DEFA14A: Viridian Therapeutics Seeks Stockholder Approval for Equity Incentive Plan Increase to Attract and Retain Talent

Viridian Therapeutics is urging stockholders to approve an increase in shares available under its equity incentive plan to maintain competitiveness in the biotech talent market and support company growth.

Summary

• Viridian Therapeutics is seeking stockholder approval for a share increase to its Amended and Restated 2016 Equity Incentive Plan.
• The company's 2024 Annual Meeting of Stockholders will be held virtually on June 17, 2024.
• The primary reason for the share increase is to support the retention and hiring of talent, which is critical for executing Viridian's corporate goals.
• Without the share increase, Viridian anticipates running out of equity to grant from its pool as soon as the first quarter of 2025.
• The proposed share increase aims to align employee and stockholder interests by using equity as a key component of compensation.
• Viridian argues that the share increase is reasonable, with a calculated three-year, value adjusted burn rate of 6.36%.
• The company believes the share increase will be sufficient to meet its expected needs for approximately one year, based on historical grant practices and performance.
• The company granted 11,075,792 options and RSUs in 2023, 2,545,500 in 2022 and 3,453,156 in 2021.
• The company had 75,050,965 common shares as converted in 2023, 57,279,478 in 2022 and 42,829,149 in 2021.

Sentiment

Score: 7

Explanation: The document presents a balanced view, highlighting the necessity of the share increase for talent retention and future growth, while also addressing concerns about dilution and burn rate. The company's proactive approach to managing equity compensation and its commitment to delivering value catalysts contribute to a moderately positive outlook.

Positives

• The share increase is intended to support the retention and hiring of talent, which is crucial for Viridian's growth and execution of corporate goals.
• The company argues that the share increase is reasonable and does not result in excessive plan cost or dilution to stockholders.
• Viridian believes that using equity as part of the overall compensation package aligns employee and stockholder interests.
• The company's historical burn rate is considered reasonable, especially considering mitigating factors such as senior management turnover in 2023.
• The company believes that its hiring and retention efforts, which utilized equity as a component, enabled it to deliver catalysts through year-end 2023 into 2024.

Negatives

• Without the share increase, Viridian anticipates running out of equity to grant from its pool as soon as the first quarter of 2025, potentially harming its competitive position.
• ISS recommends a vote against the Share Increase.
• The company's three-year average burn rate through December 31, 2023 was approximately 13.8%, which does not include the adjustments for mitigating factors.

Risks

• Failure to secure the share increase could negatively impact Viridian's ability to attract and retain talent in the competitive biotech industry.
• Increased reliance on cash or non-equity awards to compensate employees could strain the company's financial resources and may not align employee and stockholder interests as effectively as equity.
• The company's future performance and stock price could be affected by its ability to execute its corporate goals, which depends on attracting and retaining qualified personnel.

Future Outlook

Viridian expects the Share Increase, if approved, to be sufficient to meet its expected needs for approximately one year based on its historical grant practices and performance. The company anticipates a lower burn rate in 2024 compared to 2023 and expects to deliver catalysts through year-end 2023 into 2024.

Management Comments

• The Share Increase is critical to support retention and continued hiring of talent at Viridian.
• Without the Share Increase, we anticipate running out of equity to grant from our pool as soon as the first quarter of 2025.
• We believe our stockholders want us to prioritize the use of our cash for drug development and the delivery of value catalysts.

Industry Context

In the competitive biotech industry, equity compensation is a crucial tool for attracting and retaining talent, especially in locations like Massachusetts where many biotech and pharmaceutical companies compete for skilled employees. Viridian's request for a share increase reflects the industry's reliance on equity awards to offer competitive compensation packages.

Comparison to Industry Standards

• The proposed Share Increase is comparable to a less than 3% evergreen equity pool increase, 1-2% below the typical evergreen used by biotech companies.
• When biotech companies IPO, a common feature in their equity plans is an evergreen refresh provision that automatically and annually increases the equity pool by 4-5% of shares outstanding.

Stakeholder Impact

• Approval of the share increase would benefit employees by allowing the company to continue offering competitive equity compensation packages.
• Approval of the share increase would benefit shareholders by allowing the company to attract and retain the talent needed to execute its corporate goals and deliver value catalysts.
• Failure to approve the share increase could negatively impact the company's ability to attract and retain talent, potentially affecting its future performance and stock price.

Next Steps

• Stockholders will vote on the proposed share increase at the 2024 Annual Meeting of Stockholders on June 17, 2024.
• The company will continue to monitor its equity usage and adjust its compensation strategies as needed.

Key Dates

Keywords

equity incentive plan, share increase, stockholders, talent retention, biotech, compensation, burn rate, dilution, Viridian Therapeutics