Proxy Statement - Notice of Shareholders Meeting (preliminary) (pre 14a)

 

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

 

 

 

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-l2

Societal CDMO, Inc.
(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

☒ No fee required.

☐ Fee paid previously with preliminary materials.

☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

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PRELIMINARY COPY, SUBJECT TO COMPLETION, DATED MARCH 24, 2023

In accordance with Rule 14a-6(d) under Regulation 14A, please be advised that Societal CDMO, Inc. intends to release definitive copies of this Proxy Statement to security holders on or about April 6, 2023.

 

 

 

 

1 E. Uwchlan Ave., Suite 112

Exton, Pennsylvania 19341

 

2023 ANNUAL MEETING OF SHAREHOLDERS

To be Held on May 17, 2023

April 6, 2023

Dear Shareholder:

We are pleased to invite you to attend the 2023 Annual Meeting of Shareholders, or the Annual Meeting, of Societal CDMO, Inc., or Societal or the Company, which will be held at 10:00 a.m., Eastern time, on May 17, 2023. The Annual Meeting will be a completely virtual meeting and can be accessed via the Internet at: www.virtualshareholdermeeting.com/SCTL2023.

Details regarding admission to the Annual Meeting and the business to be conducted are more fully described in the accompanying Notice of 2023 Annual Meeting of Shareholders, or Notice, and 2023 Annual Meeting Proxy Statement, or Proxy Statement. Other than the proposals described in the Proxy Statement, our board of directors, or Board, is not aware of any other matters to be presented for a vote at the Annual Meeting.

Your vote is important. Whether or not you plan to virtually attend the Annual Meeting, we hope you will vote as soon as possible. Information about voting methods is set forth in the accompanying Notice and Proxy Statement.

If you have any questions with respect to voting, please call our Chief Financial Officer, Ryan D. Lake, at [phone].

Sincerely,

 

 

Wayne B. Weisman	J. David Enloe, Jr.
Chairman of the Board	Director, President and Chief Executive Officer

 

 

 

 

 

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NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS

Dear Shareholder:

You are invited to attend the Annual Meeting. At the Annual Meeting, shareholders will vote on the following:

1.

to elect the two director nominees that are set forth in the attached Proxy Statement to serve as Class III directors, whose term will expire in 2026;

2.

to adopt and approve an amendment to our Second Amended and Restated Articles of Incorporation, as amended, to increase the number of authorized shares of common stock from 95 million to 185 million;

3.

to approve, on an advisory basis, the compensation of our named executive officers as disclosed in the attached Proxy Statement; and

4.

to ratify the selection of KPMG LLP, or KPMG, as our independent registered public accounting firm for the 2023 fiscal year.

Shareholders also will transact any other business that may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting.

MEETING INFORMATION:

Date: May 17, 2023

Time: 10:00 a.m.

Location: Via the Internet

www.virtualshareholdermeeting.com/SCTL2023

Record Date: You can vote if you were a shareholder of record on

Your vote matters. Whether or not you plan to virtually attend the Annual Meeting, please ensure that your shares are represented by voting, signing, dating and returning your proxy in the enclosed envelope, which requires no postage if mailed in the United States.

 

On or about April 6, 2023, the Company will first send to its shareholders of record as of , the record date for the Annual Meeting, a copy of this Proxy Statement, including the Notice of 2023 Annual Meeting of Shareholders and the proxy card, and the Company’s 2022 Annual Report to Shareholders (the “2022 Annual Report”). Please carefully review this Proxy Statement for information on the matters to be presented at the Annual Meeting and for instructions on how to vote your shares. Our 2022 Annual Report, including financial statements for such period, does not constitute any part of the material for the solicitation of proxies, but copies are available to shareholders upon request.

 

By Order of the Board of Directors,

 

Carla Lusby

Corporate Secretary

April 6, 2023

 

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PROXY SUMMARY

 

To assist you in reviewing this year’s proposals, we call your attention to the following proxy summary and urge you to review this Proxy Statement and our 2022 Annual Report in full. This proxy statement and enclosed proxy card are first being sent to shareholders on or about April 6, 2023.

SUMMARY OF SHAREHOLDER VOTING MATTERS

Proposal		For More Information		Board of Directors Recommendation
Item 1: Election of two Class III directors for a three-year term expiring in 2026		Page 42		✓ FOR Each Nominee
William L. Ashton Laura L. Parks, Ph.D.
Item 2: Adopt and approve an amendment to our Second Amended and Restated Articles of Incorporation, as amended, to increase the number of authorized shares of common stock from 95 million to 185 million		Page 43		✓ FOR
Item 3: Approval, on a non-binding advisory basis, of the compensation of our named executive officers		Page 45		✓ FOR
Item 4: Ratification of appointment of KPMG LLP as our independent registered public accounting firm for the 2023 fiscal year		Page 46		✓ FOR

 

OUR DIRECTOR NOMINEES

The term of office of our Class III directors expires at the Annual Meeting. You are being asked to vote on the election of William L. Ashton and Laura L. Parks, Ph.D. as Class III directors. We are nominating Mr. Ashton and Dr. Parks for election at the Annual Meeting to serve until the 2026 Annual Meeting of Shareholders and until their successors, if any, are elected or appointed, or their earlier death, resignation, retirement, disqualification or removal.

The number of members of our Board is currently set at nine members and is divided into three classes, each of which has a three-year term. Currently, each class consists of three directors. Dr. Michael Berelowitz, a current Class III member of our Board, has advised us that due to other professional commitments, he will not stand for re-election at the Annual Meeting, and his service as a member of our Board will end effective as of the Annual Meeting. As a result, we intend to reduce the size of our Board from nine to eight, effective as of the Annual Meeting. We extend our deepest gratitude to Dr. Berelowitz for his distinguished service to our Board.

Directors are elected by a plurality of the votes cast by our shareholders at the Annual Meeting. The two nominees receiving the most FOR votes (among votes properly cast in person or by proxy) will be elected. If no contrary indication is made, shares represented by executed proxies will be voted FOR the election of Mr. Ashton and Dr. Parks. Each nominee has agreed to serve as a director if elected, and we have no reason to believe that any nominee will be unable to serve.

 

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The following table reflects director nominee biographical information and committee memberships:

Name

Age

Director Since

Occupation

Independent

Committee Memberships

Other Current Public Company Boards

AC

CC

GC

William L. Ashton

72

2009

Principal at Harrison Consulting Group, Inc.

Yes

-

C

M

Spectrum Pharmaceuticals, Inc.; Baudax Bio, Inc.

Laura L. Parks, Ph.D.

64

2021

Retired

Yes

-

M

M

None

AC = Audit Committee

CC = Compensation Committee

C = Chair

GC = Nominating and Corporate Governance Committee

M = Member

 

CORPORATE GOVERNANCE SUMMARY FACTS

The following table summarizes our current Board structure and key elements of our corporate governance framework:

Governance Items
Size of Board (set by the Board)		9 (to be reduced to 8 as of the Annual Meeting)
Number of Independent Directors		8 (to be reduced to 7 as of the Annual Meeting)
Independent Chairman of the Board		Yes
Board Self-Evaluation		Annual
Review of Independence of Board		Annual
Independent Directors Meet Without Management Present		Yes
Voting Standard for Election of Directors in Uncontested Elections		Plurality
Diversity of Board background, experience and skills		Yes

 

2022 CORPORATE HIGHLIGHTS

•

In December 2022, we completed a refinancing that included the repayment of $100.0 million of outstanding term loans with Athyrium, funded by entering into three transactions: (i) we raised gross proceeds of $39.0 million through the sale and subsequent leaseback of our facility located in Gainesville, Georgia; (ii) we raised net proceeds of $32.9 million from the issuance of common stock and Series A convertible preferred stock; and (iii) we borrowed $36.9 million under a new 3-year Term A loan debt facility with Royal Bank of Canada. Among other things, the refinancing has resulted in a reduction to our leverage ratio, a reset of our financial covenants and a reduction in the amount of cash payable for interest in future periods.

•

In September 2022, we appointed Elena Cant to our Board. Ms. Cant has more than 20 years of diverse business experience ranging across various functions including corporate development, business operations and strategy, marketing, commercial, manufacturing, and research and development. Ms. Cant currently serves as the chief operating officer at TwinStrand Biosciences, where she leads the company’s operational organization in support of its efforts to develop its next-generation DNA sequencing technology. Ms. Cant filled the vacancy in Class II created by the resignation of Gerri Henwood in January 2022.

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•

In July 2022, we signed an amendment to our license and supply agreement with Lannett Company, or Lannett, for the marketing of Verapamil PM and Verelan SR products. Under terms of the amendment, we will receive improved overall economics, including a 10% increase in the profit share component of revenue from Verapamil PM product sales, as well as immediate and scheduled increases in manufacturing prices. Additionally, the amendment awards us potential new Good Manufacturing Practice, or GMP, manufacturing agreements targeting injectable products for multiple additional Lannett development projects.

•

In May 2022, we unveiled our “20/80 Second Source Technical Transfer” service model. This CDMO offering provides pharmaceutical companies with a time and cost-efficient preparedness strategy for mitigating supply chain risks and vulnerabilities.

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TABLE OF CONTENTS
PROXY SUMMARY		i
GENERAL INFORMATION ABOUT THE MEETING		2
BOARD OF DIRECTORS		5
	BOARD STRUCTURE AND COMPOSITION	5
	CRITERIA FOR BOARD MEMBERSHIP	7
	SELECTION OF CANDIDATES	7
	POTENTIAL DIRECTOR CANDIDATES	8
	DIRECTOR NOMINEES	9
	CONTINUING DIRECTORS	10
CORPORATE GOVERNANCE AND RISK MANAGEMENT		14
	BOARD INDEPENDENCE	14
	BOARD LEADERSHIP STRUCTURE	14
	BOARD COMMITTEES	14
	RISK MANAGEMENT	14
	EVALUATING BOARD EFFECTIVENESS	15
	CODE OF CONDUCT	16
	DIRECTOR ORIENTATION AND CONTINUING EDUCATION	16
	RESTRICTIONS ON THE HEDGING AND PLEDGING OF SOCIETAL SHARES	16
	CORPORATE GOVERNANCE GUIDELINES	16
	BOARD ATTENDANCE, COMMITTEE MEETINGS AND COMMITTEE MEMBERSHIP	17
	FAMILY RELATIONSHIPS	21
	COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION	21
	SHAREHOLDER ENGAGEMENT	21
	OUR VALUES — ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE	21
DIRECTOR COMPENSATION		24
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		26
AUDIT COMMITTEE REPORT		27
EXECUTIVE OFFICERS		28
EXECUTIVE COMPENSATION		29
	SUMMARY COMPENSATION TABLE	29
	OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END FOR 2022	32
	EMPLOYMENT AGREEMENTS	33
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		38
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		38
EQUITY COMPENSATION PLAN INFORMATION		41
ITEMS TO BE VOTED ON		42
	ITEM 1: ELECTION OF CLASS III DIRECTORS FOR A THREE-YEAR TERM EXPIRING IN 2026	42
	ITEM 2: ADOPTION AND APPROVAL OF AN AMENDMENT TO OUR SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 95 MILLION TO 185 MILLION	43
	ITEM 3: NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS	45
	ITEM 4: RATIFICATION OF APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2023	46
OTHER INFORMATION		47
APPENDIX A		A-1

 

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PROXY STATEMENT

This Proxy Statement, with the enclosed proxy card, is being furnished to shareholders of Societal in connection with the solicitation by our Board of proxies to be voted at our Annual Meeting and at any postponements or adjournments thereof. The Annual Meeting will be held on May 17, 2023, at 10:00 a.m., Eastern time via the Internet at www.virtualshareholdermeeting.com/SCTL2023.

This Proxy Statement and the enclosed proxy card, along with the 2022 Annual Report to Shareholders, are first being made available to our shareholders on or about April 6, 2023.

 

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GENERAL INFORMATION ABOUT THE MEETING

 

PROXY SOLICITATION

Our Board is soliciting your vote on matters that will be presented at the Annual Meeting and at any adjournment or postponement thereof. This Proxy Statement contains information on these matters to assist you in voting your shares.

This Proxy Statement and the proxy card, along with the 2022 Annual Report to Shareholders, are first being made available to our shareholders on or about April 6, 2023. This Proxy Statement and our 2022 Annual Report are available to holders of our common stock at www.proxyvote.com.

SHAREHOLDERS ENTITLED TO VOTE

All shareholders of record of our common stock at the close of business on , or the Record Date, are entitled to receive the Notice and to vote their shares at the Annual Meeting. As of that date, shares of our common stock were outstanding. Each share is entitled to one vote on each matter properly brought to the meeting.

VOTING METHODS

You may vote at the Annual Meeting in person (virtually) or you may cast your vote in any of the following ways:

 

HOW YOUR SHARES WILL BE VOTED

In each case, your shares will be voted as you instruct. If you return a signed proxy card, but do not provide voting instructions, your shares will be voted FOR each of the proposals in Items 1, 2, 3 and 4. If you are the record holder of your shares, you may revoke or change your vote any time before the proxy is exercised. To do so, you must do one of the following:

•

Vote over the internet or by telephone as instructed above. Only your latest internet or telephone vote is counted. You may not revoke or change your vote over the internet or by telephone after 11:59 p.m., Eastern time, on May 16, 2023;

•

Sign a new proxy card and submit it by mail, which must be received no later than May 16, 2023. Only your latest dated proxy card will be counted;

•

Virtually attend the Annual Meeting at www.virtualshareholdermeeting.com/SCTL2023 and cast your vote during the Annual Meeting, in accordance with instructions provided. Virtually attending the Annual Meeting will not by itself revoke a previously granted proxy; or

•

Give our Corporate Secretary written notice before or at the meeting that you want to revoke your proxy.

If your shares are held by your broker, bank or other holder of record as a nominee or agent (i.e., the shares are held in “street name”), you should follow the instructions provided by your broker, bank or other holder of record.

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Deadline for Voting. The deadline for voting by telephone or internet, other than virtually attending the Annual Meeting, is 11:59 p.m., Eastern time on May 16, 2023. If you are a registered shareholder and virtually attend the Annual Meeting, you may vote online during the Annual Meeting.

BROKER VOTING AND VOTES REQUIRED FOR EACH PROPOSAL

If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of shares held in street name. The Notice has been forwarded to you by your broker, bank or other holder of record who is considered the shareholder of record of those shares. As the beneficial owner, you may direct your broker, bank or other holder of record on how to vote your shares by using the proxy card included in the materials made available or by following their instructions for voting on the internet.

A broker non-vote occurs when a broker or other nominee that holds shares for another does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the beneficial owner of the shares. The following table summarizes the proposals to be considered at the Annual Meeting, the vote required with respect to each proposal, how broker non-votes and abstentions are treated with respect to each proposal, and broker discretionary voting authority:

Proposal		Votes Required		Treatment of Withhold, Abstentions and Broker Non-Votes		Broker Discretionary Voting
Item 1: Election of Class III directors for a three-year term expiring in 2026		Plurality of the votes cast		Withhold and broker non-votes will not be taken into account in determining the outcome of the proposal		No
Item 2: Adopt and approve an amendment to our Second Amended and Restated Articles of Incorporation, as amended, to increase the number of authorized shares of common stock from 95 million to 185 million		Majority of the votes cast		Abstentions and broker non-votes will not be taken into account in determining the outcome of the proposal		No
Item 3: Approval, on a non-binding advisory basis, of the compensation of our named executive officers		Majority of the votes cast		Abstentions and broker non-votes will not be taken into account in determining the outcome of the proposal		No
Item 4: Ratification of appointment of KPMG LLP as our independent registered public accounting firm for the 2023 fiscal year		Majority of the votes cast		Abstentions and broker non-votes, if any, will not be taken into account in determining the outcome of the proposal		Yes
1 Year Recro Pharma Chart	1 Month Recro Pharma Chart