Outside Director Compensation Policy
THORNE HEALTHTECH, INC.
OUTSIDE DIRECTOR COMPENSATION POLICY
Adopted and approved July 9, 2021, and effective as of the Effective Date
Thorne HealthTech, Inc. (the Company) believes that providing cash and equity compensation to members of its Board of Directors (the Board, and members of the Board, the Directors) represents an effective tool to attract, retain and reward Directors who are not employees of the Company (the Outside Directors). This Outside Director Compensation Policy (the Policy) is intended to formalize the Companys policy regarding cash compensation and grants of equity awards to its Outside Directors. Unless otherwise defined herein, capitalized terms used in this Policy will have the meaning given such term in the Companys 2021 Equity Incentive Plan, as amended from time to time (or if such plan no longer is in use at the time of the grant of an equity award, the meaning given such term or any similar term in the equity plan then in place under which such equity award is granted) (such applicable plan, the Plan). Each Outside Director will be solely responsible for any tax obligations incurred by such Outside Director as a result of the equity awards and cash and other compensation such Outside Director receives under this Policy.
Subject to Section 9 of this Policy, this Policy will be effective as of the date of the first sale of Shares (or other common equity securities of the Company) to the general public upon the closing of an underwritten public offering (1) pursuant to an effective registration statement filed pursuant to Section 12(b) of the U.S. Securities Exchange Act of 1934, as amended, and (2) immediately after which such securities (i.e., the Shares or other common equity securities of the Company) are registered on a national securities exchange (as defined under then-applicable United States federal securities laws and regulations) (such date, the Effective Date).
1. CASH COMPENSATION
a. Annual Cash Retainers for Service as Outside Director. Each Outside Director will be paid a cash retainer of $40,000 per year. There are no per-meeting attendance fees for attending Board meetings or meetings of any committee of the Board.
b. Additional Annual Cash Retainers for Service as Non-Employee Chair, Committee Chair and Committee Member
i. As of the Effective Date, each Outside Director who serves as the Non-Employee Chair or chair or a member of a committee of the Board will be eligible to earn additional annual fees as follows:
Audit Committee Chair:
Member of Audit Committee:
Compensation Committee Chair:
Member of Compensation Committee:
For clarity, each Outside Director who serves as the chair of a committee will receive only the additional annual fee as the chair of the committee and not the additional annual fee as a member of such committee while serving as such chair, provided that the Outside Director who serves as the Non-Employee Chair will receive the annual fee as an Outside Director and the additional annual fee as the Non-Employee Chair.
c. Payments. Each annual cash retainer under this Policy will be paid quarterly in arrears on a prorated basis to each Outside Director who has served in the relevant capacity at any point during the immediately preceding fiscal quarter of the Company (Fiscal Quarter), and such payment will be made no later than 30 days following the end of such immediately preceding Fiscal Quarter. For purposes of clarity, an Outside Director who has served as an Outside Director, as a member of an applicable committee (or chair thereof) during only a portion of the relevant Fiscal Quarter will receive a prorated payment of the quarterly payment of the applicable annual cash retainer(s), calculated based on the number of days during such Fiscal Quarter such Outside Director has served in the relevant capacities. For purposes of clarity, an Outside Director who has served as an Outside Director, as a member of an applicable committee (or chair thereof), as applicable, from the Effective Date through the end of the Fiscal Quarter containing the Effective Date (the Initial Period) will receive a prorated payment of the quarterly payment of the applicable annual cash retainer(s), calculated based on the number of days during the Initial Period that such Outside Director has served in the relevant capacities.
2. EQUITY COMPENSATION
Outside Directors will be eligible to receive all types of Awards (except Incentive Stock Options) under the Plan, including discretionary Awards not covered under this Policy. All grants of Awards to Outside Directors pursuant to Section 2 of this Policy will be automatic and nondiscretionary, except as otherwise provided herein, and will be made in accordance with the following provisions:
a. No Discretion. No person will have any discretion to select which Outside Directors will be granted any Awards under this Policy or to determine the number of Shares to be covered by such Awards, except as provided in Sections 2(c)(iii) and 9 below.
b. Annual Award. On the first Trading Day immediately following the each Annual Meeting of the Companys stockholders (an Annual Meeting) that occurs after the Effective Date, each Outside Director automatically will be granted an award of Restricted Stock Units (an Annual Award) covering a number of Shares having a Value of $180,000; provided that the first Annual Award granted to an individual who first becomes an Outside Director following the Effective Date will have a Value equal to the product of (A) $180,000 multiplied by (B) a fraction, (i) the numerator of which is the number of fully completed days between the applicable date on which such individual first becomes an Outside Director and the date of the first Annual Meeting to occur after such individual first becomes an Outside Director, and (ii) the denominator of which is 365; and provided further that any resulting fraction shall be rounded down to the nearest whole Share. Each Annual Award will be scheduled to vest on the earlier of (x) the 1-year anniversary of the Annual Awards grant date, or (y) the day immediately before the date of the next Annual Meeting following the Annual Awards grant date, in each case, subject to the Outside Director continuing to be an Outside Director through the applicable vesting date.
c. Additional Terms of Annual Awards. The terms and conditions of each Annual Award will be as follows:
i. Each Annual Award will be granted under and subject to the terms and conditions of the Plan and the applicable form of Award Agreement previously approved by the Board or its Compensation Committee, as applicable, for use thereunder.
ii. For purposes of this Policy, Value means the grant date fair value as determined in accordance with U.S. generally accepted accounting principles, or such other methodology the Board or any committee of the Board designed by the Board with appropriate authority (the Designated Committee), as applicable, may determine prior to the grant of the applicable Award becoming effective.
iii. Revisions. The Board or the Designated Committee, as applicable and in its discretion, may change and otherwise revise the terms of Annual Awards granted under this Policy, including, without limitation, the number of Shares subject thereto and type of Award.
3. OTHER COMPENSATION AND BENEFITS
Outside Directors also may be eligible to receive other compensation and benefits, as may be determined by the Board or its Designated Committee, as applicable, from time to time.
4. CHANGE IN CONTROL
In the event of a Change in Control, each Outside Director will fully vest in his or her outstanding Company equity awards as of immediately prior to a Change in Control, including any Annual Awards, provided that the Outside Director continues to be an Outside Director through the date of the Change in Control.
5. ANNUAL COMPENSATION LIMIT
No Outside Director may be granted Awards with Values, and be provided cash retainers or fees, with amounts that, in any Fiscal Year, in the aggregate, exceed $1,000,000. Any Awards or other compensation provided to an individual (a) for his or her services as an Employee, or for his or her services as a Consultant other than as an Outside Director, or (b) prior to the Effective Date, will be excluded for purposes of the foregoing limit.
6. TRAVEL EXPENSES
Each Outside Directors reasonable, customary, and properly documented, out-of-pocket travel expenses to meetings of the Board and any of its committees, as applicable, will be reimbursed by the Company.
7. CODE SECTION 409A
In no event will cash compensation or expense reimbursement payments under this Policy be paid after the later of (a) the fifteenth (15th) day of the third (3rd) month following the end of the Companys taxable year in which the compensation is earned or expenses are incurred, as applicable, or (b) the fifteenth (15th) day of the third (3rd) month following the end of the calendar year in which the compensation is earned or expenses are incurred, as applicable, in compliance with the short-term deferral exception under Code Section 409A. It is the intent of this Policy that this Policy and all payments hereunder be exempt or excepted from or otherwise comply with the requirements of Code Section 409A so that none of the compensation to be provided hereunder will be subject to the additional tax imposed under Code Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be so exempt or comply. In no event will the Company Group have any responsibility, liability or obligation to reimburse, indemnify, or hold harmless an Outside Director or any other person for any taxes imposed, or other costs incurred, as a result of Code Section 409A.
8. STOCKHOLDER APPROVAL
The initial adoption of this Policy will be subject to approval by the Companys stockholders prior to the Effective Date. Unless otherwise required by applicable law, following such approval, the Policy will not be subject to approval by the Companys stockholders, including, for the avoidance of doubt, as a result of or in connection with an action taken with respect to this Policy as contemplated in Section 9.
The Board may amend, alter, suspend or terminate this Policy at any time and for any reason. No amendment, alteration, suspension or termination of this Policy will materially impair the rights of an Outside Director with respect to compensation that already has been paid or awarded, unless otherwise mutually agreed in writing between the Outside Director and the Company. Termination of this Policy will not affect the Boards or the Designated Committees ability to exercise the powers granted to it with respect to Awards granted pursuant to this Policy prior to the date of such termination, including without limitation such applicable powers set forth in the Plan.
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