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|Novan Provides Business Update via 10-Q, Adopts Incentive Plan and Agrees to CEO Contract|
The design of the Performance Plan is intended to accomplish two key objectives:
Executive Chairman of Novan’s Board of Directors,
Novan’s product, clinical drug and business development activities drive certain developmental timelines and strategic activities which depend on successful company-wide execution in order to potentially enable value creation for the Company’s stockholders. With respect to key product candidates, top line results for SB414 (psoriasis and atopic dermatitis) and SB206 (molluscum contagiosum) are targeted to be released in the third and fourth quarters of 2018 respectively; and the Company is still awaiting receipt of the FDA’s written feedback for SB204 (acne vulgaris). This new incentive plan is intended to directly align management’s execution and accountability for Company objectives with stockholder returns.
The foundational metric of the Performance Plan is the achievement of two share price goals for Novan’s common stock, which if achieved, would represent measurable increases in stockholder value. Payments under the Performance Plan will occur only if these share price targets are achieved. The two plan targets are:
For computational purposes, both share price targets will be measured as the average publicly traded share price of the Company’s common stock on the
Mr. Martin’s employment contract is designed to link his potential incentive compensation to stockholder value creation based on future stock price increases. Under the terms of his employment contract, Mr. Martin will receive a one-time signing bonus in recognition of previous contributions and an agreement to continue in this role, and an annual base salary. These are the only fixed components of his compensation. By design, Mr. Martin will not receive an annual cash bonus, annual equity awards or other discretionary annual bonuses under the terms of this agreement. Rather, in order to achieve maximum alignment with stockholders and demonstrate his commitment to the Company overall, Mr. Martin’s potential incentive compensation will take the form of participation in the Performance Plan and an award of stock appreciation rights, which will vest at the end of the initial term of the employment contract in February of 2020.
Forward Looking Statements
This press release contains forward-looking statements including, but not limited to, statements related to our future prospects and the future value of our common stock, statements related to our ability to motivate employees through the Performance Plan and other forms of compensation and statements related to our operations and business strategy. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from our expectations and plan targets, including, but not limited to: risks and uncertainties in the clinical development process, including, among others, length, expense, ability to enroll patients, reliance on third parties, and that results of earlier research and preclinical or clinical trials may not be predictive of results, conclusions or interpretations of later research activities or additional trials; risks related to the regulatory approval process, which is lengthy, time-consuming and inherently unpredictable; risks related to the manufacture of clinical trial materials and commercial supplies of any potentially approved product candidates, including the manufacture of our NVN1000 active pharmaceutical ingredient in our primary facility; the need for strategic relationships for the further development and potential commercialization of our product candidates; our need for substantial additional funding for the further development of our product candidates; uncertainties related to our ability to fund the bonus pools when plan targets are achieved and contingencies based on stockholder approval, including with respect to the stock appreciation rights to be granted to Mr. Martin; variability in our stock price due to market factors; and other risks and uncertainties described in our annual report filed with the