Provectus asked shareholders to vote on three proposals:
- A slate of five directors to serve on the company's board for a one-year term,
- An advisory vote to approve Provectus' principals' compensation, and
- Selecting accounting firm BDO USA as the company's auditor for 2015.
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Proposal #1: Board of Directors
I will vote all of our shares for...
- Provectus' Chairman and Chief Executive Officer Dr. Craig Dees, PhD (insider),
- Capital markets executive Alfred E. Smith, IV (independent member), and
- Surgical oncologist Dr. Kelly McMasters, MD, PhD (independent member).
- Provectus’ President Dr. Timothy Scott, PhD (insider), and
- Real estate executive Jan Koe (independent member).
Jan Koe originally was added to Provectus' board of directors in May 2012 to facilitate the forming of an independent board to meet corporate governance requirements in advance of uplisting onto a major U.S. stock exchange (i.e., more independent members than insiders). Up until that point, company insiders/founders (i.e., Dees, Scott and Wachter ) outnumbered independent members. As a result, Provectus' Chief Technology Officer Dr. Eric Wachter, PhD stepped off the board.
I met Mr. Koe for the first time briefly at a Provectus shareholder event during ASCO 2014. I recall he immediately sounded like he had no substantive technology (let alone life sciences) knowledge. A quick check of his background at the time of his board appointment revealed no biopharmaceutical industry experience (presumably save for his investment in Provectus). He struck me as someone who would not offer a principled, intelligent counterbalance to the company's insider directors (i.e., Craig and Dr. Scott). To be fair to Mr. Koe, Provectus' board has never struck me as an active or engaged entity, but more of a rubber stamping "authority." Board independence is not insignificant of course, but his contribution in this regard no longer is required. The time to upgrade this independent director position with someone with both substantial industry and board experience is overdue.
Boards of directors obviously can range from useful to useless. Great board members do exist, and I've been fortunate to have met and learned from a number of them; bad or disinterested board members also abound. (e/n 1) As a former early stage venture capitalist with portfolio companies in both information technologies and life sciences, I have no track record of moving against company founders, and often found myself defending them from other investors and shareholders. (e/n 2)
Dr. Scott has appeared to gradually disappear from leadership and operational sight, culminating in his near "disappearance" in 2014. For example, his apparent lack of discussed action and activity surrounding the FDA's denial of Provectus' breakthrough therapy designation application struck me as ostensibly quitting on fellow managers and, more importantly, shareholders. To be fair to Dr. Scott, his initial operational role has more than likely diminished substantially, and he may have drifted into mostly an advisory capacity with no direct responsibilities. That does happen with founders as their companies evolve over time. That he is, as described by management, an insurance policy for both Craig and Eric may have merit. But what exactly are his role and responsibilities now -- an active company manager, an engaged board member, or both? Wouldn't Dr. Scott the board director remonstrated with Dr. Scott the company manager in 2014? Would Dr. Scott the manager have thought appropriate and constructive the oversight of Dr. Scott the director?
Dr. Scott can and should be out there in a targeted, coordinated capacity, aggressively and effectively advocating for the company, its market capitalization and ultimately PV-10 and PH-10's worth, like Eric is for (among other things) the drugs' clinical development and global regulatory affairs, Provectus' Chief Operating Officer and Chief Financial Officer Peter Culpepper is for corporate and business development, and Craig is for (among other things) direct dialogue with shareholders.
Proposal #2: Executive Compensation
I will abstain from voting on this proposal.
As an advisory vote I'm inclined to believe the final decision carries little weight with management despite language to the contrary in the SEC filings (see for example, page 10 of the proxy statement). I do not believe historic share price performance and very significant share dilution has fully warranted historic levels of compensation. I also am of the opinion a negative vote is not commensurate with my net positive assessment of management's progress to date to achieve what I believe is a paradigm shift in the treatment of solid tumor cancer. Abstention in my opinion reflects a wait-and-see attitude for the next 12 months.
Proposal #3: Auditors
I will vote to retain BDO as Provectus' auditors.
I have little concern regarding their historical process with and independence from Provectus. One could debate the level of conservatism they historically have displayed (that is, they're more conservative than I have experienced, and I believe I have seen or experienced conservative-to-very-conservative).
E/n 1: From 2001 to 2014 I filled board director, committee member and observer roles at fourteen privately held companies (all venture-backed save one) and a non-profit organization.
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