geron_def14a.htm
SCHEDULE 14A
 
(Rule 14a-101)
 
INFORMATION REQUIRED IN PROXY STATEMENT
 
SCHEDULE 14A INFORMATION
 
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
 
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]

Check the appropriate box:
[_]  Preliminary Proxy Statement                  [_] Soliciting Material Under Rule
[_]  Confidential, For Use of the                        14a-12
       Commission Only (as permitted
       by Rule 14a-6(e)(2))
[x]  Definitive Proxy Statement
[_]  Definitive Additional Materials
 
GERON CORPORATION 
------------------------------------------------------------------------------------------------------------------------------------------------------
 
(Name of Registrant as Specified In Its Charter)
 
------------------------------------------------------------------------------------------------------------------------------------------------------
 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
[x]  No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
 
1)  Title of each class of securities to which transaction applies:
____________________________________________________________________________________
2)  Aggregate number of securities to which transaction applies:
3)  Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the
     amount on which the filing fee is
calculated and state how it was determined):
4)  Proposed maximum aggregate value of transaction:
____________________________________________________________________________________
5)  Total fee paid:
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which
      the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the form or
      schedule and the date of its filing.

____________________________________________________________________________________
      1) Amount previously paid:
____________________________________________________________________________________
      2) Form, Schedule or Registration Statement No.:
____________________________________________________________________________________
      3) Filing Party:
____________________________________________________________________________________
      4) Date Filed:
 

 

 
GERON CORPORATION
230 Constitution Drive
Menlo Park, CA 94025
 
March 28, 2011
 
Dear Stockholder:
 
     You are cordially invited to attend the 2011 Annual Meeting of Stockholders of Geron Corporation which will be held on Wednesday, May 11, 2011 at 8:00 a.m. Pacific Time. We are pleased to announce that this year’s annual meeting will be held completely virtual. You will be able to attend, vote and submit your questions during the meeting via live webcast via the Internet at www.virtualshareholdermeeting.com/GERN.
 
     As permitted by the rules of the Securities and Exchange Commission (the SEC), we are also pleased to be furnishing our proxy materials to stockholders primarily over the Internet. We believe this process will expedite stockholders’ receipt of the materials, lower the costs of our annual meeting and reduce the environmental impact of printing and mailing hard copies. Stockholders who continue to receive hard copies of proxy materials may help us reduce costs further by opting to receive future proxy materials by e-mail.
 
     On or about March 28, 2011, we will mail our stockholders a notice containing instructions on how to access our 2011 Proxy Statement and our 2010 Annual Report on Form 10-K and how to vote online. This notice also will include instructions on how you can receive a paper copy of the proxy materials, including the notice of the annual meeting, 2011 Proxy Statement and proxy card. If you received your proxy materials by mail, the notice of annual meeting, 2011 Proxy Statement and proxy card from our Board of Directors were enclosed. If you received your proxy materials via e-mail, the e-mail contains voting instructions and links to the 2011 Proxy Statement and 2010 Annual Report on Form 10-K, which includes information on our operations, product candidates and our audited financial statements.
 
     At this year’s annual meeting, the agenda includes the following items:
     Whether or not you plan to connect to the meeting via the webcast, please vote electronically via the Internet or by telephone, or, if you requested paper copies of the proxy materials, please complete, sign, date and return the accompanying proxy in the enclosed postage-paid envelope.
 
     Thank you for your ongoing support of, and continued interest in, Geron Corporation. I look forward to speaking with you over the Internet at our 2011 Annual Meeting of Stockholders.
 
  Sincerely,
 
  David L. Greenwood
  President, Interim Chief Executive Officer and
  Chief Financial Officer


 

 
GERON CORPORATION
230 Constitution Drive
Menlo Park, CA 94025
 
___________________
 
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 11, 2011
 
To the Stockholders of Geron Corporation:
 
     NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of GERON CORPORATION, a Delaware corporation (the Company), will be held on Wednesday, May 11, 2011, at 8:00 a.m. Pacific Time. To participate in the annual meeting via live webcast, vote your shares online and submit your questions during the meeting, please visit www.virtualshareholdermeeting.com/GERN and be sure to have your 12-Digit Control Number to enter the meeting. You will not be able to attend the annual meeting in person. The meeting will be held for the following purposes:
 
     1.      To elect the members of Class III of the Board of Directors to serve for the following three years or until their successors are elected and qualified;
   
  2.   To approve the 2011 Incentive Award Plan that will replace the 2002 Equity Incentive Plan, which is expiring;
   
  3.   An advisory vote to approve on executive compensation;
   
  4.   An advisory vote to approve the frequency of holding future advisory votes on executive compensation every 1, 2 or 3 years;
   
  5.   To ratify appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2011; and
   
  6.   To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof.
 
     The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.
 
     The Board of Directors has fixed the close of business on Tuesday, March 15, 2011, as the record date for the determination of stockholders entitled to notice of and to vote at this Annual Meeting and at any adjournment or postponement thereof. Each stockholder is entitled to one vote for each share of common stock held at that time.
 
     Whether or not you plan to connect to the meeting via the webcast, please vote electronically via the Internet or by telephone, or, if you requested paper copies of the proxy materials, please complete, sign, date and return the accompanying proxy in the enclosed postage-paid envelope. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain from the record holder a proxy issued in your name. 
 
 
By Order of the Board of Directors,
 
  David J. Earp, J.D., Ph.D.
  Secretary

Menlo Park, California
March 28, 2011
 
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER OR NOT YOU EXPECT TO CONNECT TO THE MEETING, WE URGE YOU TO SUBMIT YOUR PROXY PROMPTLY IN ORDER TO ASSURE THAT A QUORUM IS PRESENT.
 

 

GERON CORPORATION
230 Constitution Drive
Menlo Park, CA 94025
 
____________________
 
PROXY STATEMENT
____________________
 
INFORMATION CONCERNING SOLICITATION AND VOTING
 
General
 
     This proxy statement is being furnished to the stockholders of Geron Corporation, a Delaware corporation (the Company), in connection with the solicitation by the Board of Directors (the Board) of the Company of proxies to be used at the Annual Meeting of Stockholders to be held on May 11, 2011, at 8:00 a.m. local time (the Annual Meeting), or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting. To save costs, reach a greater number of investors and enable “real time” voting, the Annual Meeting is being held over the Internet via live webcast at www.virtualshareholdermeeting.com/GERN. This proxy statement and accompanying proxy card are being mailed to all stockholders entitled to vote at the Annual Meeting on or about March 28, 2011.
 
Internet Availability of Proxy Materials
 
     Proxy materials are being furnished to stockholders via the Internet rather than mailing printed copies of those materials to each stockholder. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request one. Instead, the Notice of Internet Availability of Proxy Materials will instruct you as to how you may access and review the proxy materials and cast your vote on the Internet. If you received a Notice of Internet Availability of Proxy Materials by mail and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials.
 
     This proxy statement and the Company’s 2010 Annual Report on Form 10-K are available at www.proxyvote.com. Internet distribution of proxy materials is designed to expedite receipt by stockholders, lower the cost of the Annual Meeting and conserve natural resources. However, if you have not received a copy of our proxy materials and would like to receive one for the annual meeting or for future stockholder meetings, you may request printed copies as follows:
Connecting to the Annual Meeting
 
     The annual meeting will be held live via the Internet. You will not be able to attend the meeting in person. A summary of the information you need to attend the meeting online is provided below:
1
 

 

Solicitation and Voting of Proxies
 
     Only holders of record at the close of business on Tuesday, March 15, 2011 (the Record Date) will be entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. At the close of business on the Record Date, there were 128,907,093 shares of common stock, par value $0.001 per share (Common Stock), outstanding. Each holder of record of Common Stock on such date will be entitled to one vote for each share held on all matters to be voted upon at the Annual Meeting.
 
     The Company will bear the entire cost of solicitation of proxies, including preparation, assembly, printing and mailing of this proxy statement, the proxy and any additional information furnished to stockholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of Common Stock beneficially owned by others to forward to such beneficial owners. In addition, the Company may reimburse persons representing beneficial owners of Common Stock for their costs of forwarding solicitation materials to such beneficial owners. The original solicitation of proxies by mail may be supplemented by solicitation by mail, telephone or other electronic means, or in person, by directors, officers, or other regular employees of the Company, or at the Company’s request, Alliance Advisors, LLC. No additional compensation will be paid to directors, officers or other regular employees for such services, but Alliance Advisors will be paid its customery fee, estimated to be $5,500, to render solicitation services.
 
Quorum Requirement and Votes Required for the Proposals
 
     In order to constitute a quorum and to transact business at the Annual Meeting, a majority of the outstanding shares of Common Stock on the Record Date must be represented at the Annual Meeting. Shares represented by proxies that reflect abstentions or “broker non-votes” (i.e., shares held by a broker or nominee which are represented at the Annual Meeting, but not empowered to vote on a particular proposal) will be counted as shares that are present and entitled to vote for purposes of determining the presence of a quorum.
 
     Directors will be elected by a favorable vote of a plurality of the aggregate votes present, in person or by proxy, at the Annual Meeting. Accordingly, abstentions will not affect the outcome of the election of candidates for director. Absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on certain non-routine items, such as the election of directors. Thus, if the beneficial owner does not give a broker specific instructions, the beneficially owned shares may not be voted on the election of directors and will not be counted in determining the number of shares necessary for approval, although they will count for purposes of determining whether a quorum exists. Stockholders are not permitted to cumulate their shares for the purpose of electing directors or otherwise.
 
     The proposal to approve the 2011 Incentive Award Plan (the 2011 Plan) requires the affirmative vote of a majority of the aggregate votes present, in person or by proxy, at the Annual Meeting. Accordingly, proxies reflecting abstentions to this proposal will be treated as votes against the 2011 Plan. A broker is not entitled to vote shares held for a beneficial owner on this proposal. Thus, if the beneficial owner does not give a broker specific instructions, the beneficially owned shares may not be voted on this proposal and will not be counted in determining the number of shares necessary for approval, although they will count for purposes of determining whether a quorum exists.
 
     The advisory vote to approve executive compensation requires the affirmative vote of a majority of the shares present, in person or by proxy, at the Annual Meeting and entitled to vote at the Annual Meeting. A broker is not entitled to vote shares held for a beneficial owner on this proposal. Thus, if the beneficial owner does not give a broker specific instructions, the beneficially owned shares may not be voted on this proposal and will not be counted in determining the number of shares necessary for approval, although they will count for purposes of determining whether a quorum exists. The vote is advisory and therefore will not be binding on the Company.
 
2
 

 

     With respect to the advisory vote to approve the frequency of holding future advisory votes on executive compensation, the option of one year, two years or three years that receives the affirmative vote of a majority of the aggregate votes present, in person or by proxy, at the Annual Meeting will be the frequency that has been approved by stockholders on an advisory basis. A broker is not entitled to vote shares held for a beneficial owner on this proposal. Thus, if the beneficial owner does not give a broker specific instructions, the beneficially owned shares may not be voted on this proposal and will not be counted in determining the number of shares necessary for approval, although they will count for purposes of determining whether a quorum exists. The vote is advisory and therefore will not be binding on the Company.
 
     The proposal to ratify the selection of Ernst & Young LLP as independent registered public accounting firm for the fiscal year ending December 31, 2011 requires the affirmative vote of a majority of the aggregate votes present, in person or by proxy, and entitled to vote at the Annual Meeting. Abstentions will have the same effect as a vote against this proposal. However, ratification of the selection of Ernst & Young LLP is considered a routine matter on which a broker or other nominee is empowered to vote. Accordingly, no broker non-votes will result from this proposal.
 
Geron Plan Participants
 
     Participants in the Geron 401(k) Plan will receive a proxy that incorporates all shares owned through the Geron 401(k) Plan, assuming the shares are registered in the same name. The proxy will serve as voting instructions for the trustee of the 401(k) Plan. If the proxy is not voted, the plan trustee will vote those shares in the same proportion as other 401(k) participants vote their 401(k) Plan shares.
 
     Shares purchased through the 1996 Employee Stock Purchase Plan (Purchase Plan) will follow standard brokerage industry practices. Shares held in the name of the broker will be voted on behalf of the holder on certain routine matters. To the extent the brokerage firm votes shares on the behalf of the holder, the shares will be counted for the purpose of determining a quorum.
 
Householding of Annual Meeting Materials
 
     Some brokers and other nominee record holders may be participating in the practice of “householding” proxy statements. This means that only one copy of this proxy may have been sent to multiple stockholders in a stockholder’s household. The Company will promptly deliver copies of the proxy statement and annual report to any stockholder who contacts the Company’s investor relations department at (650) 473-7765 or by mail addressed to Investor Relations, Geron Corporation, 230 Constitution Drive, Menlo Park, California 94025, requesting such copies. If a stockholder is receiving multiple copies of the proxy statement and annual report at the stockholder’s household and would like to receive a single copy of the proxy statement and annual report for a stockholder’s household in the future, stockholders should contact their broker, other nominee record holder, or the Company’s investor relations department to request mailing of a single copy of the proxy statement and annual report.
 
Voting Via the Internet or by Telephone
 
     Stockholders whose shares are registered in the name of a bank or brokerage firm may be eligible to vote electronically through the Internet or by telephone. Many banks and brokerage firms participate in the Broadridge Financial Solutions, Inc. (Broadridge) online and telephone program. This program provides eligible stockholders the opportunity to vote via the Internet or by telephone. Voting forms will provide instructions for stockholders whose banks or brokerage firms participate in Broadridge’s online and telephone program.
 
     Registered stockholders may vote electronically through the Internet or by telephone by following the instructions included with their proxy card. A stockholder not wishing to vote electronically through the Internet or by telephone or whose form does not reference Internet or telephone voting information should complete and return the enclosed paper proxy card. Signing and returning the proxy card or submitting the proxy via the Internet or by telephone does not affect the right to vote in person at the Annual Meeting.
 
3
 

 

     The telephone and Internet proxy granting procedures are designed to authenticate stockholders’ identities, to allow stockholders to give their proxy granting instructions and to confirm that stockholders’ instructions have been recorded properly. Stockholders granting proxies via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies that must be borne by the stockholder.
 
How Your Proxy Will Be Voted
 
     All shares entitled to vote and represented by properly submitted proxies (including those submitted via the Internet, by telephone and by mail) received before the polls are closed at the Annual Meeting, and not revoked or superseded, will be voted at the Annual Meeting in accordance with the instructions indicated on those proxies. If no direction is indicated on a proxy, your shares will be voted by the proxy holders named in the enclosed proxy according to the recommendation of the Board as follows:
     The Board does not know of any matters that will come before the Annual Meeting other than those described in the Notice of Annual Meeting of Stockholders. If any other matters are properly presented for consideration at the Annual Meeting, then the proxy holders will have discretion to vote on such matters as they see fit. This includes, among other things, considering any motion to adjourn the Annual Meeting to another time and/or place, including for the purpose of soliciting additional proxies for or against a given proposal.
 
Revocability of Proxies
 
     Any person giving a proxy pursuant to this solicitation has the power to revoke it at any time before it is voted. A proxy may be revoked by filing a written notice of revocation or a duly executed proxy bearing a later date with the Secretary at the Company’s offices, 230 Constitution Drive, Menlo Park, California 94025, or it may be revoked by attending the meeting and voting in person. Attendance at the meeting will not, by itself, revoke a proxy.
 
MATTERS TO BE CONSIDERED AT THE 2011 ANNUAL MEETING
 
PROPOSAL 1
 
ELECTION OF DIRECTORS
 
     The Company’s Board currently consists of nine members, eight of which are “independent,” as that term is defined by Nasdaq Rule 5606(a)(2). The Company’s Bylaws provide for the classification of the Board into three classes, as nearly equal in number as possible, with staggered terms of office. The Company’s Bylaws also provide that upon expiration of the term of office for a class of directors, nominees for such class will be elected for a term of three years or until their successors are duly elected and qualified.
 
     The term of office of the Class III directors will expire at the Annual Meeting in May 2011, and two nominees for director are to be elected as Class III directors. The two nominees are Alexander E. Barkas, Ph.D., and Karin Eastham. The Class I directors, David L. Greenwood, Thomas Hofstaetter, Ph.D., and Robert J. Spiegel, M.D., FACP, have one year remaining on their terms of office. The Class II directors, Edward V. Fritzky, Hoyoung Huh, M.D., Ph.D., and Thomas D. Kiley, Esq., have two years remaining on their terms of office. On March 9, 2011, Dr. Homcy notified the Company of his decision to retire as a Class III director of the Board effective as of May 11, 2011, the date of the Annual Meeting.
 
4
 

 

     The Board has selected two nominees for Class III directors, both of whom are currently directors of the Company. The two candidates receiving the highest number of affirmative votes of the shares represented and entitled to vote at the Annual Meeting will be elected as Class III directors of the Company. Accordingly, abstentions will not affect the outcome of the proposal. The election of directors is a non-routine matter on which a broker or other nominee is not empowered to vote. Accordingly, if the beneficial owner does not give a broker specific instructions, the beneficially owned shares may not be voted on this proposal and will not be counted in determining the number of shares necessary for approval.
 
     Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the two nominees named below. In the event that any nominee should be unavailable for election as a result of an unexpected occurrence, such shares will be voted for the election of such substitute nominee as management may propose. Each person nominated for election has agreed to serve if elected, and management has no reason to believe that any nominee will be unable to serve.
 
     Set forth below is information regarding the nominees for Class III director, the periods during which they have served as a director of the Company, and information furnished by them as to principal occupations and directorships held by them in corporations whose shares are publicly registered.
 
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
For a Three Year Term Expiring at the
2014 Annual Meeting
 
Class III Directors (Term Expiring at the 2014 Annual Meeting)
 
Name   Age       Principal Occupation  
Alexander E. Barkas, Ph.D. 63   Lead Independent Director; Managing Member, Prospect
      Management Company, LLC and the General Partner of
      Prospect Venture Partners L.P.
Karin Eastham 61   Independent Director

     Alexander E. Barkas, Ph.D., has served as Lead Independent Director since February 2011, Chairman of the Board since July 1993 and as a director of the Company since March 1992. From March 1992 until May 1993, he served as President and Chief Executive Officer of the Company. Dr. Barkas is a Managing Director of Prospect Venture Partners, a venture capital firm. Prior to co-founding Prospect Venture Partners I, II, III and IV, he was a partner at Kleiner Perkins Caufield & Byers (Kleiner Perkins), a venture capital firm, from 1991 to 1997, where he focused on healthcare product company investments. Prior to Kleiner Perkins, Dr. Barkas was a founder and Chief Executive Officer of BioBridge Associates, a healthcare industry consulting firm. Dr. Barkas currently serves on the board of directors of Amicus Therapeutics, Inc., a biotechnology company developing pharmacological chaperones to improve treatment options for patients with genetic diseases and Complete Genomics, Inc., a life sciences company developing and commercializing DNA sequencing for complete human genome sequencing and analysis, and several private life science companies. From 2000 to 2008, Dr. Barkas served as a director for Tercica, Inc., a biopharmaceutical company developing endocrine products, and its chairman from 2003 until its acquisition in 2008 by the Ipsen Group. Dr. Barkas received a Ph.D. in biology from New York University and a B.A. in Biology from Brandeis University, where he currently is Chairman of the University Science Advisory Council and serves on the Board of Trustees. The Board believes Dr. Barkas’ extensive knowledge of the healthcare industry, his experience as a board member for other public companies and the substantial understanding of the Company and its operations he has gained during his 19 years as a director of the Company and 17 years as Chairman, qualifies Dr. Barkas to again be nominated as a director.
 
5
 

 

     Karin Eastham has served as a director of the Company since March 2009. She currently serves as a director for Amylin Pharmaceuticals, Inc., a biopharmaceutical company focused on peptide hormone drug candidates for the treatment of diabetes, obesity and other metabolic diseases; Illumina, Inc., a manufacturer of life-science tools and integrated systems for the analysis of genetic variation and biological function; Genoptix, Inc., a specialized laboratory service provider focused on personalized and comprehensive diagnostic services to community-based hematologists and oncologists, which has been acquired by Novartis in March 2011; and Trius Therapeutics, Inc., a biopharmaceutical company focused on the discovery, development and commercialization of innovative antibiotics for serious, life-threatening infections. Ms. Eastham is also a director of several non-profit organizations, including UCSD Moores Cancer Center and the San Diego Symphony. Ms. Eastham served as a director for Tercica, Inc., a biopharmaceutical company developing endocrine products, from 2003 until its acquisition in 2008 by the Ipsen Group and as a director of SGX Pharmaceuticals, Inc., a biopharmaceutical company developing anti-cancer therapies targeting specific enzymes that have been implicated in human cancers, from 2005 until its acquisition in 2008 by Eli Lilly and Company. From May 2004 to September 2008, Ms. Eastham served as Executive Vice President and Chief Operating Officer and a member of the Board of Trustees of Burnham Institute for Medical Research, a non-profit corporation engaged in medical research, where she established a business development function to support translational research into commercial opportunities and managed the general and administrative operations. From April 1999 to May 2004, Ms. Eastham served as Senior Vice President, Finance and Chief Financial Officer of Diversa Corporation, a genomics technology company. While at Diversa, Ms. Eastham completed the company’s initial public offering in 2000 and participated in negotiations for several product and technology acquisitions and collaboration agreements. From April 1997 to April 1999, Ms. Eastham served as Vice President, Finance and Administration and Chief Financial Officer for CombiChem, Inc., a computational chemistry company. While at CombiChem, Ms. Eastham established the administrative infrastructure for the company, assisted in the completion of its initial public offering in 1998 and participated in negotiations and completion of several pharmaceutical collaborations. From October 1992 to April 1997, Ms. Eastham served as Vice President, Finance and Administration and Chief Financial Officer for Cytel Corporation, a biopharmaceutical company, where she completed several public and private financings and was responsible for all administrative and financial functions. Ms. Eastham also held several similar positions with other companies, including Vice President, Finance, at Boehringer Mannheim Diagnostics from 1976 to 1988. Ms. Eastham holds a B.S. and an M.B.A. from Indiana University and is a Certified Public Accountant. The Board believes Ms. Eastham’s significant financial expertise developed through her experience as a financial officer for numerous public biotechnology companies, her first-hand knowledge and experience in audit and financial control-related matters and her understanding of public and private equity financings, qualifies Ms. Eastham to be nominated as a director.
 
The Board of Directors Unanimously Recommends That Stockholders
Vote FOR the Election of Each Nominee to the Board of Directors
 
6
 

 

MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
 
     Set forth below is information regarding the continuing Class I and Class II directors of the Company, including their ages, the periods during which they have served as directors, and information furnished by them as to principal occupations and directorships held by them in corporations whose shares are publicly registered.
 
Class I Directors (Term Expiring at the 2012 Annual Meeting)
 
Name   Age       Principal Occupation/Position with the Company  
David L. Greenwood 59   President, Interim Chief Executive Officer, Chief Financial Officer
Thomas Hofstaetter, Ph.D. 62   President and Chief Executive Officer, VaxInnate Corporation
Robert J. Spiegel, M.D., FACP 61   Independent Director

     David L. Greenwood has served as our President, Interim Chief Executive Officer and a member of the Board since February 2011 and as our Chief Financial Officer since August 1995. He is also a director of Geron Bio-Med Limited, our wholly-owned subsidiary, ViaGen, Inc., an Arizona corporation, Corium International, Inc., a California corporation and Clone International, an Australian company. From January 2004 until February 2011, Mr. Greenwood served as our Executive Vice President. From August 1995 until February 2011, he also served as our Treasurer and Secretary. From August 1999 until January 2004, he served as our Senior Vice President of Corporate Development and from April 1997 until August 1999 as our Vice President of Corporate Development. He also serves on the Board of Regents for Pacific Lutheran University. From 1979 until joining us, Mr. Greenwood held various positions with J.P. Morgan & Co. Incorporated, an international banking firm. Mr. Greenwood holds a B.A. from Pacific Lutheran University and a M.B.A. from Harvard Business School. As the only management representative on the Board, Mr. Greenwood brings to the Board his strategic vision for the Company and management’s experience with and understanding of complex industry challenges and opportunities, creating a vital link that enables the Board to perform its oversight function with the benefit of management’s key perspectives. Because of these factors, the Board concluded that Mr. Greenwood should serve as a director.
 
     Thomas Hofstaetter, Ph.D., has served as a director of the Company since March 2010 and is currently President, Chief Executive Officer and a director of VaxInnate Corporation, a privately-held biotechnology company developing novel, proprietary vaccines for both pandemic and seasonal influenza. From September 2004 to October 2009, Dr. Hofstaetter was Senior Vice President, Corporate Development and Head of Global Business Development and a member of the Wyeth Management Committee at Wyeth, Inc., a global pharmaceutical company developing pharmaceuticals, biotechnology products, vaccines, non-prescription medicines and animal health products. At Wyeth, he closed more than 70 transactions, including acquisitions of biotechnology companies, in-licensing of products and broad technology collaborations. Wyeth merged with Pfizer, Inc. in October 2009. From December 1999 to August 2004, Dr. Hofstaetter was Senior Vice President of Corporate Development of Aventis, a global pharmaceutical company focused on treatments in cardiology, oncology, metabolic diseases and central nervous system disorders. While at Aventis, he was responsible for more than 100 transactions including research alliances, product in- and out-licensing, divestments and spin-outs. In 1978, Dr. Hofstaetter joined Behringwerke AG in Germany as a research scientist and rose to become head of Research in 1988 and head of the Immunology/Oncology business unit in 1989. From 1991 to 1999, Dr. Hofstaetter served in various executive managerial positions around the world, including the United States, Japan, France and his native Germany, with Hoechst Pharma, a global pharmaceutical company focused on therapies for cardiovascular, allergic, metabolic and central nervous system disorders, and infectious diseases. Dr. Hofstaetter holds a Master of Science degree in Biochemistry and a Ph.D. in Molecular Biology, magna cum laude, from the University of Tuebingen in Germany. From 2001 to 2004, he was a director of Merial Limited, a joint venture between Aventis and Merck & Co. focusing on pharmaceutical products and vaccines for livestock, pets and wildlife. From 2000 to 2004, he was a member of the board of trustees of the New Jersey Symphony Orchestra. The Board believes Dr. Hofstaetter’s expertise with numerous technology transactions developed through his roles as a senior executive responsible for corporate development and his significant operating and management knowledge of large, global pharmaceutical companies, qualifies Dr. Hofstaetter to serve as a director.
 
7
 

 

     Robert J. Spiegel, M.D., FACP, has served as a director of the Company since May 2010. He is also a director of Capstone Therapeutics Corp., a biotechnology company developing treatments for dermal scar reduction, pulmonary and cardiovascular disease, other privately-held biotechnology companies and Cancer Care of New Jersey. He served as a director for the Cancer Institute of New Jersey from 1999 to 2009. After 26 years with the Schering-Plough Corporation (now Merck & Co.), a global healthcare company developing prescription medicines, vaccines, biologic therapies, and consumer care and animal health products, Dr. Spiegel retired in 2009 as Chief Medical Officer and Senior Vice President of the Schering-Plough Research Institute, the pharmaceutical research arm of the Schering-Plough Corporation. He initially joined Schering-Plough as Director of clinical research for oncology and rose to hold various positions including senior director of clinical research for oncology and anti-infectives, Vice President of clinical research and Senior Vice President of worldwide clinical research. During his tenure at Schering-Plough, Dr. Spiegel lead the oncology development team for over 10 years where he took several antibiotics, anti-fungals and anti-virals through successful registration worldwide, including anti-HIV indications. As Vice President and Senior Vice President of worldwide clinical research, Dr. Spiegel managed Phase 1 to Phase 3 clinical development in all therapy areas, including allergy, respiratory, cardiovascular, immunology, dermatology, oncology and infection diseases. As Chief Medical Officer, Dr. Spiegel was involved with over 30 New Drug Applications, participated in multiple due diligence reviews and in-licensing decisions, re-engineered pharmacovigilence and risk management areas and built a quality system for all research operations. From 1981 to 1999, Dr. Spiegel held academic positions at the National Cancer Institute and New York University Cancer Center. Following a residency in internal medicine, he completed a fellowship in medical oncology at the National Cancer Institute. Dr. Spiegel holds an M.D. from the University of Pennsylvania and a B.A. from Yale University. He currently is a Fellow on the faculty of the University of Pennsylvania Center for Bioethics. The Board believes Dr. Spiegel’s extensive medical experience developing oncology products, his deep understanding of pharmaceutical research and development and broad expertise in gaining regulatory approval for drug candidates, enhances the Board’s ability to critically assess the progress and potential of the Company’s programs, qualifying Dr. Spiegel to serve as a director.
 
Class II Directors (Term Expiring at the 2013 Annual Meeting)
 
Name   Age       Principal Occupation  
Edward V. Fritzky 60   Former Chairman, Chief Executive Officer and President,
      Immunex Corporation
Hoyoung Huh, M.D., Ph.D. 41   Executive Chairman; Chairman, BiPar Sciences, Inc.
Thomas D. Kiley, Esq. 67   Attorney-at-law

     Edward V. Fritzky has served as a director of the Company since July 1998. From July 2002 to May 2005, he served as a director and advisor to Amgen Corporation, a U.S. pharmaceutical company, where he established a leading research center in Seattle. From January 1994 to July 2002, he served as Chief Executive Officer and Chairman of Immunex Corporation, a biopharmaceutical company that developed, manufactured, and marketed therapeutic products for the treatment of cancer, infectious diseases, and autoimmune disorders, during which time he managed the company’s growth to over $15 billion in market value and completed its acquisition by Amgen in 2002. Since 2004, Mr. Fritzky has been a director of Jacobs Engineering Group, Inc., a professional technical services firm providing scientific and specialty consulting services supporting industrial, commercial and government clients. From 1998 to 2009, Mr. Fritzky was a director of Sonosite, Inc., a leading company of hand-carried ultrasound equipment. From 1992 to 1994, Mr. Fritzky served as President of Lederle Laboratories, a division of American Cyanamid, and from 1989 to 1992, as Vice President of Lederle Laboratories. While at Lederle Laboratories, Mr. Fritzky oversaw the launch of six new products. Prior to joining Lederle Laboratories, Mr. Fritzky was an executive of Searle Pharmaceuticals, Inc., a subsidiary of the Monsanto Company that manufactures, develops and markets health care products and pharmaceuticals. During his tenure at Searle, Mr. Fritzky was Vice President of Marketing in the United States and later President and General Manager of Searle Canada, Inc. and Lorex Pharmaceuticals, a joint venture between G.D. Searle & Company, a U.S. pharmaceutical company and Synthelabo, a French pharmaceutical company, to market existing and new Synthelabo products in the United States. Mr. Fritzky served as a Trustee of the Fred Hutchinson Cancer Center from July 2001 to June 2007. Mr. Fritzky holds a B.A. from Duquesne University and is a graduate of the Advanced Executive Program, J.L. Kellogg Graduate School of Management at Northwestern University. The Board believes Mr. Fritzky’s
 
8
 

 

management and operational experience as Chairman and Chief Executive Officer of Immunex Corporation and as President of other biopharmaceutical companies, his knowledge of therapeutic product launches and the substantial understanding of the Company and its operations he has gained during his 13 years as a director of the Company, qualifies Mr. Fritzky to serve as a director.
 
     Hoyoung Huh, M.D., Ph.D., has served as Executive Chairman since February 2011 and a director of the Company since May 2010. He is Chairman of the board of directors of BiPar Sciences, Inc., a wholly-owned subsidiary and west coast innovation center for sanofi-aventis corporation, a global pharmaceutical company developing treatments in cardiology, oncology, central nervous system disorders, metabolic diseases, ophthalmology and vaccines, since the April 2009 merger, and serves on the boards of directors of several privately-held companies. Dr. Huh served on the board of directors of Facet Biotech (now a wholly-owned subsidiary of Abbott, a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics) from September 2009 to April 2010 and was President and Chief Executive Officer of BiPar Sciences from February 2008 to December 2009. From February 2008 to May 2009, he was a member of the board of directors at Nektar Therapeutics, a clinical-stage biopharmaceutical company developing small molecule drugs, peptides and other biologic drug candidates as treatments for oncology, pain, anti-infectives, anti-virals and immunology. From March 2005 to February 2008, Dr. Huh held positions as Nektar’s Chief Operating Officer and Senior Vice President of Business Development and Marketing where he was responsible for the Company’s worldwide business development, marketing and manufacturing and leading Nektar’s PEGylation business. Dr. Huh was a partner at McKinsey & Company, a global management consulting firm, where he was in the biotechnology and biopharmaceutical sectors. Prior to McKinsey, he held positions as a physician and researcher at Cornell University Medical College and Sloan-Kettering Cancer Center. Dr. Huh holds an M.D. and Ph.D. in genetics and cell biology from Cornell University Medical College and Sloan-Kettering Institute, and an A.B. in biochemistry from Dartmouth College. The Board believes Dr. Huh’s management and operational experience as President and Chief Executive Officer of BiPar Sciences and Chief Operating Officer of Nektar Therapeutics, his significant expertise with implementing strategic and line management initiatives from McKinsey and his knowledge of biotechnology and pharmaceutical collaborations, qualifies Dr. Huh to serve as a director and Executive Chairman of the Company.
 
     Thomas D. Kiley, Esq., has served as a director of the Company since September 1992. Mr. Kiley is currently a director of Transcept Pharmaceuticals, Inc., a specialty pharmaceutical company developing therapies in the field of neuroscience, several privately-held biotechnology companies and the Hospital de la Familia Foundation. Mr. Kiley was a director of Connetics Corporation, a specialty pharmaceutical company that developed dermatology products, from 1994 to 2006 when it was acquired by Stiefel Laboratories, Inc. He has been self-employed since 1988 as an attorney, consultant and investor. From 1980 to 1988, he was an officer of Genentech, Inc., a biotechnology company using human genetic information to develop medical treatments, serving as Vice President and General Counsel, Vice President for Legal Affairs and Vice President for Corporate Development where he managed patent litigation, developed patent strategy and negotiated numerous corporate partnership deals. From 1969 to 1980, he was with Lyon & Lyon, a Los Angeles-based law firm specializing in domestic and international intellectual property law matters and was a partner at the firm from 1975 to 1980. Mr. Kiley holds a B.S. in Chemical Engineering from Pennsylvania State University and a J.D. from The George Washington University. The Board believes Mr. Kiley’s specialized knowledge of intellectual property matters for biopharmaceutical companies, his experience as a board member for other public companies and the substantial understanding of the Company and its operations he has gained during his 19 years as a director of the Company, qualifies Mr. Kiley to serve as a director.
 
     There are no family relationships among the executive officers or directors of the Company. There are no current legal proceedings and claims to which the executive officers, directors or the Company are a party. There are no current, nor in the past ten years have there been any, legal proceedings involving any director or executive officer related to, among others, (i) federal bankruptcy, (ii) criminal proceedings, (iii) federal or state securities laws, (iv) any judgment, decree or order enjoining a director or officer from acting as an investment advisor, broker or dealer of securities or engaging in any type of business practice, (v) proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business activity and (vi) any disciplinary sanctions or orders imposed by stock, commodities or derivatives exchange or other self-regulatory organization.
 
9
 

 

Board of Directors Leadership Structure
 
     One class of the Board is elected annually, and each of the directors stands for election every three years. Presently the Board is comprised of nine directors, one of whom is an executive officer, one of whom is a consultant to the Company and seven of whom have been affirmatively determined by the Board to be independent, meeting the objective requirements set forth by the SEC and Nasdaq, and having no relationship, direct or indirect, to the Company other than as stockholders or through their service on the Board.
 
     The role of Chairman of the Board has historically been separate from the Chief Executive Officer of the Company. The Board has determined that its structure is appropriate to fulfill its duties effectively and efficiently, so that the Company’s business receives the undivided attention of the Chief Executive Officer.
 
     In February 2011, the Board elected to change the leadership structure of the Company and created two new positions – an Executive Chairman and a Lead Independent Director. Dr. Huh was appointed Executive Chairman and Dr. Barkas, formerly the Chairman of the Board, was appointed Lead Independent Director.
 
     The Executive Chairman works actively with the President and senior management of the Company in the formulation of short and long-term strategic goals, the development of tactical business plans and implementation of those plans. The Executive Chairman will preside over Board of Director meetings and recommend, where necessary, the holding of special meetings of the Board.
 
     The Lead Independent Director provides active leadership on behalf of the independent directors on the Board. With the Executive Chairman and President, the Lead Independent Director will advise on Board meeting agendas and discussion priorities. Along with the Executive Chairman and President, the Lead Independent Director will provide regular communications to Board members between meetings, inviting comments, ideas and concerns from each member director. In conjunction with the Governance Committee of the Board, the Lead Independent Director will provide leadership such that the Board functions independently of management.
 
     The Board believes that this leadership structure is appropriate for the Company because it provides for a designated Board member, the Executive Chairman, to have regular contact with management and to act as a liaison between the Board and management. It also provides for a clear communication path for the non-management directors, as they may raise any issues or concerns that they have with the Lead Independent Director.
 
Board’s Role in Risk Oversight
 
     Geron is subject to a variety of risks, which generally include any undesired event, circumstance or outcome that could affect Geron’s ability to achieve its objectives or adversely impact Geron’s business, operations or financial condition. Some risks can be readily perceived and even quantified, while others are unexpected or unforeseeable. Risks can be external, such as those arising from the macroeconomic or industry environment, government policies or regulations, competitors’ activities or natural disasters. Alternatively, risks can arise as a result of the Company’s business or financial activities.
 
     The Board and Geron’s management team work together to manage the Company’s risks. It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. The Board has an active role, as a whole, in overseeing management of the Company’s risks. The Board regularly reviews information regarding the Company’s credit, liquidity and operations, as well as the risks associated with each. In addition, each of our Board committees considers the risks within its areas of responsibilities. The Company’s Compensation Committee is responsible for overseeing the management of risks relating to the Company’s employment policies, executive compensation plans and arrangements. In connection with the structuring of the compensation elements for executive officers, the Compensation Committee also considered whether such programs, individually or in the aggregate, encourage executives to take unnecessary or excessive risks, and has concluded that the compensation elements and executive compensation program do not encourage such risk taking. The Audit Committee oversees management of financial risks. In addition to fulfilling its responsibilities for the oversight of the Company’s financial reporting processes and annual audit of the Company’s financial statements, the Audit Committee also reviews with the independent auditors and management the adequacy and effectiveness of the Company’s policies and procedures to assess, monitor and manage business risk and the Company’s legal and ethical compliance program. The Audit Committee also should take the appropriate actions to set the overall corporate “tone” for quality financial reporting, sound business risk practices and ethical behavior.
 
10
 

 

The Nominating Committee manages risks associated with the independence of the Board and potential conflicts of interest, and risks relating to management and Board succession planning. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about such risks.
 
Board Committees and Meetings
 
     During the fiscal year ended December 31, 2010, the Board held eight meetings and acted by written consent on two occasions. The Board has an Audit Committee, a Compensation Committee, a Stock Option Committee and a Nominating Committee. During the fiscal year ended December 31, 2010, each of the incumbent directors attended at least 85% of the meetings of the Board and the committees on which the director served.
 
     Audit Committee. The Audit Committee acts pursuant to a written charter adopted by the Board. The Audit Committee, which is comprised of Ms. Eastham and Messrs. Fritzky and Kiley, met eight times in 2010 and acted by written consent on one occasion. All of the members of the Audit Committee are “independent,” as that term is defined by Nasdaq Rule 5605(a)(2). The Board has determined that all of the members of the Audit Committee are financially literate and that at least one member of the Audit Committee, Ms. Eastham, has accounting and financial management expertise that qualifies her as an “Audit Committee Financial Expert,” as such term is defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC. The Audit Committee’s responsibilities include: (i) recommending the selection of the Company’s independent registered public accounting firm to the Board and pre-approval of any fees paid to such firm, (ii) consulting with the independent auditors with regard to the plan and scope of the audit, (iii) reviewing, in consultation with the independent auditors, their report of the audit or proposed report of the audit, and the accompanying management letter, if any, and (iv) consulting with the independent auditors and management with regard to the adequacy of the Company’s internal controls. The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and the Nasdaq Global Select Market. A copy of the Audit Committee Charter is available on the Internet at http://www.geron.com. See more information about the Audit Committee in the Audit Committee report on page 30.
 
     Compensation Committee. The Compensation Committee, which is currently comprised of Drs. Barkas and Hofstaetter, met three times in 2010 and acted by written consent on one occasion. Mr. Patrick J. Zenner also served on the Compensation Committee through May 2010 prior to retiring from the Board. Each of the members of the Compensation Committee are “independent,” as that term is defined by Nasdaq Rule 5605(a)(2). The Compensation Committee makes recommendations concerning salaries and incentive compensation, administers the incentive compensation and benefit plans of the Company, and performs such other functions regarding compensation as the Board may delegate. In addition, the Compensation Committee has exclusive authority to administer the 2002 Equity Incentive Plan (and the proposed 2011 Incentive Award Plan). The Compensation Committee operates under a written charter that satisfies the applicable standards of the SEC and the Nasdaq Global Select Market. A copy of the Compensation Committee charter is available on the Internet at http://www.geron.com. The Compensation Committee did not utilize any compensation consultants in evaluating executive compensation in 2010. For more information about the Compensation Committee and the role of our Chief Executive Officer in the determination of executive compensation see “Compensation Discussion and Analysis—Compensation Committee Role” on page 37.
 
     Compensation Risk Assessment. The Compensation Committee has reviewed the Company’s compensation policies and practices and has determined that such policies and practices do not present any risks that are reasonably likely to have a material adverse effect on the Company. In determining this, the Compensation Committee evaluated the Company’s compensation elements of base salary, annual incentive awards, long-term incentive awards, severance and change in control benefits and other benefits. Based upon this review, the Compensation Committee noted the following elements of the Company’s compensation practices that balance the Company’s compensation programs and mitigate the risks associated with the Company’s compensation practices.
11
 

 

     Stock Option Committee. The Stock Option Committee was formed in December 1996 in order to provide timely option grants to employees and consultants (other than executive officers and directors of the Company) and currently consists of one member, Mr. Greenwood. In 2010, Dr. Okarma was the sole member of the Stock Option Committee. The Stock Option Committee has limited authority to administer the Company’s 2002 Equity Incentive Plan (and the proposed 2011 Incentive Award Plan) concurrently with the Compensation Committee. The Stock Option Committee has the authority to grant options for up to 50,000 shares of Common Stock only to employees (other than executive officers and directors of the Company) and consultants in accordance with procedures approved by the Board. The Stock Option Committee acted by written consent on nine occasions during fiscal 2010.
 
     Nominating Committee. The Nominating Committee was formed in February 2001 in order to make recommendations to the Board for candidates to be nominated for election or re-election as a director by the stockholders or by the Board. The members of the Nominating Committee are Dr. Barkas and Mr. Fritzky. Both members of the Nominating Committee are “independent” as defined in Nasdaq Rule 5605(a)(2). The Nominating Committee did not meet during fiscal 2010. The Nominating Committee will consider nominees for director nominated by stockholders upon submission in writing to the Secretary of the Company of the names of such nominees in accordance with the Company’s Bylaws. The Nominating Committee will investigate, evaluate and interview, as appropriate, a director candidate with regard to his or her individual characteristics as well as how those characteristics fit with the needs of the Board as a whole. The Nominating Committee operates under a written charter that satisfies the applicable standards of the SEC and the Nasdaq Global Select Market. A copy of the Nominating Committee charter is available on the Internet at http://www.geron.com. Specific qualifications and the process for identification and recommendation of director candidates are provided in more detail on page 58.
 
Compensation of Directors
 
Fees
 
     In 2010, all non-employee directors received the following cash compensation:
 
       (i)        Twenty Thousand Dollars ($20,000) per year, plus an additional Ten Thousand Dollars ($10,000) for service as Chairman of the Board or Chairperson of the Audit Committee and an additional Five Thousand Dollars ($5,000) for service as Chair of the Compensation Committee or the Nominating Committee of the Board; plus
   
  (ii)   One Thousand Five Hundred Dollars ($1,500) for each regular or special Board meeting attended by such director in person, and Seven Hundred Fifty Dollars ($750) for each regular or special Board meeting attended by such director by telephone or videoconference; plus
   
  (iii)   For members of the Audit Committee, Nominating Committee and the Compensation Committee of the Board, Seven Hundred Fifty Dollars ($750) for each meeting of either such committee attended by such director in person, and Two Hundred Fifty Dollars ($250) for each meeting of either such committee attended by such director by telephone or videoconference; plus
   
  (iv)   Reimbursement for out-of-pocket expenses incurred in connection with attendance at meetings of the Board.
 
     The annual director compensation under (i) above shall be payable on the date of the annual meeting of stockholders with respect to the preceding twelve-month period (or a pro rata portion of such amount if such director served for less than a full year), in cash or, at each director’s election, in fully vested shares of Common Stock granted under the 2006 Directors’ Stock Option Plan (the 2006 Directors Plan) based on the closing price of our common stock on Nasdaq on the date of annual meeting. The per-meeting compensation under (ii) and (iii)
 
12
 

 

above shall be payable in cash within ten business days after each meeting. In addition to cash compensation, non-employee directors also receive automatic equity grants pursuant to the 2006 Directors Plan, as described below. In July 2010, each director, except for Dr. Barkas, received performance-based restricted stock awards (PSAs) covering 45,000 shares in the aggregate that vest during a three-year performance period based on our achievement of each of the following objectives:
For Dr. Barkas, the awards were for 13,500 shares for each of the first three milestones noted above and 27,000 shares for the last market-based award.
 
     The following table provides compensation information for the year ended December 31, 2010 for each non-employee member of the Board.
 
  Fees                  
  Earned                  
  or Paid in   Stock   Option      
  Cash   Awards   Awards   Total
Director   ($)       ($)(1)       ($)(1)       ($)
Barkas, Alexander $ 51,000 (2)   $ 146,585   $ 100,594   $ 298,179
Eastham, Karin $ 40,750     $ 93,315   $ 43,112   $ 177,177
Fritzky, Edward $ 30,750 (2)   $ 86,703   $ 50,297   $ 167,750
Hofstaetter, Thomas $ 10,333 (2)   $ 58,602   $ 157,156   $ 226,091
Homcy, Charles(3) $ 29,750     $ 80,090   $ 28,741   $ 138,581
Huh, Hoyoung $ 3,750     $ 53,640   $ 129,335   $ 186,725
Kiley, Thomas $ 30,500 (2)   $ 83,396   $ 46,704   $ 160,600
Spiegel, Robert $ 4,500     $ 53,640   $ 129,335   $ 187,475
Zenner, Patrick(4) $ 25,500     $ 29,756   $ 32,334   $ 87,590
____________________
 
(1)         Amounts represent the aggregate grant date fair value of stock awards and option awards granted during the fiscal year ended December 31, 2010. For additional information, refer to Note 8 of the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 regarding assumptions underlying the valuation of equity awards and the calculation method.
 
    Amounts shown under the “Stock Awards” column excludes the grant date fair value for 40,500 performance-based restricted stock awards granted in 2010 for Dr. Barkas and 27,000 for the other board members, except Mr. Zenner, that vest upon attainment of certain performance-based conditions based upon the outcome probability of the performance conditions, which is consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718. The grant date fair value of the restricted stock awards with performance-related or market-related conditions determined in accordance with FASB ASC Topic 718 based upon achieving the maximum level of performance under the respective performance or market conditions is $282,150 for Dr. Barkas and $188,100 for the other board members, except Mr. Zenner. Refer to the supplemental table on page 18 for information as to each non-employee director’s unvested stock award holdings and vested and unvested stock option holdings at December 31, 2010.
 
(2)   Annual director compensation paid in stock in lieu of cash. See table below for stock grant information.
 
(3)   On March 9, 2011, Dr. Homcy notified the Company of his decision to retire as a member of the Board effective as of May 11, 2011, the date of the Annual Meeting.
 
(4)   Mr. Zenner retired from the Board in May 2010.
 
13
 

 

New Leadership Structure
 
     In February 2011, the Board implemented a new leadership structure for the Company by appointing (i) David L. Greenwood as President, Interim Chief Executive Officer, Chief Financial Officer, and a member of the Board, (ii) Hoyoung Huh, M.D., Ph.D., as Executive Chairman of the Board and (iii) Alexander E. Barkas, Ph.D., as Lead Independent Director of the Board. In conjunction with the management transition, Thomas B. Okarma, Ph.D., M.D., left the Company as President and Chief Executive Officer and as a member of the Board, effective February 8, 2011, but remains a consultant to the Company.
 
     In connection with his appointment as Executive Chairman of the Board, Dr. Huh will be entitled to an annual retainer of $250,000 and he may receive an additional performance-based fee following the end of the year of up to 60% of his annual retainer, which will be determined by the Board or the Compensation Committee and is predicated on individual and overall corporate performance during the year based on criteria established by the Board or Compensation Committee. In addition, the Board granted to Dr. Huh a restricted stock award for 37,500 shares of the Company’s common stock that vests in a series of four equal consecutive annual installments, commencing on the date of his appointment to Executive Chairman, provided he continues to provide services to the Company and an option to purchase 75,000 shares of the Company’s common stock which will become exercisable in a series of 48 equal consecutive monthly installments, commencing on his appointment to Executive Chairman, with an exercise price of $5.00 per share, provided he continues to provide services to the Company. The compensation described above will be provided to Dr. Huh in lieu of the equity and cash compensation to which Dr. Huh is otherwise entitled as a non-employee director pursuant to the Company’s non-employee director compensation plan.
 
     In connection with his appointment as Lead Independent Director of the Board, Dr. Barkas will receive annual cash compensation of $40,000 for service as Lead Independent Director of the Board. In addition, the Board granted to Dr. Barkas, a restricted stock award for 18,750 shares of the Company’s common stock that vests annually in a series of four equal consecutive annual installments, commencing on the date of his appointment to Lead Independent Director, provided he continues to provide services to the Company and an option to purchase 37,500 shares of the Company’s common stock which will become exercisable in a series of 48 equal consecutive monthly installments, commencing on his appointment to Lead Independent Director, provided he continues to provide services to the Company. Dr. Barkas will remain eligible to receive equity and cash compensation to which other non-employee directors are entitled pursuant to the Company’s non-employee director compensation plan.
 
     In March 2011, the Board increased the annual cash compensation for (i) the Chairperson of the Audit Committee from $10,000 to $15,000, (ii) the Chairperson of the Compensation Committee from $5,000 to $7,500 and (iii) the Chairperson of the Nominating Committee from $5,000 to $7,500.
 
     In connection with his appointment as President, Interim Chief Executive Officer and Chief Financial Officer of the Company, Mr. Greenwood’s annual salary was increased to $500,000 and he may receive a discretionary bonus at the end of the year up to 60% of his annual salary, which will be determined by the Board or the Compensation Committee and is predicated on individual and overall corporate performance during the year based on criteria established by the Board or Compensation Committee. In addition, the Board granted to Mr. Greenwood a restricted stock award for 75,000 shares of the Company’s common stock that vests in a series four equal consecutive annual installments, commencing on the date of his appointment, provided he continues to provide services to the Company and an option to purchase 150,000 shares of the Company’s common stock which becomes exercisable in a series of 48 equal consecutive monthly installments, commencing on the date of his appointment, with an exercise price of $5.00 per share, provided he continues to provide services to the Company.
 
2006 Directors’ Stock Option Plan
 
Terms of Awards
 
     As of December 31, 2010, the 2006 Directors Plan provides for the automatic grant of the following types of equity awards.
 
14
 

 

     First Option. Each person who becomes a non-employee director, whether by election of the stockholders of the Company or by appointment by the Board to fill a vacancy, will automatically be granted an option to purchase 45,000 shares of Common Stock on the date such person first becomes a non-employee director (the First Option).
 
     Subsequent Awards. Each non-employee director (other than the Chairman of the Board and any director receiving a First Option on the date of the annual meeting) will automatically be granted a subsequent option on the date of the Annual Meeting of Stockholders in each year during such director’s service on the Board (a Subsequent Option) to purchase 10,000 shares of Common Stock and a restricted stock award (a Subsequent Stock Award) of 5,000 shares of Common Stock. In the case of the Chairman of the Board, the Subsequent Option will be for 20,000 shares of Common Stock and the Subsequent Stock Award shall be for 10,000 shares of Common Stock.
 
     Committee Chair Service Awards. On the date of each Annual Meeting of Stockholders, the Chairman of the Audit Committee receives an option to purchase 5,000 shares of Common Stock (a Committee Chair Service Option), and a restricted stock award (a Committee Chair Service Stock Award) of 2,500 shares of Common Stock. The Committee Chair Service Option for the Compensation Committee Chairman and the Nominating Committee Chairman shall be for 2,500 shares of Common Stock and the Committee Chair Service Stock Award shall be for 1,250 shares of Common Stock.
 
     Committee Service Awards. Upon each non-employee director’s appointment to the Audit Committee, Compensation Committee or Nominating Committee of the Board, the director will receive an option to purchase 2,500 shares of Common Stock (a First Committee Service Option). Thereafter, an option to purchase 1,250 shares of Common Stock (a Subsequent Committee Service Option) and a restricted stock award of 625 shares of Common Stock (a Subsequent Committee Service Stock Award) shall be granted to each non-employee director on the date of each Annual Meeting during the director’s service on such committee, other than the Chairman of such committee. There is currently no stock option grant or restricted stock award contemplated for participation on other committees.
 
     The 2006 Directors Plan provides that each First Option vests annually over three years upon each anniversary date of appointment to the Board. Each Subsequent Option, Committee Chair Service Option, First Committee Service Option and Subsequent Committee Service Option is fully vested on the date of grant. Each Subsequent Stock Award, Committee Chair Service Stock Award and Subsequent Committee Service Stock Award vests annually in four equal installments over four years commencing on the date of grant and no payment shall be required from the non-employee director in order to receive the award.
 
     Exercise Price and Term of Options. The exercise price of all stock options granted under the 2006 Directors Plan is equal to the fair market value of a share of the Company’s Common Stock on the date of grant of the option.
 
     Restricted Stock and Restricted Stock Units. In addition to the automatic grant of restricted stock awards described above, the 2006 Directors Plan, as amended, also permits the discretionary grant of restricted stock and restricted stock units.
 
     In March 2011, the Board amended the 2006 Directors Plan to (i) increase the First Option from 45,000 shares to 60,000 shares and (ii) address the new roles for Lead Independent Director and Executive Chairman.
 
Effect of Certain Corporate Events
 
     In the event of the dissolution or liquidation of the Company, a sale of all or substantially all of the assets of the Company, the merger or consolidation of the Company with or into another corporation in which the Company is not the surviving corporation or any other capital reorganization in which more than 50% of the shares of the Company entitled to vote are exchanged, each non-employee director shall have a reasonable time within which to exercise the option, including any part of the option that would not otherwise be exercisable, prior to the effectiveness of such dissolution, liquidation, sale, merger or reorganization, at the end of which time the option shall terminate, or shall receive a substitute option with comparable terms, as to an equivalent number of shares of stock of the corporation succeeding the Company or acquiring its business by reason of such dissolution, liquidation, sale, merger, consolidation or reorganization. In such an event, any unvested restricted stock awards shall immediately vest unless an award with comparable terms, as to an equivalent number of shares of stock
 
15
 

 

of the corporation succeeding the Company or acquiring its business by reason of such dissolution, liquidation, sale, merger, consolidation or reorganization is substituted. In addition, except as otherwise provided in an award agreement, unvested shares subject to awards of restricted stock and restricted stock units will become fully vested immediately prior to the date of such dissolution, liquidation, sale, merger, consolidation or reorganization.
 
     The following table sets forth the following information with respect to non-employee directors (nine persons) for the fiscal year ended December 31, 2010: (i) stock options granted under the 2006 Directors Plan; (ii) stock awards granted under the 2006 Directors Plan; and (iii) the grant date fair value of stock options and stock awards granted. As discussed below, the executive officers and employees of the Company are not eligible for grants under the 2006 Directors Plan. In May 2010, additional options were granted to certain directors in recognition of options that expired unexercised during the year. Also in May 2010, the vesting of certain outstanding restricted stock awards and the exercise periods of certain outstanding stock options held by Patrick Zenner were modified in connection with his retirement from the Board. In July 2010, stock awards with vesting based on achievement of certain performance milestones were granted to directors from the 2002 Equity Incentive Plan.
 
        Option        
        Awards   Stock Awards   Grant Date Fair Value of Option
        Granted   Granted   and Stock Awards Granted
  Grant       During 2010       During 2010       During 2010
Director   Date   (#)   (#)   ($)(1)
Barkas, Alexander 5/19/10 (2)   25,000                      71,853               
  5/19/10 (6)   10,000       $ 28,741  
  5/19/10 (5)     7,561     $ 40,000  
  5/19/10 (4)     12,500     $ 66,125  
  7/9/10 (9)     13,500     $ 67,230  
  7/9/10 (10)     13,500     $ 67,230  
  7/9/10 (11)     13,500     $ 67,230  
  7/9/10 (12)     27,000     $ 80,460  
Eastham, Karin 5/19/10 (2)   15,000       $ 43,112  
  5/19/10 (4)     7,500     $ 39,675  
  7/9/10 (9)     9,000     $ 44,820  
  7/9/10 (10)     9,000     $ 44,820  
  7/9/10 (11)     9,000     $ 44,820  
  7/9/10 (12)     18,000     $ 53,640  
Fritzky, Edward 5/19/10 (2)   12,500       $ 35,926  
  5/19/10 (7)   5,000       $ 14,371  
  5/19/10 (5)     3,781     $ 20,000  
  5/19/10 (4)     6,250     $ 33,063  
  7/9/10 (9)     9,000     $ 44,820  
  7/9/10 (10)     9,000     $ 44,820  
  7/9/10 (11)     9,000     $ 44,820  
  7/9/10 (12)     18,000     $ 53,640  

16
 

 

        Option        
        Awards   Stock Awards   Grant Date Fair Value of Option
        Granted   Granted   and Stock Awards Granted
  Grant       During 2010       During 2010       During 2010
Director   Date   (#)   (#)   ($)(1)
Hofstaetter, Thomas 3/25/10 (3)   45,000                    $ 143,779               
  3/25/10 (2)   2,500       $ 7,988  
  5/19/10 (2)   1,875       $ 5,389  
  5/19/10 (5)     630     $ 3,333  
  5/19/10 (4)     938     $ 4,962  
  7/9/10 (9)     9,000     $ 44,820  
  7/9/10 (10)     9,000     $ 44,820  
  7/9/10 (11)     9,000     $ 44,820  
  7/9/10 (12)     18,000     $ 53,640  
Homcy, Charles 5/19/10 (2)   10,000       $ 28,741  
  5/19/10 (4)     5,000     $ 26,450  
  7/9/10 (9)     9,000     $ 44,820  
  7/9/10 (10)     9,000     $ 44,820  
  7/9/10 (11)     9,000     $ 44,820  
  7/9/10 (12)     18,000     $ 53,640  
Huh, Hoyoung 5/19/10 (3)   45,000       $ 129,335  
  7/9/10 (9)     9,000     $ 44,820  
  7/9/10 (10)     9,000     $ 44,820  
  7/9/10 (11)     9,000     $ 44,820  
  7/9/10 (12)     18,000     $ 53,640  
Kiley, Thomas 5/19/10 (2)   11,250       $ 32,334  
  5/19/10 (8)   5,000       $ 14,370  
  5/19/10 (5)     3,781     $ 20,000  
  5/19/10 (4)     5,625     $ 29,756  
  7/9/10 (9)     9,000     $ 44,820  
  7/9/10 (10)     9,000     $ 44,820  
  7/9/10 (11)     9,000     $ 44,820  
  7/9/10 (12)     18,000     $ 53,640  
Spiegel, Robert 5/19/10 (3)   45,000       $ 129,335  
  7/9/10 (9)     9,000     $ 44,820  
  7/9/10 (10)     9,000     $ 44,820  
  7/9/10 (11)     9,000     $ 44,820  
  7/9/10 (12)     18,000     $ 53,640  
Zenner, Patrick 5/19/10 (2)   11,250       $ 32,334  
  5/19/10 (4)     5,625     $ 29,756  
____________________
 
(1)         Amounts represent the grant date fair value of stock options and stock awards calculated using the Black Scholes option-pricing model. For additional information, refer to Note 8 of the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 regarding assumptions underlying the valuation of equity awards and the calculation method.
 
(2)   Stock options were fully vested upon grant.
 
(3)   Stock option vests in three equal consecutive annual installments from the date of grant, provided the director continues to provide services to the Company.
 
17
 

 

(4)         Restricted stock awards vest in four equal consecutive annual installments from the date of grant, provided the director continues to provide services to the Company.
 
(5)   Stock awards represent payment of annual director compensation in lieu of cash as of May 19, 2010 at $5.29 per share. Awards were fully vested upon grant.
 
(6)   Stock options are exercisable in a series of 24 equal consecutive monthly installments commencing on March 18, 2010, provided the director continues to provide services to the Company.
 
(7)   Stock options are exercisable in a series of 24 equal consecutive monthly installments commencing on July 11, 2010, provided the director continues to provide services to the Company.
 
(8)   Stock options are exercisable in a series of 24 equal consecutive monthly installments commencing on September 12, 2010, provided the director continues to provide services to the Company.
 
(9)   Restricted stock awards vest in full upon achievement of a clinical development milestone related to Phase 2 clinical trial data for the imetelstat program during a three-year performance period.
 
(10)   Restricted stock awards vest in full upon achievement of a clinical development milestone related to Phase 1 clinical trial data for the GRNOPC1 program during a three-year performance period.
 
(11)   Restricted stock awards vest in full upon completion of a specific strategic initiative related to the Company’s cell therapy programs during a three-year performance period.
 
(12)   Restricted stock awards vest upon attainment of a market price threshold of our Common Stock within 24 months and a higher market price threshold of our Common Stock within 36 months.
 
     The following table sets forth stock options and stock awards outstanding for each non-employee director as of December 31, 2010.
 
  Option Awards Outstanding   Stock Awards Outstanding as of
  as of December 31, 2010   December 31, 2010
Director   Exercisable (#)       Unexercisable (#)       Unvested (#)
Barkas, Alexander   406,042       31,458       113,750  
Eastham, Karin   47,350       30,150       58,125  
Fritzky, Edward   208,334       5,416       75,467  
Hofstaetter, Thomas   4,375       45,000       45,938  
Homcy, Charles   105,000             72,500  
Huh, Hoyoung         45,000       45,000  
Kiley, Thomas   141,250       6,250       74,061  
Spiegel, Robert         45,000       45,000  
Zenner, Patrick   205,000              

18
 

 

PROPOSAL 2
 
APPROVAL OF THE 2011 INCENTIVE AWARD PLAN
 
     The Board is asking stockholders to approve the Geron Corporation 2011 Incentive Award Plan (2011 Plan) at this Annual Meeting. On March 9, 2011, the Board unanimously adopted the 2011 Plan, subject to stockholder approval, for employees and other service providers of the Company. If the 2011 Plan is approved by our stockholders, the 2011 Plan will replace our Amended and Restated 2002 Equity Incentive Plan (2002 Plan), which is expiring in February 2012, and we will not make any further grants of awards under the 2002 Plan.
 
Purpose
 
     The purpose of the 2011 Plan is to enhance the value of the Company and promote our success by linking the individual interests of our employees, directors and consultants to the interests of our stockholders and by providing our employees, directors and consultants with an incentive to generate superior returns to our stockholders. The 2011 Plan is also intended to provide the Company with flexibility in its ability to motivate, attract, and retain the services of employees, directors and consultants upon whose judgment, interest, and performance our success is largely dependent.
 
     Our Board believes that it is desirable for, and in the best interests of, the Company to adopt the 2011 Plan and recommends that our stockholders vote in favor of the adoption of the 2011 Plan. The 2011 Plan includes the following key features:
Description of the 2011 Plan
 
     A description of the principal features of the 2011 Plan is set forth below and is qualified in its entirety by the terms of the 2011 Plan which is attached to this Proxy Statement as Appendix A.
 
Eligibility; Administration
 
     Employees, directors and consultants of the Company or any of its affiliates will be eligible to receive awards under the 2011 Plan. As of March 1, 2011, approximately 190 employees, officers, consultants and directors are eligible to receive equity awards under the 2011 Plan, of which seven were executive officers, eight were non-employee directors and two were consultants. The closing price of our common stock on March 1, 2011 was $4.83.
 
     The 2011 Plan will be administered by our Compensation Committee, which may delegate its duties and responsibilities to subcommittees of our directors and/or officers, subject to certain limitations that may be imposed under applicable law or regulation, including Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code), Section 16 of the Exchange Act and/or stock exchange rules, as applicable. The plan administrator will have the authority to grant and set the terms of all awards under, make all determinations and interpretations under, prescribe all forms for use with, and adopt rules for the administration of, the 2011 Plan, subject to its express terms and conditions.
 
19
 

 

Limitation on Awards and Shares Available
 
     The maximum number of shares of our common stock for which grants may be made under the 2011 Plan is equal to the sum of (x) 12,000,000 shares ; (y) the number of shares available for grant under the 2002 Plan as of May 10, 2011; and (z) the number of shares that are subject to equity awards granted under the 1992 Stock Option Plan, the 1996 Directors’ Stock Option Plan and the 2002 Plan (the Prior Plans) which are outstanding as of May 10, 2011 which, on or after such date, are forfeited or otherwise terminate or expire for any reason without the issuance of shares. However, the number of shares authorized for grant as incentive stock options shall be no more than 33,603,655 shares.
 
     Shares of our common stock which will be available for issuance under awards granted pursuant to the 2011 Plan may be treasury shares, authorized but unissued shares, or shares purchased in the open market.
 
     The following types of shares will be added back to the available share limit under the 2011 Plan: (i) shares subject to awards that are forfeited, expire or are settled for cash, and (ii) shares repurchased by the Company at the same price paid by a participant pursuant to the Company’s repurchase right with respect to restricted stock awards. However, the following types of shares will not be added back to the available share limit under the 2011 Plan: (A) shares tendered by a participant or withheld by the Company in payment of the exercise price of an option; (B) shares withheld to satisfy any tax withholding obligation with respect to an award; (C) shares subject to an SAR that are not issued in connection with the stock settlement of the SAR on exercise thereof; and (D) shares purchased on the open market with the cash proceeds from the exercise of options.
 
     Awards granted under the 2011 Plan upon the assumption of, or in substitution for, awards authorized or outstanding under a qualifying equity plan maintained by an entity with which the Company enters into a merger or similar corporate transaction will not reduce the shares authorized for grant under the 2011 Plan. The maximum number of shares of our common stock that may be subject to one or more awards granted to any one participant pursuant to the 2011 Plan during any calendar year is 2,000,000 shares, and the maximum amount that may be paid in cash with respect to one or more performance awards pursuant to the 2011 Plan to any one participant during any calendar year is $10,000,000.
 
Awards
 
     The 2011 Plan provides for the grant of stock options, including incentive stock options (ISOs) and nonqualified stock options (NSOs), restricted stock, restricted stock units (RSUs), performance awards, dividend equivalent rights, stock payments, deferred stock, deferred stock units, SARs and cash awards. No determination has been made as to the types or amounts of awards that will be granted to specific individuals pursuant to the 2011 Plan. Certain awards under the 2011 Plan may constitute or provide for a deferral of compensation, subject to Section 409A of the Code, which may impose additional requirements on the terms and conditions of such awards. All awards will be set forth in award agreements, which will detail all terms and conditions of the awards, including any applicable vesting and payment terms. Awards other than cash awards will generally be settled in shares of our common stock, but the plan administrator may provide for cash settlement of any award. A brief description of each award type follows.
20
 

 

transaction) and the term of an SAR may not be longer than ten years. Vesting conditions determined by the plan administrator may apply to SARs, and may include continued service, performance and/or other conditions.
Performance Awards
 
     All awards may be granted as performance awards (in addition to those identified above as performance awards), meaning that any such award will be subject to vesting and/or payment based on the attainment of specified performance goals. The plan administrator will determine whether performance awards are intended to constitute “qualified performance-based compensation” (QPBC) within the meaning of Section 162(m) of the Code, in which case the applicable performance criteria will be selected from the list below in accordance with the requirements of Section 162(m) of the Code.
 
     Section 162(m) of the Code imposes a $1,000,000 cap on the compensation deduction that we may take in respect of compensation paid to our “covered employees” (which should include our chief executive officer and our next three most highly compensated employees other than our chief financial officer), but excludes from the calculation of amounts subject to this limitation any amounts that constitute QPBC. In order to constitute QPBC under Section 162(m) of the Code, in addition to certain other requirements, the relevant amounts must be payable only upon the attainment of pre-established, objective performance goals set by our Compensation Committee during the first ninety days of the relevant performance period and linked to stockholder-approved performance criteria.
 
     For purposes of the 2011 Plan, one or more of the following performance criteria will be used in setting performance goals applicable to QPBC, and may be used in setting performance goals applicable to other performance awards: (i) net earnings (either before or after one or more of the following: (A) interest, (B) taxes, (C) depreciation and (D) amortization); (ii) gross or net sales or revenue; (iii) net income (either before or after taxes); (iv) adjusted net income; (v) operating earnings or profit; (vi) cash flow (including, but not limited to, operating cash flow and free cash flow); (vii) return on assets; (viii) return on capital; (ix) return on stockholders’ equity; (x) total stockholder return; (xi) return on sales; (xii) gross or net profit or operating margin; (xiii) costs; (xiv)
 
21
 

 

funds from operations; (xv) expenses; (xvi) working capital; (xvii) earnings per share; (xviii) adjusted earnings per share; (xix) price per share; (xx) regulatory body approval for commercialization of a product; (xxi) positive results from clinical trials; (xxii) initiation of registration clinical trials; (xxiii) implementation or completion of critical projects; (xxiv) closing of significant financing; (xxv) execution or completion of strategic initiatives; (xxvi) market share; (xxvii) economic value; (xxviii) cash flow return on capital and (xxix) return on net assets, any of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or to market performance indicators or indices. The 2011 Plan also permits the plan administrator to provide for objectively determinable adjustments to the applicable performance criteria in setting performance goals for QPBC awards.
 
Certain Transactions
 
     The plan administrator has broad discretion to equitably adjust the provisions of the 2011 Plan, as well as the terms and conditions of existing and future awards, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events affecting our common stock, such as stock dividends, stock splits, mergers, acquisitions, consolidations and other corporate transactions. In addition, in the event of certain non-reciprocal transactions with our stockholders known as “equity restructurings,” the plan administrator will make equitable adjustments to the 2011 Plan and outstanding awards. In the event of a change in control of the Company (as defined in the 2011 Plan), the surviving entity must assume outstanding awards or substitute economically equivalent awards for such outstanding awards; however, if the surviving entity refuses to assume or substitute for outstanding awards, then the plan administrator may cause all awards to vest in full immediately prior to the transaction. Individual award agreements may provide for additional accelerated vesting and payment provisions.
 
Foreign Participants; Transferability; Participant Payments
 
     The plan administrator may modify award terms, establish subplans and/or adjust other terms and conditions of awards, subject to the share limits described above, in order to facilitate grants of awards subject to the laws and/or stock exchange rules of countries outside of the United States. With limited exceptions for estate planning, domestic relations orders, certain beneficiary designations and the laws of descent and distribution, awards under the 2011 Plan are generally non-transferable prior to vesting and are exercisable only by the participant. With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2011 Plan, the plan administrator may, in its discretion, accept cash or check, shares of our common stock that meet specified conditions, a “market sell order” or such other consideration as it deems suitable.
 
Forfeiture and Claw-Back Provisions
 
     The plan administrator will have the authority to provide or require a holder to agree by separate written or electronic instrument that any proceeds or other economic benefit received by the holder upon any receipt or exercise of an award or upon receipt or resale of shares underlying such award must be paid to the Company and awards will terminate and any unexercised portion of the award will be forfeited if the holder engages in competitive activities with the Company or which is harmful to the interests of the Company or the holder’s employment is terminated for cause. Further, the plan administrator will have the authority to provide or require a holder to agree by separate written or electronic instrument that all awards will be subject to a claw-back policy that the Company implements.
 
Plan Amendment and Termination
 
     The Board may amend or terminate the 2011 Plan at any time; however, except in connection with certain changes in capital structure, stockholder approval will be required for any amendment that increases the number of shares available under the 2011 Plan or “reprices” any stock option or SAR (including any grant of cash or another award in respect of any stock option or SAR when the option or SAR price per share exceeds the fair market value of the underlying shares). No award may be granted pursuant to the 2011 Plan after the tenth anniversary of the date the stockholders adopt the 2011 Plan.
 
22
 

 

Federal Income Tax Consequences
 
     The following is a general summary under current law of the material federal income tax consequences to participants in the 2011 Plan. This summary deals with the general tax principles that apply and is provided only for general information. Some kinds of taxes, such as state, local and foreign income taxes, are not discussed.
 
     Incentive Stock Options. The grant of an ISO will not be a taxable event for the grantee or result in a business expense deduction for us. A grantee will not recognize taxable income upon exercise of an ISO (except that the alternative minimum tax may apply), and any gain realized upon a disposition of our common stock received pursuant to the exercise of an ISO will be taxed as long-term capital gain if the grantee holds the shares of common stock for at least two years after the date of grant and for one year after the date of exercise (the “holding period requirement”). We will not be entitled to any business expense deduction with respect to the exercise of an ISO, except as discussed below.
 
     For the exercise of an option to qualify for the foregoing tax treatment, the grantee generally must be our employee or an employee of our subsidiary from the date the option is granted through a date within three months prior to the date of exercise of the option.
 
     If all of the foregoing requirements are met except the holding period requirement mentioned above, the grantee will recognize ordinary income upon the disposition of the common stock in an amount generally equal to the excess of the fair market value of the common stock at the time the option was exercised over the option exercise price (but not in excess of the gain realized on the sale). The balance of the realized gain, if any, will be a capital gain. We will be allowed a business expense deduction to the extent the grantee recognizes ordinary income, subject to our compliance with Section 162(m) of the Code and to certain reporting requirements.
 
     Nonqualified Options. The grant of a NSO will not be a taxable event for the grantee or result in a compensation expense deduction for us. Upon exercising a NSO, a grantee will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. Upon a subsequent sale or exchange of shares acquired pursuant to the exercise of a NSO, the grantee will have taxable capital gain or loss, measured by the difference between the amount realized on the disposition and the tax basis of the shares of common stock (generally, the amount paid for the shares plus the amount treated as ordinary income at the time the option was exercised).
 
     If we comply with applicable reporting requirements and, subject to the restrictions of Section 162(m) of the Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
     Restricted Stock. A grantee who is awarded shares of restricted stock will not recognize any taxable income for federal income tax purposes in the year of the award, provided that the shares of common stock are subject to restrictions requiring the restricted stock to be nontransferable and subject to a substantial risk of forfeiture. However, the grantee may elect under Section 83(b) of the Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the common stock on the date of the award, less the purchase price, if any, determined without regard to the restrictions. If the grantee does not make such a Section 83(b) election, the fair market value of the common stock on the date the restrictions lapse, less the purchase price, if any, will be treated as compensation income to the grantee and will be taxable in the year the restrictions lapse. If we comply with applicable reporting requirements and, subject to the restrictions of Section 162(m) of the Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
     Restricted Stock Units. There are no immediate tax consequences of receiving an award of RSUs under the 2011 Plan. A grantee who is awarded RSUs will be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such grantee at the end of the restriction period or, if later, the date on which shares are delivered in respect of the RSUs. If the delivery date of the shares is deferred more than a short period after vesting, employment taxes will be due in the year of vesting. If we comply with applicable reporting requirements and, subject to the restrictions of Section 162(m) of the Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
23
 

 

     Dividend Equivalent Awards. Grantees who receive dividend equivalent awards will be required to recognize ordinary income equal to the amount distributed to the grantee pursuant to the award. If we comply with applicable reporting requirements and, subject to the restrictions of Section 162(m) of the Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
     Stock Appreciation Rights. There are no immediate tax consequences of receiving an award of SARs under the 2011 Plan. Upon exercising an SAR, a grantee will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
     Performance Share Awards. Grantees who receive performance share awards generally will not realize taxable income at the time of the grant of the performance shares, and we will not be entitled to a deduction at that time. When the award is paid, whether in cash or common stock, the grantee will have ordinary income, and, if we comply with applicable reporting requirements and, subject to the restrictions of Section 162(m) of the Code, we will be entitled to a corresponding deduction.
 
     Stock Payment Awards. Grantees who receive a stock payment in lieu of a cash payment that would otherwise have been made will be taxed as if the cash payment has been received, and, if we comply with applicable reporting requirements and subject to the restrictions of Section 162(m) of the Code, we will have a deduction in the same amount.
 
     Deferred Stock. A grantee receiving deferred stock generally will not have taxable income upon the issuance of the deferred stock and we will not then be entitled to a deduction. However, when shares underlying the deferred stock are issued to the grantee, he or she will realize ordinary income and, if we comply with applicable reporting requirements and subject to the restrictions of Section 162(m) of the Code, we will be entitled to a deduction in an amount equal to the difference between the fair market value of the shares at the date of issuance over the purchase price, if any, paid for the deferred stock. Employment taxes with respect to these awards will generally be due in the year of vesting.
 
     Performance Awards. The award of a performance or annual incentive award will have no federal income tax consequences for us or for the grantee. The payment of the award is taxable to a grantee as ordinary income. If we comply with applicable reporting requirements and, subject to the restrictions of Section 162(m) of the Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
     Section 409A of the Code. Certain types of awards under the 2011 Plan, including, but not limited to RSUs and deferred stock, may constitute, or provide for, a deferral of compensation subject to Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest penalties). To the extent applicable, the 2011 Plan and awards granted under the 2011 Plan are intended to be structured and interpreted to comply with Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance that may be issued under Section 409A of the Code.
 
     Section 162(m) of the Code. In general, under Section 162(m) of the Code, income tax deductions of publicly-held corporations may be limited to the extent total compensation for certain executive officers exceeds $1,000,000 (less the amount of any “excess parachute payments” as defined in Section 280G of the Code) in any taxable year of the corporation. However, under Section 162(m) of the Code, the deduction limit does not apply to certain “performance-based” compensation. Stock options and SARs will satisfy the “performance-based” exception if (a) the awards are made by a qualifying compensation committee, (b) the plan sets the maximum number of shares that can be granted to any person within a specified period and (c) the compensation is based solely on an increase in the stock price after the grant date. The 2011 Plan is intended to permit the plan administrator to grant stock options and SARs which will qualify as “performance-based compensation.” In addition, other performance-based awards under the 2011 Plan may be intended to constitute QPBC, as discussed above.
 
24
 

 

New Plan Benefits
 
     Future benefits under the 2011 Plan are discretionary and therefore are not currently determinable.
 
The Board of Directors Unanimously Recommends That
Stockholders Vote FOR Proposal 2
 
PROPOSAL 3
 
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
 
     As required by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act, the Board is requesting stockholders to vote, on a non-binding advisory basis, to approve the compensation paid to Geron’s Named Executive Officers as disclosed in this proxy statement in the sections entitled, “Compensation Discussion and Analysis” and “Executive Compensation Tables.” This proposal, commonly known as a “say on pay” proposal, gives stockholders the opportunity to express their views on the compensation of Geron’s Named Executive Officers.
 
     As discussed in detail in the “Compensation Discussion and Analysis” section of this proxy statement, Geron’s executive compensation strategy and structure is based on the following principles: a) reward successful execution of business strategy; b) attract and retain qualified talent; and c) align management and stockholder interests. The executive compensation program is designed to achieve four primary objectives:
 
      1.       Ensure base pay is competitive for the role or job to be performed and to retain the executive for succession planning while providing reasonable and responsible pay arrangements in order to maintain a sustainable cost framework.
   
  2.   Recognize achievement of annual goals and milestones through annual incentives.
   
  3.   Reward successful completion of long-term goals and enhancement of shareholder wealth through the long-term incentive program.
   
  4.   Provide a cost effective but competitive benefits package that promotes a positive work environment fostering teamwork among and high morale within the executive team.

     The Compensation Committee actively reviews and assesses our executive compensation program in light of the highly competitive employment environment in the San Francisco Bay area, the challenge of recruiting, motivating and retaining executives in an industry with much longer business cycles than other commercial industries, and evolving compensation governance and best practices. In reconciling these areas, the Compensation Committee strives to act in the long-term best interests of the Company and its stockholders and believes that Geron’s executive compensation programs are strongly aligned with the long-term interests of our stockholders. In determining whether to approve this proposal, the Compensation Committee believes that stockholders should consider the following:
25
 

 

For these reasons, the Board recommends that stockholders vote in favor of the following resolution:
 
     “RESOLVED, that the stockholders approve, on a non-binding advisory basis, the compensation paid to Geron’s Named Executive Officers, as disclosed in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation and the accompanying narrative disclosure set forth in the Proxy Statement relating to the Company’s 2011 Annual Meeting of Stockholders.”
 
     Stockholders are not being asked to approve or disprove the Board’s recommendation. As this is an advisory vote, the outcome of the vote is non-binding to us with respect to future executive compensation decisions, including those related to our Named Executive Officers, or otherwise. However, the Board and the Compensation Committee will review the results of the vote and take them into account when considering future executive compensation policies and decisions.
 
The Board of Directors Unanimously Recommends That
Stockholders Vote FOR Proposal 3
 
PROPOSAL 4
 
ADVISORY VOTE TO APPROVE THE FREQUENCY OF HOLDING FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY 1, 2 OR 3 YEARS
 
     As required by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act, the Board is seeking a non-binding, advisory vote on the frequency with which it will seek the non-binding stockholders’ advisory vote on executive compensation (commonly referred to as “say-on-pay”), similar to Proposal No. 3 in this proxy statement. Geron is required to hold the say-on-pay vote at least once every three years. Accordingly, stockholders may vote that the advisory vote on executive compensation be held in the future as follows:
26
 

 

     Stockholders may also abstain from voting on this proposal. In considering your vote, you may wish to review the information presented in connection with Proposal No. 3 in this proxy statement, as well as the “Compensation Discussion and Analysis” and “Executive Compensation Tables” sections of this proxy statement, which provide a more detailed discussion of our executive compensation programs and policies.
 
     Our Board of Directors has determined that holding a “say-on-pay” vote every three years is most appropriate for Geron and recommends that you vote to hold such advisory vote in the future every third year, for the following reasons.
     The Board weighed these reasons against the arguments in support of conducting the advisory vote annually or biannually. In particular, the Board considered the value of the opportunity for stockholder input at each annual meeting, as well as the belief that annual votes would promote greater accountability on executive compensation. Although the Board believes that these and other positions put forth in favor of an annual “say-on-pay” vote are not without merit, on balance, the Board believes that a triennial approach is most appropriate for Geron and recommends that voting alternative to stockholders. The Compensation Committee intends to periodically reassess that view and, if it determines appropriate, may provide for an advisory vote on executive compensation on a more frequent basis.
 
     Because this proposal is advisory, it will not be binding and the Board and the Compensation Committee may determine to hold a “say-on-pay” vote more or less frequently than the option selected by our stockholders. However, the Board values stockholders’ opinions and the Board will consider the outcome of the vote when considering the frequency of future advisory votes on executive compensation. Stockholders are not being asked to approve or disapprove of the Board’s recommendation, but rather to indicate their own choice among the frequency options.
 
The Board of Directors Unanimously Recommends That
Stockholders Vote every “THREE YEARS” for Proposal 4
 
27
 

 

PROPOSAL 5
 
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     On the recommendation of the Audit Committee, the Board has selected Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2011, and has further directed that management submit the selection of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP has served as the Company’s independent registered public accounting firm since 1992. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions from stockholders.
 
     The Company has been informed by Ernst & Young LLP that, to the best of their knowledge, neither the firm nor any of its members or their associates has any direct financial interest or material indirect financial interest in the Company or its affiliates.
 
     Stockholder ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or otherwise. However, the Board is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee and the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee and the Board in their discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
 
The Board of Directors Unanimously Recommends That
Stockholders Vote FOR Proposal 5
 
28
 

 

PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
     The Audit Committee maintains policies and procedures for the pre-approval of work performed by the independent registered public accounting firm. Under the Audit Committee’s charter, all engagements of the independent registered public accounting firm must be approved in advance by the Audit Committee. The Chairperson of the Audit Committee must be notified at any time the fees for a specific project exceed 20% of the approved budget for authorization to continue the project. Management recommendations will be considered in connection with such engagements, but management will have no authority to approve engagements. For each quarterly Audit Committee meeting, management prepares a schedule of all fees paid to Ernst & Young LLP during the previous quarter and estimated fees for projects contemplated in the following quarter.
 
     Upon recommendation by the Audit Committee, the Board selected Ernst & Young LLP to act in the same capacity for the fiscal year ending December 31, 2011. The Company has been informed by Ernst & Young LLP, to the best of their knowledge, that neither the firm nor any of its members or their associates has any financial interest, direct or indirect in the Company or its affiliates.
 
Audit Fees and All Other Fees
 
     The Audit Committee approved 100% of all audit, tax and other services provided by Ernst & Young LLP in 2010 and 2009. The total fees paid to Ernst & Young LLP for the last two fiscal years are as follows:
 
    Fiscal Year Ended   Fiscal Year Ended
        December 31, 2010       December 31, 2009
Audit Fees(1)     $ 653,693       $ 675,414  
Tax Fees(2)       33,146         22,374  
All Other Fees       1,995         1,740  
____________________
 
(1)       Audit Fees include the integrated audit of annual consolidated financial statements and internal control over financial reporting, audits of certain subsidiaries, reviews of quarterly consolidated financial statements included in Quarterly Reports on Forms 10-Q, consultations on matters addressed during the audit or quarterly reviews, and services provided in connection with SEC filings, including consents and comment and comfort letters.
 
(2)   Tax Fees consist of services related to the filing of tax returns and other assistance with tax compliance.

29
 

 

AUDIT COMMITTEE REPORT(1)
 
     The Audit Committee of Geron Corporation’s Board of Directors is comprised of three independent directors as required by the listing standards of the Nasdaq Global Select Market (Nasdaq). The Audit Committee operates pursuant to a written charter adopted and amended by the Board of Directors in March 2005. A copy of the Committee’s amended and restated charter is available on the Company’s website at http://www.geron.com.
 
     The members of the Audit Committee are Ms. Eastham (Chairperson) and Messrs. Fritzky and Kiley. The Board has determined that all members of the Committee are financially literate as required by Nasdaq. The Board has also determined that Ms. Eastham is an audit committee financial expert as defined by Nasdaq.
 
     The function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities regarding (i) the quality and integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualifications and independence of the independent registered public accounting firm serving as auditors of the Company and (iv) the performance of the independent registered public accounting firm.
 
     Management is responsible for the Company’s internal controls and financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and to issue a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes.
 
     In this context, the Audit Committee hereby reports as follows:
 
  1)   The Audit Committee has reviewed and discussed the audited financial statements of the Company as of and for the year ended December 31, 2010 with management and the independent registered public accounting firm serving as the Company’s independent auditors.
   
  2)   The Audit Committee has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), other professional standards, membership provisions of the SEC Practice Session, and other SEC rules, as currently in effect.
   
  3)   The Audit Committee has received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), as currently in effect, and it has discussed with the auditors their independence from the Company.
   
      4)       The Audit Committee has considered whether the independent auditors’ provision of non-audit services to the Company is compatible with maintaining the auditors’ independence.
 
     Based on the reports and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, for filing with the SEC.
 
     Submitted on February 21, 2011 by the members of the Audit Committee of the Company’s Board of Directors.
 
Karin Eastham (Chairperson)
Edward V. Fritzky
Thomas D. Kiley, Esq.
____________________
 
(1)       This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Exchange Act of 1934, as amended (the Exchange Act), or the Securities Act of 1933, as amended (the Securities Act), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
 
30
 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The following table sets forth the amount and percentage of the outstanding shares of Common Stock, which, according to the information supplied to the Company, are beneficially owned by (i) each person who, to the best of the Company’s knowledge based exclusively on Schedules 13G filed with the Securities and Exchange Commission (SEC), is the beneficial owner of more than 5% of the Company’s outstanding Common Stock, (ii) each person who is currently a director, two of whom are also nominees for election as directors, (iii) each Named Executive Officer, as defined on page 34 below and (iv) all current directors and executive officers as a group. Unless otherwise indicated, the address for each of the stockholders in the table below is c/o Geron Corporation, 230 Constitution Drive, Menlo Park, CA 94025. Except for information based on Schedules 13G, as indicated in the footnotes, beneficial ownership is stated as of February 1, 2011.
 
    Beneficial Ownership(1)
    Number of       Percent of
Beneficial Owner         Shares   Total
Directors/Nominees and Named Executive Officers:              
Alexander E. Barkas, Ph.D.(2)   711,671     *    
Karin Eastham(3)   122,200     *    
Edward V. Fritzky(4)   376,969     *    
Thomas Hofstaetter, Ph.D.(5)   65,943     *    
Charles J. Homcy, M.D.(6)   220,251     *    
Hoyoung Huh, M.D., Ph.D.(7)   45,000     *    
Thomas D. Kiley, Esq.(8)   401,352     *    
Robert J. Spiegel, M.D., FACP(9)   45,000     *    
Patrick J. Zenner(10)   278,710     *    
Melissa A. Behrs(11)   756,267     *    
David L. Greenwood(12)   1,663,667     1.28 %  
Stephen M. Kelsey, M.D., F.R.C.P., F.R.C.Path.(13)   492,888     *    
Jane S. Lebkowski, Ph.D.(14)   1,106,210     *    
Thomas B. Okarma, Ph.D., M.D.(15)   2,454,975     1.88 %  
All directors and executive officers as a group (17 persons)   10,501,085     7.80 %  
5% Beneficial Holders:              
BlackRock Inc.(16)   7,085,418     5.50 %  
       40 East 52nd Street              
       New York, NY 10022              
____________________
 
*   Represents beneficial ownership of less than 1% of Common Stock.
 
(1)  
Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within 60 days of February 1, 2011 are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The persons named in this table, to the best of the Company’s knowledge, have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws where applicable and except as indicated in the other footnotes to this table.
 
(2)  
Includes 191,622 shares held directly by Alexander E. Barkas, 882 shares held by Lynda Wijcik, the spouse of Dr. Barkas, 113,750 shares held under unvested restricted stock awards, and 405,417 shares issuable upon the exercise of outstanding options held by Dr. Barkas exercisable within 60 days of February 1, 2011.
 
(3)      
Includes 1,875 shares held directly by Karin Eastham, 58,125 shares held under unvested restricted stock awards by Ms. Eastham and 62,200 shares issuable upon the exercise of outstanding options held by Ms. Eastham exercisable within 60 days of February 1, 2011.
 
31
 

 

(4)  
Includes 91,918 shares held directly by Edward V. Fritzky, 75,467 shares held under unvested restricted stock awards and 209,584 shares issuable upon the exercise of outstanding options held by Mr. Fritzky exercisable within 60 days of February 1, 2011.
 
(5)  
Includes 630 shares held directly by Thomas Hofstaetter, 45,938 shares held under unvested restricted stock awards and 19,375 shares issuable upon the exercise of outstanding options held by Dr. Hofstaetter exercisable within 60 days of February 1, 2011.
 
(6)  
Includes 42,751 shares held by Charles J. Homcy, 72,500 shares held under unvested restricted stock awards and 105,000 shares issuable upon the exercise of outstanding options held by Dr. Homcy exercisable within 60 days of February 1, 2011.
 
(7)  
Includes 45,000 shares held under unvested restricted stock awards by Hoyoung Huh.
 
(8)  
Includes 128,433 shares held directly by Thomas D. Kiley, 74,061 shares held under unvested restricted stock awards, 9,705 shares held by the Kiley Family Partnership and 46,653 shares held by the Thomas D. Kiley and Nancy L.M. Kiley Revocable Trust under Agreement dated August 7, 1981. Also includes 142,500 shares issuable upon the exercise of outstanding options held by Mr. Kiley exercisable within 60 days of February 1, 2011.
 
(9)  
Includes 45,000 shares held under unvested restricted stock awards by Robert J. Spiegel.
 
(10)  
Includes 73,710 shares held directly by Patrick J. Zenner and 205,000 shares issuable upon the exercise of outstanding options held by Mr. Zenner exercisable within 60 days of February 1, 2011. Mr. Zenner retired from the Board in May 2010.
 
(11)  
Includes 49,336 shares held directly by Melissa A. Behrs, 317,500 shares held under unvested restricted stock awards and 389,431 shares issuable upon the exercise of outstanding options held by Ms. Behrs exercisable within 60 days of February 1, 2011.
 
(12)  
Includes 133,991 shares held directly by David L. Greenwood, 431,250 shares held under unvested restricted stock awards and 1,098,426 shares issuable upon the exercise of outstanding options held by Mr. Greenwood exercisable within 60 days of February 1, 2011.
 
(13)  
Includes 13,930 shares held directly by Stephen M. Kelsey, 367,500 shares held under unvested restricted stock awards and 111,458 shares issuable upon the exercise of outstanding options held by Dr. Kelsey exercisable within 60 days of February 1, 2011.
 
(14)  
Includes 129,750 shares held directly by Jane S. Lebkowski, 392,500 shares held under unvested restricted stock awards and 583,960 shares issuable upon the exercise of outstanding options held by Dr. Lebkowski exercisable within 60 days of February 1, 2011.
 
(15)  
Includes 267,060 shares held directly by Thomas B. Okarma, 507,500 shares held under unvested restricted stock awards and 1,680,415 shares issuable upon the exercise of outstanding options held by Dr. Okarma exercisable within 60 days of February 1, 2011. Dr. Okarma separated employment from the Company in February 2011.
 
(16)      
Based on Schedule 13G filed by BlackRock, Inc.
 
32
 

 

EQUITY COMPENSATION PLANS
 
     The following table summarizes information with respect to equity awards under Geron’s equity compensation plans at December 31, 2010:
 
    Number of   Weighted-   Number of securities
    securities to be   average   remaining available for
    issued upon exercise   exercise price   future issuance under
    of outstanding   of outstanding   equity compensation
    options, warrants   options, warrants   plans (excluding securities
        and rights   and rights       reflected in column (a))
    (a)       (b)   (c)
Equity compensation plans approved by security                            
       holders     12,881,648 (1)            $6.68            6,151,392 (2),(3)  
Equity compensation plans not approved by                            
       security holders     700,000 (4)       $5.96          
       Total     13,581,648         $6.64       6,151,392    
____________________
 
                           
(1)   Consists of 1,185,196 shares to be issued upon exercise of outstanding options under the 1992 Stock Option Plan, 10,478,327 shares under the 2002 Equity Incentive Plan, 545,000 shares under the 1996 Directors’ Stock Option Plan and 673,125 shares under the 2006 Directors’ Stock Option Plan.
 
(2)   Consists of 580,886 shares of Common Stock reserved for issuance under Geron’s 1996 Employee Stock Purchase Plan, 3,968,628 shares of Common Stock reserved for issuance under Geron’s 2002 Equity Incentive Plan and 1,601,878 shares of Common Stock reserved for issuance under Geron’s 2006 Directors’ Stock Option Plan. No shares are available for issuance under the Geron’s 1992 Stock Option Plan or 1996 Directors’ Stock Option Plan.
 
(3)   Does not include future automatic annual increases under Geron’s 2002 Equity Incentive Plan. The maximum number of shares to be reserved will automatically increase on each anniversary date of the Board’s adoption of the 2002 Equity Incentive Plan during the term of the plan by the least of (i) 2,000,000 shares, (ii) 4% of the Company’s outstanding Common Stock as of such anniversary date, or (iii) a lesser amount determined by the Board. In addition, amounts do not include shares available for issuance under our proposed 2011 Incentive Award Plan proposed for approval by our stockholders at our 2011 Annual Meeting under Proposal 2 on page 19 of this Proxy Statement. If approved, the aggregate number of new shares of our common stock available for issuance under the 2011 Incentive Award Plan will be 12,000,000.
 
(4)       Represents outstanding warrants issued in conjunction with consulting services and license agreements with research institutions. For further details, see Note 8 of the consolidated financial statements in the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2011.
 
33
 

 

COMPENSATION DISCUSSION AND ANALYSIS
 
     This Compensation Discussion and Analysis section discusses our executive compensation policies and programs and the compensation decisions made in 2010 for our executive officers, including our “Named Executive Officers” which consist of Dr. Thomas B. Okarma, our Former President and Chief Executive Officer, Mr. David L. Greenwood our President, Interim Chief Executive Officer and Chief Financial Officer and our three next most highly paid executive officers.
 
     In February 2011, the Board implemented a new leadership structure for the Company by appointing (i) Mr. Greenwood as President, Interim Chief Executive Officer, Chief Financial Officer, and a member of the Board, (ii) Hoyoung Huh, M.D., Ph.D., as Executive Chairman of the Board and (iii) Alexander E. Barkas, Ph.D., as Lead Independent Director of the Board. In conjunction with the implementation of the new leadership structure, Dr. Okarma, left the Company as President and Chief Executive Officer and as a member of the Board, effective February 8, 2011. Dr. Okarma and the Company have entered into a transition and separation agreement described more fully below under “Calculation of Compensation Elements—Severance and Change in Control Benefits.”
 
Executive Summary
 
     The Company’s compensation programs are straightforward and do not materially change from year to year. One of the core principles of our compensation philosophy for executive officers continues to be a strong pay-for-performance structure that ties a significant portion of each executive officer’s compensation to both corporate and individual performance. At the same time, the Compensation Committee has structured the Company’s compensation program to assure that the executive officers and senior management are compensated in a manner consistent with stockholder interests, competitive practices and applicable requirements of regulatory bodies. The following table sets forth an executive summary of the Company’s compensation programs and the actions taken in 2010:
 
Compensation Element General Description/Commentary Application in 2010
Base Salary Provide a competitive annual fixed level of cash compensation. Continuation of wage freeze since year-end 2008.
Annual Incentive Awards
Discretionary performance-based bonus to reward achievement of corporate and individual goals set by Compensation Committee at the beginning of the year.
 
Bonus targets for executive officers range from 40% to 60% of base salary.
 
Corporate performance factor has more weight than individual performance factor in determining bonus amount for executive officers.
Bonus targets for executive officers set at the same levels as in 2009.
 
Overall 2010 corporate performance factor measured at 85.5% reflects progress of imetelstat and GRNOPC1 in clinical trials; launch of two commercial hESC-based products enabling testing and manufacturing services; continued preclinical data publications confirming therapeutic potential for imetelstat, GRNCM1 and GRN510; execution of global in-license of new CNS-delivered peptides to enable treatment of primary brain cancers and cancers that have metastasized to the brain; receipt of aggregate total of $1.2 million in grants under the QTDP program; and maintenance of a strong balance sheet by raising $103.7 million in net proceeds through various equity financings.
 
Individual executive officer performance factors measured at 100% reflects successful execution of departmental, functional goals and support of corporate initiatives.

34
 

 

Compensation Element General Description/Commentary Application in 2010
Long-Term Incentive Awards
Grants of stock options and restricted stock awards to align executive officer’s interests with stockholders.
 
Size of grants corresponds to executive’s position and responsibilities as well as the executive’s historical and expected level of performance.
Grants made in May 2010 were consistent with historical practice.
 
To further motivate executive officers to achieve specific long-term goals and strongly link pay-for-performance, new grants of performance-based restricted stock awards (PSAs) were made in July 2010.
 
PSAs either will not vest at all or will vest 100% upon achievement of specified performance criteria which include:
  • A clinical development milestone related to Phase 2 clinical trial data for the imetelstat program;
     
  • A clinical development milestone related to Phase 1 clinical trial data for the GRNOPC1 program;
     
  • Completion of a specific strategic initiative related to the Company’s cell therapy programs; and
     
  • Attainment of a certain market price thresholds of our Common Stock within 24 months and a higher market price threshold of our Common Stock within 36 months.
Other Benefits
Benefit programs offered to all employees, including executive officers include:
  • Comprehensive medical, dental, vision coverage and life insurance;
     
  • A cafeteria plan covering medical and dental insurance, medical reimbursement, and dependent care;
     
  • A 401(k) plan; and
     
  • An Employee Stock Purchase Plan.
 
The Company does not offer any pension plans or any retirement benefits.
 
Executive officers receive limited perquisites consisting of limited tax and financial planning services.
There were no changes to other benefits offered to all employees, including executive officers, in 2010.

35
 

 

Compensation Element General Description/Commentary Application in 2010
Severance and Change in Control Benefits
The Company maintains a Change of Control Severance Plan that applies to all employees, including executive officers. Payments are made upon actual or constructive termination of employment and range from three to 18 months of base salary depending on the employee’s position at the time of change in control.
 
The Company maintains employment agreements with certain executive officers and key employees. These agreements generally provide for severance payments in connection with termination without cause. Any payments under the Severance Plan above would reduce any payments under the employment agreements.
 
Upon a change in control, outstanding equity awards under the current plans would accelerate so that each option and award would be fully vested prior to the change in control.
No modifications or payments have been made under the Change in Control Severance Plan.
 
No new employment agreements were entered into or modified in 2010.
 
See discussion on Transition and Separation Agreement entered into in February 2011 with Dr. Okarma on page 46.
 
No modifications to outstanding equity awards have been made in 2010 in connection with a change in control.

Executive Compensation Philosophy
 
     Our executive compensation programs impact all employees by establishing a general framework for compensation and creating a work environment focused on expectations, goals and rewards. Because the performance of every employee is important to overall success of the Company, the Board is mindful of the impact executive compensation and incentive programs have on all employees. In considering executive compensation policies and practices, the Board balances the needs to conserve cash and minimize stockholder dilution against the requirements to attract, retain and motivate company management and employees while fostering an innovative and entrepreneurial corporate culture.
 
     We maintain our headquarters and operations in the San Francisco Bay area, which has a high cost of living and a highly competitive employment environment. Specifically, numerous biotechnology and other high-growth or commercial companies are nearby and compete for the same personnel that we seek to recruit, motivate and retain. In addition, the business cycle in the biotechnology industry is much longer than other commercial industries requiring long-term dedication from employees. We recognize that highly qualified executives and other skilled professionals have many career opportunities and that their choices to join or stay with the Company may rest in part with the compensation being paid. Building an infrastructure that fosters growth and technological innovation requires substantial investment in people and resources with no guarantee of return.
 
     In reconciling these areas, the Board strives to act in the long-term best interests of the Company and its stockholders, as well as ensure that the elements of compensation do not, individually or in the aggregate, encourage excessive risk-taking. To address these challenges, the Board has structured Geron’s executive compensation strategy and structure based on the following principles:
36
 

 

Objectives of the Executive Compensation Program
 
     The executive compensation program is designed to achieve four primary objectives:
 
  1.  
Ensure base pay is competitive for the role or job to be performed and to retain the executive for succession planning while providing reasonable and responsible pay arrangements in order to maintain a sustainable cost framework.
   
  2.  
Recognize achievement of annual goals and milestones through annual incentives.
   
  3.  
Reward successful completion of long-term goals and enhancement of shareholder wealth through the long-term incentive program.
   
      4.      
Provide a cost effective but competitive benefits package that promotes a positive work environment fostering teamwork among and high morale within the executive team.
 
Compensation Elements and Purpose
 
     Executive compensation at Geron consists of the following elements:
     To date, we have not structured our compensation elements for executive officers so as to target each separate component at a specific percentage of their total direct compensation for the year. The component elements of the compensation plan work together to help attract, retain and incentivize an experienced and highly capable management team and our Compensation Committee and the Board consider a wide variety of information and use their judgment in making compensation decisions.
 
Compensation Committee Role
 
     The Compensation Committee determines all compensation for executive officers. Both Compensation Committee members are independent of the Company’s management. The Chief Executive Officer does not participate in the Compensation Committee’s deliberations or decisions with regard to his compensation.
 
     To aid the Compensation Committee in its responsibilities, the Chief Executive Officer (assisted by senior human resources personnel) provides the Compensation Committee with a variety of information, including analyses and recommendations relating to the Company’s performance, individual performance of other executive officers and compensation recommendations for every employee, including all executive officers, except the Chief Executive Officer.
 
     At the Compensation Committee’s request, the Chief Executive Officer reviews the performance of the other executive officers with the Compensation Committee, but no other executive officer has any input into executive compensation decisions. The Compensation Committee gives considerable weight to the Chief Executive Officer’s performance evaluation of the other executive officers because of his direct knowledge of each executive’s
 
37
 

 

performance and contributions. For each executive officer, the Compensation Committee independently determines each component of compensation based on their collective assessment of the executive’s performance using the following factors:
     The Compensation Committee exercises judgment in allocating between cash and non-cash compensation. The Compensation Committee has the authority to retain special counsel and other experts, including compensation consultants, to support their responsibilities in determining executive compensation and related programs. In 2010, the Compensation Committee did not utilize any consultants in evaluating executive compensation.
 
Calculation of Compensation Elements
 
Base Salary
 
     Base salary provides a minimum element of financial certainty and security to our executive officers on an ongoing basis. We do not have an annual “merit budget” for overall base salary increases throughout the Company. Instead, the Compensation Committee annually evaluates base salaries for all employees, including executive officers, and adjustments are made at the beginning of the year to reflect changes in job responsibilities and market conditions. When establishing or reviewing base salaries for each executive officer, the Compensation Committee considers numerous factors, including the qualifications of the executive, his or her level of relevant experience, nature and responsibility of the position, strategic goals for which the executive has responsibility, Company and individual performance, salary norms for persons in comparable positions at comparable companies, the competitiveness of the market for the executive’s services and industry compensation levels.
 
     In determining base salary, the Compensation Committee reviews independent survey data, such as the Radford Global Life Sciences compensation survey, as well as publicly available data from companies with which Geron competes for talent. The businesses chosen for comparison may differ from one executive to the next depending on the scope and nature of the business for which the particular executive is responsible. Companies used for compensation evaluation include Gilead Sciences, Inc., Amgen Inc., Genzyme Corporation, Biogen Idec Inc., Affymax, Inc., Amylin Pharmaceuticals Inc. and BioMarin Pharmaceuticals, Inc. These companies are larger than us with respect to market capitalization, revenue and employees and represent the market in which we compete for talented executives, especially for positions which we will be developing in the future to help us plan for our next stage of anticipated growth. Although base salary information from comparable companies is useful comparative information, the Compensation Committee does not require that the base salary of individual executives bear any particular relationship to salaries of executives of similar positions of those comparable companies. In the biopharmaceutical industry, many traditional measures of corporate performance, such as earnings per share or sales growth, may not readily apply in reviewing performance of executives. Because of Geron’s current stage of development, the Compensation Committee evaluates other indications of performance, including progress of the Company’s research and development programs and corporate development activities, as well as the Company’s success in securing capital sufficient to enable the Company to continue research and development activities.
 
38
 

 

No Base Salary Increases for 2009 or 2010
 
     The Compensation Committee met in December 2009 to evaluate each executive officer’s performance and compensation and recognized that in light of the continuing challenging economic environment, the Compensation Committee would continue the 2009 freeze that was placed on base salaries for all executive officers, including the Chief Executive Officer, for fiscal year 2010.
 
Annual Incentive Awards
 
     Annual incentive awards are awarded on a discretionary basis, usually at the end of the Company’s fiscal year-end. They are designed to reward achievement of corporate and individual goals set by the Compensation Committee at the beginning of the year.
 
     We have established a bonus structure for all employees, including the executive officers, that provides bonuses depending on whether we achieve pre-established corporate goals related to operational and financial performance, as well as achievement of individual objectives. By using an appropriate amount of performance-based compensation, we believe our bonus structure creates a direct link between executive compensation and operational and financial performance to provide further motivation for our executives to implement strategic initiatives in order to meet or exceed pre-established corporate goals. Every employee, including the executive officers, has an established potential award which is equal to a percentage of the employee’s base salary. The percentage increases with increasing rank in the Company. The bonus targets for the executive officers in 2010 ranged from 40% to 60% of base salary depending on the executive’s position. The executive officers’ 2010 bonus targets were set at the same levels as in 2009.
 
     Each employee’s bonus amount is calculated using individual and corporate performance factors with increasing weight on Company performance for more senior employees. There are no minimum payouts and the only multipliers that would increase a bonus amount above the targets apply to the individual performance component. The corporate performance factor ranges from 0 to 1.0 and is assigned by the Compensation Committee based upon its qualitative assessment of Company performance against corporate goals. Individual performance factors range from 0 to 1.25 and are based on a supervisor’s assessment of the employee’s performance. As noted below, the Chief Executive Officer reviews the performance of the other executive officers and each Board member conducts an independent assessment of the Chief Executive Officer’s performance which is submitted to the Compensation Committee for tabulation and evaluation.
 
     Each year, the Chief Executive Officer provides Company goals to the Board for review and approval and the Board approves the goals and assigned weightings. The weightings for each goal vary year to year depending on the importance of the goal for a particular year. The goals correlate with increased business value of the Company and for its stockholders. Annual goals typically include the following:
39
 

 

     Individual goals for executive officers focus on contributions that facilitate the achievement of overall Company goals and development of the organization. Each year, the Board reviews and approves the individual goals for executive officers. The corporate and individual goals are set at challenging levels requiring the Company and the executive officers to perform at a high level in order to meet the goals and receive a bonus payout and the likelihood of attaining these goals is not assured.
 
     As part of the annual year-end performance reviews, the Compensation Committee (with input from the Chief Executive Officer and other Board members) evaluates the Company’s overall performance for the given year with respect to the approved goals as well as other significant Company performance accomplishments while also taking into consideration the degree of difficulty in achieving the goal and any particular events or circumstances that impacted performance. For this assessment, the Compensation Committee evaluates the status of Geron’s development programs, clinical progress and corporate development activities. This necessarily involves a subjective assessment of corporate performance by the Compensation Committee. Moreover, the Compensation Committee does not base its considerations on a single performance area, but rather considers the entire mix of accomplishments, challenges and efforts in evaluating Company performance and assigning a corporate performance factor.
 
     The Chief Executive Officer evaluates individual performance (for executives other than himself) through written evaluations. He provides the evaluations to the Compensation Committee along with his recommendations for each executive officer’s individual performance factor. The Compensation Committee reviews the performance and assessment of each executive officer. The Compensation Committee obtains reviews of the Chief Executive Officer from each Board member to evaluate the Chief Executive Officer. The Compensation Committee also considers the following general criteria when evaluating individual performance, not all of which are applicable to all executive officers:
     At the end of the year, the Compensation Committee evaluates, on a qualitative basis, the level of each executive officer’s attainment of his or her individual performance goals, including the Chief Executive Officer. The Compensation Committee does not specifically allocate or weight these goals and considers the attainment of individual goals on an overall basis when assessing performance for each executive officer. The Compensation Committee’s assessment of the executive officer’s level of attainment of individual performance goals becomes the individual performance factor used in the calculation of the bonus for the end of the year (as described in the second table set forth below which illustrates the calculation of the 2010 bonus awarded as a percentage of salary).
 
40
 

 

2010 Corporate Performance
 
     The table below summarizes our performance goal categories, 2010 weightings and our Compensation Committee’s assessment of Company performance as measured in terms of each category that was used to calculate the overall corporate performance factor of 85.5%.
 
        2010 Weighting   2010 Result   Total
Corporate Performance Category         Description       (A)       (B)       (A x B)
Clinical Development   Progress of product candidates   50%   85%        0.425     
    to and through clinical trials                
Product Development   Research and development,   25%   84%     0.210  
    including process                
    improvements                
Corporate Development   In-licensing and out-licensing   15%   80%     0.120  
    technology and strategic                
    transactions to enhance                
    corporate business plan                
Administration   Finance, legal, human   10%   100%     0.100  
    resources and intellectual                
    property management                
  Total Corporate Performance Factor       0.855  
                 
     Highlights of the 2010 accomplishments taken into account by the Compensation Committee in determining overall Company performance as well as individual performance for the executive officers included the following:
 
Clinical Development
Product Development
41
 

 

Corporate Development
Finance, Legal and Administration
2010 Executive Officer Performance
 
     For 2010, the Compensation Committee concluded that on an overall basis Dr. Okarma had achieved his individual goals, which included providing overall management and leadership for all research and development programs to spur achievement of corporate goals; seeking potential collaborations and partnerships to provide funding and other resources for the Company’s programs; participating in governmental deliberations related to stem cell funding policies; representing the Company to the investment community through frequent corporate presentations to provide updates on developments and progress; developing and mentoring other executive officers and employees for succession planning; and serving as the primary Company spokesperson for the media. For 2010, the Compensation Committee concurred with Dr. Okarma’s recommendation for each executive officer’s achievement of his or her individual performance goals and concluded that each Named Executive Officer on an overall basis had achieved his or her individual goals, which included support of the corporate initiatives mentioned above and also departmental, functional goals, as described below.
42
 

 

     The following are the bonus targets and weighting percentages used to calculate the 2010 bonus for the Named Executive Officers as well as the 2010 actual bonus percentage awarded:
 
    (A)   (B)   (C)   (D)   (E)   = (A*B*C)
                        + (A*D*E)
                        Bonus
    Bonus   Corporate   Corporate   Individual   Individual   Awarded
    Potential as a   Performance   Performance   Performance   Performance   as a % of
Officer and Position       % of Salary     Weighting     Factor     Weighting     Factor     Salary
Thomas B. Okarma, Ph.D., M.D.                        
       Former President and Chief Executive Officer   60%   80%   0.855   20%   1.0   53%
David L. Greenwood                        
       President, Interim Chief Executive Officer and                        
       Chief Financial Officer   45%   80%   0.855   20%   1.0   40%
Stephen M. Kelsey, M.D., F.R.C.P., F.R.C.Path.                        
       Executive Vice President, Chief Medical                        
       Officer, Oncology   45%   80%   0.855   20%   1.0   40%
Melissa A. Behrs                        
       Senior Vice President, Oncology Therapeutic                        
       Development   40%   80%   0.855   20%   1.0   35%
Jane S. Lebkowski, Ph.D.                        
       Senior Vice President, Chief Scientific Officer,                        
       Cell Therapies   40%   80%   0.855   20%   1.0   35%

Long-Term Incentive Awards
 
     Stock option grants and restricted stock awards from the 2002 Equity Incentive Plan encourage employee ownership in Geron, link pay with performance and align interests of stockholders and employees. Without sustained growth and positive stock price performance, all our employees, including the executive officers, carry the risk that they will not be able to realize significant gains from their equity-based awards. The Compensation Committee determines the size of the stock option grant and restricted stock award according to each executive’s position within the Company and sets a level it considers appropriate to create an opportunity for reward predicated on increasing stockholder value. The Compensation Committee takes into account an individual’s performance history and his or her potential for future responsibility and promotion. Other factors include long-term incentives previously granted, the amount of actual versus theoretical equity value per year that has been derived to date by the individual, the current actual value of the unvested equity grants for each individual, the percentage of stock option grants with exercise prices greater than the Company’s stock price and the number of stock option grants
 
43
 

 

that have expired unexercised as a result of market conditions. The relative weight given to each of these factors varies among individuals at the Compensation Committee’s discretion. There is no set formula for the granting of stock options or other equity awards to individual executive officers or employees.
 
     Historically, long-term incentive awards consisted primarily of stock options. However, in recent years there has been rapid evolution of practices relating to long-term incentive awards among companies with which the Company competes. Like many of these companies, in 2007 the Company began to utilize a mix of stock options and restricted stock awards for all employees, including the executive officers. A number of factors contributed to the shift in higher use of restricted stock grants including:
     To further our compensation philosophy of linking compensation with performance, the Compensation Committee granted performance-based restricted stock awards (PSAs) in 2010 to certain employees, including the executive officers, and members of the Board. The vesting for these PSAs is based on the achievement of certain corporate objectives and market price thresholds of our common stock. These PSAs either will not vest at all or will vest 100% upon achievement of the specified performance criteria as certified by the Compensation Committee.
 
Equity Grant Practices and Vesting Conditions
 
     The Company has a consistent approach to equity granting practices. Stock option grants to all newly hired employees are made on the third Wednesday of the month following the new employee’s hire date. To facilitate this practice, the Compensation Committee has authorized the Chief Executive Officer as the sole member of the Stock Option Committee to approve individual stock option grants up to 50,000 shares to non-executive employees. Restricted stock awards and stock option grants greater than 50,000 shares or for executive officers must be approved by the Compensation Committee. The exercise price of all stock options is equal to the closing price of Geron Common Stock as reported by the Nasdaq Global Select Market on the date of grant so that the recipient will not earn any compensation from his or her options unless our share price increases above the exercise price; thus aligning the interests of our stockholders, and our employees and executives, during their employment, for the long-term success of the Company. Geron’s standard practice is to grant options that vest monthly over four years from the date of grant, provided the employee continues to provide services to the Company.
 
     Annual equity awards to all employees, including the executive officers, are typically granted on the same date of the Annual Meeting of Stockholders, which is also the date that non-employee board members receive their equity awards in accordance with the 2006 Directors Plan. The exercise price for the annual stock option grants is equal to the closing price of Geron Common Stock as reported by the Nasdaq Global Select Market on the date of grant and the vest schedule is monthly over four years from the date of grant, provided the employee continues to provide services to the Company. For restricted stock awards, the vesting schedule is typically annually over four years from the date of grant, provided the employee continues to provide services to the Company.
 
2010 Compensation Decisions
 
     In May 2010, the Compensation Committee granted a mix of stock options and restricted stock awards to all Geron employees, including executive officers. The Compensation Committee first pre-approved a grant matrix, based on employee base salary, level and individual performance ratings at the end of 2009, which determined the number of options that may be awarded to each employee, including executive officers. Once the number of stock options for each employee was determined, that number was then reduced by 50%. The restricted stock award for each employee, including the executive officers, was equal to one-half of the reduced option grant.
 
44
 

 

     In July 2010, the Compensation Committee granted four types of performance-based restricted stock awards (PSAs) to certain employees, including executive officers, and members of the Board. The vesting of each PSA is linked to the achievement of specific corporate objectives during a three-year performance period which must be certified by the Compensation Committee. Allocation of the PSAs amongst employees, including the executive officers and members of the Board, was based on the potential contributions, accountability and influence an individual had on a particular corporate objective, with 60% of the aggregate total award being linked to the accomplishment of specific business objectives and the remaining 40% linked to the accomplishment of certain market price thresholds. Except for Dr. Okarma, approximately 80% of the PSAs based on the accomplishment of specific business objectives were tied to a single primary objective for which the executive officer has the most influence and the remaining 20% was evenly allocated between the other two criteria. For Dr. Okarma, the allocation was evenly distributed amongst the three business objectives since he would have influence on all of them. Performance criteria for 2010 PSA grants are described below:
     See section “Grants of Plan-Based Awards” on page 50 for additional information regarding stock option grants, restricted stock awards and performance-based restricted stock awards to Named Executive Officers in 2010.
 
Other Benefits
 
     Geron offers a comprehensive array of benefit programs to its employees, including Named Executive Officers. These include:
     Executive officers pay for 30% of their health premium cost which is deducted from their gross salary. Other employees pay either 16% or 25% of their health premium cost.
 
     The Company does not offer any pension plans or health benefits during retirement.
 
Severance and Change in Control Benefits
 
     In September 2002, the Board approved a Change of Control Severance Plan (the Severance Plan) that became effective on January 21, 2003 and was subsequently revised in October 2006 and December 2008. The Severance Plan applies to all employees, and provides for each employee to receive a severance payment upon a triggering event following a change of control. A triggering event is defined as an event where (i) an employee is terminated by the Company without cause in connection with a change of control or within 12 months following a change of control; or (ii) an employee is not offered comparable employment (new or continuing) by the Company or the Company’s successor or acquirer within 30 days after the change of control or any employment offer is rejected; or (iii) after accepting (or continuing) employment with the Company after a change of control, an employee resigns within six months following a change of control due to a material change in the terms of employment. Severance payments range from three to 18 months of base salary, depending on the employee’s position with the Company, payable in a lump sum payment. Severance payment would be 18 months for the Chief Executive Officer and 15 months for the Named Executive Officers. In addition to a cash payment, the Company will also pay the COBRA
 
45
 

 

health insurance premiums for each employee through the earlier of the end of his or her severance period or the time that the employee obtains other coverage. Change of control provisions in the Severance Plan are intended to allow executives to focus their attention on our business operations in the face of the potentially disruptive impact of a proposed change of control transaction, to assess takeover bids objectively without regard to the potential impact on their own job security and to allow for a smooth transition in the event of a change of control of the Company.
 
     In the event of a merger, acquisition or similar change in control of the Company, the 1992 Stock Option Plan, the 1996 Directors’ Stock Option Plan, the 2002 Equity Incentive Plan and the 2006 Directors Plan provide that each outstanding option and award will accelerate so that each option will be fully exercisable for all of the shares subject to such option immediately prior to the effective date of the transaction and each other type of award shall be fully vested. In addition, upon the occurrence of such transaction, the 2002 Equity Incentive Plan provides that all of the outstanding repurchase rights of the Company with respect to shares of Common Stock acquired upon exercise of options granted, as well as shares of restricted stock, under the 2002 Equity Incentive Plan (and the proposed 2011 Incentive Award Plan) will terminate.
 
     In January 2003, the Company entered into employment agreements with certain executive officers and key employees which were amended in 2008 to comply with the requirements of Code Section 409A. These agreements provide for severance pay, in lump-sum payment, equal to a percentage of annual salary (150% in the case of the Chief Executive Officer, 125% in the case of the Chief Financial Officer, and 110% in the case of each of the other executive officers) plus benefits continuation for one year to the affected executive officer in the event his or her employment is terminated involuntarily without cause. Payments under these agreements are to be reduced by the amount of any payments made under the Severance Plan previously described. The employment agreements provide that such executive officers may not interfere with the business of the Company by soliciting or attempting to solicit any employee of the Company to terminate his or her employment in order to become an employee, consultant or independent contractor to or for any competitor of the Company. The Compensation Committee believes that these severance benefits remain essential to fulfill our objective to recruit, retain and develop key management talent in the competitive market. These arrangements enable the Company to recruit and retain high-quality new management talent because they provide reasonable protection to the executive in the event that he or she is not retained under limited circumstances.
 
     In conjunction with the implementation of the new leadership structure, Thomas B. Okarma, Ph.D., M.D. left as Geron’s President and Chief Executive Officer and as a member of the Board, effective February 8, 2011. On February 11, 2011, the Company and Dr. Okarma entered into a Transition and Separation Agreement (the Separation Agreement), effective as of February 19, 2011, that provides for, among other things, a lump-sum cash severance payment of $802,500 and up to 12 months of continued health care coverage under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), which he is entitled to receive in connection with his termination of employment under his 2003 employment agreement, and the full acceleration of vesting and exercisability of previously unvested stock options to purchase up to 264,169 shares of the Company’s common stock. In addition, the exercise period of all stock options held by Dr. Okarma was extended to the earlier of February 8, 2014 and the original expiration date of such stock option. As consideration, Dr. Okarma has provided the Company with a general release of claims against the Company. In addition, pursuant to the Separation Agreement, Dr. Okarma has agreed to serve as a non-exclusive independent consultant to the Company until July 9, 2013 and will receive for such services an aggregate of $401,250 in consulting fees, payable in quarterly installments, and a lump-sum cash payment of $72,000 that is intended to compensate Dr. Okarma for expenses incurred by him in connection with office space and administrative support during the consulting period. Dr. Okarma is also entitled to continued vesting of 170,000 shares of unvested restricted stock awards such that the shares will become vested in full on August 8, 2011 if Dr. Okarma continues to serve as a consultant to the Company through such time, and 337,500 shares of performance-based restricted stock will remain eligible for vesting based on Dr. Okarma’s continued service as a consultant and in accordance with the original terms of the award if the respective performance conditions are achieved by July 9, 2013. The Company is also obligated to pay Dr. Okarma $24,000, which is intended to compensate him for healthcare benefits not covered by Medicare and up to $12,500 for the reimbursement of legal fees. The indemnification and confidentiality provisions of his 2003 employment agreement with the Company remain in full force and effect.
 
46
 

 

Perquisites
 
     Executive officers receive limited perquisites consisting of limited tax and financial planning services. We believe that providing these benefits is a relatively inexpensive way to enhance the competitiveness of the executive’s compensation package.
 
Tax and Accounting Implications for Executive Compensation
 
     The Compensation Committee is responsible to address the issues raised by Section 162(m) of the Code, which makes certain “non-performance-based” compensation to certain executives of the Company in excess of $1,000,000 non-deductible to the Company. To qualify as “performance-based” under Section 162(m), compensation payments must be determined pursuant to a plan, by a committee of at least two “outside” directors (as defined in the regulations promulgated under the Code) and must be based on achieving objective performance goals. In addition, the material terms of the plan must be disclosed to and approved by stockholders and the outside directors or the Compensation Committee, as applicable, must certify that the performance goals were achieved before payments can be awarded.
 
     The Compensation Committee will continue to examine the effects of Section 162(m), to monitor the level of compensation paid to the Company’s executive officers and take appropriate action in response to the provisions of Section 162(m) to the extent practicable while maintaining competitive compensation practices. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee reserves the right to recommend and award compensation that is not deductible under Section 162(m).
 
     In addition to considering the tax consequences, the Compensation Committee considers the accounting consequences of, including the impact of expenses being recognized in connection with equity awards, its decisions in determining the size and form of different equity-based awards.
 
COMPENSATION COMMITTEE REPORT(1)
 
     Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and contained within this Proxy Statement with management and, based on such review and discussions, our Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated into our Annual Report on Form 10-K for the year ended December 31, 2010.
 
     Submitted on February 22, 2011 by the members of the Compensation Committee of the Board of Directors:
 
Alexander E. Barkas, Ph.D.             Compensation Committee Chair
Thomas Hofstaetter, Ph.D.   Compensation Committee Member
____________________
 
(1)       This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Exchange Act of 1934, as amended (the Exchange Act), or the Securities Act of 1933, as amended (the Securities Act), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

47
 

 

EXECUTIVE COMPENSATION TABLES
 
2010 Summary Compensation Table
 
     The following table includes information concerning compensation for the years ended December 31, 2010, 2009 and 2008 to the Principal Executive Officer, Principal Financial Officer and the three most highly compensated executive officers of the Company (our “Named Executive Officers”).
 
                                All      
                    Stock   Option   Other      
        Salary   Bonus   Awards   Awards   Compensation   Total
Name and Principal Position         Year       ($)       ($)(2)       ($)(1)       ($)(1)       ($)(3)       ($)
Thomas B. Okarma, Ph.D., M.D(4)   2010   $ 535,000   $ 283,800   $ 666,800   $ 287,410        $ 16,368        $ 1,789,378
       Former President and Chief   2009     535,000     282,500     717,200     1,551,558       15,742       3,102,000
       Executive Officer   2008     535,000     280,900     198,500     788,750       14,508       1,817,658
David L. Greenwood(5)                                            
       President, Interim Chief   2010   $ 415,000   $ 165,100   $ 555,975   $ 215,558     $ 38,498     $ 1,390,131
       Executive Officer and Chief   2009     415,000     164,300     570,500     606,356       36,817       1,792,973
       Financial Officer   2008     415,000     163,400     148,875     607,114       36,623       1,371,012
Stephen M. Kelsey, M.D., F.R.C.P,                                            
       F.R.C.Path(6)                                            
       Executive Vice President,   2010   $ 400,000   $ 159,100   $ 555,975   $ 215,558     $ 36,697     $ 1,367,330
       Chief Medical Officer, Oncology   2009     272,821     158,400     193,600     735,060       12,101       1,371,982
Melissa A. Behrs   2010   $ 320,000   $ 113,200   $ 400,450   $ 172,446     $ 38,219     $ 1,044,315
       Senior Vice President, Oncology   2009     320,000     112,600     423,800     249,676       37,067       1,143,143
       Therapeutic Development   2008     320,000     112,000     99,250     131,459       33,971       696,680
Jane S. Lebkowski, Ph.D.                                            
       Senior Vice President,   2010   $ 335,000   $ 118,500   $ 489,850   $ 143,705     $ 35,827     $ 1,122,882
       Chief Scientific Officer   2009     335,000     117,900     423,800     374,514       35,200       1,286,414
       Cell Therapies   2008     335,000     117,300     99,250     194,627       32,271       778,448
____________________
 
(1)       Amounts represent the aggregate grant date fair value of stock awards and option awards granted during fiscal years 2010, 2009 and 2008. For additional information, refer to Note 8 of the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 regarding assumptions underlying the valuation of equity awards and the calculation method. For 2010, amounts shown under the “Stock Awards” column excludes the grant date fair value for performance-based restricted stock awards of 202,500 shares for Dr. Okarma, 180,000 shares each for Mr. Greenwood, Dr. Kelsey and Dr. Lebkowski and 135,000 shares for Ms. Behrs, granted in 2010 that vest upon attainment of certain performance conditions based upon the probable outcome of the performance conditions, which is consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718. The grant date fair value of the restricted stock awards with performance-related and market-related conditions determined in accordance with FASB ASC Topic 718 based upon achieving maximum level of performance under the respective performance or market conditions is $1,410,750, $1,254,000, $1,254,000, $940,500 and $1,254,000 for Dr. Okarma, Messrs. Greenwood and Kelsey, Ms. Behrs and Dr. Lebkowski, respectively. Refer to the supplemental table on page 52 for information as to each Named Executive Officers unvested stock award holdings and vested and unvested stock option holdings and page 50 for the number of stock awards and option awards granted during 2010.

48
 

 

(2)       Amounts represent cash payments for Annual Incentive Awards. See discussion on page 39.
 
(3)   Amounts shown include: (i) the net portion of life and health insurance premiums paid by the Company; (ii) the matching contributions made to the Geron 401(k) Plan on behalf of the Named Executive Officers; and (iii) contributions toward tax return preparation services as follows:

                  401(k) Match   Tax Return    
Name         Year       Premiums ($)       ($)(a)       Preparation ($)       Total ($)
Thomas B. Okarma, Ph.D., M.D.   2010      $ 13,868         $           $ 2,500        $ 16,368
    2009       13,242                 2,500       15,742
    2008       12,008                 2,500       14,508
David L. Greenwood   2010     $ 13,868       $ 22,000       $ 2,630     $ 38,498
    2009       13,242         22,000         1,575       36,817
    2008       12,008         20,500         4,115       36,623
Stephen M. Kelsey, M.D., F.R.C.P, F.R.C.Path.   2010     $ 19,045       $ 16,500       $ 1,152     $ 36,697
    2009       12,101                       12,101
Melissa A. Behrs   2010     $ 19,219       $ 16,500       $ 2,500     $ 38,219
    2009       18,067         16,500         2,500       37,067
    2008       15,971         15,500         2,500       33,971
Jane S. Lebkowski, Ph.D.   2010     $ 13,827       $ 22,000         $ —     $ 35,827
    2009       13,200         22,000               35,200
    2008       11,771         20,500               32,271
____________________
 
(a)       Under Geron’s 401(k) Plan, all participating employees may contribute up to the annual Internal Revenue Service contribution limit. In December 2010, 2009 and 2008, the Board approved a matching contribution equal to 100% of each employee’s annual contributions during 2010, 2009 and 2008, respectively. The matching contribution is invested in Geron Common Stock and vests ratably over four years for each year of service completed by the employee, commencing from the date of hire, until it is fully vested when the employee has completed four years of service. The 2010 match was made on January 3, 2011 at $5.26 per share. The 2009 match was made on January 4, 2010 at $6.22 per share. The 2008 match was made on January 2, 2009 at $4.82 per share.
     
(4)   Dr. Okarma separated employment from the Company in February 2011.
     
(5)   Mr. Greenwood was appointed President, Interim Chief Executive Officer and Chief Financial Officer in February 2011. Previously, he was Executive Vice President and Chief Financial Officer.
     
(6)   Dr. Kelsey joined the Company in April 2009.

49
 

 

Grants of Plan-Based Awards for 2010
 
     The following table sets forth information with respect to the stock options and restricted stock awards granted during the year ended December 31, 2010 to each of the Named Executive Officers as listed in the Summary Compensation Table shown under the caption “Executive Compensation Tables.”
 
                    All   All              
                    Other   Other              
                    Option   Stock   Exercise          
                    Awards:   Awards:   or Base   Grant Date
                    Number of   Number of   Price   Fair Value of
        Estimated Future Payouts Under   Securities   Shares of   of Stock   Stock and
        Equity Incentive Plan Awards   Underlying   Stock or   Option   Option
        Threshold   Target   Maximum   Options   Units   Awards   Awards
Name       Grant Date     (#)     (#)     (#)     (#)     (#)     ($/Sh)     ($)(1)
Thomas B. Okarma, Ph.D., M.D.   5/19/10(2)           100,000             $ 5.29       $ 287,410  
    5/19/10(3)                 50,000                 264,500  
    7/9/10(5)     67,500                             336,150  
    7/9/10(6)     67,500                             336,150  
    7/9/10(7)     67,500                             336,150  
    7/9/10(8)     135,000                             402,300  
David L. Greenwood   5/19/10(2)           75,000             $ 5.29       $ 215,558  
    5/19/10(3)                 37,500                 198,375  
    7/9/10(5)     20,000                             99,600  
    7/9/10(6)     20,000                             99,600  
    7/9/10(7)     140,000                             697,200  
    7/9/10(8)     120,000                             357,600  
Stephen M. Kelsey, M.D., F.R.C.P,    5/19/10(2)    —         75,000             $ 5.29       $ 215,558   
F.R.C.Path   5/19/10(3)                 37,500                 198,375  
    7/9/10(5)     140,000                             697,200  
    7/9/10(6)     20,000                             99,600  
    7/9/10(7)     20,000                             99,600  
    7/9/10(8)     120,000                             357,600  
Melissa A. Behrs   5/19/10(2)           50,000             $ 5.29       $ 143,705  
    5/19/10(4)           10,000             $ 5.29         28,741  
    5/19/10(3)                 25,000                 132,250  
    7/9/10(5)     105,000                             522,900  
    7/9/10(6)     15,000                             74,700  
    7/9/10(7)     15,000                             74,700  
    7/9/10(8)     90,000                             268,200  
Jane S. Lebkowski, Ph.D.   5/19/10(2)           50,000             $ 5.29       $ 143,705  
    5/19/10(3)                 25,000                 132,250  
    7/9/10(5)     20,000                             99,600  
    7/9/10(6)     130,000                             647,400  
    7/9/10(7)     30,000                             149,400  
    7/9/10(8)     120,000                             357,600  

50
 

 

____________________
 
(1)       Amounts represent the grant date fair value of stock options and restricted stock awards calculated in accordance with FASB ASC Topic 718. For additional information, refer to Note 8 of the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 regarding assumptions underlying the valuation of equity awards and the calculation method.
 
(2)   Options are exercisable in a series of 48 equal consecutive monthly installments commencing May 19, 2010, provided the executive continues to provide services to the Company.
 
(3)   Restricted stock awards vest in a series of four equal consecutive annual installments commencing May 28, 2010, provided the executive continues to provide services to the Company.
 
(4)   Options are exercisable in a series of 24 equal consecutive monthly installments commencing June 2, 2010, provided the executive continues to provide services to the Company.
 
(5)   Restricted stock awards vest in full upon achievement of a clinical development milestone related to Phase 2 clinical trial data for the imetelstat program during a three-year performance period.
 
(6)   Restricted stock awards vest in full upon achievement of a clinical development milestone related to Phase 1 clinical trial data for the GRNOPC1 program during a three-year performance period.
 
(7)   Restricted stock awards vest in full upon completion of a specific strategic initiative related to the Company’s cell therapy programs during a three-year performance period.
 
(8)   Restricted stock awards vest upon attainment of a market price threshold of our Common Stock within 24 months and a higher market price threshold of our Common Stock within 36 months.
 
    Further information on performance criteria is provided on page 45.

51
 

 

Outstanding Equity Awards Value at Fiscal Year-End
 
     The following table includes information with respect to the value of all outstanding equity awards previously awarded to the Named Executive Officers as of December 31, 2010.
 
        Option Awards   Stock Awards
                                                          Equity
                                                          Incentive
                                                    Equity   Plan
                                                    Incentive   Awards:
                                                    Plan   Market or
                                                    Awards:   Payout
                                                    Number   Value of
                                                    of   Unearned
                                                    Shares,   Shares,
        Number   Number                         Market   Units or   Units or
        of   of                     Number of   Value of   Other   Other
        Securities   Securities                     Shares or   Shares   Rights   Rights
        Underlying   Underlying                     Units of   or Units of   That   That
        Unexercised   Unexercised   Option             Stock   Stock   Have   Have
        Options   Options   Exercise   Option         That Have   That Have   Not   Not
  Grant    Exercisable   Unexercisable    Price    Expiration   Grant   Not Vested   Not Vested   Vested   Vested
Name   Date   (#)   (#)   ($)   Date    Date    (#)    ($)(1)    (#)    ($)(1)
Thomas B. Okarma, 1/26/01 (2)   150,000           $ 18.63       1/26/11   5/23/07 (11)   12,500     $ 64,875                  
       Ph.D., M.D.(19) 12/14/01 (3)   90,000         $ 8.23     12/14/11   5/28/08 (11)   25,000     $ 129,750                  
  6/27/02 (3)   60,000         $ 8.23     6/27/12   5/29/09 (11)   37,500     $ 194,625                  
  9/5/02 (2)   245,000         $ 3.76     9/5/12   5/29/09 (12)   45,000     $ 233,550                  
  5/30/03 (2)   100,000         $ 5.08     5/30/13   5/19/10 (11)   50,000     $ 259,500                  
  5/27/04 (2)   100,000         $ 7.56     5/27/14   7/9/10 (15)                 67,500       $ 350,325  
  5/6/05 (2)   110,000         $ 6.40     5/6/15   7/9/10 (16)                 67,500       $ 350,325  
  5/24/06 (2)   175,000         $ 6.63     5/24/16   7/9/10 (17)                 67,500       $ 350,325  
  5/23/07 (2)   89,583     10,417     $ 9.32     5/23/17   7/9/10 (18)                  135,000       $ 700,650  
  5/28/08 (2)   64,583     35,417     $ 3.97     5/28/18                                    
  5/28/08 (4)   285,000         $ 3.97     5/28/18                                    
  5/29/09 (2)   39,583     60,417     $ 6.52     5/29/19                                    
  5/29/09 (6)   27,708     7,292     $ 6.52     5/29/19                                    
  5/29/09 (7)   212,500     87,500     $ 6.52     5/29/19                                    
  5/19/10 (2)   14,583     85,417     $ 5.29     5/19/20                                    
David L. Greenwood(20) 1/26/01 (2)   80,000         $ 18.63     1/26/11   5/23/07 (11)   9,375     $ 48,656                  
  12/14/01 (3)   75,000         $ 8.23     12/14/11   5/28/08 (11)   18,750     $ 97,313                  
  6/27/02 (3)   50,000         $ 8.23     6/27/12   5/29/09 (11)   28,125     $ 145,969                  
  9/5/02 (2)   145,000         $ 3.76     9/5/12   5/29/09 (12)   37,500     $ 194,625                  
  5/30/03 (2)   75,000         $ 5.08     5/30/13   5/19/10 (11)   37,500     $ 194,625                  
  5/27/04 (2)   75,000         $ 7.56     5/27/14   7/9/10 (15)                 20,000       $ 103,800  
  5/6/05 (2)   85,000         $ 6.40     5/6/15   7/9/10 (16)                 20,000       $ 103,800  
  5/24/06 (2)   125,000         $ 6.63     5/24/16   7/9/10 (17)                 140,000       $ 726,600  
  5/23/07 (2)   67,188     7,812     $ 9.32     5/23/17   7/9/10 (18)                 120,000       $ 622,800  
  5/28/08 (2)   48,438     26,562     $ 3.97     5/28/18                                    
  5/28/08 (4)   221,341         $ 3.97     5/28/18                                    
  5/29/09 (2)   29,688     45,312     $ 6.52     5/29/19                                    
  5/29/09 (6)   27,708     7,292     $ 6.52     5/29/19                                    
  5/29/09 (8)   11,667     8,333     $ 6.52     5/29/19                                    
  5/29/09 (9)   20,000     20,000     $ 6.52     5/29/19                                    
  5/19/10 (2)   10,938     64,062     $ 5.29     5/19/20                                    
Stephen M. Kelsey, M.D., 5/20/09 (10)   83,333     116,667     $ 6.76     5/20/19   4/27/09 (12)   30,000     $ 155,700                  
       F.R.C.P, F.R.C.Path 5/19/10 (2)   10,938     64,062     $ 5.29     5/19/20   5/19/10 (11)   37,500     $ 194,625                  
                                7/9/10 (15)                 140,000       $ 726,600  
                                7/9/10 (16)                 20,000       $ 103,800  
                                7/9/10 (17)                 20,000       $ 103,800  
                                7/9/10 (18)                 120,000       $ 622,800  

52
 

 

        Option Awards   Stock Awards
                                                          Equity
                                                          Incentive
                                                    Equity   Plan
                                                    Incentive   Awards:
                                                    Plan   Market or
                                                    Awards:   Payout
                                                    Number   Value of
                                                    of   Unearned
                                                    Shares,   Shares,
        Number   Number                         Market   Units or   Units or
        of   of                     Number of   Value of   Other   Other
        Securities   Securities                     Shares or   Shares   Rights   Rights
        Underlying   Underlying                     Units of   or Units of   That   That
        Unexercised   Unexercised   Option             Stock   Stock   Have   Have
        Options   Options   Exercise   Option         That Have   That Have   Not   Not
  Grant    Exercisable    Unexercisable    Price    Expiration   Grant   Not Vested   Not Vested   Vested   Vested
Name   Date   (#)   (#)   ($)   Date    Date    (#)    ($)(1)    (#)    ($)(1)
Melissa A. Behrs 1/26/01 (2)   20,000         $ 18.63     1/26/11   5/23/07 (11)   6,250     $ 32,438                  
  12/14/01 (3)   32,500         $ 8.23     12/14/11   5/28/08 (11)   12,500     $ 64,875                  
  4/8/02 (2)   15,000         $ 7.49     4/8/12   5/29/09 (11)   18,750     $ 97,313                  
  9/5/02 (2)   18,961         $ 3.76     9/5/12   5/29/09 (12)   30,000     $ 155,700                  
  5/30/03 (2)   17,968         $ 5.08     5/30/13   5/19/10 (11)   25,000     $ 129,750                  
  5/27/04 (2)   37,500         $ 7.56     5/27/14   7/9/10 (15)                  105,000       $ 544,950  
  5/6/05 (2)   60,000         $ 6.40     5/6/15   7/9/10 (16)                 15,000       $ 77,850  
  5/24/06 (2)   60,000         $ 6.63     5/24/16   7/9/10 (17)                 15,000       $ 77,850  
  5/23/07 (2)   44,792     5,208     $ 9.32     5/23/17   7/9/10 (18)                 90,000       $ 467,100  
  5/28/08 (2)   32,292     17,708     $ 3.97     5/28/18                                    
  5/28/08 (13)   14,167         $ 3.97     5/28/18                                    
  5/29/09 (2)   19,792     30,208     $ 6.52     5/29/19                                    
  5/29/09 (9)   10,000     10,000     $ 6.52     5/29/19                                    
  5/19/10 (2)   7,292     42,708     $ 5.29     5/19/20                                    
  5/19/10 (14)   2,500     7,500     $ 5.29     5/19/20                                    
Jane S. Lebkowski, Ph.D. 1/26/01 (2)   75,000         $ 18.63     1/26/11   5/23/07 (11)   6,250     $ 32,438                  
  12/14/01 (3)   54,000         $ 8.23     12/14/11   5/28/08 (11)   12,500     $ 64,875                  
  6/27/02 (3)   36,000         $ 8.23     6/27/12   5/29/09 (11)   18,750     $ 97,313                  
  9/5/02 (2)   70,000         $ 3.76     9/5/12   5/29/09 (12)   30,000     $ 155,700                  
  5/30/03 (2)   37,500         $ 5.08     5/30/13   5/19/10 (11)   25,000     $ 129,750                  
  5/27/04 (2)   50,000         $ 7.56     5/27/14   7/9/10 (15)                 20,000       $ 103,800  
  5/6/05 (2)   60,000         $ 6.40     5/6/15   7/9/10 (16)                 130,000       $ 674,700  
  5/24/06 (2)   75,000         $ 6.63     5/24/16   7/9/10 (17)                 30,000       $ 155,700  
  5/23/07 (2)   44,792     5,208     $ 9.32     5/23/17   7/9/10 (18)                 120,000       $ 622,800  
  5/28/08 (2)   32,292     17,708     $ 3.97     5/28/18                                    
  5/28/08 (5)   45,000         $ 3.97     5/28/18                                    
  5/29/09 (2)   19,792     30,208     $ 6.52     5/29/19                                    
  5/29/09 (6)   7,917     2,083     $ 6.52     5/29/19                                    
  5/29/09 (8)   11,667     8,333     $ 6.52     5/29/19                                    
  5/29/09 (9)   12,500     12,500     $ 6.52     5/29/19                                    
  5/19/10 (2)   7,292     42,708     $ 5.29     5/19/20                                    
____________________
 
(1)         Amounts represent an estimate of the market value of unvested restricted stock awards as of December 31, 2010, assuming a market value of $5.19 per share.
 
(2)   Options are exercisable in a series of 48 equal consecutive monthly installments commencing on the date of grant provided the executive continues to provide services to the Company.
 
(3)   Options are exercisable in a series of 48 equal consecutive monthly installments commencing in January 2002, provided the executive continues to provide services to the Company.
 
(4)   Options are exercisable in a series of 24 equal consecutive monthly installments commencing in September 2008, provided the executive continues to provide services to the Company.
 
53
 

 
 
 
 

(5)         Options are exercisable in a series of 24 equal consecutive monthly installments commencing in May and September 2008, provided the executive continues to provide services to the Company.
 
(6)   Options are exercisable in a series of 24 equal consecutive monthly installments commencing in May 2009, provided the executive continues to provide services to the Company.
 
(7)   Options are exercisable in a series of 24 equal consecutive monthly installments commencing in July 2009, provided the executive continues to provide services to the Company.
 
(8)   Options are exercisable in a series of 24 equal consecutive monthly installments commencing in October 2009, provided the executive continues to provide services to the Company.
 
(9)   Options are exercisable in a series of 24 equal consecutive monthly installments commencing in December 2009, provided the executive continues to provide services to the Company.
 
(10)   Option is exercisable as follows: 25,000 shares on October 27, 2009, the remaining 175,000 shares become exercisable in a series of 42 equal consecutive monthly installments commencing October 27, 2009.
 
(11)   Restricted stock awards vest in four equal annual installments commencing on the date of grant, provided the executive continues to provide services to the Company.
 
(12)   Restricted stock awards vest over two years with 25% of the total award vesting on the first anniversary of the date of grant and the remaining 75% on the second anniversary of the date of grant, provided the executive continues to provide services to the Company.
 
(13)   Options are exercisable in a series of 24 equal consecutive monthly installments commencing in October 2008, provided the executive continues to provide services to the Company.
 
(14)   Options are exercisable in a series of 24 equal consecutive monthly installments commencing in June 2010, provided the executive continues to provide services to the Company.
 
(15)   Restricted stock awards vest in full upon achievement of a clinical development milestone related to Phase 2 clinical trial data for the imetelstat program during a three-year performance period.
 
(16)   Restricted stock awards vest in full upon achievement of a clinical development milestone related to Phase 1 clinical trial data for the GRNOPC1 program during a three-year performance period.
       
(17)   Restricted stock awards vest in full upon completion of a specific strategic initiative related to the Company’s cell therapy programs during a three-year performance period.
 
(18)   Restricted stock awards vest in full following a three-year performance period upon attainment of a market price threshold of our Common Stock within 24 months and a higher market price threshold of our Common Stock within 36 months.
 
(19)   Dr. Okarma separated employment from the Company in February 2011.
 
(20)   Mr. Greenwood was appointed President, Interim Chief Executive Officer and Chief Financial Officer in February 2011. Previously, he was Executive Vice President and Chief Financial Officer.
 
Option Exercises and Stock Awards Vested in 2010
 
     The following table includes certain information with respect to the options exercised and restricted stock awards vested by the Named Executive Officers during the year ended December 31, 2010.
 
  Option Awards   Stock Awards
  Number of   Value   Number of   Value
  Shares Acquired   Realized on   Shares Acquired   Realized on
  On Exercise       Exercise       On Vesting       Vesting
Name   (#)   ($)   (#)   ($)
Thomas B. Okarma, Ph.D., M.D.   $ —   52,500     $ 275,450  
David L. Greenwood   $ —   40,625     $ 213,188  
Stephen M. Kelsey, M.D., F.R.C.P, F.R.C.Path.   $ —   10,000     $ 56,300  
Melissa A. Behrs   $ —   28,750     $ 150,925  
Jane S. Lebkowski, Ph.D.   $ —   28,750     $ 150,925  

54
 

 

Pension Benefits
 
     None of the Named Executive Officers participates in or has an account balance under qualified or non-qualified defined benefit plans sponsored by the Company.
 
Non-Qualified Deferred Compensation
 
     None of the Named Executive Officers participates in or has an account balance under non-qualified defined contribution plans or other deferred compensation plans maintained by the Company.
 
Potential Payments Upon Termination or Change in Control
 
     See discussion of potential payments upon termination or change in control in the section entitled, “Compensation Discussion and Analysis—Severance and Change in Control Benefits.”
 
     The table below summarizes the potential payments under the Severance Plan, individual employment agreements for the Named Executive Officers and the Company’s equity plans if a qualifying termination and/or change in control event occurred on December 31, 2010:
 
      Before Change in                    
      Control   After Change in Control          
      Termination w/o   Termination w/o          
      Cause or   Cause or   Change
Officer and Position   Benefit   for Good Reason(1)      for Good Reason(2)(3)      in Control(3)
Thomas B. Okarma, Ph.D., M.D.(4) Severance         $ 802,500                 $ 802,500                  
       Former President and Chief Benefits       13,868         27,496            
       Executive Officer Option and                                   
  Restricted                              
  Stock Vesting               3,464,975       $ 3,464,975  
Total       $ 816,368         $ 4,294,971       $ 3,464,975  
David L. Greenwood(5) Severance     $ 518,750       $ 518,750            
       President, Interim Chief Benefits       13,868         22,914            
       Executive Officer and Option and                              
       Chief Financial Officer Restricted                              
  Stock Vesting               2,815,324       $ 2,815,324  
Total       $ 532,618       $ 3,356,988       $ 2,815,324  
Stephen M. Kelsey, M.D., F.R.C.P, F.R.C.Path. Severance     $       $ 500,000            
       Executive Vice President, Benefits               31,775            
       Chief Medical Officer, Oncology Option and                              
  Restricted                              
  Stock Vesting               1,907,325       $ 1,907,325  
Total       $       $ 2,439,100       $ 1,907,325  
Melissa A. Behrs Severance     $ 352,000       $ 400,000            
       Senior Vice President, Benefits       19,219         31,993            
       Oncology Therapeutic Option and                              
       Development Restricted                              
  Stock Vesting               1,755,199       $ 1,755,199  
Total       $ 371,219       $ 2,187,192       $ 1,755,199  
Jane S. Lebkowski, Ph.D. Severance     $ 368,500       $ 418,750            
       Senior Vice President, Benefits       13,827         22,862            
       Chief Scientific Officer, Option and                              
       Cell Therapies Restricted                              
  Stock Vesting               2,257,200       $ 2,257,200  
Total       $ 382,327       $ 2,698,812       $ 2,257,200  
                                 
55
 

 
____________________
 
(1)         Amounts represent lump sum severance payments and continued benefits that could be paid to the Named Executive Officer under such executive’s employment agreement as of December 31, 2010.
 
(2)   Amounts represent lump sum payments and continued benefits that could be paid to the Named Executive Officer under the Company’s Severance Plan in the event of a qualifying termination in connection with a change in control on December 31, 2010. Any payments made under the Named Executive Officer’s employment agreement would be deducted from payments due under the Severance Plan.
 
(3)   Amounts represent an estimate of the intrinsic value of options that would become fully vested and exercisable and restricted stock awards that would fully vest upon a change of control based on a market value of $5.19 per share of common stock as of December 31, 2010.
 
(4)   Dr. Okarma separated employment from the Company in February 2011. See “2010 Compensation Decisions—Severance and Change in Control Benefits” for a description of the benefits Dr. Okarma is entitled to in connection with his separation.
 
(5)   Mr. Greenwood was appointed President, Interim Chief Executive Officer and Chief Financial Officer in February 2011. Previously, he was Executive Vice President and Chief Financial Officer.
 
CERTAIN TRANSACTIONS
 
     There has not been, nor is there currently proposed, any transaction or series of similar transactions to which the Company was or is to be a party in which the amount involved exceeds $120,000 and in which any current director, executive officer, holder of more than 5% of the Company’s Common Stock or any immediate family member of any of the foregoing persons had or will have a direct or indirect material interest other than compensation arrangements, described under the caption “Executive Compensation,” and the transactions described below.
 
     The Company has entered into indemnity agreements with all of its officers and directors which provide, among other things, that the Company will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines, settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason for his or her position as a director, officer or other agent of the Company, and otherwise to the full extent permitted under Delaware law and the Company’s Bylaws.
 
Policies and Procedures
 
     Our Audit Committee is responsible for reviewing and approving, in advance, all related party transactions. Related parties include any of our directors or executive officers, certain of our stockholders and their immediate family members. This obligation is set forth in writing in the Audit Committee charter. A copy of the Audit Committee charter is available on our website at http://www.geron.com in the Investors section under “Corporate Governance.” To identify related party transactions, each year, our directors and officers complete Director and Officer Questionnaires identifying any transactions with us in which the executive officer or director or their family members have an interest. We review related party transactions due to the potential for a conflict of interest. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, with our interests. In addition, our Nominating Committee Charter determines, on an annual basis, which members of our Board meet the definition of independent director as defined in Nasdaq Rule 5605(a)(2). This obligation is set forth in writing in the Nominating Committee charter. A copy of the Nominating charter is available on our website at http://www.geron.com in the Investors section under “Corporate Governance.” Our Nominating Committee reviews and discusses any relationships with directors that would potentially interfere with his or her exercise of independent judgment in carrying out the responsibilities of a director. Finally, our Code of Conduct establishes the corporate standards of behavior for all our employees, officers, and directors and sets our expectations of contractors and agents. The Code of Conduct is available on our website at http://www.geron.com in the Investors section under “Corporate Governance.” Our Code of Conduct requires any person who becomes aware of any departure from the standards in our Code of Conduct to report his or her knowledge promptly to a supervisor or an attorney in the legal department.
 
56
 

 

Compensation Committee Interlocks and Insider Participation
 
     Drs. Barkas and Hofstaetter and Mr. Zenner all served on the Compensation Committee for the fiscal year ended December 31, 2010, except that Mr. Zenner retired from the Board in May 2010. With the exception of Dr. Barkas’ term as President and Chief Executive Officer of the Company from March 1992 until May 1993, neither Drs. Barkas or Hofstaetter nor Mr. Zenner is a former or current officer or employee of the Company or any of its subsidiaries. None of the executive officers serves as a member of a compensation committee of any entity that has one or more executive officers serving as a member of the Company’s Board or Compensation Committee.
 
CORPORATE GOVERNANCE
 
     The Company has an ongoing commitment to good governance and business practices. In furtherance of this commitment, the Company regularly monitors developments in the area of corporate governance and reviews its processes and procedures in light of such developments. The Company complies with the rules and regulations promulgated by the SEC and Nasdaq, and implements other corporate governance practices which it believes are in the best interest of the Company and its stockholders.
 
Code of Conduct
 
     In 2003, the Company adopted a Code of Conduct (the Code of Conduct), which is available in its entirety on the Company’s website at http://www.geron.com and to any stockholder otherwise requesting a copy. All Company employees, officers, and directors, including the Chief Executive Officer and Chief Financial Officer, are required to adhere to the Code of Conduct in discharging their work-related responsibilities. Employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Conduct. Amendments to the Code of Conduct, and any waivers from the Code of Conduct granted to directors or executive officers, will also be made available through the Company’s website as they are adopted.
 
     In keeping with the Sarbanes-Oxley Act of 2002, the Audit Committee has established procedures for the receipt and handling of complaints received by the Company regarding accounting, internal accounting controls or auditing matters. Contact information for the Chairperson of the Audit Committee has been distributed to all employees to allow for the confidential, anonymous submission by its employees of concerns regarding accounting or auditing matters.
 
Communications with the Board of Directors
 
     Stockholders wishing to communicate with the Board, or with a specific Board member, may do so by writing to the Board, or to the particular Board member, and delivering the communication in person or mailing it to: Board of Directors, c/o David J. Earp, Corporate Secretary, Geron Corporation, 230 Constitution Drive, Menlo Park, CA 94025. All mail addressed in this manner will be delivered to the Chair or Chairs of the Committees with responsibilities touching most closely on the matters addressed in the communication. From time to time, the Board may change the process by means of which stockholders may communicate with the Board or its members. Please refer to the Company’s website for any changes to this process.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
     Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities (collectively, Reporting Persons), to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Reporting Persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
 
     To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, the Company believes that during fiscal year ended December 31, 2010, all Reporting Persons complied with the applicable filing requirement.
 
57
 

 

Stockholder Nominations and Proposals for 2012 Annual Meeting
 
     The Company expects to hold its 2012 Annual Meeting of Stockholders in May 2012. All proposals or director nominations of stockholders intended to be presented at the 2012 Annual Meeting of Stockholders must be directed to the attention of the Company’s Secretary, at the address set forth on the first page of this proxy statement. A stockholder’s notice to include any proposal in the 2012 Annual Meeting of Stockholders must be delivered to the Company’s Secretary not less than 90 days and not more than 120 days before the anniversary date of the immediately preceding annual meeting. For the 2012 Annual Meeting of Stockholders, the notice must be delivered between January 11, 2012 and February 10, 2012. However, if the 2012 Annual Meeting of Stockholders is not within 30 days of May 11, 2012, the notice must be delivered no later than the close of business on the 10th day following the earlier of the day on which the first public announcement of the date of the 2012 Annual Meeting of Stockholders was made or the day the notice of the 2012 Annual Meeting of Stockholders is mailed. In addition, the Company’s Bylaws provide that the stockholder’s notice must include certain information for the person making the proposal or the nomination for director, including:
     The stockholder’s notice must also include the following information for each proposed director nominee:
     Copies of the Company’s Bylaws may be obtained from the Company’s Secretary.
 
     Stockholders who wish to submit a proposed nominee to the Nominating Committee should send written notice to Dr. Alexander Barkas, Nominating Committee Chairman, Geron Corporation, 230 Constitution Drive, Menlo Park, CA 94025, within the time periods set forth above. Such notification should set forth all information relating to such nominee as is required to be disclosed in solicitations of proxies for elections of directors pursuant to Regulation 14A under the Exchange Act, including such person’s written consent to being named in a proxy statement as a nominee and to serving as a director if elected, the name and address of such stockholder or beneficial owner on whose behalf the nomination is being made, and the class and number of shares of the Company owned beneficially and of record by such stockholder or beneficial owner. The Nominating Committee will consider stockholder nominees on the same terms as nominees selected by the Nominating Committee.
 
     The Nominating Committee believes that nominees for election to the Board must possess certain minimum qualifications and attributes. The nominee: 1) must meet the objective independence requirements set forth by the SEC and Nasdaq, 2) must exhibit strong personal integrity, character and ethics, and a commitment to ethical business and accounting practices, 3) must not be involved in on-going litigation with the Company or be
 
58
 

 

employed by an entity which is engaged in such litigation and 4) must not be the subject of any on-going criminal investigations, including investigations for fraud or financial misconduct. In addition, the Committee may consider the following criteria, among others:
 
        (i)         experience in corporate management, such as serving as an officer or former officer of a publicly held company, and a general understanding of marketing, finance and other elements relevant to the success of a publicly traded company in today’s business environment;
   
  (ii)   experience in the Company’s industry and with relevant social policy concerns;
   
  (iii)   experience as a board member of other publicly held companies;
   
  (iv)   expertise in an area of the Company’s operations; and
   
  (v)   practical and mature business judgment, including the ability to make independent analytical inquiries.
 
     The Nominating Committee does not specifically consider diversity in identifying nominees for election as a director. However, specific experience or expertise that could assist the Company in developing its product candidates provides added value and insight to the Board. In general, the Nominating Committee aspires the Board to be comprised of individuals that represent a diversity of professional experience, perspective and experience, and who portray characteristics of diligence, commitment, mutual respect and professionalism with an emphasis on consensus building. The Board does not follow any ratio or formula to determine the appropriate mix. Rather, it uses its judgment to identify nominees whose backgrounds, attributes and experiences, taken as a whole, will contribute to the high standards of board service at the Company.
 
     Directors are expected to rigorously prepare for, attend and participate in Board meetings and meetings of the Committees of the Board on which they serve, to ask direct questions and require straight answers, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities and duties as directors. Each Board member is expected to ensure that other existing and planned future commitments do not materially interfere with the member’s service as an outstanding director.
 
OTHER MATTERS
 
     The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
 
  By Order of the Board of Directors,
 
  David J. Earp, J.D., Ph.D.
  Secretary
 
 
March 28, 2011
 
59
 

 

APPENDIX A
 
GERON CORPORATION
2011 INCENTIVE AWARD PLAN
(Adopted by the Board of Directors, March 2011)
 
ARTICLE 1.
 
PURPOSE
 
     The purpose of the Geron Corporation 2011 Incentive Award Plan (as it may be amended or restated from time to time, the “Plan”) is to promote the success and enhance the value of Geron Corporation (the “Company”) by linking the individual interests of the members of the Board, Employees, and Consultants to those of Company stockholders and by providing such individuals with an incentive to generate superior returns to Company stockholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.
 
ARTICLE 2.
 
DEFINITIONS AND CONSTRUCTION
 
     Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.
 
     2.1 “Administrator” shall mean the entity that conducts the general administration of the Plan as provided in Article 13. With reference to the duties of the Committee under the Plan which have been delegated to one or more persons pursuant to Section 13.6, or as to which the Board has assumed, the term “Administrator” shall refer to such person(s) unless the Committee or the Board has revoked such delegation or the Board has terminated the assumption of such duties.
 
     2.2 “Affiliate” shall mean (a) Subsidiary; and (b) any domestic eligible entity that is disregarded, under Treasury Regulation Section 301.7701-3, as an entity separate from either (i) the Company or (ii) any Subsidiary.
 
     2.3 “Applicable Accounting Standards” shall mean Generally Accepted Accounting Principles in the United States, International Financial Reporting Standards or such other accounting principles or standards as may apply to the Company’s financial statements under United States federal securities laws from time to time.
 
     2.4 “Award” shall mean an Option, a Restricted Stock award, a Restricted Stock Unit award, a Performance Award, a Dividend Equivalents award, a Deferred Stock award, a Deferred Stock Unit award, a Stock Payment award or a Stock Appreciation Right, which may be awarded or granted under the Plan (collectively, “Awards”).
 
     2.5 “Award Agreement” shall mean any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan.
 
     2.6 “Award Limit” shall mean with respect to Awards that shall be payable in Shares or in cash, as the case may be, the respective limit set forth in Section 3.3.
 
     2.7 “Board” shall mean the Board of Directors of the Company.
 
     2.8 “Change in Control” shall mean and includes each of the following:
 
          (a) as a result of any merger or consolidation, the voting securities of the Company outstanding immediately prior thereto represent (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity) less than 49% of the combined voting power of the voting securities of the Company or such surviving or acquiring entity outstanding immediately after such merger or consolidation;
 
A-1
 

 

          (b) during any period of twenty-four consecutive calendar months, the individuals who at the beginning of such period constitute the Board, and any new directors whose election by such Board or nomination for election by stockholders was approved by a vote of at least two-thirds of the members of such Board who were either directors on such Board at the beginning of the period or whose election or nomination for election as directors was previously so approved, for any reason cease to constitute at least a majority of the members thereof;
 
          (c) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) shall become the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 20% of the then outstanding shares of Common Stock of the Company;
 
          (d) any sale of all or substantially all of the assets of the Company; or
 
          (e) the complete liquidation or dissolution of the Company.
 
Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award which provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event with respect to such Award must also constitute a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5) to the extent required by Section 409A.
 
The Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change in Control and any incidental matters relating thereto.
 
     2.9 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance promulgated thereunder.
 
     2.10 “Committee” shall mean the Compensation Committee of the Board, or another committee or subcommittee of the Board, appointed as provided in Section 13.1.
 
     2.11 “Common Stock” shall mean the common stock of the Company, par value $0.001 per share.
 
     2.12 “Company” shall have the meaning set forth in Article 1.
 
     2.13 “Consultant” shall mean any consultant or adviser engaged to provide services to the Company or any Affiliate that qualifies as a consultant under the applicable rules of the Securities and Exchange Commission for registration of shares on a Form S-8 Registration Statement.
 
     2.14 “Covered Employee” shall mean any Employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of the Code.
 
     2.15 “Deferred Stock” shall mean a right to receive Shares awarded under Section 10.4.
 
     2.16 “Deferred Stock Unit” shall mean a right to receive Shares awarded under Section 10.5.
 
     2.17 “Director” shall mean a member of the Board, as constituted from time to time.
 
     2.18 “Dividend Equivalent” shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 10.2.
 
     2.19 “DRO” shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder.
 
     2.20 “Effective Date” shall mean the date the Plan is approved by the Company’s stockholders.
 
     2.21 “Eligible Individual” shall mean any person who is an Employee, a Consultant or a Non-Employee Director, as determined by the Committee.
 
     2.22 “Employee” shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code and the Treasury Regulations thereunder) of the Company or of any Affiliate.
 
A-2
 

 

     2.23 “Equity Restructuring” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of shares of Common Stock (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a change in the per share value of the Common Stock underlying outstanding Awards.
 
     2.24 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.
 
     2.25 “Fair Market Value” shall mean, as of any given date, the value of a Share determined as follows:
 
          (a) If the Common Stock is listed on any (i) established securities exchange (such as the New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market), (ii) national market system or (iii) automated quotation system on which the Shares are listed, quoted or traded, its Fair Market Value shall be the closing sales price for a Share as quoted on such exchange or system for such date or, if there is no closing sales price for a Share on the date in question, the closing sales price for a Share on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
 
          (b) If the Common Stock is not listed on an established securities exchange, national market system or automated quotation system, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a Share on such date, the mean of the high bid and low asked prices for a Share on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
 
          (c) If the Common Stock is neither listed on an established securities exchange, national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Administrator in good faith.
 
     2.26 “Greater Than 10% Stockholder” shall mean an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation thereof (as defined in Section 424(e) of the Code).
 
     2.27 “Holder” shall mean a person who has been granted an Award.
 
     2.28 “Incentive Stock Option” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of t