- A slate of five directors to serve on the company's board for a one-year term,
- An advisory vote to approve Provectus' named executive officers’ compensation, and
- The selection of accounting firm Marcum LLP as the company's independent auditor for 2016.
My Ballot
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- The category of intralesional (IL)/intratumoral (IT)/local cancer agents would not have been abject failures for so long,
- See Class of Drug (May 20, 2016) on the blog's Archived News V page.
- There would have been earlier regulatory agency comfort with IL/IT/local agents that could treat the systemic disease that is cancer,
- See April 29, 2015 blog post The first guy through the wall.
- Perhaps, what once may have been an industry (the pharmaceutical industry, that is) of regular, real innovation would not have become one of mostly me-toos and followers,
- See, for example, "Regulator says too many drugmakers chasing same cancer strategy," Deena Beasley, Reuters, June 10, 2016.
- There would have been a better balance between Provectus management arrogance/confidence and humility; or, said (written) another, more cliched way: "Hoping for the best, prepared for the worst, and unsurprised by anything in between,"
- For example, former Provectus Chairman, CEO and a co-founder Dr. Craig Dees, PhD's belief (my assumption) that the pharmaceutical industry would immediately beat a path to the company's and his door because of how well Rose Bengal and PV-10 (and PH-10) worked therapeutically. How well, of course, was based on his contextual view of the "necessary amount" of preclinical and clinical data. Well, what happens (what was your plan and approach) if they (Big Pharma) did not do so, immediately?
- And/or company CTO, board member and a co-founder Dr. Eric Wachter, PhD's belief (again, my assumption) that the FDA, a/the key regulatory agency, would immediately embrace (approve?) Rose Bengal and PV-10 for therapeutic use because of how well Rose Bengal and PV-10 (and PH-10) worked. How well, of course, was based on Eric's contextual view of the "necessary amount" of preclinical and clinical data. Well, what happens (what was your plan and approach) if it (the Agency) did not do so, immediately?
- There would have been real Provectus board members.
- Both Craig and company President, board member and a co-founder Dr. Tim Scott, PhD had insufficient innate or learned ability to be Provectus board members. Founding a company is not a long-term reason or mandate for board membership.
- In my view, Eric possesses/has had the ability to be a quality board member of this company if so developed, coached and immersed over time on/in a real, thoughtful, intelligent board and board culture.
- Past and present independent/outside board members have not contributed enough leadership in principled and/or intelligent manners.
- There would have been more effort and experience by company management and the board to surround themselves/associate with a higher quality of non-clinical advisors across several operational functions.
But the world in which Provectus and its shareholders currently live is all that it/they/we have until it changes for the better, and hopefully in a sustainably, much more positively manner.
If I had to sum up or more cogently articulate my sense of Provectus' singular, primary and key deficit, it would be, generally speaking, a lack or vacuum of quality leadership, at both company management and board levels. Prior and certain current company "leadership" created an unacceptable culture, potentially paradigm-shifting innovation notwithstanding. Independent/outside directors appear to have done little-to-nothing to change or improve this culture for the better.
Proposal #1, A slate of five directors to serve on the company's board for a one-year term
The rationale for my WITHHOLD vote for board member Dr. Scott, consistent with how I voted our shares in 2015 (a Withhold vote), includes his insufficient leadership at the board level and, at a minimum, his disqualification as a board member resulting from the Dees debacle (i.e., Provectus' March 16, 2016 press release Announces Results of Internal Investigation).
My FOR vote for board member Eric, who replaced Craig on the board, is based on my belief that he is capable of being a quality board member with the potential to display better leadership at the board level, and my thinking that his clinical development program experience (among other clinical operational roles and responsibilities) would be an important and necessary contribution to an eventual, hoped for, board level discussion of a company buyout in the future.
The rationale for my FOR votes for board Chairman Al Smith IV and board members Dr. Kelly McMasters, MD, PhD and Jan Koe includes my thinking that they should be in place at the present time for business continuity reasons (such as but not limited to the CEO search process). I acknowledge the potentially inconsistency of this vote given they have not acted like real board members (i.e., they have displayed insufficient leadership). I believe they should transition themselves off Provectus' board at the appropriate time and be replaced by board members committed to doing "it" properly.
While one might argue that good board leadership could include meaningful [to a board member in context and based on his or her individual circumstance] stock ownership, consistent with Provectus' proposed guidelines on corporate governance, section IV.l {badly numbered], it is not the only consideration. Nevertheless, consider that two independent/outside directors (Dr. McMasters, Mr. Smith) own no common stock despite having joined the board in 2008 and 2011, respectively. Consider also that Peter has acquired (purchased) all of his stock ownership, compared to Dr. Scott who purchased (for money) fractions of what Eric and Peter themselves have bought over time.
My FOR vote for Jan Koe in 2016 is different from my vote in 2015, which was Withhold. At the time I wrote:
I believe both COO and interim CEO Peter Culpepper and Eric are important to the current process of generating sufficient clinical trial data in context, and engaging prospective licensees/co-development partners/[eventual] acquirers. Neither of them, however, is a suitable CEO candidate. I do believe both of them would agree that a good-to-great candidate would be a medical doctor who has a proven track record of leading a successful biopharmaceutical company.
In regards to the CEO search process, I tried to convey not only the above to Jan, but also the following. First, the person the search committee and board may pick today might not be the person they would pick in, say, 6 months (round number) when more clinical data potentially were available. I do not believe a deal person with fundraising experience is necessary or an important qualification.
Second, the CEO search process might be a two-step or two-stage one, where the first step/stage would be the concurrent following of Eric’s process/path (together with Peter's non-clinical business/corporate development) efforts as data are generated in context and continuing of interviewing CEO candidates to get smarter about who the committee and board are looking for and why. The second step/stage is, assuming they do not find an A+ candidate during first step/stage, would be to determine whether the company is on a clear and present trajectory to be sold at a/the proper price as data in context becomes available, or whether the board would want to transition to a new board and CEO who could take the valuation level Eric and Peter may have helped build to a much higher amount.
Proposal #2, An advisory vote to approve Provectus' named executive officers’ compensation
The rationale for my AGAINST vote includes, repetitiously, the poor or lacking leadership of current independent/outside board members (i.e., those on the compensation committee, and of course on the full board), and the tone deafness of management to accept enhanced compensation at this point in time, irrespective of the company's compensation committee and its policies, reviews, deliberations, plans, etc.
I voted Abstain in 2015. At the time I wrote:
I do not believe compensation committee members (or the full board) would be any more real or intelligent in 2016. Show me meaningful success on the share price and market capitalization fronts, and I would very much and very easily consider, in context, substantial enhanced compensation for Eric and Peter.
Proposal #3, The selection of accounting firm Marcum LLP as the company's independent auditor for 2016
My FOR vote for this proposal is pretty much a perfunctory one. At a basic level Provectus needs this, in context, to eliminate questions over being a going concern and all that might or could come from not being one or operating without such an opinion.
Accounting professionals (and those who dig into this due diligence topic) may assess firm and individual account leadership (and team) reputations. Recent rankings, primarily revenue-based, would place Marcum as a Top 20 accounting firm. See, for example, below.
Relating this proposal to the blog post's theme of a vacuum/lack of leadership, Provectus' former independent auditor BDO USA LLP (like the company's internal auditor vendor that was terminated earlier this year) clearly displayed insufficient leadership by not identifying Craig's potentially or purported inappropriate actions and activities sooner.
Road trippin': I would have got this post out sooner, but I was dealing with car troubles in cheese country.
Proposal #1, A slate of five directors to serve on the company's board for a one-year term
The rationale for my WITHHOLD vote for board member Dr. Scott, consistent with how I voted our shares in 2015 (a Withhold vote), includes his insufficient leadership at the board level and, at a minimum, his disqualification as a board member resulting from the Dees debacle (i.e., Provectus' March 16, 2016 press release Announces Results of Internal Investigation).
My FOR vote for board member Eric, who replaced Craig on the board, is based on my belief that he is capable of being a quality board member with the potential to display better leadership at the board level, and my thinking that his clinical development program experience (among other clinical operational roles and responsibilities) would be an important and necessary contribution to an eventual, hoped for, board level discussion of a company buyout in the future.
The rationale for my FOR votes for board Chairman Al Smith IV and board members Dr. Kelly McMasters, MD, PhD and Jan Koe includes my thinking that they should be in place at the present time for business continuity reasons (such as but not limited to the CEO search process). I acknowledge the potentially inconsistency of this vote given they have not acted like real board members (i.e., they have displayed insufficient leadership). I believe they should transition themselves off Provectus' board at the appropriate time and be replaced by board members committed to doing "it" properly.
While one might argue that good board leadership could include meaningful [to a board member in context and based on his or her individual circumstance] stock ownership, consistent with Provectus' proposed guidelines on corporate governance, section IV.l {badly numbered], it is not the only consideration. Nevertheless, consider that two independent/outside directors (Dr. McMasters, Mr. Smith) own no common stock despite having joined the board in 2008 and 2011, respectively. Consider also that Peter has acquired (purchased) all of his stock ownership, compared to Dr. Scott who purchased (for money) fractions of what Eric and Peter themselves have bought over time.
My FOR vote for Jan Koe in 2016 is different from my vote in 2015, which was Withhold. At the time I wrote:
"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."I have recently spoken to Jan on a couple of occasions in regards to the CEO search process — see CEO Search Committee (June 13, 2016) on the blog's Current News page — and believe his heart and intent is in the right place even though I do not believe he can fully/properly execute on his goals and this process.
I believe both COO and interim CEO Peter Culpepper and Eric are important to the current process of generating sufficient clinical trial data in context, and engaging prospective licensees/co-development partners/[eventual] acquirers. Neither of them, however, is a suitable CEO candidate. I do believe both of them would agree that a good-to-great candidate would be a medical doctor who has a proven track record of leading a successful biopharmaceutical company.
In regards to the CEO search process, I tried to convey not only the above to Jan, but also the following. First, the person the search committee and board may pick today might not be the person they would pick in, say, 6 months (round number) when more clinical data potentially were available. I do not believe a deal person with fundraising experience is necessary or an important qualification.
Second, the CEO search process might be a two-step or two-stage one, where the first step/stage would be the concurrent following of Eric’s process/path (together with Peter's non-clinical business/corporate development) efforts as data are generated in context and continuing of interviewing CEO candidates to get smarter about who the committee and board are looking for and why. The second step/stage is, assuming they do not find an A+ candidate during first step/stage, would be to determine whether the company is on a clear and present trajectory to be sold at a/the proper price as data in context becomes available, or whether the board would want to transition to a new board and CEO who could take the valuation level Eric and Peter may have helped build to a much higher amount.
Proposal #2, An advisory vote to approve Provectus' named executive officers’ compensation
The rationale for my AGAINST vote includes, repetitiously, the poor or lacking leadership of current independent/outside board members (i.e., those on the compensation committee, and of course on the full board), and the tone deafness of management to accept enhanced compensation at this point in time, irrespective of the company's compensation committee and its policies, reviews, deliberations, plans, etc.
I voted Abstain in 2015. At the time I wrote:
"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."The board and management continued to fail to show leadership by granting and accepting compensation in 2015 based on commercial and operational performance milestones, peer company compensation data, and the achievement of specific scientific, medical and clinical milestones while not acknowledging poor share price (and market capitalization so as to address the notion of fully diluted) performance as a major component of their thinking.
I do not believe compensation committee members (or the full board) would be any more real or intelligent in 2016. Show me meaningful success on the share price and market capitalization fronts, and I would very much and very easily consider, in context, substantial enhanced compensation for Eric and Peter.
Proposal #3, The selection of accounting firm Marcum LLP as the company's independent auditor for 2016
My FOR vote for this proposal is pretty much a perfunctory one. At a basic level Provectus needs this, in context, to eliminate questions over being a going concern and all that might or could come from not being one or operating without such an opinion.
Accounting professionals (and those who dig into this due diligence topic) may assess firm and individual account leadership (and team) reputations. Recent rankings, primarily revenue-based, would place Marcum as a Top 20 accounting firm. See, for example, below.
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| Click to enlarge. The 2015 Inside Public Accounting (IPA) 100 Firms |
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| Click to enlarge. The 2014 accountingTODAY Top 100 Firms |
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