     Percentage
Increase
 

Mark Rothera

   $ 513,000      $ 527,440        2.8

Frank Thomas

   $ 418,000      $ 430,090        2.9

Bobby Gaspar

   $ 317,500      $ 344,348        8.5

The actual base salaries paid to our NEOs in 2019 are set forth in the “Summary Compensation Table” below.

Short-Term Incentive Compensation

Annual Cash Bonuses

We provide short-term incentive compensation opportunities to our executive officers, including our NEOs, in the form of annual cash bonuses to reward short-term achievements and milestones towards our long-term goals. We focus on our overall corporate performance to determine the cash incentives of our CEO. Our other NEOs’ cash incentives are assessed on both our overall corporate performance and on their individual contributions.

Performance Goals

At the beginning of each year, the Compensation Committee discusses with the CEO the annual corporate performance objectives that are intended to be the most significant drivers of our short-term and long-term success.

At the beginning of the following year, the Compensation Committee assesses the results of the corporate goals, reviews management’s self-assessment, evaluates specific achievements that advanced the prior year’s corporate objectives, and determines our overall success in the prior year. Our CEO evaluates the other executive officers’, including the other NEOs’, achievement of their prior year’s individual performance. The Compensation Committee considers our CEO’s recommendations, and independently reviews and approves the total percentage achievement level for each of the other executive officers, including our other NEOs.

Target Annual Bonuses

At the time of hire, the target annual bonus is determined for each of our executive officers, including our NEOs, and at the beginning of each year, the Compensation Committee reviews and determines whether to change the target annual bonus for each such individual. The Compensation Committee considers the factors described in “Governance of Executive Compensation Program—Compensation-Setting Factors” above, with an emphasis on market data from our compensation peer group for comparable positions. Target annual bonuses represent a specific percentage of annual base salary.

2019 Annual Cash Bonuses

The 2019 corporate goals and achievements are set forth below. The Compensation Committee determines the range of our corporate performance from a threshold of 50% to a maximum of 150%. No bonus is paid to any executive officer unless 50% of the corporate goals are achieved.

 

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Corporate Goals and Achievements

 

   

Advance lead three clinical programs to regulatory filing: enable a filing with the U.S. Food and Drug Administration (“FDA”) in 2020 for OTL-101 for the treatment of ADA-SCID, enable a filing with the EMA in 2020 for OTL-200 for the treatment of MLD, and enable filings with each of the EMA and FDA in 2021 for OTL-103 for the treatment of WAS – Our key achievements in 2019 for our lead three programs included filing an MAA with the EMA for OTL-200 ahead of schedule, releasing key data sets with respect to OTL-101, OTL-200 and OTL-103, and initiating a clinical trial for OTL-103 in which patients were treated using a cryopreserved formulation.

 

   

Build a world-leading pipeline, advancing early stage programs into and through the clinic – We made several advancements to our pipeline, including in-licensing OTL-203 for the treatment of MPS-I, reporting data from clinical proof-of-concept trials for multiple of our product candidates and having a clinical trial application accepted for another product candidate.

 

   

Build a world-leading chemistry, manufacturing, and controls (“CMC”) platform, including manufacturing facility design and implementation of processes for improved transduction efficiency – We completed the conceptual design of an in-house manufacturing facility in Fremont, California and initiated implementation of select transduction enhancers for certain of our clinical programs.

 

   

Fund Company growth and operations through mid-2021 – We entered into a credit facility in May 2019 and closed a follow-on public offering in June 2019, which extended our cash runway into the second half of 2021.

During a series of meetings in December 2019 and January 2020, the Compensation Committee evaluated our achievement of the 2019 corporate objectives and each NEO’s individual performance. Based on our 2019 results, the Compensation Committee determined that we had not only achieved each of our performance goals at target but had also achieved certain stretch goals, in particular, filing the MAA with the EMA for OTL-200 ahead of schedule. Based on this assessment, the Compensation Committee determined that our corporate performance was 140% of target.

The table below sets forth the 2019 annual base salaries, target annual cash bonuses, relative weighting of corporate and individual performance, and the 2019 annual cash bonuses earned by our NEOs.

 

NEO    2019
Annual
Base
Salary
     Target Annual
Cash Bonus
(% of Annual
Base Salary)
    Corporate
Performance
Weight
(%)
    Corporate
Performance
Achievement
(%)
    Individual
Performance
Weight
(%)
    Individual
Performance
Achievement
(%)
   

2019

Annual

Cash
Bonus

 

Mark Rothera

   $ 527,440        50     100     140     0     —       $ 369,208  

Frank Thomas

   $ 430,090        40     70     140     30     155   $ 250,000  

Bobby Gaspar

   $ 344,308        35     70     140     30     155   $ 175,125  

Mr. Thomas and Dr. Gaspar’s individual achievement was 155%, yielding a total payout to each of them at 145% of target. Their 2019 individual performance was exceptional because of their strong cross-functional leadership and the role this played in delivering exceptional overall corporate performance.

Long-Term Incentive Compensation

We view long-term incentive compensation in the form of equity awards as an important element of our executive compensation program. The value of equity awards is directly related to share price appreciation over time, which incentivizes our executive officers to achieve long-term corporate goals and create long-term value for our shareholders. Equity awards also help us attract and retain top-performing executive officers in a competitive market.

 

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At the time of hire, equity awards are granted to our executive officers, including our NEOs, based on the factors described in “Governance of Executive Compensation Program—Compensation-Setting Factors” above. Typically, at the beginning of each year, the Compensation Committee determines the size and relative weighting of the annual equity awards for our executive officers, including our NEOs, it deems reasonable and appropriate based on such factors. The size and relative weighting is the same for each of our executive officers, including our NEOs, who are at the same level. In addition, the Compensation Committee may deem it advisable to grant subsequent equity awards to our executive officers, including our NEOs, and may adjust their equity awards in the event of a promotion or significant change in responsibilities.

2019 Annual Equity Awards

In January 2019, the Compensation Committee considered the factors described in “Governance of Executive Compensation Program—Compensation-Setting Factors” above, particularly market data from the companies in our compensation peer group, and approved the 2019 annual equity awards for our NEOs below. The PSUs were granted to further incentivize our executive team towards meeting longer-term performance milestones and in consideration of completing our IPO in 2018. The table below sets forth the option and PSU awards approved in January 2019:

 

NEO    Share Options      PSUs  

Mark Rothera

     415,000        0 (1)  

Frank Thomas

     100,000        32,000  

Bobby Gaspar

     50,000        18,750  

 

(1)  

Mr. Rothera was granted his PSU award of 219,922 units in November 2018.

The options vest, and become exercisable, over a four-year period on a monthly basis commencing upon the one-month anniversary of the vesting commencement date of January 16, 2019. The PSUs were granted to Mr. Thomas and Dr. Gaspar to align with the PSUs granted to Mr. Rothera in November 2018. The PSUs granted to all three NEOs have a three-year performance period of January 1, 2019 to December 31, 2021 and vest as to 1/3 of the award on each of the first three to occur of the following milestones: (i) regulatory approval of OTL-101 for the treatment of ADA-SCID by either the FDA or the EMA, (ii) regulatory approval of OTL-200 for the treatment of metachromatic leukodystrophy by either the FDA or the EMA, (iii) submission of an MAA with EMA or a biologics licensing application with the FDA for OTL-103 for the treatment of WAS and (iv) the date as of which the daily volume weighted average price for the Company’s ADSs on The Nasdaq Global Select Market equals or exceeds $29.19 for 40 trading days in any 60-day consecutive trading day period.

The equity awards granted to our NEOs in 2019 are set forth in the “Summary Compensation Table” and the “Grants of Plan-Based Awards for Fiscal Year 2019” table below.

2019 Promotions

In December 2019, the Compensation Committee approved the promotion of Mr. Thomas to Chief Operating Officer and Chief Financial Officer, and Dr. Gaspar to President of Research and Chief Scientific Officer. In connection with these promotions, the Compensation Committee engaged Radford to gather market data for compensation of similar positions. Based upon this data, our Compensation Committee approved increases in target total annual cash compensation consisting of base salary and target bonus as follows, effective January 1, 2020:

 

NEO    2019 Annual
Base Salary
     2020 Annual
Base Salary
     2019 Target
Bonus
(% of Annual
Base Salary)
    2020 Target
Bonus

(% of Annual
Base Salary)
 

Mr. Thomas

   $ 430,000      $ 470,000        40     40

Dr. Gaspar

   £ 262,500    £ 338,500        35     40

 

*

Dr. Gaspar’s salary in 2019 was pro-rated for 4 days per week.

 

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In addition, Dr. Gaspar received a one-time grant of 195,000 PSUs, effective April 1, 2020. If Dr. Gaspar remains continuously employed with the Company through January 2, 2024, this PSU award will vest on January 2, 2024 as to 1/3 of the award for each of the first three to occur of four milestones that are achieved by the Company on or before December 31, 2023. The milestones relate to achievement of specific clinical and regulatory milestones.

2020 Promotions

On March 18, 2020, Dr. Gaspar was promoted to Chief Executive Officer and Mr. Thomas was promoted to President and Chief Operating Officer. In connection with the promotions of Dr. Gaspar and Mr. Thomas, (i) Dr. Gaspar’s annual base salary was increased to £440,000, his target annual bonus opportunity was increased to 60% of his base salary, and he was granted an option to purchase 300,000 of the Company’s ordinary shares, effective April 1, 2020 and (ii) Mr. Thomas’s target annual bonus opportunity was increased to 45% of his base salary, and he was granted an option to purchase 150,000 of the Company’s ordinary shares, effective April 1, 2020. Each of the foregoing options will vest in equal monthly installments over four years commencing on the grant.

Employment Arrangements with our NEOs

Employment Agreements

We have employment agreements with each of our NEOs. These agreements set forth the individual’s base salary, bonus compensation, principles for equity compensation and other employee benefits as described above, as well as providing the NEO with the opportunity to receive certain post-employment payments and benefits in the case of certain involuntary terminations of employment or resignations for good reason. The agreements also prohibit our NEOs from engaging directly or indirectly in competition with us, recruiting or soliciting our employees, diverting our customers to a competitor, or disclosing our confidential information or business practices. After completion of our IPO, the Compensation Committee reviewed the employment agreements with our executive officers, including our NEOs, with a focus on public market practices and severance arrangements in the event of involuntary termination not in connection with a change in control and involuntary termination or good reason termination in connection with a change in control, and determined to revise the terms of employment agreements with our executive officers in line with prevailing U.S. market practice for our CEO and CFO and considering both U.S. market and U.K. market practice for Dr. Gaspar.

Post-Employment Compensation

Our post-employment compensation arrangements are designed to provide reasonable compensation to executive officers who leave the Company under certain circumstances to facilitate their transition to new employment. Further, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing executive officer to sign a separation and release agreement acceptable to us as a condition to receiving post-employment compensation payments or benefits.

Our Compensation Committee and the Board of Directors do not consider specific amounts payable under these post-employment compensation arrangements when establishing annual compensation. It does believe, however, that these arrangements are necessary to offer compensation packages that are competitive.

For more information on the service and employment agreements with our NEOs and post-employment compensation arrangements, see the discussion under the headings “Employment, Change in Control and Severance Arrangements with Named Executive Officers” and “Potential Payments upon Termination or Change in Control” later in this proxy statement.

 

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Other Compensation Policies and Practices

Equity Award Grant Policy

We have adopted an Equity Award Grant Policy that sets forth the process and timing for us to follow when we grant equity awards to our employees, including our executive officers, pursuant to any of our equity compensation plans. Pursuant to the policy, all grants of equity awards must be approved in advance by our Board of Directors, the Compensation Committee or, subject to the delegation requirements in the policy, our CEO. The equity award granting authority delegated to our CEO applies only to employees below the vice president level.

Generally, equity awards are granted on the following regularly scheduled basis as set forth in the policy:

 

   

Equity awards granted in connection with the hiring of a new employee are generally effective on the first trading day of the next calendar month following the later of (i) the date of approval, (ii) the employee’s first day of employment or (iii) such later date as specified in such approval.

 

   

Equity awards granted in connection with the promotion of an existing employee are effective on the date of approval by our Board of Directors or the Compensation Committee, as applicable, or such later date as specified in such approval. Our Board of Directors and the Compensation Committee retain the discretion to grant equity awards at other times to the extent appropriate in light of the circumstances of such awards.

 

   

Annual equity awards granted to existing employees (other than in connection with a promotion) will generally be granted effective on the date of approval by our Board of Directors or the Compensation Committee, as applicable, or such later date as specified in such approval.

In addition, the policy sets forth the way our equity awards will be priced. The exercise price of all options will be at least equal to the closing market price of an ADS, each of which currently represents one ordinary share, on The Nasdaq Global Select Market on the effective date of grant.

Policy Prohibiting Hedging and Pledging

Our Insider Trading Policy prohibits our executive officers, the non-employee members of our Board of Directors and certain designated employees who in the course of the performance of their duties have access to material, nonpublic information regarding the Company from engaging in the following transactions:

 

   

selling any of our securities that they do not own at the time of the sale (a “short sale”);

 

   

buying or selling puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities or engaging in any other hedging transaction with respect to our securities at any time;

 

   

using our securities as collateral in a margin account; and

 

   

pledging our securities as collateral for a loan (or modifying an existing pledge) unless the pledge has been approved by the Audit Committee of the Board of Directors.

Tax and Accounting Considerations

Deductibility of Executive Compensation

Generally, Section 162(m) of the of the U.S. Internal Revenue Code of 1986 (“Section 162(m)”) disallows a U.S. federal income tax deduction for public corporations of remuneration in excess of $1 million paid in any fiscal year to certain specified executive officers. The Company generally expects that all remuneration in excess of $1 million paid to a specified executive will not be deductible by us as a corporate entity unless it qualifies for the transition relief applicable to certain newly public companies.

 

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To maintain flexibility to compensate our executive officers in a manner designed to promote our short-term and long-term corporate goals, the Compensation Committee has not adopted a policy that all compensation must be deductible. The Compensation Committee believes that our shareholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted in order to allow such compensation to be consistent with the goals of our executive compensation program, even though some compensation awards may result in non-deductible compensation expense.

Taxation of “Parachute” Payments

Sections 280G and 4999 of the U.S. Internal Revenue Code of 1986 (the “U.S. Code”) provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the company that exceeds certain prescribed limits, and that the company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We have not agreed to provide any executive officer, including any NEO, with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the U.S. Code.

Risk Assessment

Compensation Risk Assessment

Our Compensation Committee annually assesses our compensation plans, policies and practices for NEOs and other employees and concluded that they do not create risks that are reasonably likely to have a material adverse effect on our Company.

 

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NEO Compensation Tables

Summary Compensation Table

The following table sets forth information regarding total compensation awarded to, earned by and paid to each of our NEOs during the fiscal years ended December 31, 2019 and 2018.

 

Name and Principal Position    Year      Salary
($)
     Bonus
($)
    Stock
Awards
($) (1)
     Option
Awards
($) (2)
     Non-Equity
Incentive
Plan
Compensation
($) (3)
     All Other
Compensation
($) (4)
     Total
($)
 

Mark Rothera,(5)

     2019        525,350        —         —          3,330,458        369,208        87,973        4,312,989  

Former President and Chief Executive Officer

     2018        481,333        —         0        3,831,036        298,181        202,198        4,812,748  

Frank Thomas

     2019        430,043        —         0        802,520        250,000        11,200        1,493,763  

President and Chief Operating Officer

     2018        387,385        —         —          2,785,347        201,624        147,923        3,522,279  

Bobby Gaspar (5)

     2019        344,348        —         0        401,260        175,125        —          920,733  

Chief Executive Officer

     2018        338,400        117,430 (6)      —          1,062,980        148,838        —          1,667,647  

 

(1)

In November 2018, Mr. Rothera received an award of 219,922 PSUs, and in January 2019, each of Mr. Thomas and Dr. Gaspar received an award of 32,000 PSUs and 18,750 PSUs, respectively. Such PSUs will vest based upon achievement of certain performance milestones, assuming the applicable NEO remains continuously employed by us through the vesting date. In accordance with SEC rules, the grant date fair value to be reported for PSUs in the Stock Awards column is calculated based on the probable outcome of the performance condition as of the grant date. We determined that as of the date of the grant of the PSU awards to Mr. Rothera in 2018 and Mr. Thomas and Dr. Gaspar in 2019, it was not probable, as defined under applicable accounting guidance, that the performance condition would be achieved and assigned a grant date fair value of $0 in the Stock Awards column for 2018, in the case of Mr. Rothera, and a grant date fair value of $0 in the Stock Awards column for 2019, in the case of Mr. Thomas and Dr. Gaspar, based on this evaluation. The assumptions we used in calculating these amounts are included in Note 10 of our audited consolidated financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K, filed with the SEC on February 27, 2020. However, if we had determined that as of the applicable date of the grant it was probable that the performance conditions would be achieved at maximum levels, we would have assigned a grant date fair value of $3,404,393 for the PSU award to Mr. Rothera in the Stock Awards column for 2018, measured based on the closing price of our ADSs on the date of grant, and $357,440 and $209,438, respectively, for the PSU awards to Mr. Thomas and Dr. Gaspar, respectively, in the Stock Awards column for 2019, measured based on the closing price of our ADSs on the date of grant.

(2)

The amounts reported in the Option Awards column represent the aggregate grant date fair value for the fiscal years ended December 31, 2019 and 2018 of grants of time-based share options to each of the NEOs, calculated in accordance with the provisions of FASB ASC Topic 718. The assumptions we used in calculating these amounts are included in Note 10 of our audited consolidated financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K, filed with the SEC on February 27, 2020. The amounts reported in the Summary Compensation Table for these time-based option awards may not represent the amounts that the NEOs will actually realize from the awards. Whether, and to what extent, a NEO realizes value will depend on our actual operating performance, share price fluctuations and the NEO’s continued employment.

(3)

The amounts reported in the Non-Equity Incentive Plan Compensation column reflect the annual cash incentive bonus earned by the NEOs for each respective year. The annual cash incentive bonuses were paid in the first quarter of the calendar year following the year to which the cash bonus relates.

(4)

Amounts in this column include (i) in the case of Mr. Rothera, $62,606 in a housing allowance, $14,167 in taxable reimbursement for tax services, and $11,200 in a Company matching contribution under our 401(k) plan and (ii) in the case of Mr. Thomas, $11,200 in a Company matching contribution under our 401(k) plan.

(5)

A portion of Mr. Rothera’s salary was paid in British Pounds and all of Dr. Gaspar’s cash compensation was paid in British Pounds. Amounts paid in British Pounds have been converted to USD at an exchange rate of 1 British Pound to 1.3118 USD in 2019 and 1 British Pound to 1.2678 USD in 2018, based upon the exchange rate as of December 31 in each applicable year.

(6)

Amount represents a sign-on bonus in connection with Dr. Gaspar’s employment with us.

 

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Grants of Plan-Based Awards for Fiscal Year 2019

The following table sets forth the individual awards made to each of our NEOs during 2019. For a description of the types of awards indicated below, please see our “Compensation Discussion and Analysis” above.

 

Name    Grant
Date
     Estimated Future
Payouts Under
Non-Equity Incentive
Plan Awards (1)
     Estimated Future
Payouts Under
Equity Incentive
Plan Awards (2)
     All Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#) (3)
     Exercise
or Base
Price of
Option
Awards
($/sh.)
     Grant
Date Fair
Market
Value of
Awards
($) (4)
 
  

Threshold

($)

     Target
($)
     Maximum
($)
     Threshold
(#)
     Maximum
(#)
 

Mark Rothera

      $ 131,860      $ 263,720      $ 395,580                 
     1/16/2019                       415,000      $ 12.54      $ 3,330,458  

Frank Thomas

      $ 86,081      $ 172,036      $ 258,054                 
     1/16/2019                 10,667        32,000              —(5)  
     1/16/2019                       100,000      $ 12.54      $ 802,520  

Bobby Gaspar

      $ 60,261      $ 120,522      $ 180,782                 
     1/16/2019                 6,250        18,750              —(5)  
     1/16/2019                       50,000      $ 12.54      $ 401,260  

 

(1)

The amounts shown in the target and maximum columns reflect the target and maximum amounts payable, respectively, under our 2019 annual cash incentive program, which is described above in the “Compensation Discussion and Analysis” under the heading “Short-Term Incentive Compensation—2019 Annual Cash Bonuses.” The actual amounts paid to each NEO can be found above in the Summary Compensation Table under the column entitled Non-Equity Incentive Plan Compensation.

(2)

The amount shown in the maximum column reflects the maximum potential future payout for PSUs granted with performance-based milestones. These performance-based milestones were established by the Board of Directors or the Compensation Committee, as applicable, and are described in the footnotes to the Outstanding Equity Awards at December 31, 2019 table below.

(3)

The share options shown in this column are subject to time-based vesting criteria established by the Board of Directors or the Compensation Committee, as applicable, and are described in the footnotes to the Outstanding Equity Awards at December 31, 2019 table below.

(4)

The amounts reported in this column represent the aggregate grant date fair value for equity awards granted to our NEOs in 2019 calculated in accordance with the provisions of FASB ASC Topic 718. The assumptions we used in calculating these amounts are included in Note 10 of our audited consolidated financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K, filed with the SEC on February 27, 2020. The amounts reported in the Summary Compensation Table for these time-based option awards may not represent the amounts that the NEOs will actually realize from the awards. In accordance with SEC rules, the grant date fair value to be reported for performance-based equity awards in the Grant Date Fair Value of Stock and Option Awards column is calculated based on the probable outcome of the performance condition(s) as of the grant date. Whether, and to what extent, a NEO realizes value will depend on our actual operating performance, share price fluctuations and the NEO’s continued employment.

(5)

We determined that as of the date of grant it was not probable, as defined under applicable accounting guidance, that any of the performance-based vesting conditions for these equity awards would be achieved and assigned a grant date fair value of $0 in the Grant Date Fair Value of Stock and Option Awards column based on this determination.

 

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2019 Outstanding Equity Awards at Fiscal Year End

The following table sets forth certain information with respect to outstanding equity awards held by each of our NEOs as of December 31, 2019.

 

          Option Awards     Stock Awards  

Name

  Vesting
Commencement
Date
    Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
    Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
    Option
Exercise
Price ($)
    Option
Expiration
Date
    Equity
Incentive
Plan
Awards:
Number
of
unearned
shares,
units or
other
rights
that have
not vested
(#)
    Equity Incentive
Plan Awards:
Market value or
payout value of
unearned shares,
units or other rights
that have not vested
($) (2)
 
(a)         (b)     (c)     (d)     (e)     (f)     (i)     (j)  

Mark Rothera

    9/4/2017       855,771       688,927 (3)        2.44       10/25/2027      
    2/7/2018       200,148       236,538 (4)        2.44       2/6/2028      
    9/13/2018       128,222       282,067         9.06       9/12/2028      
    1/16/2019       95,104       319.896         12.54       1/15/2029      
                219,922 (5)      3,023,928  

Frank Thomas

    1/15/2018       187,757       258,428 (6)        2.44       2/6/2028      
    9/13/2018       57,574       126,655         9.06       9/12/2028      
    1/16/2019       22,916       77,084         12.54       1/15/2029      
                32,000 (5)      440,000  

Bobby Gaspar

    2/1/2016       577,670       25,118 (7)        0.00002       9/13/2026      
    2/7/2018       18,340       21,675 (8)        0.00002       2/6/2028      
    9/13/2018       30,131       66,289         0.00002       9/12/2028      
    1/16/2019       11,458       38,542         12.54       1/15/2029      
                18,750 (5)      257,813  

 

(1)

All share option awards were granted with a ten-year term and, unless otherwise noted, vest in 48 equal monthly installments following the vesting commencement date, unless otherwise noted, subject to a continuous service relationship through each vesting date.

(2)

The market value of PSUs that have not vested is based on the number of unvested PSUs outstanding times $13.75, which was the closing price of our ADSs on The Nasdaq Global Select Market on December 31, 2019.

(3)

393,670 shares subject to this option vested on September 4, 2018 and the remaining shares vest in equal monthly installments over the three years thereafter, subject to a continuous service relationship through each vesting date.

(4)

109,173 shares subject to this option vested on February 7, 2019 and the remaining shares vest in equal monthly installments over the three years thereafter, subject to a continuous service relationship through each vesting date.

(5)

These PSU awards will vest upon achievement of specified performance milestones, as more fully described above in the “Compensation Discussion and Analysis” under the heading “Long-Term Incentive Compensation—2019 Annual Equity Awards.”

(6)

124,407 shares subject to this option vested on January 15, 2019 and the remaining shares vest in equal monthly installments over the three years thereafter, subject to a continuous service relationship through each vesting date.

(7)

150,697 shares subject to this option vested on February 1, 2017 and the remaining shares vest in equal monthly installments over the three years thereafter, subject to a continuous service relationship through each vesting date.

(8)

10,004 shares subject to this option vested on February 7, 2019 and the remaining shares vest in equal monthly installments over the three years thereafter, subject to a continuous service relationship through each vesting date.

 

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Option Exercises and Stock Vested in Fiscal Year 2019

The following table sets forth the number of shares acquired and the value realized upon exercises of share options during the fiscal year ended December 31, 2019 by each of our NEOs.

 

     Option Awards  
Name    Number of
Shares
Acquired on
Exercise
(#)
     Value Realized
on Exercise
($) (1)
 

Mark Rothera

     30,000        372,176  

Frank Thomas

     50,000        647,562  

Bobby Gaspar

     —          —    

 

(1)

The value realized on exercise is based on the market price of the shares at exercise less the applicable option exercise price.

Employment, Change in Control and Severance Arrangements with Named Executive Officers

We have entered into employment agreements with each of our NEOs. These agreements set forth the individual’s base salary, bonus compensation, equity compensation and other employee benefits, which are described above in the “Compensation Discussion and Analysis”. In addition, these agreements provide for severance payments upon a termination of employment under certain circumstances as described below. Certain key terms of those agreements are described below.

2019 Employment Agreements

Bobby Gaspar

In May 2019, we entered into an amendment to Dr. Gaspar’s January 2018 employment agreement in connection with his continued employment as our Chief Scientific Officer. Dr. Gaspar was promoted to Chief Executive Officer on March 18, 2020.

Dr. Gaspar’s amended employment agreement provides for an initial base salary of £250,000, which is prorated for a 4-day week, and which is subject to annual review and increases. In addition, Dr. Gaspar is entitled to participate in our executive variable cash compensation program at an initial annual target variable cash compensation payment of 35% of his base salary, with the actual amount to be determined in the discretion of the Compensation Committee based on the Company’s performance and the individual performance of Dr. Gaspar. Dr. Gaspar is also eligible to participate in all of our employee benefit plans and programs that are generally available to our U.K. employees.

Upon a termination of Dr. Gaspar’s employment without cause or for good reason that does not occur within the Change in Control Period, Dr. Gaspar will be entitled to severance pay and benefits as follows:

 

   

in the case of a termination for good reason, salary continuation for a period of nine months following his termination of employment; provided that, in the case of a termination without cause, Dr. Gaspar shall be entitled to six months’ written notice of his termination (or payment in lieu of such notice) and salary continuation for an additional three months;

 

   

the amount of any annual cash incentive compensation for the year prior to the year in which Dr. Gaspar’s employment terminates, to the extent that it has not already been paid and otherwise would have been earned had Dr. Gaspar remained employed through the payment date;

 

   

continued health, long-term disability and other insurance programs for up to nine months; and

 

   

up to £15,000 in outplacement benefits.

 

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In the event Dr. Gaspar’s employment is terminated without cause or if he resigns his position for good reason in the Change in Control Period, in lieu of the payments and benefits described above, he will be entitled to receive:

 

   

in the case of a termination for good reason, a lump sum payment equal to 12 months of his base salary; provided that, in the case of a termination without cause, Dr. Gaspar shall be entitled to receive six months’ written notice of his termination (or payment in lieu of such notice), plus an amount equal to six months of his base salary;

 

   

the amount of Dr. Gaspar’s target annual incentive compensation for the year in which Dr. Gaspar’s employment terminates;

 

   

continued health, long-term disability and other insurance programs for up to 12 months;

 

   

up to £15,000 in outplacement benefits; and

 

   

accelerated vesting of all unvested equity awards.

All severance payments and benefits under Dr. Gaspar’s employment agreement are subject to the execution of a separation and release agreement by Dr. Gaspar containing, among other provisions, a general release of claims in favor of us.

Frank Thomas

In September 2019, we entered into an employment agreement with Mr. Thomas in connection with his continued employment as our Chief Financial Officer and Chief Business Officer, which supersedes his prior employment agreement with our U.K. subsidiary entered into in 2018. Mr. Thomas was promoted to President and Chief Operating Officer on March 18, 2020.

Mr. Thomas’s employment agreement provides for an initial base salary of $430,090, which is subject to annual review and redetermination. In addition, Mr. Thomas is entitled to participate in our executive variable cash compensation program at an initial annual target variable cash compensation payment of 40% of his base salary, with the actual amount to be determined in the discretion of the Compensation Committee based on the Company’s performance and the individual performance of Mr. Thomas. Mr. Thomas is also eligible to participate in all of our generally-available employee benefit plans and programs in effect from time to time.

Upon a termination of Mr. Thomas’s employment without cause or for good reason that does not occur within the 12-month period following a change in control (the “Change in Control Period”), Mr. Thomas will be entitled to severance pay and benefits as follows:

 

   

salary continuation for a period of nine months following his termination of employment;

 

   

the amount of any annual cash incentive compensation for the year prior to the year in which Mr. Thomas’s employment terminates, to the extent that it has not already been paid and otherwise would have been earned had Mr. Thomas remained employed through the payment date;

 

   

continued health insurance coverage for up to nine months; and

 

   

up to $20,000 in outplacement benefits.

In the event Mr. Thomas’s employment is terminated without cause or if he resigns his position for good reason in the Change in Control Period, in lieu of the payments and benefits described above, he will be entitled to receive:

 

   

a lump sum payment equal to the sum of (a) 12 months of his annual base salary and (b) 1 times his target annual cash compensation;

 

   

continued health insurance coverage for up to 12 months;

 

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accelerated vesting of all unvested equity awards; and

 

   

up to $20,000 in outplacement benefits.

All severance payments and benefits under Mr. Thomas’s employment agreement are subject to the execution of a separation and release agreement by Mr. Thomas containing, among other provisions, a general release of claims in favor of us.

In the event that any payments made to Mr. Thomas in connection with a change in control or termination would be subject to the excise tax imposed by Section 4999, the payments to Mr. Thomas would be reduced to the maximum amount that can be paid without the imposition of an excise tax under Section 4999, but only if such reduction provides a higher benefit on an after-tax basis to Mr. Thomas. The employment agreement does not provide for any tax gross-up payments.

Mark Rothera

In May 2019, we entered into an employment agreement with Mr. Rothera in connection with his continued employment as our President and Chief Executive Officer, which supersedes his prior employment agreement with our U.S. subsidiary entered into in 2017. Mr. Rothera stepped down from his position on March 17, 2020 and entered into a Separation Agreement and Release with us, which is described below under the heading “Rothera Separation Agreement.”

Mr. Rothera’s employment agreement provides for an initial base salary of $527,440, which is subject to annual review and increases. In addition, Mr. Rothera is entitled to participate in our executive variable cash compensation program at an initial annual target variable cash compensation payment of 50% of his base salary, with the actual amount to be determined in the discretion of the Compensation Committee based on the Company’s performance and the individual performance of Mr. Rothera. Mr. Rothera also is eligible to receive a monthly payment equal to $3,550 in connection with his travel to and from London. Mr. Rothera is also eligible to participate in all of our generally-available employee benefit plans and programs that are in effect from time to time.

Upon a termination of Mr. Rothera’s employment without cause or for good reason outside the period beginning 3 months before and ending 12 months after a change in control (the “Rothera Change in Control Period”), Mr. Rothera will be entitled to severance pay and benefits as follows:

 

   

salary continuation for a period of 12 months following his termination of employment;

 

   

the amount of any annual cash incentive compensation for the year prior to the year in which Mr. Rothera’s employment terminates, to the extent that it has not already been paid and otherwise would have been earned had Mr. Rothera remained employed through the payment date;

 

   

a prorated amount of Mr. Rothera’s target annual incentive compensation for the year in which the termination occurs, based on actual performance;

 

   

continued health insurance coverage for up to 12 months; and

 

   

up to $20,000 in outplacement benefits.

In the event Mr. Rothera’s employment is terminated without cause or if he resigns his position for good reason during the Rothera Change in Control Period, in lieu of the payments and benefits described above, he will be entitled to receive:

 

   

a lump sum payment equal to the sum of (a) 18 months of his annual base salary and (b) 1.5 times his target annual cash compensation;

 

   

continued health insurance coverage for up to 18 months;

 

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accelerated vesting of all unvested equity awards; and

 

   

up to $20,000 in outplacement benefits.

All severance payments and benefits under Mr. Rothera’s employment agreement are subject to the execution of a separation and release agreement by Mr. Rothera containing, among other provisions, a general release of claims in favor of us.

In the event that any payments made to Mr. Rothera in connection with a change in control or termination would be subject to the excise tax imposed by Section 4999 of the U.S. Code (“Section 4999”), the payments to Mr. Rothera would be reduced to the maximum amount that can be paid without the imposition of an excise tax under Section 4999, but only if such reduction provides a higher benefit on an after-tax basis to Mr. Rothera. The employment agreement does not provide for any tax gross-up payments.

Each of our NEOs is also subject to non-solicitation, non-compete and confidentiality and employee non-disclosure provisions with us.

Rothera Separation Agreement

On March 17, 2020, we entered into a Separation Agreement and Release with Mr. Rothera which provides, among other things, that Mr. Rothera will receive (i) salary continuation for 12 months, provided that Mr. Rothera has not breached any of his continuing obligations, (ii) a pro-rated bonus representing Mr. Rothera’s 50% target bonus for 2020, (iii) reimbursement of COBRA premiums for health benefit coverage for up to 12 months, in an amount equal to the monthly employer contribution that we would have made to provide health insurance to Mr. Rothera had he remained employed with us, (iv) $15,000 in outplacement benefits, and (v) reimbursement of legal fees up to $5,000 and tax assistance up to $7,500. Additionally, all time-based equity awards held by Mr. Rothera that would have vested had Mr. Rothera remained employed with us for an additional 12 months following March 17, 2020 shall immediately vest and become fully exercisable or non-forfeitable. In addition, any vested options will remain exercisable until the earlier of (a) the original expiration date for such vested awards or (b) 12 months after the date of his separation. The unvested options held by Mr. Rothera at the time of his separation will not be exercisable, unless a change of control of the Company occurs within three months of Mr. Rothera’s separation, in which case, such unvested options will be accelerated in full and his issued PSUs shall be deemed earned in full. If a change in control does not occur within three months following Mr. Rothera’s separation, the unvested portion of his options shall terminate and all of his PSUs shall be forfeited on the three month anniversary of Mr. Rothera’s separation.

Potential Payments on Termination or Change in Control

Each of our NEOs has entered into an employment agreement with us, as described above, that provides for certain payments and benefits in the event of certain qualifying terminations of employment, including involuntary termination of employment in connection with a change in control of the Company. In addition, under the terms of the PSUs awarded to our NEOs, any unvested PSUs will automatically vest in full upon a “Sale Event” as such term is defined in the 2018 Plan.

 

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We have calculated the impact of a change in control, a termination without cause or for good reason not in connection with a change in control on December 31, 2019, as well as a termination without cause or for good reason following a change in control of the Company as if it had occurred as of December 31, 2019, in each case, pursuant to the terms of the employment agreements in effect as of December 31, 2019. For a discussion of the payments and benefits Mr. Rothera actually achieved upon his separation, see the section immediately above entitled “— Rothera Separation Agreement. ” The market price per share of an ADS as of that date was $13.75.

 

Name    Change in
Control
without
Termination
of
Employment
    Termination
without
Cause or
Resignation
for Good
Reason
Not in
Connection
with a
Change
in Control
($)
    Termination
without
Cause or
Resignation
for Good
Reason in
Connection
with a Change
in Control
($)
 

Mark Rothera

      

Cash Severance Payment

     —       $ 527,440 (1)    $ 1,186,740 (2) 

Cash Incentive Bonus Payment

     —       $ 369,208 (3)      —    

COBRA Premiums

     —       $ 28,989 (4)    $ 43,483 (5) 

Accelerated Equity Vesting

   $ 3,023,928 (6)      —       $ 15,201,712 (7) 

Outplacement

     —       $ 20,000     $ 20,000  

Frank Thomas

      

Cash Severance Payment

     —       $ 322,568 (8)    $ 602,126 (9) 

Cash Incentive Bonus Payment

     —         —         —    

COBRA Premiums

     —       $ 21,488 (10)      28,650 (4) 

Accelerated Equity Vesting

   $ 440,000 (6)      —       $ 4,050,694 (7) 

Outplacement

     —       $ 20,000     $ 20,000  

Bobby Gaspar(11)

      

Cash Severance Payment

     —       $ 258,621 (8)    $ 344.347 (12) 

Cash Incentive Bonus Payment

     —         —       $ 120,521 (13) 

Benefits Continuation

     —         —         —    

Accelerated Equity Vesting

   $ 257,813 (6)      —       $ 1,859,324 (7) 

Outplacement

     —       $ 19,677     $ 19,677  

 

(1)

Amount represents 12 months’ salary continuation.

(2)

Amount represents a lump sum payment equal to 18 months’ base salary and 1.5 times target bonus.

(3)

Amount represents 2019 prorated target bonus, based upon actual performance for 2019.

(4)

Amount represents 12 months of our contribution toward health insurance.

(5)

Amount represents 18 months of our contribution toward health insurance.

(6)

All PSUs that are outstanding as of a date of a “Sale Event” as defined in the 2018 Plan shall accelerate and vest immediately. Amount represents the market value of the shares underlying the outstanding unvested PSUs as of December 31, 2019.

(7)

Amount represents the market value of the shares underlying the outstanding unvested share options and PSUs as of December 31, 2019, less any applicable exercise price.

(8)

Amount represents nine months of base salary continuation

(9)

Amount represents a lump sum payment equal to 12 months’ base salary and 1.0 times target bonus.

(10)

Amount represents nine months of our contribution toward health insurance.

(11)

Amounts have been converted from British Pounds to USD at an exchange rate of 1 British Pound to 1.3118 USD in 2019, based upon the exchange rate as of December 31 in each applicable year.

(12)

Amount represents 12 months of base salary.

(13)

Amount represents 2019 target bonus.

 

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Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plans

The following table sets forth information as of December 31, 2019 regarding ordinary shares that may be issued under our equity compensation plans:

 

Plan Category    Number of Securities
to be Issued upon
Exercise
of Outstanding
Options,
Warrants and
Rights (#)(a) (2)
     Weighted Average
Exercise
Price of Outstanding
Options, Warrants
and
Rights (b) (3)
     Number of Securities
Remaining Available
for
Future Issuance under
Equity Compensation
Plans
(Excluding Securities
Reflected in Column
(a))(c) (1)
 

Equity compensation plans approved by security holders (1)

     12,772,562      $ 6.61        6,267,916  

Equity compensation plans not approved by security holders

     —          —          —    

Total

     12,772,562      $ 6.61        6,267,916  

 

(1)  

Consists of our 2018 Share Option and Incentive Plan (“2018 Plan”), 2016 Share Option Plan (“2016 Plan”), and 2018 Employee Share Purchase Plan (the “ESPP”). Following our initial public offering, we have not and will not grant any awards under our 2016 Plan, but all outstanding awards under the 2016 Plan will continue to be governed by their existing terms. The shares underlying any awards granted under the 2016 Plan or 2018 Plan that are forfeited, canceled, reacquired by us prior to vesting, satisfied without the issuance of shares, or otherwise terminated (other than by exercise) and the shares that are withheld upon exercise of an option or settlement of such award to cover the exercise price or tax withholding will be added to the shares available for issuance under the 2018 Plan.

(2)  

Includes 556,422 shares subject to restricted share units that will entitle the holder to one share for each unit that vests and is settled.

(3)  

The calculation does not take into account the 556,422 shares subject to outstanding restricted share units. Such shares will be issued at the time the restricted share units vest and settle, without any cash consideration payable for those shares.

(4)  

Consists of shares available for future issuance under the ESPP and the 2018 Plan. As of December 31, 2019, 1,580,887 shares were available for issuance under the ESPP, and 4,687,029shares were available for issuance under the 2018 Plan.

(5)  

The 2018 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2019, by 5% of the outstanding number of shares on the immediately preceding December 31, or such lesser number of shares as determined by our Compensation Committee. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2019 and ending on January 1, 2028, by the least of 1,500,000 shares, 1% of the outstanding number of shares on the immediately preceding December 31, or such lesser number of shares as determined by our Compensation Committee.

 

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COMPENSATION COMMITTEE REPORT

The material in this report is not (1) “soliciting material,” (2) deemed “filed” with the U.S. Securities and Exchange Commission, (3) subject to Regulations 14A or 14C of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), or (4) subject to the liabilities of Section 18 of the Exchange Act. The report shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that the Company specifically incorporates this information by reference to such filing.

The Compensation Committee of the Board of Directors (the “Board”) of Orchard Therapeutics plc (the “Company”) has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for the fiscal year ended December 31, 2019.

 

The Compensation Committee of the Board

Charles A. Rowland, Jr., Chairperson

Joanne T. Beck

Alicia Secor

 

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AUDIT COMMITTEE REPORT

The Audit Committee oversees the accounting and financial reporting processes of Orchard Therapeutics plc (the “Company”) and the audits of the Company’s financial statements, evaluates auditor performance, manages relations with the Company’s independent registered public accounting firm and evaluates policies and procedures relating to internal control systems. The Audit Committee operates under a written Audit Committee charter that has been adopted by the Board of Directors of the Company (the “Board”). All members of the Audit Committee currently meet the independence and qualification standards for Audit Committee membership set forth in the listing standards provided by Nasdaq and the U.S. Securities and Exchange Commission (“SEC”), and the Board has determined that Charles A. Rowland, Jr. is an “audit committee financial expert,” as the SEC has defined that term in Item 407 of Regulation S-K.

The Audit Committee members are not professional accountants or auditors. The members’ functions are not intended to duplicate or to certify the activities of management and the independent registered public accounting firm. The Audit Committee serves a board-level oversight role in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors, and the experience of the Audit Committee’s members in business, financial and accounting matters.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. The Company’s management has the primary responsibility for the financial statements and reporting process, including the Company’s system of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management the audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. This review included a discussion of the quality and the acceptability of the Company’s financial reporting, including the nature and extent of disclosures in the financial statements and the accompanying notes. The Audit Committee also reviewed the progress and results of the testing of the design and effectiveness of its internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.

The Audit Committee also reviewed with PricewaterhouseCoopers LLP (“PwC USA”) , our independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of the audited financial statements with accounting principles generally accepted in the United States of America, their judgments as to the quality and the acceptability of the Company’s financial reporting and such other matters as are required to be discussed with the Committee by Public Company Accounting Oversight Board (“PCAOB”) AU 380, Communications with Audit Committees , and SEC Regulation S-X Rule 207, Communication with Audit Committees .

The Audit Committee has received the written disclosures and the letter from PwC USA required by the applicable requirements of the PCAOB regarding communications with the audit committee concerning independence. The Audit Committee has discussed with PwC USA its independence from management and the Company.

In addition to the matters specified above, the Audit Committee discussed with PwC USA the overall scope, plans and estimated costs of their audit. The Committee met with PwC USA periodically, with and without management present, to discuss the results of PwC USA’s examinations, the overall quality of the Company’s financial reporting and PwC USA’s reviews of the quarterly financial statements, and drafts of the quarterly and annual reports.

In reliance on the reviews and discussions referred to above, and subject to the limitations of the Audit Committee’s role and responsibilities referred to above and in the Audit Committee charter, the Audit Committee

 

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recommended to the Board that the Company’s audited financial statements should be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

 

The Audit Committee of the Board

Charles A. Rowland, Jr., Chairperson

Marc Dunoyer

Jon Ellis

The foregoing report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.

 

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DELIVERY OF PROXY MATERIALS

Our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “Annual Report”), including audited financial statements, accompanies this proxy statement. Copies of our Annual Report and the exhibits thereto are available from the Company without charge upon written request of a shareholder. Copies of these materials are also available online through the SEC at www.sec.gov . The Company may satisfy SEC rules regarding delivery of proxy materials, including this proxy statement and our Annual Report, by delivering a single set of proxy materials to an address shared by two or more Company shareholders or ADS holders. This delivery method can result in meaningful cost savings for the Company. In order to take advantage of this opportunity, the Company may deliver only a single set of proxy materials to multiple shareholders or ADS holders who share an address, unless contrary instructions are received prior to the mailing date. Similarly, if you share an address with another shareholder or ADS holder and have received multiple copies of our proxy materials, you may write or call us at the address and phone number below to request delivery of a single copy of the proxy materials in the future. We undertake to deliver promptly upon written or oral request a separate copy of the proxy materials, as requested, to a shareholder or ADS holders at a shared address to which a single copy of the proxy materials was delivered. If you are an ordinary shareholder of record and prefer to receive separate copies of proxy materials either now or in the future, please contact John Ilett, Company Secretary, Orchard Therapeutics plc, 108 Cannon Street, London EC4N 6EU United Kingdom or by telephone at +44 (0) 203 808 8286. If you hold ADSs and you prefer to receive separate copies of proxy materials either now or in the future, please contact the Depositary, your brokerage firm or bank, as applicable.

EACH SHAREHOLDER IS URGED TO COMPLETE, DATE, SIGN

AND PROMPTLY RETURN THE ENCLOSED FORM OF PROXY.

EACH ADS HOLDER IS URGED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN

THE ADS PROXY CARD TO CITIBANK, N.A., THE DEPOSITARY FOR THE ADSs.

 

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ADDITIONAL INFORMATION

U.K. Statutory Annual Accounts and Reports of the Board of Directors and Auditors of Orchard Therapeutics plc for the year ended December 31, 2019

Consistent with its obligations under the U.K. Companies Act 2006, our Board of Directors will present at the AGM our U.K. statutory annual accounts and reports for the year ended December 31, 2019a, which have been approved by and, where appropriate, signed on behalf of our Board of Directors and will be delivered to the Registrar of Companies in the United Kingdom following the AGM. A copy of our U.K. statutory directors’ remuneration report, including the annual report on remuneration, is included as Annex A to this proxy statement. A complete copy of our U.K. statutory annual accounts and reports, including the statutory Board of Directors report, strategic report, and auditor’s report on our U.K. accounts will be sent separately to you no less than 21 days prior to the AGM. You will be provided an opportunity to raise questions in relation to such accounts and reports at the AGM. Full accounts and reports will be available for inspection prior to and during the AGM.

Shareholders’ Rights to Call a General Meeting

Our shareholders have the right to call a meeting of our shareholders. The U.K. Companies Act 2006 generally requires the directors to call a general meeting once we have received requests to do so from shareholders representing at least 5% of our paid-up shares entitled to vote at a general meeting. The U.K. Companies Act 2006 generally prohibits shareholders of a U.K. public limited company from passing written resolutions. However, significant shareholders would, in any case, still have the power to call a general meeting and propose resolutions. These provisions are mandatory under the U.K. Companies Act 2006 and cannot be waived by our shareholders.

Shareholder Proposals

Pursuant to Rule 14a-8 under the Exchange Act, in order to be considered for inclusion in our proxy statement for our 2021 annual general meeting of shareholders, shareholder proposals must be received by the Company at the Office of the Company Secretary, 108 Cannon Street, London EC4N 6EU, United Kingdom no later than 120 days before the anniversary of the date on which we sent our proxy materials for the AGM, or December 30, 2020. However, if the date of such annual general meeting is more than 30 calendar days from the date of the anniversary of the AGM, then the notice must be received by our Company Secretary a reasonable time before we begin to print and send our proxy materials.

If a shareholder wishes to present a proposal at an annual general meeting but does not wish to have the proposal considered for inclusion in our proxy statement and proxy card, such shareholder proposal must be received by the Company at the Office of the Company Secretary, 108 Cannon Street, London EC4N 6EU, United Kingdom no later than 45 days before the anniversary of the date on which the Company first mailed its proxy materials for the prior year’s annual general meeting. However, if the date of the annual general meeting is changed by more than 30 calendar days from the date of the anniversary of the prior year’s annual general meeting, the notice must be received by our Company Secretary within a reasonable time before we begin to print and send our proxy materials with respect to such annual general meeting. If a shareholder does not timely provide notice as described above, proxies solicited on behalf of our management for such annual general meeting will confer discretionary authority to vote with respect to any such matter, as permitted by the proxy rules of the SEC.

Under section 338 of the U.K. Companies Act 2006, shareholders representing at least 5% of holders entitled to vote on a resolution at an annual general meeting may require the Company to include such resolution in its notice of an annual general meeting. Provided the applicable thresholds are met, notice of the resolution must be received by the Company at the Office of the Company Secretary, 108 Cannon Street, London EC4N 6EU, United Kingdom at least six weeks prior to the date of the annual general meeting, or, if later, at the time notice of the annual general meeting is delivered to shareholders.

 

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Questions?

If you have any questions or need more information about the AGM please write to us at:

John Ilett

Company Secretary

Orchard Therapeutics plc

108 Cannon Street

London EC4N 6EU

United Kingdom

 

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Annex A

DIRECTORS’ REMUNERATION REPORT

 

 

Annual Statement from the Chair of the Compensation Committee

Dear Shareholder,

As the Chair of the Compensation Committee (the “Committee”), I am pleased to present, on behalf of the board of directors (the “Board”) of Orchard Therapeutics plc (the “Company” or “Orchard”), the Directors’ Remuneration Report for the year ended 31 December 2019 (the “Remuneration Report”).

The Company’s Annual Report and Financial Statements, along with the Remuneration Report, will be subject to an advisory vote at the forthcoming Annual General Meeting on 17 June 2020    (the “AGM”).

Introduction

Our executive compensation program seeks to incentivize and reward strong corporate performance. Highlights of our 2019 corporate performance are set forth below.

Clinical and Regulatory

MLD European MAA submission: The Marketing Authorization Application (“MAA”) for OTL-200 for the treatment of metachromatic leukodystrophy (“MLD”) was filed and accepted for review by the European Medicines Agency (“EMA”) in November 2019, ahead of previous guidance.

Cryopreserved gene therapy formulations: Similar engraftment profiles were observed between the cryopreserved and fresh formulations of OTL-200 for MLD and OTL-101 for the treatment of adenosine deaminase severe combined immunodeficiency (“ADA-SCID”), which represents an important achievement toward the potential approvals of these investigational gene therapies and a key step toward global patient availability.

WAS registrational data set: The registrational trial for OTL-103 for the treatment of Wiskott-Aldrich syndrome (“WAS”) met its key primary and secondary endpoints (n=8 at three years), including the elimination of severe bleeding episodes and a significant reduction in the frequency of severe infections.

MPS-I global license: The Company signed an exclusive license with Fondazione Telethon and Ospedale San Raffaele in Milan, Italy, for a clinical-stage HSC gene therapy program—OTL-203, a treatment for mucopolysaccharidosis type I (“MPS-I”) that has shown promising early data in an ongoing proof-of-concept clinical trial.

Corporate Financings

Credit facility: In May 2019, the Company secured a five-year senior credit facility for up to $75 million with MidCap Financial (Ireland) Limited (“MidCap Financial”).

Follow-on public offering: In June 2019, the Company completed a follow-on public offering for net proceeds of approximately $130 million, after deducting underwriting discounts and commission and offering expenses paid by the Company.

The global marketplace for talent

Orchard is a global biopharmaceutical company with major operations in the United States and Europe. The Company intends for both regions to be areas of high growth and great importance both now and in the future.

 

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DIRECTORS’ REMUNERATION REPORT

 

continued

 

Given that the market for experienced directors and biopharmaceutical executive talent is very competitive, particularly in the United States, the Committee references the US market as the leading indicator for remuneration levels and practices. This will help attract and retain directors and motivate the superior executive talent needed to successfully manage the Company’s complex global operations. Being consistent in this market view of the United States as the primary benchmark for remuneration practices for our Executive and Non-Executive Directors is key for the Company as it builds its global operations in a manner designed to deliver sustainable, long-term growth and shareholder value.

It can be difficult for Orchard, as a global company with operations in multiple major global regions to have remuneration arrangements that satisfy all local jurisdiction requirements and market demands. In taking any actions, the Committee is mindful of the general UK compensation framework, including investor bodies’ guidance, and has considered these when determining the remuneration programs and policies where it believes they best serve the long-term interests of shareholders.

Pay for Performance

We believe that a significant portion of remuneration of our Executive Directors should be based on achieving objectives designed to create inherent value in the Company, and ultimately on achieving value creation for our shareholders. In line with this belief, the compensation of our Executive Directors includes both short and long-term incentives based on strategic goals. Similarly, our Non-Executive Directors receive equity incentives designed to reward long-term value creation for our shareholders.

2019 remuneration outcome

The Compensation Committee approved increases in base salary effective as of 1 January 2020. The salary for the Chief Executive Officer (“CEO”) was increased by 3% to $543,300. The Chief Scientific Officer (“CSO”) was promoted in 2019 to the title of President of Research and CSO, and his salary was increased by 29% to £338,500 for his new role, and his target bonus was increased from 35% to 40% of salary for 2020. The target bonus for the CEO remains at 50% of salary.

As outlined above, a core principle in Orchard’s remuneration program is the linkage between pay and performance. In financial year 2019, the annual bonuses paid to our Executive Directors, Mark Rothera, our CEO, and Bobby Gaspar, our CSO, were based on achieving the 2019 Company objectives, and in the case of our CSO, was also based on his individual performance. In light of the exceptional performance of the Executive Directors in 2019 in terms of their strong cross-functional leadership and the role this played in delivering exceptional overall Company performance, the Committee reviewed the 2019 corporate goals and based on the results approved a total outcome of 140% and 145% of target respectively for the CEO and CSO, resulting in a total bonus payout of 70% of the CEO’s base salary and 51% of the CSO’s base salary for the financial year ended 31 December 2019. The bonuses were paid in February 2020 and March 2020 for the CSO and CEO respectively. Please see page 46 of the Remuneration Report for additional information on the pay for performance linkage for these bonus outcomes.

Option awards were made under the 2018 Share Option and Incentive Plan to the two Executive Directors in 2019. The CEO was granted 415,000 options, and the CSO was granted 50,000 options, in each case at $12.54 per share. The CSO was further granted 18,750 performance-based restricted share units (“PSUs”).

Changes to the Board and Chief Executive Officer

Steven Altschuler was appointed as a Non-Executive Director of the Company, effective as of 3 February 2020, and he serves on the Board’s Science and Technology Committee. Further information is set out in the statement of implementation for 2020 on page 52.

 

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DIRECTORS’ REMUNERATION REPORT

 

continued

 

On 18 March 2020, Bobby Gaspar was promoted to Chief Executive Officer. In connection with his promotion, Dr. Gaspar’s annual base salary was increased to £440,000, his target annual bonus opportunity was increased to 60% of his base salary, and he was granted an option to purchase 300,000 of the Company’s ordinary shares, effective 1 April 2020. The foregoing options will vest in equal monthly installments over four years commencing on the date of grant. In addition, Dr. Gaspar received a one-time grant of 195,000 PSUs, effective 1 April 2020. This PSU award vests on 2 January 2024 as to 1/3 of the award for each of the first three to occur of four milestones, if each such milestone is achieved by the Company on or before 31 December 2023 and Dr. Gaspar remains continuously employed with the Company through 2 January 2024. The milestones relate to achievement of specific clinical and regulatory milestones. While this information is included in the current report for full disclosure, the 2019 Directors’ Remuneration Report refers to Mark Rothera as CEO, as he was the Chief Executive Officer throughout the 2019 financial year. Mr. Rothera stepped down from his position as President and Chief Executive Officer and resigned as a director of the Company on 17 March 2020.

Conclusion

The Committee believes that the Directors’ Remuneration Policy has been implemented fairly and consistently, as described in this report, and that it will continue to properly motivate our Executive Directors to deliver sustainable growth and shareholder value over the long term and to do so in a responsible and cost-efficient manner.

I hope that you find the information in this report helpful, and I look forward to your support at the Company’s AGM.

Yours sincerely,

 

LOGO

Charles Rowland, Jr.

Chair of the Compensation Committee

9 April 2020

Remuneration Policy

This part of the Directors’ Remuneration Report sets out the remuneration policy for the Company. The current Directors’ Remuneration Policy (the “Policy”) was put forward for approval by shareholders in a binding vote at the AGM on 26 June 2019 and approved with a majority of 91.6% vote in favour of taking effect from the date of approval and applying for a period of three years until 2022.

Key considerations when determining the Remuneration Policy

The Policy was designed by the Committee with a number of specific principles in mind:

 

   

attract, retain and motivate high calibre senior management and focus them on the delivery of the Company’s strategic and business objectives;

 

   

encourage a corporate culture that promotes the highest level of integrity, teamwork and ethical standards;

 

   

be competitive against appropriate market benchmarks (being predominantly the US biotech sector) and have a strong link to performance, providing the ability to earn above-market rewards for strong performance;

 

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be simple and understandable, both internally and externally;

 

   

encourage increased equity ownership to motivate executives in the overall interests of shareholders, the Company, employees and customers; and

 

   

take due account of good governance and promote the long-term success of the Company.

In seeking to achieve the above objectives, the Committee is mindful of the views of a broad range of stakeholders in the business and accordingly takes account of a number of factors when setting remuneration including: market conditions; pay and benefits in relevant comparator organisations; terms and conditions of employment across the Company; the Company’s risk appetite; the expectations of institutional shareholders; and any specific feedback received from shareholders and other stakeholders.

Remuneration Policy table

The table in the following pages sets out, for each element of pay, a summary of how remuneration is structured and how it supports the Company’s strategy.

 

Executive Directors

             

Purpose and link to strategy Operation

 

Maximum opportunity

  

Performance metrics

Base salary

       
To recruit and retain Executive Directors of the highest calibre who are capable of delivering the Company’s strategic objectives, reflecting the individual’s experience and role within the Company.   

Salaries are normally reviewed annually, and changes are generally effective from 1 January each year.

 

The annual salary review for Executive Directors takes a number of factors into consideration, including:

  Whilst there is no prescribed formulaic maximum, any increases will take into account prevailing market and economic conditions and the approach to employee pay throughout the organisation.    Executive Directors’ performance is a factor considered when determining any salary increases.
Base salary is designed to provide an appropriate level of fixed income to avoid any over-reliance on variable pay elements that could encourage excessive risk taking.   

•   business performance;

 

•   salary increases awarded to the overall employee population;

 

•   skills and experience of the individual over time;

  Base salary increases are awarded at the discretion of the Committee; however, salary increases will normally be no greater than the general increase awarded to the wider workforce, in percentage of salary terms.   

 

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Executive Directors

             

Purpose and link to strategy Operation

 

Maximum opportunity

  

Performance metrics

  

•   scope of the individual’s responsibilities;

 

•   changes in the size and complexity of the Company;

 

•   market competitiveness assessed by periodic benchmarking; and

 

•   the underlying rate of inflation.

  However, a higher increase may be made where an individual had been appointed to a new role at below-market salary while gaining experience. Subsequent demonstration of strong performance may result in a salary increase that is higher than that awarded to the wider workforce.   

Benefits

       
Reasonable benefits-in- kind are provided to support Executive Directors in carrying out their duties and assist with retention and recruitment.   

The Company aims to offer benefits that are in line with market practice.

 

The main benefits currently provided include private health insurance, long-term disability, critical illness and death in service.

 

Under certain circumstances the Company may offer relocation allowances or assistance. Expatriate benefits may be offered where required.

 

Travel and any reasonable business-related expenses (including tax thereon) may be reimbursed.

 

Executive Directors may become eligible for other benefits in future where the Committee deems it appropriate. Where additional benefits are introduced for the wider workforce, Executive Directors may participate on broadly similar terms.

  The value of each benefit is not predetermined and is typically based upon the cost to the Company of providing said benefit.    Not performance related.

 

 

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Executive Directors

             

Purpose and link to strategy Operation

 

Maximum opportunity

  

Performance metrics

Pensions

The Company aims to provide a contribution towards life in retirement.

   Executive Directors are eligible to receive employer contributions to the Company’s Group Personal Pension Scheme or to a 401k plan or a salary supplement in lieu of pension benefits, or a mixture of both.   Up to 6% of salary per annum for Executive Directors.    Not performance
related.

Annual bonus

       
The annual bonus scheme rewards the achievement of stretching objectives that support the Company’s corporate goals and delivery of the business strategy.    Bonuses are determined based on measures and targets that are agreed by the Committee at the start of each financial year.  

The maximum target bonus opportunity for Executive Directors is 80% of salary, with a maximum bonus opportunity of up to two times the target opportunity.

 

For threshold performance, no more than 50% of target bonus may be payable.

 

For 2020, the target bonus opportunity for Executive Directors will be no more than 50% of salary, with a maximum bonus opportunity of up to 150% of the target opportunity.

  

Performance measures are determined by the Committee each year and may vary to ensure that they promote the Company’s business strategy and shareholder value.

 

The annual bonus will be based on strategic goals, which may include financial, strategic and personal objectives.

 

The Committee may alter the bonus outcome if it considers that the pay-out is inconsistent with the Company’s overall performance, taking account of any factors it considers relevant. This will help ensure that pay- outs reflect overall Company performance during the period.

 

 

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Executive Directors

             

Purpose and link to strategy Operation

 

Maximum opportunity

  

Performance metrics

2018 Share Option and Incentive Plan (“SOIP”)

    

The SOIP is designed to incentivise the

successful execution of business strategy over the longer term and provide long-term retention.

 

Facilitates share ownership to provide further alignment with shareholders.

  

The Committee will select the most appropriate form of SOIP award(s) each year.

 

Awards will typically be granted annually, in the form of options and restricted share units (“RSUs”) although may also be granted in the form of share appreciation rights, restricted shares, unrestricted shares, performance share units, cash or dividend equivalent rights.

 

Currently, options normally vest over a period of four years on a monthly basis. Initial grants generally vest 25% after one year, and monthly thereafter for 36 months. PSUs normally vest in three equal tranches on the meeting of agreed milestone events within a period of three years. The Committee may vary the vesting schedule of future grants of options and PSUs as it considers appropriate.

 

At the discretion of the Committee, participants may also be entitled to receive the value of dividends paid between grant and vesting on vested shares. The payment may be in cash or shares and may assume dividend reinvestment.

  There is no defined maximum opportunity under the SOIP. However, the Committee will generally work within the guidelines provided by our compensation consultants. We seek to establish equity-based remuneration competitive to that offered by a set of comparable companies with whom we may compete for talent.   

Performance conditions may apply to awards. Such conditions may be strategic objectives which may include milestones events, financial, strategic and/or personal objectives.

 

Share options are granted with an exercise price no less than the fair market value of the shares on the date of grant. Accordingly, share options will only have value to the extent the Company’s share price appreciates following the date of grant.

 

Any performance conditions set will be designed to incentivise performance in support of the Company’s strategy and business objectives.

 

The Committee has flexibility to vary the mix of measures or introduce new measures for each subsequent award taking into account business priorities at the time of grant.

 

The Committee may alter the vesting outcome if it considers that the level of vesting is inconsistent with the underlying performance of the business, taking account of any factors it considers relevant. This will help ensure that vesting reflects overall Company performance during the period.

 

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Executive Directors

             

Purpose and link to strategy Operation

 

Maximum opportunity

  

Performance metrics

Employee Stock Purchase Plan (“ESPP”)

    
Encourages employee share ownership and therefore increases alignment with shareholders.    The Company operates an employee share purchase plan that offers employees the opportunity to purchase shares in the Company through payroll deductions at a price equal to 85% of the lower of fair market value of the shares on the first business day or the last business day of the offering period. The ESPP is available to all employees who whose customary employment is for more than 20 hours per week and have completed at least 30 days of employment.   Employees may contribute up to 15% of their base compensation to purchase shares under the ESPP. However, the right to purchase shares under the ESPP may not accrue at a rate that exceeds $25,000 worth of ordinary shares, valued at the start of the purchase period, under the ESPP, for each calendar year in the purchase period.    Not performance related.

 

 

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Chair and Non-Executive Directors

        

Purpose and link to strategy Operation

 

Maximum opportunity

  

Performance metrics

Fees

       
To attract Non-Executive Directors who have a broad range of experience and skills to provide independent judgement on issues of strategy, performance, resources and standards of conduct.   

Non-Executive Directors receive an annual retainer paid in cash, comprising a base fee plus additional fees for additional responsibilities, such as a Committee Chairpersonship or membership and the role of Chairperson.

 

The Chair’s fee is reviewed annually by the Committee (without the Chair present). Fee levels for the Non-Executive Directors are determined by the Company Chair and Executive Directors.

 

When reviewing fee levels, account is taken of market movements in fee levels, Board committee responsibilities, ongoing time commitments and the general economic environment.

 

In exceptional circumstances, if there is a temporary yet material increase in the time commitments for Non- Executive Directors, the Board may pay additional fees to recognise that additional workload.

 

Non-Executive Directors ordinarily do not participate in any pension, bonus or performance- based share incentive plans. Travel, accommodation and other business-related expenses incurred in carrying out the role will be paid by the Company including, if relevant, any gross-up for tax.

 

When reviewing fee levels, account is taken of market movements in the fees of Non-Executive Directors, Board Committee responsibilities and ongoing time commitments, as well as the underlying rate of inflation.

 

Actual fee levels are disclosed in the annual Directors’ Remuneration Report for the relevant financial year.

   Not performance related.

 

 

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Chair and Non-Executive Directors

        

Purpose and link to strategy Operation

 

Maximum opportunity

  

Performance metrics

Equity Awards

       
To facilitate share ownership and provide alignment with shareholders.   

Non-Executive Directors may receive an equity award in the form of options, share appreciation rights, restricted shares, restricted share units or such other form permitted under the SOIP.

New Non-Executive Directors receive an initial equity award upon appointment or election. In addition, Non-Executive Directors receive annual equity awards at the time of the annual meeting.

Currently any initial equity awards normally vest one- third after one year, and monthly thereafter for 24 months, and any annual awards normally vest monthly over three years.

 

There is no maximum award level for equity awards to Non- Executive Directors.

The size of the equity awards is determined by the full Board of Directors, upon recommendation of the Compensation Committee.

When reviewing award levels, account is taken of market movements in equity awards, Board committee responsibilities, ongoing time commitments and the general economic conditions.

   Not performance related.

 

Notes to the policy table

Legacy arrangements

For the duration of this Policy, the Company will honour any commitments made in respect of current or former Directors before the date on which either: (i) the Policy becomes effective; or (ii) an individual becomes a Director, even where not consistent with the Policy set out in this report or prevailing at the time such commitment is fulfilled. For the avoidance of doubt, all outstanding historic awards that were granted in connection with, or prior to, listing remain eligible to vest based on their original or modified terms.

Performance conditions

The choice of annual bonus performance metrics reflects the Committee’s belief that any incentive remuneration should be appropriately challenging and tied to the delivery of key strategic objectives intended to ensure that Executive Directors are incentivised to deliver across a range of objectives for which they are accountable. The Committee has retained flexibility on the specific measures which will be used to ensure that any measures are fully aligned with the strategic imperatives prevailing at the time they are set.

The targets for the bonus scheme for the forthcoming year will be set out in general terms, subject to limitations with regards to commercial sensitivity. The full details of the targets will be disclosed when they are in the public domain and are no longer considered commercially sensitive.

 

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Where used, performance conditions applicable to SOIP awards will be aligned with the Company’s objective of delivering superior levels of long-term value to shareholders. The full details of performance conditions will be disclosed when they are in the public domain and are no longer commercially sensitive. Prior to each award, the Committee has flexibility to select measures that are fully aligned with the strategy prevailing at the time awards are granted.

The Committee will review the calibration of targets applicable to the annual bonus, and the SOIP in years where performance measures apply, annually to ensure they remain appropriate and sufficiently challenging, taking into account the Company’s strategic objectives and the interests of shareholders.

Differences in remuneration policy between Executive Directors and other employees

The overall approach to reward for employees across the workforce is a key reference point when setting the remuneration of the Executive Directors. When reviewing the salaries of the Executive Directors, the Committee pays close attention to pay and employment conditions across the wider workforce and in normal circumstances the increase for Executive Directors will be no higher than the average increase for the general workforce.

The key difference between the remuneration of Executive Directors and that of our other employees is that, overall, at senior levels, remuneration is increasingly long-term, and ‘at risk’ with an emphasis on performance-related pay linked to business performance and share-based remuneration. This ensures that remuneration at senior levels will increase or decrease in line with business performance and provides alignment between the interests of Executive Directors and shareholders. In particular, long-term incentives are provided only to the most senior executives as they are reserved for those considered to have the greatest potential to influence overall levels of performance.

Committee discretion in operation of variable pay schemes

The Committee operates under the powers it has been delegated by the Board. In addition, it complies with rules that are either subject to shareholder approval or by approval from the Board. These rules provide the Committee with certain discretions which serve to ensure that the implementation of the remuneration policy is fair, both to the individual Director and to the shareholders. The Committee also has discretions to set components of remuneration within a range, from time to time. The extent of such discretions is set out in the relevant rules, the maximum opportunity or the performance metrics section of the policy table above. To ensure the efficient administration of the variable incentive plans outlined above, the Committee will apply certain operational discretions.

These include the following:

 

   

selecting the participants in the plans on an annual basis;

 

   

determining the timing of grants of awards and/or payments;

 

   

determining the quantum of awards and/or payments (within the limits set out in the policy table above);

 

   

determining the choice (and adjustment) of performance measures and targets for each incentive plan in accordance with the policy set out above and the rules of each plan;

 

   

determining the extent of vesting based on the assessment of performance and discretion relating to measurement of performance in certain events such as a change of control or reconstruction;

 

   

making the appropriate adjustments required in certain circumstances, for instance for changes in capital structure;

 

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determining “good leaver” status, if applicable, for incentive plan purposes and applying the appropriate treatment; and

 

   

undertaking the annual review of weighting of performance measures and setting targets for the annual bonus plan and other incentive schemes, where applicable, from year to year.

If an event occurs which results in the annual bonus plan or SOIP performance conditions and/or targets being deemed no longer appropriate (e.g. material acquisition or divestment), the Committee will have the ability to make appropriate adjustments to the measures and/or targets and alter weightings, provided that the revised conditions are not materially less challenging than the original conditions. Any use of the above discretion would, where relevant, be explained in the Annual Report on Remuneration and may, as appropriate, be the subject of consultation with the Company’s major shareholders.

Shareholder views

The Board is committed to dialogue with shareholders and intends to engage directly with them and their representative bodies when considering any significant changes to our remuneration arrangements. The Compensation Committee will consider shareholder feedback received following the AGM, as well as any additional feedback and guidance received from time to time. This feedback will be considered by the Committee as it develops the Company’s remuneration framework and practices going forward. Assisted by its independent adviser, the Compensation Committee also actively monitors developments in the expectations of institutional investors and their representative bodies.

Employment conditions

The Committee is regularly updated throughout the year on pay and conditions applying to Company employees. Where significant changes are proposed to employment conditions elsewhere in the Company these are highlighted for the attention of the Committee at an early stage.

 

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Remuneration scenarios for Executive Directors

The charts below show an estimate of the 2020 remuneration package for the Executive Directors under three assumed performance scenarios and these scenarios are based upon the remuneration policy set out above. The chart includes information related to our former CEO, Mark Rothera, which would have been his potential compensation prior to his resignation on 17 March 2020. The chart also includes information related to our current CEO, Bobby Gaspar, in both his role as CEO, and his former role as CSO.

 

LOGO

Notes to the scenario charts:

 

1.

Minimum scenario comprises of fixed pay only, which includes the 2020 annual base salaries of $543,300, $572,000 and $440,000 for the CEO (Rothera), CEO (Gaspar) and CSO, respectively, benefits values as provided in the single total figure remuneration table, and pension contribution of up to 6% of salary. Dr. Gaspar’s salary utilized in the chart above of £440,000 as CEO and £338,500 as CSO have been translated to USD at a rate of $1.30 to £1.00 for comparability.

 

2.

Target scenario comprises of fixed pay as set out above, and bonus pay-outs assuming on-target performance, as set in the policy, at a maximum target of 80% of salary for the executive directors.

 

3.

Maximum scenario comprises of fixed pay as set out above, and 100% of maximum bonus pay-out, which is set in the policy at two times of the maximum target of 80% of salary for the executive directors.

The variable remuneration in the charts above only include annual bonus opportunity. The Executive Directors will additionally receive awards under the SOIP in 2020, in the form of market value options and PSUs. The maximum and target value of any equity awards under the plan is not defined, and, therefore, the awards cannot be valued nor included in the charts. Consequently, no share price growth has been factored into the chart.

 

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Other remuneration policies

Remuneration for new appointments

Where it is necessary to appoint or replace an Executive Director or to promote an existing Executive Director, the Committee’s approach when considering the overall remuneration arrangements in the recruitment of a new Executive Director is to take account of the calibre, expertise and responsibilities of the individual, his or her remuneration package in their prior role and market rates. Remuneration will be in line with our policy and the Committee will not pay more than is necessary to facilitate their recruitment.

The remuneration package for a new Executive Director will be set in accordance with the terms of the Company’s approved remuneration policy in force at the time of appointment. Further details are provided below:

 

 

Salary   

The Committee will set a base salary appropriate to the calibre, experience and responsibilities of the new appointee. In arriving at a salary, the Committee may take into account, amongst other things, the market rate for the role and internal relativities.

 

The Committee has the flexibility to set the salary of a new Executive Director at a lower level initially, with a series of planned increases implemented over the following few years to bring the salary to the desired positioning, subject to individual performance.

 

In exceptional circumstances, the Committee has the ability to set the salary of a new Executive Director at a rate higher than the market level to reflect the criticality of the role and the experience and performance of the individual.

 

Benefits    Benefits will be consistent with the principles of the policy. The Company may award certain additional benefits and other allowances including, but not limited to, those to assist with relocation support, temporary living and transportation expenses, educational costs for children and tax equalisation to allow flexibility in employing an overseas national.

 

Pension benefits    A maximum pension contribution of 6% of salary may be payable for external appointments. For an internal appointment, his or her existing pension arrangements may continue to operate. Any new Executive Director based outside the UK will be eligible to participate in pension or pension allowance, insurance and other benefit programmes in line with local practice.

 

Annual bonus    The maximum bonus opportunity for new appointments is 150% of their target bonus.

 

Other cash or equity-based awards   

Executive Directors may receive awards under the SOIP on appointment. The Committee will assess and determine the award level, award vehicle, performance conditions and vesting schedule for each individual on a case-by-case basis. In addition, Executive Directors are eligible to participate in the ESPP subject to the conditions set forth therein.

 

In addition, the Committee may offer additional cash and/or equity-based elements in order to “buy-out” remuneration relinquished on leaving a former employer. Any awards made in this regard may have no performance conditions, or different performance conditions, or a different vesting schedule compared to the Company’s existing plans, as the Committee considers appropriate. Depending on the timing and responsibilities of the appointment, it may be necessary to set different annual bonus or SOIP performance measures and targets as applicable to other Executive Directors.

 

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The terms of appointment for a Non-Executive Director would be in accordance with the remuneration policy for Non-Executive Directors as set out in the policy table.

Service contracts and termination policy

Executive Directors have rolling service agreements which may be terminated in accordance with the terms of these agreements. The period of notice for Executive Directors will not normally exceed 12 months. Executive Directors’ service agreements are available for inspection at the Company’s registered office during normal business hours.

 

Name

  

Position

  

Date of service contract

  

Notice period

Mark Rothera    Chief Executive Officer    30 May 2019    60 days either party
Bobby Gaspar    Chief Scientific Officer    2 January 2018    6 months either party

The Company’s policy on remuneration for Executive Directors who leave the Company is set out below. The Committee will exercise its discretion when determining amounts that should be paid to leavers, taking into account the facts and circumstances of each case. Generally, in the event of termination, the Directors’ service contracts may provide for payment of basic salary over the notice period. Where applicable, the Company may elect to make a payment in lieu of notice (PILON) equivalent in value to basic salary for any unexpired portion of the notice period. PILON payments may be made in monthly instalments or as a lump sum, and the individual is expected to take reasonable steps to seek alternative income to mitigate the payments. The Company may also pay for outplacement services for Executive Directors on termination or the Company may elect to make a payment in lieu of outplacement services. The Company may continue to pay the employer health plan premium for the Executive Director on termination for a period of up to 12 months (up to 18 months in connection with a change in control).

Any outstanding incentive awards will be treated in accordance with the plan rules, as follows:

 

    

Termination without cause
or for cause by participant

   Termination
for cause
  

Termination without cause
or for cause by participant
in connection with change
of control

Salary    A payment equal to up to 12 months’ salary payable as a lump sum or on a monthly basis, less any amounts payable pursuant to any restrictive covenant agreements (if applicable) (“Restrictive Covenants Agreement Setoff”) paid or to be paid in the same calendar year.    No
payment.
   A payment of up to 18 months’ salary payable as a lump sum or on a monthly basis for termination without cause, less any Restrictive Covenants Agreement Setoff (if applicable) paid or to be paid in the same calendar year.

 

 

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Termination without cause
or for cause by participant

   Termination for cause   

Termination without cause
or for cause by participant
in connection with change
of control

Annual Bonus    Unpaid annual cash bonus in respect of prior year performance, which otherwise would have been earned if participant had remained employed through the payment date, should be paid in full. A pro-rata amount of the participant’s target bonus for the current year should be paid, subject to the participant’s actual performance.    Unpaid awards lapse in
full.
   Up to 1.5 times the participant’s target bonus may be payable less any Restrictive Covenants Agreement Setoff (if applicable) paid or to be paid in the same calendar year.

 

Share Option Incentive Plan    Unvested awards lapse in full, except where the participant leaves in circumstances where they retain a statutory right to return to work (in which case, awards will continue to vest on normal terms).    Unvested awards lapse
in full.
   On a change of control, merger, reorganization or other corporate event, the Company may seek to replace awards with new awards in the successor company (to the extent agreed with the successor company). In the case of a termination without cause or for cause by the participant in connection with a change of control, such awards will accelerate and vest in full.
        

Where there is no agreement to replace awards, on a corporate event awards with time- based vesting conditions shall vest on the date of that event and awards with performance-based vesting conditions shall vest on the date of that event to the extent determined by the Company (regardless of the extent to which any performance conditions attached to awards have been satisfied).

 

 

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The Company is unequivocally against rewards for failure; the circumstances of any departure, including the individual’s performance, would be taken into account in every case. Statutory redundancy payments may be made, as appropriate. Service agreements may be terminated summarily without notice (or on shorter notice periods) and without payment in lieu of notice in certain circumstances, such as gross misconduct or any other material breach of the obligations under their employment contract. The Company may require the individual to work during their notice period or may place them on garden leave during which they would be entitled to salary, benefits and pension only.

Except in the case of gross misconduct or resignation, the Company may at its absolute discretion reimburse for reasonable professional fees relating to the termination of employment and, where an Executive Director has been required to re-locate, to pay reasonable repatriation costs, including possible tax exposure costs. This includes any statutory entitlements or sums to settle or compromise claims in connection with a termination (including, at the discretion of the Committee, reimbursement for legal advice and provision of outplacement services).

On 17 March 2020, the Company entered into a Separation Agreement and Release with Mr. Rothera (the “Rothera Separation Agreement”), which provides, among other things, that Mr. Rothera will receive (i) an amount equal to 12 months of his base salary, payable in substantially equal installments in accordance with the Company’s payroll practice over 12 months, provided that Mr. Rothera has not breached any of his continuing obligations, (ii) a pro-rated bonus representing Mr. Rothera’s 50% target bonus for 2020, and (iii) reimbursement of COBRA premiums for health benefit coverage for up to 12 months, in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to Mr. Rothera had he remained employed with the Company. Additionally, all time-based equity awards held by Mr. Rothera that would have vested had Mr. Rothera remained employed by the Company for an additional 12 months following March 17, 2020 shall immediately vest and become fully exercisable or non-forfeitable. With respect to vested awards held by Mr. Rothera as of the date of his separation, the Company has agreed to extend the exercise period until the earlier of (a) the original expiration date for such vested awards or (b) 12 months after the date of his separation. After taking into account the acceleration of time-based equity awards described above, the unvested equity awards held by Mr. Rothera at the time of his separation will not be exercisable, unless a change in control of the Company occurs within three months of Mr. Rothera’s separation, in which case such unvested equity awards will be accelerated in full. If a change in control does not occur within three months following Mr. Rothera’s separation, such unvested portion of his equity awards shall terminate or be forfeited on the three month anniversary of Mr. Rothera’s separation.

Policy on external appointments

The Board believes that it may be beneficial to the Company for executives to hold non-executive directorships outside the Company. Any such appointments are subject to approval by the Board, and the director may retain any fees received at the discretion of the Board. Neither Executive Director currently holds any outside directorships.

Non-Executive Directors’ terms of engagement

Each of the Non-Executive Directors is engaged under a Non-Executive Director appointment letter. In any event, each appointment is terminable by either party on not less than three months’ written notice. Our board of directors is classified, meaning that each of our directors is designated to one of three classes and is elected to serve a term of between one and three years. The Chair and Non- Executive Directors are only entitled to fees accrued to the date of termination.

 

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The dates of appointment of each of the Non-Executive Directors serving at 31 December 2019 are summarised in the table below. Dates prior to our incorporation in August 2018 as Orchard Rx Limited (now known as Orchard Therapeutics plc) are for Non-Executive Directors who served on the board of our predecessor company, Orchard Therapeutics Limited (now known as Orchard Therapeutics (Europe) Limited). Dates after year end are for newly appointed Non-Executive Directors.

 

Non-Executive Directors

  

Date of contract or date of appointment

Joanne Beck    1 July 2018
Marc Dunoyer    6 June 2018
Jon Ellis    17 July 2018
James Geraghty    4 June 2018
Charles Rowland    1 June 2018
Alicia Secor    7 December 2018
John Curnutte    30 August 2019
Steven Altschuler    3 February 2020

Directors’ letters of appointment are available for inspection at the Company’s registered office during normal business hours and will be available for inspection at the AGM

Annual Report on Remuneration

This part of the report has been prepared in accordance with Part 3 of The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 as amended and Rule 9.8.6 of the Listing Rules. Since the Company is not FTSE-listed, it is under no obligation to comply with the UK Corporate Governance Code, but best practice and good governance have been considered when preparing this report. The Annual Report on Remuneration and the Annual Statement by the Chair of the Compensation Committee will be put to a single advisory shareholder vote at the AGM on 17 June 2020.

Compensation Committee (the “Committee”)

The current members of the Committee, who are all independent, are Charles Rowland, Joanne Beck and Alicia Secor.

The Company Chair and members of management are invited to attend meetings where appropriate. The Company Secretary is the secretary to the Committee. Attendees are not involved in any decisions and are not present for any discussions regarding their own remuneration.

No conflicts of interest have arisen during the period and none of the members of the Committee has any personal financial interest in the matters discussed, other than as shareholders. The fees of the Non-Executive Directors are approved by the Board on the joint recommendation of the Committee and the Executive Directors.

Meetings attendance

(since 1 January 2019)

 

    

Attendance

Charles Rowland    7 of 7
Joanne Beck    7 of 7
Alicia Secor    7 of 7

 

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Table of Contents

DIRECTORS’ REMUNERATION REPORT

 

continued

 

Independent advisors

Wholly independent advice on executive remuneration is received from the Executive Compensation practice of Aon plc. Aon is a member of the Remuneration Consultants Group and is a signatory to its Code of Conduct. Aon advises on remuneration arrangements and all aspects of senior executive remuneration. In 2019, Aon assisted with the Committee and kept the Committee up to date on remuneration trends. During the 2019 financial year, fees charged by Aon for advice provided to the Committee for 2019 amounted to $175,000 (excluding VAT). In addition, Aon provided advice to the Company’s Human Resources function on implementation, which the Committee considers in no way prejudices Aon’s position as the Committee’s independent advisor. Goodwin Procter LLP have also advised the Company’s Human Resources function on compensation.

Activity in the period

The Committee’s principal function is to support Orchard’s strategy by ensuring that those individuals responsible for delivering the strategy are appropriately incentivised and rewarded through the operation of Orchard’s remuneration policy. In implementing the remuneration policy, and in constructing the remuneration arrangements for executive directors and senior employees, the Board, advised by the Committee, aims to provide remuneration packages that are competitive and designed to attract, retain and motivate Executive Directors and senior employees of the highest calibre.

The Committee is responsible for and considered, where applicable, during the period:

 

   

evaluating the efficacy of the Company’s remuneration policy and strategy;

 

   

reviewing and determining remuneration to be paid to the Company’s executive officers and directors, including setting the executive remuneration policy;

 

   

reviewing and making recommendations to the Board regarding remuneration for non-executive members of the Board, including the approval of the director remuneration policy;

 

   

agreeing the design of all share incentive plans;

 

   

prepare any report on executive remuneration required by the rules and regulations of the US Securities and Exchange Commission, The Nasdaq Stock Market LLC and as required under UK law;

 

   

reviewing, evaluating, and approving employment agreements, severance agreements, change- of-control protections, corporate performance goals and objectives, and other compensatory arrangements of the executive officers and other senior management and adjusting remuneration, as appropriate;

 

   

evaluating and approving remuneration plans and programs and establishing equity remuneration policies;

 

   

reviewing remuneration practices and trends to assess the adequacy and competitiveness of the executive remuneration programs as compared to industry peers, and determining the appropriate levels and types of remuneration to be paid;

 

   

approving any loans by the Company to employees;

 

   

reviewing and approving remuneration arrangements for any executive officer involving any subsidiary, special purpose or similar entity, with consideration of the potential for conflicts of interest; and

 

   

reviewing the Company’s practices and policies of employee remuneration as they relate to risk management and risk-taking incentives.

 

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Table of Contents

DIRECTORS’ REMUNERATION REPORT

 

continued

 

The Committee is formally constituted and operates on written terms of reference, which are available on Orchard’s website, www.orchard-tx.com.

Statement of shareholder voting at 2019 AGM

At last year’s AGM held on 26 June 2019, votes cast by proxy and at the meeting in respect of the Directors’ remuneration were as follows:

 

     Votes For      Votes Against      Votes Withheld  
     % of     Number      % of     Number      % of     Number  
     votes     of      votes     of      votes     of  
     cast     votes      cast     votes      cast     votes  

To approve the Directors’ Remuneration Report

     98.2     36,304,691        1.8     669,446        0     750  

To approve the Directors’ Remuneration Policy

     91.6     33,863,941        8.4     3,110,196        0     750  

Single total figure of Directors’ remuneration – year ended 31 December 2019 (audited)

The total remuneration of the individual Directors who served in the year ended 31 December 2019, is shown below. Total remuneration is the sum of emoluments plus Company pension contributions. Total remuneration of the Individual Directors in the year ended 31 December 2018 is for the 2 months after the Company’s listing on the Nasdaq from 31 October 2018 to 31 December 2018. The below table has been presented in US dollars ($) which is the functional currency of the reporting entity:

 

           

Base
salary

/fees

     Benefits 1      Pension      Bonus 2      SOIP 3      Other 4     

Total
remun-

eration

 
          $000      $000      $000      $000      $000      $000      $000  

Executive Directors

                       

Mark Rothera

     2019        527        32        11        369        2,888        77        3,904  
     2018        100        7        4        50        350        44        555  

Bobby Gaspar

     2019        344        —          —          174        503        —          1,021  
     2018        55        —          —          33        68        —          156  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Non-Executive Directors

                       

Joanne Beck

     2019        41        —          —          —          266        —          307  
     2018        7        —          —          —          20        —          27  

Marc Dunoyer

     2019        47        —          —          —          322        —          369  
     2018        8        —          —          —          29        —          37  

Jon Ellis

     2019        —          —          —          —          —          —          —    
     2018        —          —          —          —          —          —          —    

Hong Fang Song

     2019        —          —          —          —          —          —          —    
     2018        —          —          —          —          —          —          —    

James Geraghty

     2019        83        —          —          —          631        —          714  
     2018        14        —          —          —          81        —          95  

Charles Rowland

     2019        60        —          —          —          269        —          329  
     2018        10        —          —          —          20        —          30  

Alicia Secor

     2019        43        —          —          —          292        —          335  
     2018        —          —          —          —          24        —          24  

John Curnutte

     2019        16        —          —          —          50        —          66  
     2018        —          —          —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2019        1,161        32        11        543        5,221        77        7,045  
     2018        194        7        4        83        592        44        924  

 

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Table of Contents

DIRECTORS’ REMUNERATION REPORT

 

continued

 

1.

For Executive Directors, included private health insurance, long term disability, critical illness and death in service benefits.

2.

Bonus for our Executive Directors for 2018 was calculated on an accrual basis for the 2 months after the Company’s listing on the Nasdaq. Bonus for our Executive Directors for 2019 was paid in February 2020.

3.

SOIP options do not have performance conditions and have therefore been included based on the proportion of expense incurred on a straight-line basis during the period based on their Black Scholes estimated value at date of grant. 2018 comparators have been restated using the same approach, resulting in restated total remuneration for 2018.

4.

Other expenses include payments for relocation/housing benefits and tax-related services.

2019 Annual bonus (audited)

In 2019, the CEO and CSO’s annual bonus outcome of 140% and 145% of target, respectively resulted in a total bonus pay out of 70% of the CEO’s base salary and 51% of the CSO’s base salary for the financial year ended 31 December 2019.

During a series of meetings in December 2019 and January 2020, the Compensation Committee evaluated achievement of the 2019 corporate objectives and each Executive Director’s individual performance. The Compensation Committee reviewed the following corporate goals and based on the results approved a 140% achievement level of the 2019 corporate objectives as the Company exceeded the target goals. The goals were as follows:

Corporate Goals and Achievements

 

   

Advance lead three clinical programs to regulatory filing: enable a filing with the U.S. Food and Drug Administration (“FDA”) in 2020 for OTL-101 for the treatment of ADA-SCID, enable a filing with the EMA in 2020 for OTL-200 for the treatment of MLD, and enable filings with each of the EMA and FDA in 2021 for OTL-103 for the treatment of WAS – Our key achievements in 2019 for our lead three programs included filing an MAA with the EMA for OTL-200 ahead of schedule, releasing key data sets with respect to OTL-101, OTL-200 and OTL-103, and initiating a clinical trial for OTL-103 in which patients were treated using a cryopreserved formulation.

 

   

Build a world-leading pipeline, advancing early stage programs into and through the clinic – We made several advancements to our pipeline, including in-licensing OTL-203 for the treatment of MPS-I, reporting data from clinical proof-of-concept trials for multiple of our product candidates and submitting a clinical trial application for another product candidate.

 

   

Build a world-leading chemistry, manufacturing, and controls (“CMC”) platform, including manufacturing facility design and implementation of processes for improved transduction efficiency – We completed the conceptual design of an in-house manufacturing facility in Fremont, California and initiated implementation of select transduction enhancers for certain of our clinical programs.

 

   

Fund Company growth and operations through mid-2021 – We entered into a credit facility in May 2019 and closed a follow-on public offering in June 2019, which extended our cash runway into the second half of 2021.

During a series of meetings in December 2019 and January 2020, the Compensation Committee evaluated our achievement of the 2019 corporate objectives and each executive director’s individual performance. Based on our 2019 results, the Compensation Committee determined that our corporate performance was 140% of target.

 

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Table of Contents

DIRECTORS’ REMUNERATION REPORT

 

continued

 

The table below sets forth the 2019 annual base salaries, target annual cash bonuses, relative weighting of corporate and individual performance, and the 2019 annual cash bonuses earned by our executive director’s.

 

               

Corporate Performance

 

Individual Performance

       

Executive
Director

  2019 Annual
Base salary
($)
    Target Annual
Cash Bonus
(% of annual

base salary)
   

Weighting
(%)

 

Outcome

(% of
salary)

 

Cash
outcome
($)

 

Weighting
(%)

 

Outcome

(% of
salary)

 

Cash
outcome
($)

 

Annual
Cash

Bonus
(%)

 

Annual
Cash

Bonus
($)

Mark Rothera

  $ 527,440       50   100%   140%   $369,208   —     —     —     70%   $369,208

Bobby Gaspar

  $ 344,381       35   70%   140%   $118,111   30%   155%   $56,042   51%   $174,154

 

1

Dr. Gaspar’s base salary and bonus are paid in GBP (£) and awards have been translated into USD at a rate of £1.00 = $1.3118, which was the prevailing rate as of 31 December 2019.

Share Option Incentive Plan

Awards granted to Executive Directors in 2020

In January 2020, the CSO was granted share options. Additionally, upon his promotion, Bobby Gaspar was granted PSUs and share options as follows (in thousands, except share and per share amounts):

 

Executive
Director

  Form of
Award
    Date of
Grant
    Shares
Covered
    Exercise
Price
    Face
Value
at Date

of Grant
    Fair
Value
at Date

of Grant
    Expiry
Date
    Vest
Terms
    Vested     Exercised     Value
realized at
exercise or

vesting
    Unexe-
rcised
 

Bobby Gaspar

    FMV Options *(1)      02 Jan 2020       200,000     $ 13.58     $ 2,716     $ 1,729       01 Jan 2030       (1     Nil       N/A       N/A       N/A  

Bobby Gaspar

    PSU **      01 April 2020       195,000       N/A     $ 1,375     $ 1,375       02 Jan 2024       (2     Nil       N/A       N/A       N/A  

Bobby Gaspar

    FMV Options *(3)      01 April 2020       300,000     $ 7.05     $ 2,115     $ 1,316       31 March 2030       (3     Nil       N/A       N/A       N/A  

 

*

The fair market value options are granted at the market price which is the exercise price. The face value at date of grant is calculated as the number of shares multiplied by the exercise price. The fair value at date of grant is calculated as the Black Scholes value.

**

The fair value on date of grant for the PSU is based on the market price on the date of grant. None of the performance conditions, as described below, have been deemed probable.

(1)

The options vest, and become exercisable, over a four-year period on a monthly basis commencing upon the one-month anniversary of the vesting commencement date of 2 January 2020.

(2)

Bobby Gaspar received a one-time grant of 195,000 PSUs, effective 1 April 2020. This PSU award vests as follows: 1/3 of the PSUs will vest on each of the first three of specific clinical and regulatory milestones achieved, subject to Bobby Gaspar remaining an employee of the Company on the date of achievement and provided that in each case the milestone is achieved on or before 2 January 2024.

(3)

The options vest, and become exercisable, over a four-year period on a monthly basis commencing upon the one-month anniversary of the vesting commencement date of 1 April 2020.

Awards granted to Executive Directors in the year ended 31 December 2019 (audited)

The table below sets forth the option and PSU awards approved in January 2019 (in thousands, except share and per share amounts):

 

Executive Director

  Form of
Award
    Date of
Grant
    Shares
Covered
    Exercise
Price
    Face
Value
at Date

of Grant
    Fair
Value
at Date

of Grant
    Expiry Date     Vest
Terms
    Vested     Exercised     Value
realized at
exercise
    Unexe-
rcised
 

Mark Rothera

    FMV options     16 Jan 2019       415,000     $ 12.54     $ 5,204     $ 3,330       15 Jan 2029       (1     95,104       Nil       N/A       415,000  

Bobby Gaspar

    FMV options     16 Jan 2019       50,000     $ 12.54     $ 627     $ 401       15 Jan 2029       (1     11,458       Nil       N/A       50,000  

Bobby Gaspar

    PSU       16 Jan 2019       18,750       N/A     $ 235     $ 235 **      31 Dec 2021       (2     Nil       N/A       N/A       N/A  

 

*

The fair market value options are granted at the market price which is the exercise price. The face value at date of grant is calculated as the number of shares multiplied by the exercise price. The fair value at date of grant is calculated as the Black Scholes value.

 

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Table of Contents

DIRECTORS’ REMUNERATION REPORT

 

continued

 

**

The fair value on date of grant for the PSU is based on the market price on the date of grant. None of the performance conditions, as described below, have been deemed probable and none have vested as of 31 December 2019.

(1)

The options vest, and become exercisable, over a four-year period on a monthly basis commencing upon the one-month anniversary of the date of grant.

(2)

In January 2019, PSUs were granted to further incentivise the executive team towards meeting longer-term performance milestones and in consideration of completing our follow on offering in 2019. The PSUs granted have a three-year performance period of 1 January 2019 to 31 December 2021 and vest as to 1/3 of the award with vesting linked to the achievement of three specific regulatory and research and development milestones and one market condition based upon the volume weighted-average price (“VWAP”) of the Company’s ADSs for a certain period. The award becomes fully vested upon achievement of three of the four performance conditions. None of the milestones were deemed probable as of 31 December 2019.

During the year ended 2019, Mark Rothera exercised 30,000 share options that were granted in 2017 with an exercise price of $2.44 per share. The value realized on exercise was $372,176.

Awards granted to Executive Directors between 1 January 2018 and 31 December 2018 (audited)

The CEO and CSO received the following share option awards during the financial year from 1 January 2018 through 31 December 2018 prior to our listing as a public company, as set forth in the table below (in thousands, except share and per share amounts):

 

Executive
Director

  Form of
Award
    Date of
Grant
    Shares
Covered
    Exercise
Price
    Face
Value
at Date

of Grant
    Fair
Value
at Date

of Grant
    Expiry Date     Vest
Terms
    Vested     Exercised     Value
realized at
exercise
    Unexe-
rcised
 

Mark Rothera

    FMV Options     7 Feb 2018       436,686     $ 2.44     $ 1,064     $ 672       6 Feb 2028     (1     200,148       Nil       N/A       436,686  

Mark Rothera

    FMV Options     13 Sep 2018       410,289     $ 9.06     $ 3,717     $ 2,281