Upon request of shareholders entered in the share register, the Company will provide them with regular information such as Annual Reports, Half-year Reports and press announcements.
Cytos Biotechnology’s website http:www.cytos.com provides additional information such as an overview of the Company’s organization, science and technology, product pipeline, archived and latest press releases, publication dates of financial reports and the date of the annual shareholders’ meeting. Quarterly and Annual Reports as well as the Articles are also available on the website. Ad-hoc press releases are available on the website at: http://www.cytos.com/press-releases/
Existing and potential investors are welcome to visit the Company’s site; members of the Executive Board hold regular meetings with existing and potential investors and other interested parties. Contact details are displayed on page 5 of this Annual Report.
OVERVIEW OF THE COMPENSATION REPORT
This Compensation Report provides the information required by the federal Ordinance against ex cessive compensation in listed companies (VegüV) (effective as of January 1, 2014), which prevails over article 663c paragraph 3 of the Swiss Code of Obligations. It also includes the information re quired by section 5 of the Annex to the Directive on Information relating to Corporate Governance of the SIX Swiss Exchange (effective date October 1, 2014) and the Swiss Code of Best Practice for Corporate Governance (status August 28, 2014).
The Board of Directors will submit the Compensation Report to a consultative vote at the Annual Shareholders’ Meeting (ASM) 2015 together with proposals for additional changes to the compen sation policy in order to comply with the new legal framework in the Ordinance against Excessive Compensation at Public Corporations (OeEC).
The first part of this report provides Cytos’ compensation principles, and the second part provides details of each of the compensation elements, with compensation details for the Board of Directors followed by details for the Executive Board.
GENERAL REMARK
In light of the major setback with its lead product, CYT003, and the subsequent major reduction in operational activities including a reduction in workforce, the Board of Directors as well as the Exe cutive Board were substantially reduced. As per year end 2014, the Board of Directors consists of four people and the composition of the subcommittees has been amended accordingly as shown in the corporate governance report. Due to the low number of Board members, three Board members hold positions in two committees (out of three) and one member holds a position in each of the three committees. The compensation committee is comprised of three members of the Board of Directors whereby the CEO and Chairman of the Board, Dr. Christian Itin, is not member of that committee.
COMPENSATION POLICY AND PHILOSOPHY
The compensation of the members of the Board of Directors and of the Executive Board has to be reviewed annually by the Compensation Committee which in turn suggests to the Board of Directors any changes to such compensation. In light of the corporate restructuring as mentioned above, the compensation committee suggested and the board of directors approved such changes to the com pensation outside the annual review schedule to address the substantial changes in the business operation. In particular, the Board of Directors has resolved not to pay any board fees anymore to Joe Anderson and Kurt von Emster (Christian Itin as Chairman of the Board has never received any Board compensation) with effect as of June 1, 2014. The compensation for John Berriman has been reduced as mentioned on the next page.
Any discussion among the compensation committee takes place in absence of members of the Executive Board. Any discussion within the Board of Directors takes place in presence of the Chair man and CEO unless his own compensation is being discussed in which case he is absent from such session.
COMPENSATION ELEMENTS FOR THE BOARD AND EXECUTIVE BOARD Board of Directors
Up until May 30, 2014, nonexecutive members of the Board of Directors received an annual fixed (not performancerelated) compensation of CHF 30,000 plus an attendance fee of CHF 4,000 for each board meeting attended in person, plus the payment of social security contributions, where such contributions occur. In the event of an attendance by telephone, the fee was reduced to CHF 2,000. The attendance fee for a committee meeting was CHF 2,000 (chairman: CHF 4,000); in the event of attendance by telephone, the fee was reduced to CHF 1,000 (chairman: CHF 2,000). In light of the failed Phase 2b study of the Company’s lead product CYT003, the Board agreed to change the compensation as of June 1, 2014, with Mr. Berriman receiving 85% of the amounts due as described above, and Dr. Anderson and Mr. von Emster waiving their right to such compensation. With effect as of January 1, 2015, Mr. Berriman compensation has been further reduced to CHF 10’000 per quarter as a lumpsum.
As the Chairman of the Board is also the CEO of the Company, he is not entitled to compensation under the Director Compensation Policy and has not received any compensation relating to his service as a member or Chairman of the Board.
Cytos reimburses all board members’ outofpocket expenses incurred in relation to their service on the board on an ongoing basis upon presentation of the corresponding receipts.