PALISADE BIO INC

EXECUTIVE COMPENSATION

Our named executive officers for the year ended December 31, 2023, consisting of our current principal executive officer and financial officer, our the next two most highly compensated executive officers as of December 31, 2023, and two additional individuals for whom disclosure would have been required to be provided under applicable SEC rules but for the fact that the individuals were not serving as an executive officer at December 31, 2023, were:

The following table presents all of the compensation awarded to or earned by or paid to our named executive officers during the fiscal years ended December 31, 2023 and 2022.

Summary Compensation Table

(1)

In accordance with SEC rules, amount reflects the aggregate grant date fair value of stock options granted to our named executive officers during fiscal years ended December 31, 2022 and 2023 under the 2021 Inducement Pan and the 2021 Equity Incentive Plan, as determined in accordance with the provisions of FASB ASC Topic 718. The valuation assumptions used in calculating the fair value of the stock options are included in Note 9 to our audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2023 with respect to grants in 2022. With respect to the grants in the 2023, those valuation assumptions were as follow: (i) a weighted-average exercise price of $1.39, (ii) a weighted-average expected term of 5.66 years, (iii) a weighted-average risk-free interest rate of 4.08%, (iv) a weighted-average expected dividend yield of 0%, and (v) a weighted-average volatility of 78.35%. These amounts do not reflect the actual economic value that may be realized by the named executive officer upon the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options.

(2)

Amounts reflect non-equity discretionary cash incentive plan bonuses paid.

(3)

Dr. Hallam ceased to serve as our Chief Executive Officer and as a member of the Board effective October 11, 2022.

(4)

Amount includes an option grant to purchase 1,296 shares under the 2021 Equity Incentive Plan. The options were issued on February 17, 2022 and have an exercise price of $47.71 per share.

(5)

Mr. Finley was appointed Chief Executive Officer on October 11, 2022. Mr. Finley’s salary was increased to $490,000 effective October 1, 2022. Effective June 1, 2023, Mr. Finley’s salary was increased to 542,000 and his target cash bonus from 45% to 50% of his base salary.

(6)

Amount includes: (i) 5,236 restricted stock units issued on January 3, 2023, (ii) 41,700 restricted stock units issued on February 6, 2023, (iii) 66,700 restricted stock units issued on June 11, 2023, (iv) 38,000 restricted stock units issued on November 21, 2023, and (v) 32,500 restricted performance stock units issued on February 6, 2023. All the grants were issued under the 2021 Equity Incentive Plan.

(7)

Amount includes: (i) an option grant issued on February 6, 2023 to purchase 57,200 shares at an exercise price of $2.40 per share, (ii) an option grant issued on June 11, 2023 to purchase 148,500 shares at an exercise price of $1.60 per share, and (iii) an option grant issued on November 11, 2023 to purchase 45,000 shares at an exercise price of $0.59 per share. All the grants were issued under the 2021 Equity Incentive Plan.

(8)

Amount includes an option grant to purchase 3,132 shares under the 2021 Equity Incentive Plan. The options were issued on February 17, 2022 and have an exercise price of $47.71 per share.

(9)

Mitchell Jones was appointed Chief Medical Officer effective September 5, 2023 with a base salary of $415,000.

(10)

Amount includes 54,700 restricted stock units issued on September 5, 2023 under the 2021 Inducement Plan and 28,000 restricted stock units issued on November 21, 2023 under the 2021 Equity Incentive Plan.

(11)

Amount includes 75,000 option grants issued on September 5, 2023 under the 2021 Inducement Plan at an exercise price of $0.6897 per share and 33,160 options grants issued on November 21, 2023 under the 2021 Equity Incentive Plan at an exercise price of $0.59 per share.

(12)

Amounts reflect payment made to Dr. Jones as a consultant of the Company prior to becoming the Chief Medical Officer on September 5, 2023.

(13)

Dr. Dawson ceased to serve as our Chief Medical Officer effective October 11, 2022.

(14)

Amount includes an option grant to purchase 1,800 shares under the 2021 Equity Incentive Plan. The options were issued on February 9, 2022 and have an exercise price of $52.50 per share.

(15)

Mr. McRae served as our chief operating officer from February 2, 2023 through May 15, 2023. Mr. McRae continued to provide consulting services to the Company through January 15, 2024.

(16)

Amount includes: (i) 2,618 restricted stock units issued on January 1, 2023, (ii) 8,000 restricted stock units issued on February 6, 2023, and (iii) 17,900 restricted performance stock units issued on February 6, 2023. All of the grants were issued under the 2021 Equity Incentive Plan.

(17)

Amount includes an option grant to purchase 12,000 shares under the 2021 Equity Incentive Plan. The options were issued on February 6, 2023 and have an exercise price of $2.40 per share.

(18)

Represents amounts paid to Mr. McRae for consulting services to the Company after he ceased being Chief Operating Officer on May 15, 2023.

(19)

Amount includes an option grant to purchase 1,800 shares under the 2021 Equity Incentive Plan. The options were issued on February 9, 2022 and have an exercise price of $52.50 per share.

Compensation Program Overview

Our compensation program for executive officers is designed to encourage our management team to continually achieve our short-term and long-term corporate objectives while effectively managing business risks and challenges. We provide what we believe is a competitive total compensation package to our management team through a combination of base salary, an annual performance-based bonus and long-term equity-based incentives.

The Compensation Committee shall review, determine and approve (or, if it deems appropriate, recommend to the Board for determination and approval, except as provided below), at their discretion, in light of relevant performance goals and objectives, taking into account such other items as the Compensation Committee deems relevant.

Bonus Opportunity

Named executive officers are eligible to be considered for an annual discretionary cash incentive bonus of up to a percentage of their respective base salary, based on achievement of individual and/or corporate performance targets, metrics and/or objectives to be determined and approved by the Board or the Compensation Committee, including pursuant to an annual incentive plan or similar plan adopted by the Board, if any. Any such bonus would be paid after the close of the fiscal year and after determination by the Board or the Compensation Committee. All annual incentive compensation is discretionary and not guaranteed and, in addition to the other conditions for earning such compensation, each officer must remain an employee in good standing of the Company on the annual incentive compensation payment date in order to be eligible for any annual incentive compensation. The Board (or the Compensation Committee thereof) may review an executive officer’s annual performance bonus amount for adjustment from time to time. The 2023 annual discretionary cash incentive bonus targets were 50% of base salary for Mr. Finley (which amount was increased from 45% effective June 1, 2023) and 40% of base salary for Dr. Jones.

In 2023, the annual cash incentive bonuses paid to Mr. Finley and Dr. Jones were calculated based on achievement of 100% of the corporate performance targets for the year multiplied by their respective bonus target percentages at the time. The corporate performance targets related to clinical and medical development, financial position, and corporate operations and infrastructure during 2023.

Equity Compensation Plans

As of December 31, 2023, we currently have the following equity compensation plans: (i) the Palisade 2021 Equity Incentive Plan, as amended (the "2021 EIP"), (ii) the Palisade 2021 Employee Stock Purchase Plan, as amended (the "Employee Stock Purchase Plan”), (ii) the Leading BioSciences 2013 Amended and Restated Employee, Director, and Consultant Equity Incentive Plan (the "2013 Plan"), which was assumed by the Company in connection with the merger with Seneca BioPharma, (iii) the Palisade 2021 Inducement Plan, (the "2021 Inducement Plan"), (iv) Seneca’s 2019 Equity Incentive Plan (the “Seneca 2019 Plan”), (v) Seneca’s 2020 Equity Incentive Plan (the “Seneca 2020 Plan”) and (vi) Seneca’s Inducement Award Stock Option Plan (the “Seneca Inducement Plan”). As a result of the approval of the 2021 EIP, no future awards may be granted under the 2013 Plan. Additionally, no future awards may be granted under the Seneca 2019 Plan, the Seneca 2020 Plan, or the Seneca Inducement Plan.

Clawback Policy

Effective October 2, 2023, we adopted a clawback policy (the “Clawback Policy”), that is administered by our Compensation Committee. Pursuant to the Clawback Policy, our current and former executive officers are required to reimburse us in the event that any Incentive Compensation (as defined in the Clawback Policy) is awarded to such executive and is determined to be awarded in error subsequent to an accounting restatement resulting from material noncompliance with financial reporting requirements under federal securities laws. Notwithstanding, we have not historically granted Incentive Compensation based on financial metrics that would be subject to a restatement.

FOR ADDITIONAL INFORMATION, PLEASE SEE BELOW UNDER “OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END.”

Say-on-Pay

At our 2023 Annual Meeting of Stockholders held on June 8, 2023 (the "2023 Annual Meeting"), we submitted two proposals to our stockholders regarding our executive compensation.

The first is an advisory vote on the compensation awarded to our named executive officers (commonly known as a “say-on-pay” vote). At our 2023 Annual Meeting, excluding broker non-votes, approximately 1,332,108 shares cast votes with regard to the say-on-pay proposal. Of those, or approximately 57.45%, of the shares approved the compensation of our named executive officers. We believe that the outcome of our say-on-pay vote signals our stockholders’ support of our compensation approach, specifically our efforts to retain and motivate our named executive officers. In light of this stockholder support, the Compensation Committee determined not to change its approach to compensation. However, even though stockholders demonstrated support for our compensation approach in 2023, the Compensation Committee annually reviews our compensation practices to determine how they might be improved. The Compensation Committee will continue to consider the outcome of say-on-pay votes when making future compensation decisions for our named executive officers.

The second proposal was a vote on the frequency of future stockholder advisory votes regarding compensation awarded to named executive officers (commonly known as a “say-when-on-pay” vote). The frequency of every one (1) year received the highest number of votes cast. Notwithstanding these results, our Board determined that we would hold our next say-on-pay votes at the 2026 Annual Meeting or three (3) years from the 2023 Annual Meeting.

Agreements with Our Named Executive Officers

We are party to (i) an employment agreement with Mr. Finley, our Chief Executive Officer and Chief Financial Officer and (ii) an employment agreement with Mitchell Jones, M.D., Ph.D., our Chief Medical Officer.

Previously, we were a party to (i) an employment agreement entered into with Dr. Hallam in December 2020 (entered into by LBS), and (ii) an employment agreement entered into with Dr. Dawson in December 2020 (entered into by LBS). Employment for both Dr. Hallam and Dr. Dawson terminated on October 11, 2022.

Descriptions of each of the foregoing employment or consulting agreement(s) are described below.

Finley Employment Agreement

Mr. Finley served as our Chief Financial Officer pursuant to his amended and restated employment agreement dated January 22, 2021 (“Finley Employment Agreement”). Additionally, effective October 11, 2022, Mr. Finley was appointed to serve as our interim Chief Executive Officer and effective June 1, 2023, Mr. Finley’s title was changed from interim Chief Executive Officer to Chief Executive Officer. Pursuant to the Finley Employment Agreement, Mr. Finley received an annual base salary of $400,000, with an annual target cash bonus of 40% of his base salary. In February 2022, his base salary was increased to $424,000 per annum. Effective October 1, 2022, Mr. Finley’s salary was increased to $490,000 and his target cash bonus increased to 45% of his base salary pursuant to his appointment as interim Chief Executive Officer. Effective June 1, 2023, Mr. Finley’s base salary was increased to $542,000 per annum and his target cash bonus to 50% of his base salary.

Finley Termination / Change in Control Payments

The Finley Employment Agreement also provided that if the Company terminated Mr. Finley without “Cause” or if Mr. Finley resigned his employment for “Good Reason”, each as defined in the Finley Employment Agreement, Mr. Finley would be entitled to receive (i) salary continuation and COBRA reimbursement for twelve (12) months each, up to three (3) months of outplacement assistance, and (iii) 9 months of immediate vesting of equity grants subject to time based vesting. In the case of a termination that occurred during the period beginning three (3) months before and ending twelve (12) months after a “Change in Control”, (a) these severance-related periods would also be (12) months, (b) the equity award acceleration will result in full vesting for all time-based awards, and (c) Mr. Finley would receive an additional payment equal to his target bonus.

Upon Mr. Finley’s termination for any reason, Mr. Finley will be entitled to receive amounts earned but unpaid during his term of service, including unpaid salary and unused vacation, as applicable.

Mr. Finley received certain stock option grants and restricted stock unit grants under the 2013 Plan and the 2021 EIP that were granted subject to the general terms of the 2013 Plan or the 2021 EIP, as applicable, and the relevant form of stock option or stock award agreement. The specific terms of such grants are described under the heading “Outstanding Equity Awards at Fiscal Year-End.”

Jones Employment Agreement

On September 5, 2023, we entered into an at-will employment agreement with Dr. Jones (the “Jones Employment Agreement”). Pursuant to the terms of the Jones Employment Agreement, Dr. Jones (i) receives a base salary of $415,000 per annum and is eligible to receive an annual cash bonus based on the achievement of certain performance goals with a target of 40% of his base salary, and (ii) is eligible to receive an annual market-based stock option grant as determined by the Board or a committee thereof.

Per the Jones Employment Agreement, we issued to Dr. Jones under the 2021 Inducement Plan (i) options to purchase 75,000 shares of our common stock, and (ii) 54,700 restricted stock units. Dr. Jones has also received certain stock option grants and restricted stock unit grants under the 2021 EIP that were granted subject to the general terms of the 2021 EIP, as applicable, and the relevant form of stock option or stock award agreement. The specific terms of such grants are described under the heading “Outstanding Equity Awards at Fiscal Year-End.”

Severance Benefits

Pursuant to the terms of the Jones Employment Agreement, if we terminate Dr. Jones’ employment without “Cause” or Dr. Jones resigns for “Good Reason,” as each term is defined in the Jones Employment Agreement, Dr. Jones will be eligible for the continued payment of his base salary (in accordance with regular payroll practices) and COBRA benefits for nine (9) months following the termination date (collectively, the “Jones Severance Benefits”).

Jones Termination / Change in Control Payments

In the event that we terminate Dr. Jones’ employment without “Cause” or Dr. Jones resigns for “Good Reason” within three (3) months immediately prior to or twelve (12) months after the effective date of a “Change in Control” as such term is defined in the Jones Employment Agreement (the “Jones Change in Control Period”), then in lieu of the Jones Severance Benefits described above, Dr. Jones will be eligible for (i) a lump sum payment equal to the sum of (x) twelve (12) months of base salary plus (y) 100% of the target bonus in effect at the time of termination, (ii) the continued payment of COBRA benefits for twelve (12) months, and (iii) the immediately and full acceleration of 100% of outstanding equity awards that are subject to time-based vesting. The foregoing benefits are contingent on Dr. Jones entering into a release of claims satisfactory to the Company.

McRae Employment

Effective February 2, 2022, Robert McRae was appointed our Chief Operating Officer. Pursuant to Mr. McRae’s appointment, the Board agreed to pay Mr. McRae a base salary of $400,000 per annum and set his target bonus at 40% of his base salary. We did not enter into a formal employment agreement with Mr. McRae. Effective May 15, 2023, Mr. McRae transitioned from the Company’s COO to an executive strategic consultant. For his services as a consultant, Mr. McRae received monthly compensation of $4,000. Mr. McRae’s service to the Company as a consultant terminated on January 15, 2024.

Mr. McRae received certain stock option grants and restricted stock unit grants under the 2021 EIP and the 2021 Inducement Plan that were granted subject to the general terms of the 2021 EIP and 2021 Inducement Plan, as applicable, and the relevant form of stock option or stock award agreement. The specific terms of such grants are described under the heading “Outstanding Equity Awards at Fiscal Year-End.”

Hallam Employment Agreement

Dr. Hallam served as our Chief Executive Officer pursuant to his employment agreement dated December 16, 2022 (“Hallam Employment Agreement”) until October 11, 2022. Pursuant to the Hallam Employment Agreement, Dr. Hallam received an annual base salary of $490,000, with an annual target cash bonus of 50% of his base salary. Dr. Hallam also received a one-time payment of $285,000, consisting of (i) $73,500 for the 2019 performance bonus, which had been voluntarily deferred (ii) $164,937 for the amount of 2020 salary that had been voluntarily deferred, (iii) a bonus equal to 10% of the 2020 salary that had been voluntarily deferred and (iv) a discretionary bonus of $30,000 awarded for the successful close of the merger with Seneca. In February 2022, Dr. Hallam’s base salary was increased to $530,000 per annum.

Hallam Termination / Change in Control Payments

The Hallam Employment Agreement also provided that if we terminated Dr. Hallam without “Cause” or if Dr. Hallam resigned his employment for “Good Reason”, each as defined in the Hallam Employment Agreement, Dr. Hallam would be entitled to receive (i) salary continuation and COBRA reimbursement for twelve (12) months each, up to three (3) months of outplacement assistance, and (iii) 12 months of immediate vesting of equity grants subject to time based vesting. In the case of a termination that occurred during the period beginning three (3) months before and ending twelve (12) months after a “Change in Control”, (a) these severance-related periods would have increased to eighteen (18) months, (b) the equity award acceleration will result in full vesting for all time-based awards, and (c) Dr. Hallam would receive an additional payment equal to his target bonus.

Upon Dr. Hallam’s termination, Dr. Hallam received amounts earned but unpaid during his term of service, including unpaid salary and unused vacation, as applicable.

Pursuant to his service, Dr. Hallam received certain stock option grants under the 2013 Plan and the 2021 EIP that were granted subject to the general terms of the 2013 Plan or 2021 EIP, as applicable, and the relevant form of stock option agreement. The specific terms of such grants are described under the heading “Outstanding Equity Awards at Fiscal Year-End.”

Termination of Employment of Dr. Hallam

On October 11, 2022, the Company entered into a separation agreement with Thomas Hallam, Ph.D., its former chief executive officer and member of its board of directors whereby the Company and Dr. Hallam agreed to a mutual release of claims in exchange for (i) the payment of an aggregate of $530,000 payable in twelve equal monthly installments, (ii) up to twelve (12) months of continued COBRA coverage, (iii) twelve (12) months of immediate vesting of his outstanding equity grants subject to time based vesting, and (iv) up to six (6) months of virtual job replacement services valued at $3,100. Subsequent to entering into the separation agreement, certain facts and conduct by Dr. Hallam were discovered that excused the Company’s performance under the settlement agreement. As a result, subsequent to paying Dr. Hallam an aggregate of $22,000, the Company determined that it is not probable that any additional compensation would be due to Dr. Hallam.

Dawson Employment Agreement

Dr. Dawson served as our Chief Medical Officer pursuant to his employment agreement dated December 16, 2020 (“Dawson Employment Agreement”) until October 11, 2022. Pursuant to the Dawson Employment Agreement, Dr. Dawson received an annual base salary of $115,900, with an annual target cash bonus of 40% of his base salary. Dr. Dawson also received a one-time payment of $66,000, consisting of (i) $7,500 for the 2019 performance bonus, which had been voluntarily deferred (ii) $52,515 for the amount of 2020 salary that had been voluntarily deferred, and (iii) a bonus equal to 10% of the 2020 salary that had been voluntarily deferred. In February 2022, Dr. Dawson’s base salary was increased to $240,000 per annum.

Dawson Termination / Change in Control Payments

The Dawson Employment Agreement also provided that if we terminated Dr. Dawson without “Cause” or if Dr. Dawson resigned his employment for “Good Reason”, each as defined in the Dawson Employment Agreement, Dr. Dawson would be entitled to receive (i) salary continuation and COBRA reimbursement for nine (9) months each, (ii) up to three (3) months of outplacement assistance, and (iii) nine (9) months of immediate vesting of equity grants subject to time based vesting. In the case of a termination that occurred during the period beginning three (3) months before and ending twelve (12) months after a “Change in Control”, (a) these severance-related periods would have increased to nine (9) months, (b) the equity award acceleration will result in full vesting for all time-based awards, and (c) Dr. Dawson would receive an additional payment equal to his target bonus.

Upon a termination of service for any reason, Dr. Dawson would have been entitled to receive amounts earned during his term of service, including unpaid salary and unused vacation, as applicable.

As a result of his termination, all of Dr. Dawson’s option grants have expired.

Perquisites, Health, Welfare and Retirement Benefits

All of our current named executive officers are eligible to participate in our employee benefit plans, including our medical, dental, vision, life, disability and accidental death and dismemberment insurance plans, in each case on the same basis as all of our other employees. Current named executive officers are eligible to participate in our defined contribution 401(k) plan, on the same basis as all of our other employees, under which they may make voluntary contributions as a percentage of compensation. No matching contributions have been made by us since the adoption of the 401(k) plan.

Outstanding Equity Awards at Fiscal Year-End

Equity Benefit Plans

The principal features of our equity plans are summarized below.

2021 Equity Incentive Plan

Our board and stockholders approved the 2021 EIP, which became effective in April 2021. On June 8, 2023, our stockholders approved amendments to the 2021 EIP increasing the numbers of shares of common stock issuable under the plan and increasing the annual evergreen share amount. The number of shares of common stock reserved for issuance under the 2021 EIP will automatically increase on January 1 of each calendar year, starting on January 1, 2022 through January 1, 3031, in an amount equal to the lesser of (1) 7.5% (increased from 4.5% pursuant to the approval of stockholders in our 2023 Annual Meeting) of the total number of shares of our common stock outstanding on December 31 of the preceding year, or (2) a lesser number of shares of our common stock determined by the Board prior to the date of the increase. As of December 31, 2023, 4,947 shares of our common stock were authorized for future grants under the 2021 EIP and there were an aggregate of 805,326 outstanding awards issued under the 2021 EIP, excluding 144,160 conditional grants that we made to certain members of management that are subject to sufficient shares available under the 2021 EIP.

Our 2021 EIP provides for the grant of incentive stock options (“ISOs”), within the meaning of Section 422 of the Code to employees, including employees of any parent or subsidiary, and for the grant of nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of our affiliates. Our compensation committee has the authority, concurrent with our Board, to administer our 2021 EIP. The Board may also delegate to one or more of our officers certain authority under the terms of the 2021 EIP.

Stock options under the 2021 EIP are generally granted with an exercise price equal to the fair market value of our common stock on the date of grant. Options granted under the 2021 EIP vest at the rate specified in the stock option agreement as determined by the plan administrator. Options may have a term up to a maximum of 10 years. Unless the terms of an optionee’s stock option agreement provides otherwise, if an optionee’s service relationship with us, or any of our affiliates, ceases for any reason other than disability, death or cause, the optionee may generally exercise any vested options for a period of three months following the cessation of service. If an optionee’s service relationship with us, or any of our affiliates, ceases due to disability or death, or an optionee dies within a certain period following cessation of service, the optionee or a beneficiary may generally exercise any vested options for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a termination for cause, options generally terminate immediately upon the termination of the individual. In no event may an option be exercised beyond the expiration of its term.

Our 2021 EIP provides that in the event of certain specified significant corporate transactions (or a change in control, as defined below), unless otherwise provided in an award agreement or other written agreement between us and the award holder, the administrator may take one or more of the following actions with respect to such stock awards:

Under the 2021 EIP, a corporate transaction is generally the consummation of: (1) a sale of all or substantially all of our assets, (2) the sale or disposition of more than 50% of our outstanding securities, (3) a merger or consolidation where we do not survive the transaction, or (4) a merger or consolidation where we do survive the transaction but the shares of our common stock outstanding immediately before such transaction are converted or exchanged into other property by virtue of the transaction.

If the surviving or acquiring corporation (or its parent company) does not assume, continue or substitute for such stock awards, then (i) with respect to any such stock awards that are held by participants whose continuous service has not terminated prior to the effective time of the corporate transaction, or current participants, the vesting (and exercisability, if applicable) of such stock awards will be accelerated in full (or, in the case of performance awards with multiple vesting levels depending on the level of performance, vesting will accelerate at 100% of the target level) to a date prior to the effective time of the corporate transaction (contingent upon the effectiveness of the corporate transaction), and such stock awards will terminate if not exercised (if applicable) at or prior to the effective time of the corporate transaction, and any reacquisition or repurchase rights held by us with respect to such stock awards will lapse (contingent upon the effectiveness of the corporate transaction), and (ii) any such stock awards that are held by persons other than current participants will terminate if not exercised (if applicable) prior to the effective time of the corporate transaction, except that any reacquisition or repurchase rights held by us with respect to such stock awards will not terminate and may continue to be exercised notwithstanding the corporate transaction. In the event a stock award will terminate if not exercised prior to the effective time of a corporate transaction, our Board may provide, in its sole discretion, that the holder of such stock award may not exercise such stock award but instead will receive a payment equal in value to the excess (if any) of (i) the per share amount payable to holders of common stock in connection with the corporate transaction, over (ii) any per share exercise price payable by such holder, if applicable.

2021 Employee Stock Purchase Plan

Additional long-term equity incentives are provided through the ESPP. On June 8, 2023 our stockholder approved amendments to the ESPP increasing the number of shares of common stock authorized under the ESPP and increasing the annual evergreen share amount. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Our compensation committee has the authority, concurrent with our Board, to administer the ESPP. Under the ESPP, all of our regular employees (including our named executive officers during their employment with us) may participate and may contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of our common stock. The number of shares of common stock reserved for issuance under the ESPP will automatically increase on January 1 of each calendar year, starting on January 1, 2022 through January 1, 3031, in an amount equal to the lesser of (1) 2.5% (increased from 1% pursuant to the approval of stockholders in our 2023 annual meeting of shareholders) of the total number of shares of our common stock outstanding on December 31 of the preceding year, (2) 433,641 shares of our common stock, or (3) such lesser number of shares of our common stock as the Board may designate prior to the date of increase. As of December 31, 2023, 110,871 shares of our common stock were authorized for future grants under the ESPP. A total of 33,676 shares of our common stock were purchased by employees under participation in the ESPP during the year ended December 31, 2023.

The ESPP is implemented through a series of offerings of purchase rights to eligible employees. Under the ESPP, we may specify offerings with a duration of not more than 27 months, and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which our common stock will be purchased for employees participating in the offering. Unless otherwise determined by our compensation committee, shares are purchased for accounts of employees participating in the ESPP at a price per share equal to the lower of (a) 85% of the fair market value of our common stock on the first date of an offering or (b) 85% of the fair market value of our common stock on the date of purchase.

2021 Inducement Plan

The Board adopted the 2021 Inducement Plan in November 2021. The 2021 Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c) of the Nasdaq Listing Rules. On August 7, 2023, the Board amended the 2021 Inducement Plan to increase the number of common shares authorized under the plan from 15,000 to 1,000,000. The 2021 Inducement Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards and other forms of stock awards.

Stock awards granted under our 2021 Inducement Plan may only be made to individuals who did not previously serve as employees or non-employee directors of the Company or an affiliate of the Company (or following such individuals’ bona fide period of non-employment with the Company or an affiliate of the Company), as an inducement material to the individuals’ entering into employment with the Company or an affiliate of the Company or in a manner otherwise permitted by Rule 5635(c) of the Nasdaq Listing Rules. In addition, stock awards must be approved by either a majority of our “independent directors” (as such term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules) or the Compensation Committee, provided such committee comprises solely independent directors. The terms of the 2021 Inducement Plan are otherwise substantially similar to our 2021 EIP (including with respect to the treatment of stock awards upon corporate transactions involving us or certain changes in our capitalization), except stock awards granted under the 2021 Inducement Plan may not be repriced without stockholder approval.

The maximum number of shares of our common stock that may be issued under the 2021 Inducement Plan is 1,000,000 shares. Shares subject to stock awards granted under the 2021 Inducement Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, do not reduce the number of shares available for issuance under the 2021 Inducement Plan. Additionally, shares become available for future grant under the 2021 Inducement Plan if they were issued under stock awards granted under the 2021 Inducement Plan and we repurchase or reacquire them or they are forfeited. This includes shares used to pay the exercise price of a stock award or to satisfy the tax withholding obligations related to a stock award. As of December 31, 2023, there were 863,214 shares of our common stock authorized and available for issuance as equity-based awards under the 2021 Inducement Plan and there were an aggregate of 132,230 outstanding awards issued under the 2021 Inducement Plan.

Seneca Equity Compensation Plans

Seneca 2019 Plan

Pursuant to the completion of the merger transaction in April 2021, all outstanding awards under the Seneca 2019 Plan were cancelled and no further awards will be granted under the Seneca 2019 Plan.

Seneca Inducement Plan

Pursuant to the completion of the merger transaction in April 2021, all outstanding awards under the Seneca Inducement Plan were cancelled and no further awards will be granted under the Seneca Inducement Plan.

DIRECTOR COMPENSATION

Board Compensation Arrangements

Current Non-employee Director Compensation Policy

Our Compensation Committee amended the Non-employee Director Compensation Policy (the “Current Director Compensation Policy”) of the Company on February 22, 2023 that is applicable to each member of our Board who is not also serving as an employee or consultant to the Company. This compensation policy provides that each such non-employee director will receive the following compensation for service on our Board:

Cash Compensation

Equity Compensation

We have reimbursed and will continue to reimburse all of our non-employee directors for their reasonable out-of-pocket expenses incurred in attending Board and committee meetings. J.D. Finley was appointed to the Board on February 2, 2023, but will not participate in any of the foregoing director compensation given his service as an executive officer of the Company.

Supplemental Grants

In addition to the foregoing compensation, the Compensation Committee of the Board periodically issues supplemental grants to the independent members of the Board on an ad hoc basis.

Legacy Non-employee Director Compensation Policy

Our Board adopted a Non-employee Director Compensation Policy in November 2021 that was applicable to each member of our Board who was not an employee or consultant to the Company. The policy was substantially the same as the Current Director Compensation Policy described above, except that the equity compensation component of the legacy policy was determined on an ad hoc basis at the discretion of the Board or Compensation Committee.

Compensation During 2023

The following table sets forth in summary form information concerning the compensation that was earned by each of our non-employee directors during the year ended December 31, 2023.

• Each non-employee director received 7,000 common stock options and 5,100 restricted stock units on June 11, 2023 pursuant to the Company’s non-employee director compensation policy, each of which is included in the footnotes below. All additional stock awards and option awards described in the footnotes below are supplemental grants in addition to the standard non-employee director compensation policy.

(1)

Amount includes (i) 5,100 restricted stock units issued on June 11, 2023 and (ii) 5,820 restricted stock units issued on November 21, 2023. The grants were issued under the 2021 EIP.

(2)

Amount includes (i) an option grant to purchase 12,160 common stock shares issued on June 11, 2023 with an exercise price of $1.60 per share and (ii) an option grant to purchase 6,880 common stock shares issued on November 21, 2023, with an exercise price of $0.59 per share. The option grants were each issued under the 2021 EIP, vest fully on the one (1) year anniversary of the respective grant date, and have terms of 10 years from issuance.

(3)

(4)

Amount includes (i) an option grant to purchase 9,580 shares issued on June 11, 2023 with an exercise price of $1.60 per share and (ii) an option grant to purchase 6,880 shares issued on November 21, 2023 with an exercise price of $0.59 per share. The option grants were each issued under the 2021 EIP, vest fully on the one (1) year anniversary of the respective grant date, and have terms of 10 years from issuance.

(5)

(6)

Amount includes (i) an option grant to purchase 12,160 shares issued on June 11, 2023 with an exercise price of $1.60 per share and (ii) an option grant to purchase 6,880 shares issued on November 21, 2023. with an exercise price of $0.59 per share. The option grants were each issued under the 2021 EIP, vest fully on the one (1) year anniversary of the respective grant date, and have terms of 10 years from issuance.

(7)

(8)

Amount includes (i) an option grant to purchase 12,160 shares issued on June 11, 2023 with an exercise price of $1.60 per share and (ii) an option grant to purchase 6,880 shares issued on November 21, 2023. with an exercise price of $0.59 per share. The option grants were each issued under the 2021 EIP, vest fully on the one (1) year anniversary of the respective grant date, and have terms of 10 years from issuance.

(9)

(10)

Amount includes (i) an option grant to purchase 9,580 shares issued on June 11, 2023 with an exercise price of $1.60 per share and (ii) an option grant to purchase 6,880 shares issued on November 21, 2023 with an exercise price of $0.59 per share. The option grants were each issued under the 2021 EIP, vest fully on the one (1) year anniversary of the respective grant date, and have terms of 10 years from issuance.

(11)

(12)

Amount includes (i) an option grant to purchase 12,160 shares issued on June 11, 2023 with an exercise price of $1.60 per share and (ii) an option grant to purchase 6,880 shares issued on November 21, 2023. with an exercise price of $0.59 per share. The option grants were each issued under the 2021 EIP, vest fully on the one (1) year anniversary of the respective grant date, and have terms of 10 years from issuance.

(13)

(14)

Amount includes (i) an option grant to purchase 9,580 shares issued on June 11, 2023 with an exercise price of $1.60 per share and (ii) an option grant to purchase 6,880 shares issued on November 21, 2023 with an exercise price of $0.59 per share. The option grants were each issued under the 2021 EIP, vest fully on the one (1) year anniversary of the respective grant date, and have terms of 10 years from issuance.

(15)

Effective February 9, 2024, James R. Neal resigned as a member of our Board.

(16)

Effective February 8, 2024, Stephanie C. Diaz, Dr. Cristina Csimma, and Dr. Robert Trenschel resigned as members of our Board.

(17)

Effective March 4, 2024, Dr. Mary Ann Gray resigned as a member of our Board.