Spyre Therapeutics Inc

Overview

This section provides an overview of the material components of our executive compensation program each for our Chief Executive Officer, other individuals who served as a principal executive officer during any part of 2024, and each of our two other most highly compensated executive officers (collectively, our “named executive officers” or “NEOs”) during 2024. The compensation provided to our named executive officers for 2024 is set forth in detail in the “Summary Compensation Table” and other tables that follow in this section, as well as the accompanying footnotes and narratives relating to those tables.

Our named executive officers for 2024 were:

(1)Dr. Sloan was appointed Chief Medical Officer of the Company effective October 1, 2024.

Investor Outreach and Response to 2024 Say-on-Pay Vote

Each year, we provide our stockholders the opportunity to cast a non-binding advisory vote on the compensation of our named executive officers (commonly known as a "Say-on-Pay" vote). Our Board and our Compensation Committee consider the results of the Say-on-Pay vote in determining the compensation of our executive officers, including our named executive officers. At our 2024 Annual Meeting of Stockholders, approximately 62% of the votes cast approved the compensation of our named executive officers. Since the vote, we reached out to our top 25 institutional investors and have spoken with the investment team or corporate governance contacts at several of our major stockholders, excluding Fairmount, representing approximately 43% of our outstanding common stock based on public filings as of September 30, 2024. The primary stockholder concerns raised during our discussions included the lack of disclosure of clear performance goals and compensation rationale, lack of outreach due to prior year low Say-on-Pay vote and the magnitude of awards granted to executives.

We believe that proxy advisor voting recommendations and the voting results for our 2024 annual meeting reflect a general misunderstanding around legacy Aeglea pay decisions and the significance of our transformation in 2023. During 2023, the Company completed a reverse merger, which brought in an entirely new pipeline of product candidates targeting IBD, and refreshed the Board and executive team to lead development of this new pipeline and sunset legacy asset development. The investment required to pivot the Company’s business and strategy included situation-specific compensation arrangements necessary to recruit an executive team, which are not reflective of our go-forward compensation program. These investments drove significant value creation for stockholders in 2023, including going from a market capitalization of less than $50 million prior to the closing of the reverse merger in June 2023 to a market capitalization well over $1.0 billion by the end of 2023 and throughout 2024.

Our current Board, the Compensation Committee and our management team are committed to implementing a robust compensation program aligned with stockholder interests and supported by peer group and market data, which we believe is reflected in our 2024 compensation program. We value the opinion of our stockholders. Our Board and our Compensation Committee will continue to consider the result of the Say-on-Pay vote, as well as feedback received throughout the year, when making compensation decisions for our executive officers.

Summary Compensation Table

The following table provides information regarding all plan and non-plan compensation awarded to, earned by or paid to each of our named executive officers for the years ended December 31, 2024 and 2023.

(1)For 2024, the amount reported in this column reflects a sign-on bonus for Dr. Sloan in connection with the commencement of his employment with the Company during 2024, as described in more detail under “Narrative Disclosure to Summary Compensation Table—Offer Letters” below.

(2) Amounts reported in this column for 2024 represent the aggregate grant date fair value of stock options granted to our NEOs, as computed in accordance with ASC 718. See Note 15 to our consolidated financial statements in this Annual Report for more information regarding the assumptions used in calculating the grant date fair value of stock options.

(3) Amounts reported in this column for 2024 represent the annual bonuses earned under the 2024 annual bonus program, as described in more detail under “Narrative Disclosure to Summary Compensation Table—Elements of Compensation—Annual Bonus Program” below.

(4) Amounts reported in this column for 2024 include matching contributions under our 401(k) plan made during 2024.

Narrative Disclosure to Summary Compensation Table

Under the Compensation Committee's compensation philosophy, compensation positioning is used to attract and retain key employees for the Company’s continued success and growth. While market data is helpful to the Compensation Committee in setting compensation framework and guiding decisions, other factors such as general market practices, Company strategy, tenure, performance and criticality are also considered. The compensation philosophy serves as the foundation to reinforce the Company’s business strategy and desired culture, while balancing internal and external alignment.

Peer Group

In October 2023, our Compensation Committee, in consultation with Alpine, its independent compensation consultant, established a peer group that focuses on U.S.-based, pre-clinical or early clinical biotechnology/pharmaceutical companies (with priority placed on companies with a similar therapeutic focus) with a market capitalization ranging from $250 million to $2 billion and less than 100 employees. The peer group, which was approved by the Board and used in establishing executive compensation for 2024, includes the following companies:

In September 2024, our Compensation Committee, in consultation with Alpine, evaluated our peer group and approved updates to the peer group used in establishing executive compensation for 2025 based on market capitalization, pipeline stage, employee population and other relevant factors.

Elements of Compensation

Base Salary

Each NEO’s base salary is a fixed annual amount that is intended to compensate the NEO for performing specific job responsibilities and is based on the NEO’s level of experience and requisite skills. Our Compensation Committee annually evaluates and approves (or recommends to the Board for approval for our Chief Executive Officer) each NEO’s base salary. As part of this annual evaluation in 2024, the Compensation Committee determined to increase the base salary for Mr. Burrows by $20,000 in consideration of peer group data and recommendations from the Company's independent compensation consultant. In connection with his appointment, the Compensation Committee established Dr. Sloan's base salary of $496,000. The table below sets forth the base salary as of December 31, 2024 for each NEO:

Annual Bonus Program

We provide our executive officers, including our NEOs, with the opportunity to earn annual cash incentives to encourage the achievement of corporate objectives. We established our annual bonus program to motivate our executives to achieve short-term financial and business objectives, reflecting our “pay for performance” culture, resulting in a significant portion of NEO compensation tying directly to Company achievements.

For each NEO, the target annual bonus opportunity is determined as a percentage of his or her base salary (as indicated in the table below), which was established for 2024 by the Compensation Committee in consultation with Alpine, based on market data from companies in our peer group.

The Board approved the objectives and key targeted results and stretch goals applicable to 2024 annual bonus program for our executives in December 2023. These milestones were intended to measure our performance in the following categories: Portfolio, Platform, and Corporate, as further described below. The level of attainment of these performance milestones determines our NEOs’ earned annual bonuses.

At the end of 2024, the Board and the Compensation Committee reviewed the Company’s performance against these performance measures and determined that performance was achieved at 120% of target, as each target result and all stretch goals were timely achieved.

As a result, each NEO received an annual bonus for 2024 equal to 120% of target; however, Dr. Sloan’s annual bonus was pro-rated based on the date he commenced employment with the Company.

Long-Term Incentive Compensation

For 2024, after taking into account the results of Alpine's market assessment, reviewing the practices of companies in our peer group and considering the important retentive value and performance alignment of our long-term incentive strategy, our Compensation Committee determined that it was appropriate to use stock options as 100% of the annual long-term incentive awards granted to our employees, including the NEOs. On February 1, 2024, Dr. Turtle and Mr. Burrows received annual grants of stock options to purchase 277,750 shares of our common stock and 70,000 shares of our common stock, respectively, which vest in equal monthly installments through the fourth anniversary of the grant date.

In connection with his appointment as Chief Medical Officer of the Company, Dr. Sloan received an initial grant of stock options to purchase 400,000 shares of our common stock, which vest as to 25% on October 1, 2025 (the first anniversary of the grant date) and in equal monthly installments thereafter through October 1, 2028.

Offer Letters

We have entered into offer letters with each of our NEOs in connection with their appointments (and, for Dr. Turtle, his promotion to Chief Executive Officer), which for Dr. Turtle was further amended in February 2024

(collectively, the “Offer Letters”). Each Offer Letter provides for an initial base salary, target bonus opportunity and stock option grant. Under the Offer Letters, the NEOs are eligible for certain payments or benefits upon certain terminations of employment, as described under “Additional Narrative Disclosure-Potential Payments Upon Termination of Change in Control” below. Mr. Burrows’ Offer Letter also provided for a sign-on bonus of $115,000, which was subject to repayment in the event of a termination for cause or resignation without good reason prior to September 1, 2024, and Dr. Sloan’s Offer Letter also provided for a sign-on bonus of $120,000, which is subject to repayment in the event of a termination for cause or resignation without good reason prior to October 1, 2025.

Each of our NEOs is also party to our standard employee invention assignment, confidentiality and non-competition agreement, which, among other things, provides standard protections regarding our ownership of intellectual property, the confidentiality of our proprietary information, non-competition and non-solicitation.

Outstanding Equity Awards at December 31, 2024

The following table presents information regarding outstanding stock options, RSUs and restricted stock held by each named executive officers as of December 31, 2024.

(1)The market value was determined by multiplying the number of shares by $23.28, the closing price of our common stock as reported on the Nasdaq Global Select Market on December 31, 2024.

(2)These stock options vest in equal monthly installments through the fourth anniversary of the grant date, subject to the NEO’s continued service.

(3)These stock options vest as to 25% on the first anniversary of the grant date and in equal monthly installments thereafter through the fourth anniversary of the grant date, subject to the NEO’s continued service.

(4)In connection with the Asset Acquisition, outstanding shares of restricted common stock of Pre-Merger Spyre were assumed by the Company and converted into restricted common stock and restricted Series A Preferred Stock, which were subsequently converted to restricted and unrestricted common stock on November 24, 2023.

(5)These shares of restricted common stock vest in equal monthly installments through November 22, 2026, subject to the NEO’s continued service.

(6)These RSUs vest in equal annual installments through the fourth anniversary of the grant date, subject to the NEO’s continued service.

Additional Narrative Disclosure

Retirement Benefits

We maintain a tax-qualified 401(k) defined contribution plan that provides eligible U.S. employees, including our NEOs, with an opportunity to save for retirement on a tax-advantaged basis. Eligible employees may make voluntary contributions from their eligible pay, up to certain applicable annual limits set by the Internal Revenue Code of 1986, as amended. We provide matching contributions equal to 100% of the first 3% of eligible compensation contributed by each employee, and 50% of the next 2% of eligible compensation contributed by each employee. All company matching contributions are immediately and fully vested. We do not maintain, and have not historically maintained, any non-qualified deferred compensation or defined benefit pension plan.

Potential Payments Upon Termination or Change in Control

Pursuant to the terms of the Offer Letters, in the event each NEO (other than Dr. Sloan) that is a current executive officer is terminated by the Company without “cause” or as a result of a resignation for “good reason” (collectively, an “Involuntary Termination”), such NEO will, subject to the execution of a release in favor of the Company, receive: (i) severance payments equal to 12 months of base salary and any earned but unpaid annual bonus for the preceding year; (ii) up to 12 months of partially subsidized COBRA coverage; and (iii) accelerated vesting of any time-based equity awards scheduled to vest in the 12 months following such termination. However, if the Involuntary Termination is within three months before or 12 months after a change in control of the Company, the NEO will instead receive: (A) severance payments equal to 18 months of base salary, any earned but unpaid annual bonus for the preceding year, and the target annual bonus for the year of termination (or, for Dr. Turtle, 1.5 times the target annual bonus for the year of termination); (B) up to 18 months of fully subsidized COBRA continuation coverage; and (C) full acceleration of all equity awards (with performance-based awards determined in accordance with the terms of the applicable award agreement or, if not specified in such award agreement, based on the greater of target or, if determinable, actual performance).

Pursuant to the terms of Dr. Sloan’s Offer Letter, in the event of his Involuntary Termination, Dr. Sloan will, subject to the execution of a release in favor of the Company, receive: (i) severance payments equal to nine months of base salary and (ii) up to nine months of partially subsidized COBRA coverage. However, if the Involuntary Termination is within three months before or 12 months after a change in control of the Company, the NEO will instead receive: (A) severance payments equal to 12 months of base salary and the target annual bonus for the year of termination; (B) up to 12 months of fully subsidized COBRA continuation coverage; and (C) full acceleration of all equity awards (with performance-based awards determined in accordance with the terms of the applicable award agreement or, if not specified in such award agreement, based on the greater of target or, if determinable, actual performance).

As used in the Offer Letters:

•“Cause” generally means (i) the NEO’s dishonest statements or acts with respect to the Company or any affiliate of the Company, or any current or prospective customers, suppliers, vendors or other third parties with which such entity does business that results in or is reasonably anticipated to result in material harm to the Company; (ii) the NEO’s conviction or plea of no contest to a felony or misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the NEO’s failure to perform his or her duties or responsibilities, subject to a 30-day cure period; (iv) the NEO’s gross negligence, willful misconduct that results in or is reasonably anticipated to result in material harm to the Company; or (v) the NEO’s violation of any material provision of any agreement with the Company or any written Company policies.

•“Good Reason” generally means (i) a material diminution in the NEO’s base salary or target bonus (excluding across-the-board reductions of less than 10%); (ii) a material geographic relocation or requirement to change the NEO’s remote work location; (iii) a material reduction in the NEO’s duties, authority or responsibilities; (or, for Dr. Sloan, a requirement that he report to any person other than the Chief Executive Officer); (iv) the failure of the Company to obtain the assumption of the Offer Letter by a successor; or (v) the material breach of any agreement between the NEO and the Company, in each case, subject to standard notice and cure periods.

Clawback Policy and Restatement Analysis

We have a Compensation Recoupment (Clawback) Policy (the "Clawback Policy"), which is intended to comply with the requirements of Nasdaq Listing Standard 5608 implementing Rule 10D-1 under the Exchange Act. In the event the Company is required to prepare an accounting restatement of the Company’s financial statements due to material non-compliance with any financial reporting requirement under the federal securities laws, the Company will recover, on a reasonably prompt basis, the excess incentive-based compensation received by any covered executive after October 2, 2023 and during the prior three fiscal years that exceeds the amount that the executive otherwise would have received had the incentive-based compensation been determined based on the restated financial statements.

During 2024, the Company was required to prepare an accounting restatement of the Company’s consolidated financial statements as of and for the year ended December 31, 2023, as well as the quarterly condensed consolidated financial information for the 2024 interim periods ended March 31, 2024, June 30, 2024, and September 30, 2024, as described under Part II, Item 9A of this Annual Report titled “Controls and Procedures.” In accordance with the Clawback Policy, our Compensation Committee reviewed the restated financials and concluded that there was no recovery of erroneously awarded compensation required under the Clawback Policy because the restated financials did not impact any incentive-based compensation received on or after October 2, 2023.

Equity Grant Timing Policy and Practices

In December 2024, our Compensation Committee adopted an Equity Grant Timing Policy (the “Equity Grant Timing Policy”), which provides that it is the Company’s policy to generally grant equity awards, including stock options, outside of blackout periods under our insider trading policy. With respect to grants of stock options to our named executive officers and to the extent a grant during a close window is deemed necessary or appropriate by the Compensation Committee, awards typically may not occur during the period beginning four business days before and ending one business day after the filing of a Form 10-K or Form 10-Q or the filing or furnishing of a Form 8-K that contains material non-public information (“MNPI”). Under the Equity Grant Timing Policy, annual equity grants to the Company’s employees are typically granted within one week following the first regularly scheduled Compensation Committee meeting each year (or, with respect to grants to the Chief Executive Officer, within one week following the first regularly scheduled Board meeting each year). Grants to new hires generally occur on the first business day of each month for new hires who commenced employment during the previous month. Employees, including the named executive officers, may enroll to purchase shares under the terms of our 2016 Employee Stock Purchase Plan, as amended (the “ESPP”), with purchase dates generally in February and August of each year using payroll deductions accumulated during the prior six-month period. During 2024, we didnot time the disclosure of MNPI for the purpose of affecting the value of executive compensation.

The following table sets forth information regarding stock options issued to our named executive officers during 2024 during any period beginning four business days before and ending one business day after the filing of a Form 10-K or Form 10-Q or the filing or furnishing of a Form 8-K that contains MNPI. Dr. Sloan did not receive any stock options during any such period in 2024. The awards set forth in the following table were granted prior to the Company's adoption of the Equity Grant Timing Policy.

(1) Reflects the percentage change in the closing market price of our common stock between the trading day ending immediately prior to the disclosure of MNPI ($25.74 on February 2, 2024) and the trading day beginning immediately following the disclosure of MNPI ($25.53 on February 6, 2024).

Director Compensation

Each of our non-employee directors receives compensation pursuant to the non-employee director cash and equity compensation program adopted by our Board. This program provides for the following annual cash retainers:

Each non-employee director who initially joins our Board receives an initial grant of stock options that vests in equal monthly installments over three years. Prior to May 9, 2024, new directors received stock options to purchase 40,000 shares, and following May 9, 2024, new directors received stock options with an aggregate grant date value approximating $700,000. In accordance with this program, Mr. McKenna received a stock option to purchase 40,000 shares on February 1, 2024, and Dr. Milligan received a stock option to purchase 21,980 shares on May 14, 2024.

Each non-employee director who is serving as of the date of the Annual Meeting will receive a grant of stock options with an aggregate grant date value approximately $350,000. Annual stock option grants vest in equal monthly installments over one year or, if earlier, upon the next Annual Meeting of Stockholders. For directors appointed on or after January 1, 2024, a director is only eligible to receive an annual stock option grant if the Annual Meeting of Stockholders is more than six months following the director’s appointment to the Board. As such, each of Messrs. Albers, Harwin, and Kiselak, Dr. Henderson and Ms. Stelzer received a stock option to purchase 11,323 shares on May 14, 2024.

In addition, all non-employee directors are reimbursed their reasonable travel expenses incurred in attending board and committee meetings.

The following table provides information for the year ended December 31, 2024 regarding all compensation awarded to, earned by or paid to each person who served as a non-employee director for some portion of 2024. Employees who served on our Board during 2024 did not receive additional compensation for such service.

(1)The amounts reported in this column represent the aggregate grant date fair value of the awards granted to our non-employee directors during the year ended December 31, 2024, as computed in accordance with Accounting Standards Codification Topic 718 (“ASC 718”). The assumptions used in calculating the grant date fair value of the awards reported in the Option Awards column are set forth in Note 15 to our consolidated financial statements included in this Annual Report on Form 10-K. Note that the amounts reported in this column reflect the aggregate accounting cost for these awards, and do not necessarily correspond to the actual economic value that may be received by the non-employee directors from the awards. As of December 31, 2024, our non-employee directors held the following number of outstanding stock options: (i) Mr. Albers, 61,323; (ii) Mr. Cox, 86,228; (iii) Mr. Harwin, 89,323; (iv) Dr. Henderson, 89,323; (v) Mr. Kiselak, 89,323; (vi) Ms. Lawton, 3,488; (vii) Mr. McKenna, 517,000; (viii) Dr. Milligan, 21,980; and (ix) Ms. Stelzer, 61,323.

(2)Mr. Cox did not stand for reelection at the 2024 Annual Meeting of Stockholders.

(3)Ms. Lawton resigned from the Board effective as of February 1, 2024.

(4)Mr. McKenna was appointed to the Board effective as of February 1, 2024.

(5)Dr. Milligan was appointed to the Board effective as of May 14, 2024.