DEF 14A: Journey Medical Corporation Seeks Stockholder Approval for Director Elections, Auditor Ratification, and Stock Plan Amendment

Journey Medical Corporation is holding its Annual Meeting of Stockholders virtually on June 25, 2024, to vote on the election of directors, ratification of the independent auditor, and an amendment to the company's stock plan.

Summary

• Journey Medical Corporation will hold its Annual Meeting of Stockholders virtually on June 25, 2024, at 11:00 a.m. Eastern Time.
• Stockholders will vote on (i) electing five directors for a one-year term, (ii) ratifying the appointment of KPMG LLP as the independent registered public accounting firm for the year ending December 31, 2024, (iii) amending the Company's 2015 Stock Plan, and (iv) transacting any other business that may properly come before the meeting.
• The Board of Directors recommends voting FOR all director nominees, FOR the ratification of KPMG LLP, and FOR the amendment to the 2015 Stock Plan.
• The record date for determining stockholders eligible to vote is April 26, 2024.
• Stockholders can attend and participate in the Annual Meeting virtually at www.virtualshareholdermeeting.com/DERM2024 using their 16-digit control number.
• As of April 26, 2024, there were 13,972,896 shares of common stock and 6,000,000 shares of Class A common stock outstanding and entitled to vote.
• Each share of common stock entitles the holder thereof to one vote on all matters submitted to stockholders and each share of Class A common stock has the voting power of 3.66 votes per share on the record date.

Sentiment

Score: 7

Explanation: The document is primarily informational and procedural, with a neutral to slightly positive sentiment. The company is taking steps to ensure good corporate governance and incentivize employees.

Positives

• The company is holding a virtual meeting to encourage broader attendance and reduce costs.
• The Board is actively engaged in corporate governance, with regular meetings and committee oversight.
• The Audit Committee has determined that Neil Herskowitz qualifies as an audit committee financial expert.
• The company has a Code of Business Conduct and Ethics in place.
• The company has a policy prohibiting hedging and speculative trading by officers, directors, and employees.

Negatives

• The company is a controlled company, which means it is exempt from certain Nasdaq corporate governance requirements.
• One director resigned in December 2023, leaving a vacancy on the board, which was subsequently addressed by reducing the number of directors from six to five.
• The company had a late filing of a Form 4 by a former director due to a delay in reporting the transaction.

Risks

• If the proposed amendment to the 2015 Stock Plan is not approved, the company may have difficulty attracting and retaining employees.
• The company's reliance on Fortress Biotech for shared services and income tax benefits creates a related-party transaction risk.
• The company's status as a controlled company may reduce the level of independent oversight.

Future Outlook

The company seeks to ensure it retains the ability to use equity awards as a means of compensation to align the interests of management and employees with those of stockholders, link pay to performance, and provide incentives for executives and employees to join and remain with the company.

Industry Context

The document reflects standard corporate governance practices for publicly traded companies, including the election of directors, ratification of auditors, and equity compensation plans. The company's status as a controlled company is a common structure, particularly for companies with significant ownership by a single entity.

Comparison to Industry Standards

• The director compensation program, including cash retainers and equity awards, is generally in line with industry standards for companies of similar size and stage.
• The use of KPMG LLP as the independent auditor is a common practice among publicly traded companies.
• The proposed amendment to the 2015 Stock Plan, including increasing the number of shares authorized for issuance and extending the plan's term, is a typical approach to ensure the company has sufficient equity compensation available for future grants.
• The company's related-party transactions with Fortress Biotech are not uncommon for companies with significant ownership by another entity, but they require careful review and approval by the Audit Committee to ensure they are on terms no less favorable to the company than could be obtained from unaffiliated parties.

Management Changes

Corporate Governance

Related Party Transactions

• The Company has a Shared Services Agreement with Fortress Biotech, Inc. where the Company reimburses Fortress for the salary and benefit costs associated with certain employees based upon actual hours worked on Company related projects.
• As of December 31, 2023, the Company was 52.01% owned by Fortress Biotech, Inc. (Fortress) and was filing consolidated federal tax returns and consolidated or combined state tax returns in multiple jurisdictions with Fortress for tax years prior to 2021.
• Fortress has agreed that the Company does not have to make payments to Fortress for the use of net operating losses (NOLs) of Fortress (including other Fortress group members).

Stakeholder Impact

• Stockholders will have the opportunity to vote on key corporate governance matters.
• Employees may benefit from the proposed amendment to the 2015 Stock Plan, which could provide additional equity compensation opportunities.
• The company's financial performance and strategic direction will be influenced by the decisions made at the Annual Meeting.

Next Steps

• Stockholders to vote on the proposals at the Annual Meeting on June 25, 2024.
• The company to implement the approved proposals, including the election of directors, ratification of KPMG LLP, and amendment to the 2015 Stock Plan.
• The Audit Committee to continue to review and approve related-party transactions.
• The Board to periodically review the matter of forming a nominating and corporate governance committee.

Key Dates

Keywords

proxy statement, annual meeting, directors, KPMG, stock plan, corporate governance, Fortress Biotech, executive compensation, audit committee, stockholders