ORMP.NASDAQOramed Pharmaceuticals INC
10-K/A: Oramed Pharmaceuticals Amends 2024 Annual Report to Correct Executive Compensation and Stock Ownership Disclosures
Sentiment:
Annual Report Amendment
Oramed Pharmaceuticals Inc. filed an amendment to its 2024 Annual Report on Form 10-K to correct disclosures related to Named Executive Officer compensation and security ownership, reflecting revised NEO qualifications and updated certifications.
Summary
- Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, was filed to correct disclosures regarding Named Executive Officers (NEOs) compensation and security ownership.
- The amendment includes updated certifications from the Principal Executive Officer and Principal Financial Officer.
- No financial statements were amended or included in this filing.
- The company's executive compensation program aims to attract, retain, motivate, and align executives with stockholder interests through a mix of base salary, discretionary bonuses, and long-term equity incentives.
- NEOs' base salaries were increased by 15% effective July 1, 2024, based on market compensation analysis by Aon Solutions UK Limited.
- Total compensation for Nadav Kidron (President, Chief Executive Officer and Chairman) increased from $1,659,222 in 2023 to $2,097,689 in 2024.
- Total compensation for Dr. Miriam Kidron (Chief Scientific Officer and director) increased from $1,109,431 in 2023 to $1,534,547 in 2024.
- Total compensation for Joshua Hexter (Chief Operating & Business Officer) increased from $728,440 in 2023 to $1,031,450 in 2024.
- As of March 27, 2025, Oramed had 40,850,455 shares of common stock issued and outstanding.
- The aggregate market value of voting and non-voting common equity held by non-affiliates was $131,190,607 as of the last business day of the most recently completed second fiscal quarter, based on a price of $3.58 per share.
- As of December 31, 2024, 3,947,562 securities were to be issued upon exercise of outstanding options, RSUs, and rights, with a weighted-average exercise price of $2.80.
- 2,148,993 securities remained available for future issuance under equity compensation plans.
- As of March 27, 2025, Nadav Kidron beneficially owned 3,193,699 shares (7.6%), Dr. Miriam Kidron 1,256,332 shares (3.0%), and Joshua Hexter 781,587 shares (1.9%).
- All current executive officers and directors as a group beneficially owned 7,533,336 shares (18.2%) as of March 27, 2025.
Sentiment
Score: 6
Explanation: The document is a routine amendment to correct prior disclosures, which is a neutral event. The compensation structure aims to align with shareholder interests, which is positive, but the need for correction indicates a minor administrative issue. The overall sentiment is slightly positive due to good governance practices like a clawback policy and shareholder approval of compensation, despite the need for an amendment.
Positives
- The company's executive compensation program is designed to align management interests with those of stockholders through long-term equity incentives.
- The Compensation Committee, comprised of independent directors, regularly reviews compensation to ensure alignment with strategic goals and competitive market practices.
- Stockholders approved the executive compensation program on an advisory basis with over 90% of votes cast in favor at the August 1, 2024 annual meeting.
- The company has a clawback policy for erroneously awarded compensation in the event of an accounting restatement due to material non-compliance with financial reporting requirements.
Negatives
- The filing is an amendment to correct previously filed information regarding executive compensation and security ownership, indicating initial inaccuracies in the original Form 10-K.
Future Outlook
The Compensation Committee is considering alternative models and equity vehicles for future equity-based grants to executive officers. Performance Stock Units (PSUs) granted on January 2, 2025, are tied to the closing of an OraTech transaction with HTIT or the repayment of the company's principal investment in Scilex plus 10%.
Management Comments
- The Compensation Committee believes that our executive compensation is appropriately designed to incentivize our NEOs to work for our long-term prosperity, is reasonable in comparison with the levels of compensation provided by comparable companies and reflects a reasonable cost.
- We believe our NEOs are critical to the achievement of our corporate goals, through which we can drive stockholder value.
- We believe that a competitive base salary and monthly compensation is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives.
- We believe that annual bonuses payable based on the achievement of short-term corporate goals incentivize our NEOs to create stockholder value and attain short-term performance objectives.
- The Compensation Committee believes that stock participation aligns executive officers interests with those of our stockholders.
Industry Context
The company's executive compensation practices, including the use of base salaries, performance-based bonuses, and long-term equity incentives, are aligned with common practices in the biotechnology industry and among Israeli-based companies. The Compensation Committee utilizes external consultants (Aon Solutions UK Limited) and peer group data to benchmark compensation levels, ensuring competitiveness within the sector.
Comparison to Industry Standards
- The Compensation Committee engaged Aon Solutions UK Limited to provide competitive compensation benchmarks based on U.S. and Israeli compensation practices.
- Aon developed a peer group including ALX Oncology Holdings Inc., AN2 Therapeutics, Inc., Anavex Life Sciences Corp., Atossa Therapeutics Inc., aTyr Pharma, Inc., Chimerix, Inc., Compugen Ltd., Fulcrum Therapeutics, Inc., Immunic, Inc., Marinus Pharmaceuticals, Inc., MediciNova, Inc., Pluri Biotech Ltd., Rani Therapeutics, Inc., Relmada Therapeutics, Inc., Rezolute, Inc., Vistagen Therapeutics, Inc., vTv Therapeutics Inc., and Zevra Therapeutics, Inc.
- Base salaries for executives are targeted near the median of the range for similar positions at comparable companies.
- Equity incentive awards are designed to be competitive within the biotechnology industry and with Israeli-based companies.
- Benefits and perquisites provided to NEOs are customary for executive officers in Israel for companies of similar size and development stage.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Director | Yadin Rozov | NA | 2024-01-17 | Resigned from the Board. |
| Director | NA | Daniel Aghion | 2024-01-01 | Joined the Board. |
| Director | NA | Yehuda Reznik | 2024-04-01 | Joined the Board. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Executive Compensation Disclosure Correction | Amendment to Item 11 (Executive Compensation) to correct compensation information for Named Executive Officers (NEOs) due to a revision in who qualified as NEOs for the year ended December 31, 2024. | 2025-03-27 | Enhances transparency and accuracy of executive compensation reporting. |
| Security Ownership Disclosure Correction | Amendment to Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters) as a result of the change in NEOs. | 2025-03-27 | Ensures accurate reporting of beneficial ownership by key personnel. |
| Certification Update | Part IV, Item 15 amended and restated to include currently dated certifications from the Company's principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | 2025-07-16 | Maintains compliance with regulatory reporting requirements and enhances accountability. |
| Executive Compensation Policy | The Compensation Committee, comprised solely of independent directors, has the authority to review and approve compensation for the CEO and other executive officers, aiming to attract, retain, motivate, and align executives with stockholder interests. | NA | Promotes sound governance in executive remuneration. |
| Director Compensation Policy | Effective January 1, 2024, independent directors receive an annual sum of $30,000 and a grant of 5,070 RSUs, with additional compensation for committee roles and the Chairman. New meeting fees of $500 per meeting beyond six per year and $2,000 for meetings over three hours were approved on January 2, 2025. | 2024-01-01 | Standardizes and potentially increases director remuneration to attract and retain qualified board members. |
| Clawback Policy | Board adopted an executive compensation clawback policy for recoupment of excess incentive compensation from current and former executive officers in the event of an accounting restatement due to material non-compliance with financial reporting requirements. | NA | Strengthens accountability and discourages financial misreporting. |
| Equity Award Grant Policy | No formal policy for timing equity grants, but the company does not grant awards in anticipation of material nonpublic information and does not time public release of information based on grant dates. Timing for non-routine grants is tied to the event. | NA | Aims to prevent insider trading concerns related to equity grants. |
Related Party Transactions
- Consulting agreement with KNRY Ltd. for Dr. Miriam Kidron's services as Chief Scientific Officer, through which she receives compensation.
- Consulting agreement with Shnida Ltd. for Nadav Kidron's services as President and Chief Executive Officer, through which he receives compensation.
- Employment agreement with Nadav Kidron through Oramed Ltd. for his services as President and Chief Executive Officer of Oramed Ltd.
Stakeholder Impact
- Shareholders: Improved transparency and accuracy of executive compensation and ownership data. The compensation structure aims to align executive interests with shareholder value creation.
- Executive Officers: Compensation adjustments (including a 15% base salary increase), new equity grants, and clear severance provisions in case of change-in-control. Subject to a clawback policy.
- Directors: Updated compensation structure including cash fees and RSU grants, with additional fees for committee participation and meeting attendance.
- Employees: General benefits available to NEOs are also available to all employees on similar terms.
Next Steps
- The Compensation Committee is considering alternative models and equity vehicles for future equity-based grants.
- PSUs granted on January 2, 2025, are contingent on the closing of an OraTech transaction with HTIT or the repayment of the company's principal investment in Scilex plus 10%.
Key Dates
| Date | Description |
|---|---|
| 2008-07-01 | Oramed Ltd. entered into a consulting agreement with KNRY for Dr. Miriam Kidron's services. |
| 2014-11-13 | 9,788 RSUs granted to Nadav Kidron. |
| 2015-02-23 | 79,848 RSUs granted to Nadav Kidron. |
| 2017-06-30 | 147,000 options granted to Nadav Kidron and 69,999 options granted to Dr. Miriam Kidron under the 2008 Plan. |
| 2018-01-31 | 97,000 options granted to Nadav Kidron and 47,000 options granted to Dr. Miriam Kidron under the 2008 Plan. |
| 2019-02-26 | 196,500 options granted to Nadav Kidron and 104,000 options granted to Dr. Miriam Kidron under the 2008 Plan. |
| 2019-08-18 | Employment agreement entered into with Joshua Hexter. |
| 2019-09-11 | Options granted on February 26, 2019, were canceled and re-granted under the 2019 Plan. 100,000 options granted to Joshua Hexter under the 2019 Plan. |
| 2019-09-19 | Joshua Hexter's appointment as Chief Operating & Business Officer became effective. |
| 2019-11-09 | 100,000 options granted to Joshua Hexter under the 2019 Plan. |
| 2020-01-08 | 190,000 options granted to Nadav Kidron and 100,000 options granted to Dr. Miriam Kidron under the 2019 Plan. |
| 2020-06-29 | Board approved amendment to 2019 Plan to increase shares available. |
| 2020-08-03 | Stockholders approved amendment to 2019 Plan to increase shares available. |
| 2021-02-03 | 150,000 options and 300,000 RSUs granted to Nadav Kidron; 100,000 options and 200,000 RSUs granted to Dr. Miriam Kidron; 50,000 options and 100,000 RSUs granted to Joshua Hexter under the 2019 Plan. |
| 2022-01-03 | 107,000 options and 63,000 RSUs granted to Nadav Kidron; 72,000 options and 42,000 RSUs granted to Dr. Miriam Kidron; 36,000 options and 21,000 RSUs granted to Joshua Hexter under the 2019 Plan. |
| 2022-06-30 | Board and stockholders approved amendment to 2019 Plan to increase shares available to 7,500,000. |
| 2022-07-28 | 126,000 RSUs granted to Nadav Kidron and 84,000 RSUs granted to Dr. Miriam Kidron and 42,000 RSUs granted to Joshua Hexter. |
| 2022-09-18 | 116,127 options granted to Nadav Kidron and 32,079 options granted to Dr. Miriam Kidron under the Oravax Medical Inc. 2021 Long-Term Incentive Plan. |
| 2022-11-01 | Company entered into a consulting agreement with Shnida Ltd. for Nadav Kidron's services. |
| 2023-04-17 | 279,000 RSUs granted to Nadav Kidron, 213,000 RSUs and 53,500 performance-based RSUs granted to Dr. Miriam Kidron, and 108,000 RSUs granted to Joshua Hexter. |
| 2024-01-01 | Effective date for Dr. Miriam Kidron's monthly consulting fee of NIS 117,040 and Nadav Kidron's monthly consulting fee of NIS 96,825 and gross monthly salary of NIS 51,591. Effective date for independent director annual compensation. |
| 2024-01-04 | 329,000 RSUs and 141,000 PSUs granted to Nadav Kidron; 295,500 RSUs and 74,000 PSUs granted to Dr. Miriam Kidron; 45,000 PSUs and 180,500 RSUs granted to Joshua Hexter. |
| 2024-01-17 | Yadin Rozov resigned from the Board. |
| 2024-04-01 | Yehuda Reznik joined the Board. |
| 2024-07-01 | Effective date for 15% increase in NEO base salaries. Dr. Miriam Kidron's monthly consulting fee increased to NIS 134,550. Nadav Kidron's monthly consulting fee increased to NIS 111,349 and gross monthly salary increased to NIS 59,330. Joshua Hexter's gross monthly salary became NIS 81,466. |
| 2024-08-01 | Annual meeting of stockholders where executive compensation program was approved on an advisory basis. |
| 2024-11-01 | Compensation Committee increased NEO base salaries by 15% (effective July 1, 2024). |
| 2024-12-31 | Fiscal year end. Date for outstanding equity awards and equity compensation plan information. |
| 2025-01-02 | 1,023,000 RSUs and 328,500 PSUs granted to executive officers. Compensation Committee approved new director meeting fees. |
| 2025-02-13 | Schedule 13G/A filed by BML Investment Partners, L.P. |
| 2025-03-27 | Original Form 10-K filing date. Date for shares outstanding and PSU performance target achievement. |
| 2025-07-16 | Date of signing for Amendment No. 1 on Form 10-K/A by Nadav Kidron (CEO) and Avraham Gabay (CFO). |
Recommendation
holdKeywords
Oramed Pharmaceuticals, ORMP, SEC Filing, 10-K/A, Annual Report Amendment, Executive Compensation, Named Executive Officers, NEO, Stock Ownership, Equity Compensation, RSU, PSU, Stock Options, Corporate Governance, Nasdaq Capital Market, Tel Aviv Stock Exchange, Biotechnology, Pharmaceuticals, Financial Reporting, SEC Disclosure
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