PROPOSAL 5
APPROVAL OF THE INNOVIVA, INC. 2023 EMPLOYEE STOCK PURCHASE PLAN
The Company seeks stockholder approval of this Innoviva, Inc. 2023 Employee Stock Purchase Plan (the “2023 ESPP”), which, if approved by our stockholders, will permit employees of the Company and certain of its direct and indirect subsidiaries to participate in the ownership of the Company in furtherance of its broader compensation strategy, as discussed below.
Background
On April 13, 2023, the Board of Directors adopted the 2023 ESPP, subject to the approval by the Company’s stockholders. The adoption of the 2023 ESPP will not affect the terms and conditions of any current offerings under the Theravance, Inc. 2004 Employee Stock Purchase Plan, as amended (the “2004 ESPP”). If the 2023 ESPP is approved by our stockholders, the first offering period under the 2023 ESPP will commence on November 16, 2023 and end on May 15, 2024 and (i) the 2004 ESPP will terminate immediately following the issuance of Common Stock pursuant to the 2004 ESPP to participants who participated in the “accumulation period” ending November 15, 2023, (ii) no new offering periods or accumulation periods under the 2004 ESPP will commence after November 15, 2023, and (iii) all employee contributions in respect of the 2004 ESPP shall be discontinued as of November 15, 2023. If the 2023 ESPP is not approved by our stockholders, the 2023 ESPP will be null and void, and the 2004 ESPP will remain in full force and effect in accordance with its terms and conditions until its expiration on May 27, 2024. No offering will commence, and no shares will be available for purchase, pursuant to the 2023 ESPP until it is approved by the Company’s stockholders.
If the 2023 ESPP is approved, 2,500,000 shares of our Common Stock will be available for purchase thereunder, which represents approximately 3% of our outstanding Common Stock (on a fully diluted basis) as of March 31, 2023. The Company’s stockholders previously approved the 2004 ESPP, under which 160,995 shares remain available for issuance as of March 31, 2023.
The Board of Directors adopted the 2023 ESPP because the 2004 ESPP will expire pursuant to its terms on May 27, 2024, which the Company believes has been successful in aligning the interests of employees and the senior management team with those of our stockholders. The Board of Directors believes that stock ownership by employees is instrumental in the Company’s ability to attract, motivate and retain team members and provides performance incentives and fosters long-term commitment to our benefit and to the benefit of our stockholders. Therefore, the Board of Directors recommends that stockholders to approve the 2023 ESPP.
The following is a summary of the material features of the 2023 ESPP, the complete text of which is attached to this proxy statement as Appendix A.
Purpose
The purpose of the 2023 ESPP is to enhance the Company’s and its direct and indirect subsidiaries’ ability to attract and retain the types of employees who will contribute to its long range success by permitting them to participate in the ownership of the Company. The Board of Directors believe that participation in the ownership of the Company is necessary to remain competitive in our industry and is essential to recruiting and retaining the highly qualified individuals who help us meet our goals.
Administration
The 2023 ESPP will be administered by the Compensation Committee.
Shares Subject to the 2023 ESPP
A total of 2,500,000 shares of Common Stock will be reserved and available for issuance under the 2023 ESPP, which, as of March 31, 2023, had a fair market value of $13.25 per share. Shares authorized under the
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