0001213900-25-0577856-K PolyPid Ltd. 2025062520250625160512160515160515 0
0001213900-25-057785
6-K
2
20250625
20250625
20250625
PolyPid Ltd.
0001611842
3841
000000000
L3
1231
6-K
34
001-38428
251073658
18 HASIVIM STREET
PETACH TIKVA
L3
4959376
972-74-7195700
18 HASIVIM STREET
PETACH TIKVA
L3
4959376
6-K
1
ea0246900-6k_polypid.htm
REPORT OF FOREIGN PRIVATE ISSUER
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of: June 2025 (Report No. 3)
Commission File Number: 001-38428
PolyPid Ltd.
(Translation of registrant’s name into
English)
18 Hasivim Street
Petach Tikva 495376, Israel
(Address of principal executive office)
Indicate by check mark whether the registrant files
or will file annual reports under cover of Form 20-F or Form 40-F:
☒ Form 20-F ☐ Form
40-F
CONTENTS
Meeting of Shareholders
On June 25, 2025, PolyPid Ltd. (the “Company”)
convened an Annual and Extraordinary General Meeting of Shareholders (the “Meeting”).
The Meeting was called for the following purposes:
Proposal No. 1
To re-elect Kost Forer Gabbay & Kasierer, Certified Public Accountants, as the independent registered public accountants of the Company, and to authorize the board of directors of the Company to determine their compensation, until the next annual general meeting of the Company’s shareholders;
Proposal No. 2
To re-elect eight members of the board of directors of the Company and approve their compensation;
Proposal No. 3
To approve an additional option grant for non-executive directors;
Proposal No. 4
To approve an option grant for the Company’s Chief Executive Officer, Ms. Dikla Czaczkes Akselbrad;
Proposal No. 5
To approve an additional milestone-based option grant for the Company’s Chief Executive Officer, Ms. Dikla Czaczkes Akselbrad;
Proposal No. 6
To approve the renewal of the Company’s compensation policy;
Proposal No. 7
To approve an acceleration of vesting period for unvested options upon
termination of services of Mr. Jacob Harel, as the Company’s chairman of the board of directors; and
To discuss the Company’s financial statements for the fiscal year ended December 31, 2024.
At
the Meeting, a quorum was present and the shareholders of the Company approved Proposal Nos. 1 through 7 as originally proposed.
Attached hereto as Exhibit 99.1 is the Company’s
compensation policy, which reflects the approval of Proposal No. 6 above.
This Report of Foreign Private
Issuer on Form 6-K is incorporated by reference into the Company’s registration statements on Form F-3 (File No. 333-276826,
File No. 333-280658,
File No. 333-281863,
and File No. 333-284376)
and Form S-8 (File No. 333-239517,
File No. 333-271060, File
No. 333-277703 and
File No. 333-280662) filed
with the Securities and Exchange Commission to be a part thereof from the date on which this report is submitted, to the extent not superseded
by documents or reports subsequently filed or furnished.
EXHIBIT INDEX
Exhibit
No.
99.1
Compensation Policy.
1
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
POLYPID LTD.
Date: June 25, 2025
By:
/s/ Dikla Czaczkes Akselbrad
Name
Dikla Czaczkes Akselbrad
Title:
Chief Executive Officer
2
EX-99.1
2
ea024690001ex99-1_polypid.htm
COMPENSATION POLICY
Exhibit 99.1
Compensation Policy
PolyPid Ltd.
(the “Company”)
Compensation Policy for Officers and Directors
of the Company
Table of Contents
1.
Background
1
2.
Compensation Objectives
1
3.
Compensation policy
2
3.1.
Officers’ Compensation Package Components
2
3.2.
Parameters for reviewing compensation terms
2
3.3.
Ratio between Fixed Compensation and Variable Compensation
3
3.4.
Base Salary
3
3.5.
Benefits and Perquisites
4
3.6.
Cash Bonus
4
3.7.
A lump sum sign up bonus
7
3.8.
Equity based Compensation
7
3.9.
Retirement and termination of service arrangements
8
3.10.
Intra-Company Compensation Ratio
8
3.11.
Non-Executive Directors’ and Chairman Compensation
9
3.12.
Insurance, Indemnification and Release
9
3.13.
Immaterial change in terms of employment
9
i
1.Background
Amendment No. 20 to the Israeli Companies
Law, 5759-1999 (the “Companies Law”) was enacted on December 12, 2012. This amendment mandates the adoption of a compensation
policy for Officers and Directors in publicly traded companies, and defines a special procedure for authorizing employment terms for Officers
(as defined below).
The purpose of the Compensation Policy
is to describe PolyPid’s overall compensation strategy for Officers and Directors and to provide guidelines for setting compensation
of its Officers and Directors.
The Compensation Policy is a multi-year
policy which initially shall be in effect for a period of five years from the date that the Company becomes a public company, and thereafter
will need to be approved by the Company’s shareholders every three years.
The Compensation Committee and the Board
of Directors (the “Board” or “Board of Directors”) shall review the Compensation Policy from time
to time, as required by the Companies Law. The Compensation Policy shall be brought for reconsideration as required by the Companies Law.
For purposes of this Policy, “Officers”
shall mean “office holders” as such term is defined in the Companies Law, excluding, unless otherwise expressly indicated
herein, PolyPid non-executive directors or Chairman (the “Directors”).
This Policy is not intended to affect
current agreements nor affect obligating customs (if applicable) between the Company and its Officers or Directors as such may exist prior
to the approval of this Compensation Policy.
Nothing in this Compensation Policy
shall obligate the Company to grant any particular type or amount of compensation to any Officer, unless expressly stated otherwise, nor
shall it derogate from approval procedures mandated by the Companies Law.
Any amendment to this Compensation
Policy shall require the approvals as set forth in the Companies Law.
2.Compensation
Objectives
Strong and effective leadership is fundamental
to PolyPid’s continued growth and success. This requires the ability to attract, retain, reward and motivate highly skilled officers
in international, competitive labor markets.
The Compensation Policy is intended to
align between the need to incentivize officers to succeed in achieving the Company’s Objectives and their assigned goals and the
need to assure that the compensation structure meets PolyPid’s interests and its overall strategic and financial objectives.
In support of this goal, the compensation
elements granted to PolyPid’s Officers are designed to meet the following objectives:
●Improve
business results and strategy implementation, and support the Company’s work-plans, from a long-term perspective.
●Create
a clear correlation between Officers’ compensation, overall Company performance and the individual performance.
●Align
Officers’ interests with those of the Company and its stakeholders (customers, employees, partners, environment, shareholders etc.)
and incentivize Officers to create long- term economic value for the Company.
●Consider
the ratio between the Officer’s employment terms and the salary of other Company employees and contractors, and in particular the
ratio between the average salary and the median salary of such employees and the effect of differences between such on work relations
in the Company (for purposes of this section “contractors” and “salary”- as defined in the Companies Law).
●Create
fair and reasonable incentives, considering the Company’s size, characteristics and type of activity.
●Create
appropriate incentives taking into account; inter alia, the Company’s risk management policy.
●Create
the right balance (a) between fixed and variable compensation components; and (b) between short-term and long-term results, so as to
ensure sustained business performance over time.
1
3.Compensation
Policy
3.1.Officers’
Compensation Package Components
Officers’ compensation packages
will generally (but is not limited to) be comprised of the following elements:
3.1.1.Fixed
Compensation
a.
Base Salary – a fixed monetary compensation paid on monthly basis or other periodical basis as customary in the place of employment, excluding any social benefits and related benefits, and in respect to compensation paid as consultancy fee or equivalent (to a non-employee Officer) – the monthly gross consultation fees, excluding VAT (if applicable).
b.
Benefits and Perquisites – benefits designed to supplement cash compensation, based on market practice for comparable positions and as prescribed by any local law (pension savings, contributions towards severance pay, contributions towards training fund, vacation pay, sick leave, recreation pay, etc.) and related benefits, such as company vehicle/vehicle maintenance, telephone expenses, laptop, meals at the workplace, gifts on public holidays, etc.
3.1.2.
Variable Compensation
a.
Cash Bonus (Short and Medium-Term Incentive) – variable monetary bonus paid annually, based on results and achievement of targets. The Company may also determine that a certain Officer will be paid discretionary annual/one-time/special bonuses, considering his/her contribution to the Company and the restrictions placed under this policy..
b.
Equity based Compensation (Long Term Incentive) – variable equity-based compensation designed to retain Officers, align Officers’ and shareholders’ interests and incentivize achievement of long term goals (subject to the existence of valid long-term compensation plans and provided that the Company decides to award such compensation).
c.
Termination Payments – retirement, adjustments, and termination of service arrangements.
The “mix” of the elements
that will be provided to each Officer will be structured in order to support the Company’s philosophy of compensating Officers for
Company and individual performance and aligning their interests with stakeholders’ interests, while recognizing that the mix may
vary from period to period and from Officer to Officer.
3.2.Parameters
for reviewing compensation terms
Generally, some or all of the following
parameters will be considered when reviewing the compensation terms of an Officer:
3.2.1Education, skills, expertise, tenure (specifically in the Company and in the Officer’s field of
expertise in general), professional experience and achievements of the Officer;
3.2.2The role of the Officer, his/her areas of responsibility and his/her employment or services terms under
previous signed employment/service agreements;
3.2.3The Officer’s contribution to the Company’s business, the achievement of its strategic goals
and implementation of its work plans, the maximization of its profits and the enhancement of its strength and stability.
3.2.4The extent of responsibility delegated to the Officer.
3.2.5The Company’s need to recruit or retain an Officer with unique skills, knowledge, or expertise.
2
3.2.6Whether a material change has been made to the role or function of the Officer, or to the Company’s
requirements from the Officer.
3.2.7The size of the Company and the nature of its activities.
3.2.8As to service and employment terms that include retirement grants – the term of service or employment
of the Officer, the Officer’s terms of service and employment over the relevant period, the Company’s performances in the said period,
the Officer’s contribution to the achievement of the Company’s goals and the circumstances of the Officer retirement.
3.2.9(a) The market conditions of the industry in which the Company operates at any relevant time, including
the Officer’s base salary or consultation fee compared to the salaries or consultation fees of other office holders working in similar
positions (or in position of comparable level) in companies whose characteristics are similar to those of the Company in terms of its
activity; (b) the availability of suitable candidates that can serve as Officers in the Company, the recruitment and retainment of the
Officers and the need to offer an attractive compensation package in a global competitive market; and (c) changes in the Company’s
area of activity and in the scope and complexity of its activities.
3.2.10The ratio between the cost of the terms of office and engagement
of the Officer and the total cost of salary of other employees of the Company, and specifically the average and median total cost of
salary of other employees of the Company, and the effect of such differences on the employment environment in the Company.
3.3.Ratio
between Fixed Compensation and Variable Compensation
Notwithstanding the foregoing, the
maximum value of the variable compensation components (excluding the termination payments, Special Bonus and Lump sum sign up bonus) shall
be up to 450% of each Officer’s total fixed compensation as specified in section 3.1.1., on an annual basis.
3.4.Base
Salary
Base salary is a fixed compensation
element which provides compensation to an Officer for performance of his or her standard duties and responsibilities taking into account
the parameters described in section 3.2 above (the “Base Salary”).
The Base Salary for newly hired Officers
will be set taking the following considerations into account:
●
Role and business responsibilities.
●
Professional experience, education, expertise and qualifications.
●
Previous compensation paid to the Officer.
●
Internal comparison: (a) Base Salary and the total compensation package of comparable PolyPid Officers; (b) The ratio between the Officer’s compensation package and the salaries of the Company’s other employees and specifically the median and average salaries and the effect of such ratio on work relations in the Company.
Payroll review
When deciding on increasing an Officer’s
Base Salary, the following considerations, in addition to the abovementioned, shall be applied: Changes to the Officer’s scope of
responsibilities and business challenges, the need to retain the Officer, inflation since the last Base Salary update and updated market
rate.
Adjustments to Base Salary may be
periodically reviewed, considered and approved in accordance with the law. Such review will be conducted by the Company itself, or by
an external advisor, at the Company’s discretion.
3
3.5.Benefits
and perquisites
The following benefits and perquisites
may be granted to the Officers in order, among other things, to comply with legal requirements:
●Pension
and savings – subject to applicable law and common practices, Officers can choose between any combinations of executive insurance
and a pension fund.
●Disability
insurance – the Company may purchase disability insurance, as allowed by applicable law and/or is common in the applicable employment
place.
●Provident
(Educational) fund – Officers are entitled to a providence fund provision at the expense of the Company at a rate of 7.5% of the
monthly salary (or the maximum amount allowed under applicable law (as the Company may determine).
●Convalescence
pay - Officers are entitled to convalescence pay according to applicable law and/or common practices.
●Vacation
– Officers are entitled to annual vacation days pursuant to their employment agreement, up to a cap of 28 days per annum. The vacation
days can be accumulated and carried over subject to applicable law, rules and regulations.
●Sick
Days – Officers will be entitled to paid sick days (officers’ or their immediate family members) in accordance with law.
However, the Company may cover sick days from the first day up to the officers’ overall annual sick day balance regardless of whether
the sick day is for themselves or their immediate family members.
●Relocation
package - in the event of relocation of an Officer to another geography, the benefits provided will include customary benefits associated
with such relocation (such as reimbursement of travel for officers and their family, housing and shipping allowances, healthcare and
children’s education) all as shall be determined in accordance with PolyPid’s policies and procedures or per customary market
practice.
PolyPid may offer additional benefits
and perquisites to the Officers, which will be comparable to customary market practices, such as, but not limited to: company car benefits
(including coverage or related tax expenses); company cellular phone (including coverage or related tax expenses); complementary health
insurance; medical check-ups; meals; etc.; provided however, that such additional benefits and perquisites shall be determined in accordance
with PolyPid’s policies and procedures.
Non-Israeli Officers may receive similar,
comparable or customary benefits and perquisites as applicable in the jurisdiction in which they are employed.
The compensation derived from the
benefits and perquisites set forth in this Section 3.5 shall not be deemed part of the Maximum Monthly Base Salary and shall be added
thereto.
3.6.Cash
Bonus
PolyPid’s short term incentive
scheme will be based on a variable monetary bonus paid annually, designed to reward Officers based on the Company and/or their individually
defined results (the “Bonus”).
4
During the first calendar quarter
of each calendar year (or for new hired Officers during each calendar year, no more than three months following his/her employment), the
Compensation Committee and the Board will determine the following for each Officer as well as the formula for calculating the bonus payment
at the end of the year:
Maximum Bonus (cap):
The maximum bonus is the maximum amount an Officer will be entitled to receive upon overachievement. The maximum bonus of each Officer
shall not exceed the amount of 9 monthly base salaries, or with respect to the Chief Executive Officer, 12 monthly base salaries.
Objectives: The Company
Objectives and Individual Objectives will be determined based on pre-defined measurable and quantified considerations.
The Bonus may include (but is not limited
to) any one or more of the following criteria:
●
Financial objectives such as: Revenue, EBITDA, Cash balance, Net profit or outperforming budget objectives
●
Business development objectives such as: new corporate partnerships, project and product acquisitions, licensing agreements, achievement of milestones with partners / licensees, receipt of funds from partners / licensees.
●
Funding objectives such as: private fund raising, public fund raising, receipt of research / development grants, achieving of certain target valuations.
●
Regulatory objectives such as: receipt of clinical study approvals, receipt of product marketing approvals, approval of reimbursement schemes, successful patient recruitment to studies etc.
●
Marketing objectives such as: set up of a sales force, achieving certain sales targets.
●
Intellectual property objectives such as: submission / grant of new patents.
●
R&D objectives such as: attainment of certain prototypes, scientific breakthroughs, succeeding in technology evaluations with partners etc.
●
Operational objectives such as: attainment of operational excellence criteria in purchasing, manufacturing, quality, yields, on-time delivery, ramp-ups and ramp- downs etc.
Both Company Objectives and Individual
Objectives may combine quantitative and qualitative goals, provided that, there is a clear and measurable index for each goal.
The Board may set targets for a period
of more than one year, in which case either: (a) the Officer will be entitled to the bonus (per each year included in such multi-year
period) only upon achieving such targets at the end of such period; or (b) the Officer shall be entitled to a relative portion/milestone
of such bonus, according to the estimated progress to date, in each case, as determined in advance.
Discretionary Component:
The bonus may include a discretionary component of up to 20% of the Officer’s annual cash target Bonus and with respect to the CEO
up to 30% of the CEO’s annual cash target Bonus but not more than 3 monthly salaries (without the need of shareholders’ approval),
based on the evaluation of such Officer’s supervisors, or the Board of Directors in the case of the CEO.
Discretionary bonuses must be supported
by rationale clearly articulating the individual contributions or circumstances warranting additional compensation beyond predetermined
metrics.
Thresholds: Subject to
the last paragraph below, the Compensation Committee and the Board may, with respect to any period or Officer, determine one or more thresholds
for the payment of the annual cash bonus or any components thereof, in such manner that if the threshold is not achieved, the annual cash
bonus or the particular component thereof, with respect to which the threshold was not achieved, will not be paid.
5
The Compensation Committee and the
Board of Directors alone may decide to change the measurable targets applicable to an Officer at any time during the year, if the change
is for the best interest of the Company and for special circumstances (for example: change of job description, regulatory changes, other
material events), that the Compensation Committee and Board of Directors believes that justify making such change (including retroactive
change).
Notwithstanding the foregoing, subject
to any applicable law, the Company’s Compensation Committee and Board of Directors shall be entitled to approve payment of Bonus
based on all or some of the measurable targets and/or of discretionary bonus, on an annual, quarterly, monthly, or otherwise basis.
The Board may determine to pay the
Bonus (in whole or partially) by equity.
3.6.1 Clawback Recoupment Policy
The Company may seek reimbursement
of all, or a portion of any compensation paid to an Officer based on financial data included in Company’s financial statements in
any fiscal year that are found to be inaccurate and are subsequently restated. In any such event, the Company will seek reimbursement
from the Officers to the extent such Officers would not have been entitled to all or a portion of such compensation, based on the financial
data included in the restated financial statements. The Compensation Committee will be responsible for approving the amounts to be recouped
and for setting terms for such recoupment from time to time in accordance with a recoupment policy adopted from time to time by the Compensation
Committee or the Board. Any recoupment under this Section 3.6.1 may be in addition to (and not limited by) any other remedies or rights
of recoupment available to the Company pursuant to the terms of any similar policy or under any applicable law.
Reduction of Bonus: The Board
of Directors according to its professional experience and the circumstances may reduce the Bonus, at its sole discretion prior to the
Bonus payment.
The Compensation Committee and the
Board may determine that with respect to any specific year, all or any particular Officer or Officers shall not be entitled to a Bonus
or that the payment of bonus will be delayed.
3.6.2. Cash Bonus for Vice Presidents
(VPs) (Officers subordinate to the CEO)
Notwithstanding the aforesaid in this
Section 3.6 , if the Company has so determined in the framework of an annual bonus plan, the Company may grant its VPs an annual bonus
that is not based, in whole or in part, upon measurable criteria. Such annual bonus (or part thereof) shall be determined according to
this Section 3.6, except that the performance level of each such VP may not be determined pursuant to qualitative measurements but rather
on non-measurable evaluation of such VPs performance.
3.6.3. Neutralization of one-off
events
As part of the calculation of the eligibility
to Cash Bonus that is based measurable targets on the basis of financial statements data (if such targets are set) the Board of Directors
or the Compensation Committee will be authorized to neutralize the effect of “one-off events”, or alternatively to decide
that such events should not be neutralized in a certain year, as applicable.
3.6.4. One-Time Bonus: In addition
to the Cash Bonus, the Compensation Committee and the Board of Directors may elect upon the recommendation of the Chief Executive Officer
(or the Chairman in the case of a bonus payable to the Chief Executive Officer) to pay certain Officers (including Directors, subject
to other approvals required under applicable law) a one-time bonus in recognition for their special contribution to key transactions and
events in the company’s lifecycle, such as (but not limited to) M&A, consummation of a merger, or sale or assignment by the
Company of all or substantially all of the issued and outstanding shares of the Company and/or all or substantially all of the Company’s
assets, public financing, achievement of major corporate goal in R&D, sales, strategic alliances, operations etc.
6
Such One-Time Bonus shall not exceed
the amount of six (6) monthly salaries for each Officer.
An approval of a One-Time Bonus to
the CEO which is not a controlling shareholder, that meets the aforesaid conditions, shall not be subject to the approval of the General
Meeting, as long as the aggregate amount of all of the discretionary bonuses paid to the CEO in the relevant year does not exceed three
(3) monthly salaries.
3.7.A
lump sum sign up bonus
All Officers, excluding Non-Employee
directors, may be incentivized through lump sum sign up cash bonuses, designed to attract skilled and experienced executives in a competitive
industry environment. The lump sum sign-up bonus shall not exceed NIS 250,000 for Israeli based officers and 100,000$ for non-Israel based
officers and shall not be calculated as part of the Base salary and/or Cash Bonus compensation.
3.8.Equity
based compensation
PolyPid’s long term incentive
is variable equity-based compensation, designed to retain Officers, align Officers and shareholders’ interests and incentivize achievement
of long-term goals.
The Company shall be entitled to grant
to Officers (including Employee and Directors) Stock Options, Restricted Stocks, Restricted Stock Units (if applicable) or any other equity-based
compensation.
General guidelines for the grant
of Stock Options (“Options”):
●The
Options shall be granted from time to time and be individually determined and awarded according to the performance, skills, qualifications,
experience, role and the personal responsibilities of the Officer.
●Vesting
schedule - the Options will vest and become fully exercisable over a period of at least 2 years. Vesting schedule may be quarterly,
annually, bi-annually, or any other schedule as will appear in the specific grant documentation signed by the Company and the optionee.
●Exercise
price – the exercise price shall be the closing price of the shares on the day before the grant date or the average closing
price of the shares in the 30 trading days prior to the grant date, as will be determined by the Compensation Committee and the Board
of Directors.
●Expiry
date - this period shall not exceed 10 years from the date of the issuance.
●Cap
on the annual value of the Options - the fair market value (according to acceptable valuation practices at the time of grant) of
options so granted, as at grant date, shall not exceed the amount of 350% of the total annual fixed compensation as specified in section
3.1.1., for each Officer per year of vesting, on a linear basis. For the purpose of this section, “grant date” shall mean
the date in which the company’s Board approved the grant.
●Acceleration
and other terms – The Company shall have the discretion to provide, generally or for specific Officers, for the accelerated
vesting of equity-based awards. The Company shall provide acceleration terms upon a change of control of the Company (as will be defined
by the Compensation Committee and the Board) or upon termination of service or employment of the Officer, and may extend the exercise
period of equity-based awards beyond those generally applicable pursuant to the relevant plan, provided such extension does not extend
beyond ten years from the date of grant.
Any other terms of the equity-based
compensation will be determined by the Compensation Committee and the Board of Directors, in accordance with the Company’s equity
compensation policies and programs in place from time to time, subject to any applicable law.
Repricing and exchange equity-based
compensation: With approval of the Compensation Committee and the Board of Directors, the Company may decide to replace existing Options
with RSUs or existing Options with other Options, in different quantities of RSUs and/or Options as well as with different vesting periods
and/or exercise price.
7
3.9.Retirement
and termination of service arrangements
Advance notice
Pursuant to the Officer’s employment
agreement, he or she shall be entitled to an advance notice prior to termination for a period of up to six (6) months (the “Notice
Period”).
During the Notice Period, the Officer
is required to keep performing his or her duties pursuant to his or her agreement with the Company, unless the compensation committee
has released the Officer from such obligation.
During the Notice Period, Officers will be entitled to
full payment of compensation.
Adjustment period
Officers may receive an additional
transition period during which the Officer will be entitled to up to an additional eight (8) months of continued Base Salary, benefits
and perquisites beyond the Advance Notice period described above.
When determining such payments, the
Compensation Committee and the Board will generally consider, inter alia, the term of service or employment, Company performance
during such term, the contribution of the Officer to the achievement of the Company’s goals, the circumstances of termination and
the Officer’s compensation during the term of service or employment.
Officers may receive an adjustment
period only if they work in the Company for at least two (2) years.
Adjustment period may be materialized
by continued employee-employer relations or by a payment of lump sum equal to the economic value of base salary, benefits and perquisites
for the number of adjustment months approved for the specific officer.
3.10.Intra-Company
Compensation Ratio
In the process of composing this policy,
the Committee and the Board examined, among other things, the ratio between overall compensation of Officers and the average and median
compensation of other employees in Israel, as well as the possible ramifications of such ratio on the work environment in PolyPid, in
order to ensure that levels of Officer compensation will not have a negative impact on the positive work relations in PolyPid.
The possible ramifications of the ratio
in the work environment will continue to be examined from time to time in order to ensure that levels of Officer’s compensation,
as compared to that for the other employees, will not have a negative impact on work relations in PolyPid.
8
3.11.Non-Executive
Directors’ and Chairman Compensation
(a)The following table indicates the non-executive directors
and Chairman maximum annual cash compensation:
Position
Board
Audit
Committee
Compensation,
Nominating and
Corporate
Governance
Committee
Chairman
US$
60,000
US$
15,000
US$
10,000
Director/Member
US$
40,000
US$
7,500
US$
5,000
(b)
Equity-based plan for non-executive directors
and Chairman- Each newly appointed director will be granted an option to purchase up to such number of Ordinary Shares (“Ordinary
Shares”) in an annual value of $50,000 utilizing any reasonable, best practice or commonly accepted equity-based compensation
valuation model, at an exercise price per share equal to the closing price. The shares subject to each such stock option will vest in
equal quarterly installments for 16 quarters, subject to the director’s continuous service through such vesting dates. A grant in
excess of such initial grant may be applied as an inducement for prospective or existing Directors, including the Chairman of the Company,
in cases where the Board deems it appropriate in order to advance the interest of the Company.
On the date of each annual shareholders meeting of the Company, each director who continues to serve
as a non- employee member of the Board at such shareholders meeting will be automatically, and without further action by the Board or
Compensation Committee, granted an option to purchase such number of Ordinary Shares in an annual value of $40,000 utilizing any reasonable,
best practice or commonly accepted equity-based compensation valuation model, at an exercise price equal to the closing price of the
Ordinary Shares on the date of grant. The shares subject to each such stock option will vest in equal quarterly installments for 16 quarters,
subject to the director’s continuous service through such vesting dates. The Company shall be entitled to engage with a Director
as a service provider. In such case, the director may be entitled to an annual compensation of up to $250,000.
(c)
All non-executive directors and the Chairman may be reimbursed for their reasonable expenses (against invoices) incurred in connection with attending meetings of the Board and its committees thereof (including domestic and international travel expenses) and travelling on behalf of the Company, consistent with the Company’s practices and policies.
3.12.Insurance,
Indemnification and Release
The Company will release all current
and future Directors and Officers from liability and provide them with indemnification to the fullest extent permitted by law and its
Articles of Association.
Liability insurance policy
Until otherwise determined, the Company
will purchase and periodically renew, at the Company’s expense, insurance coverage in respect of the liability of its current and
future Directors and Officers to the maximum extent permitted by law and its Articles of Association, with an annual coverage of up to
$100 million with an annual premium: (i) reflecting market terms and not having a substantial effect on the Company’s profitability,
assets or obligations; or (ii) in the amount which will not exceed $5,000,000 and will include coverage with respect to any public offering
of shares or other securities of the Company.
In addition, such insurance coverage
may include “run-off” provisions covering the Directors and Officers liability following termination of service or employment.
Officers and Directors shall be covered
by directors’ and Officers’ liability insurance which the Company shall acquire, from time to time, subject to the approval
of the Company’s board of directors and shareholders, to the extent required by law.
The Chief Executive Officer, as shall
be in office from time to time, and/or any other person designated by him or her, shall have the authority to obtain, renew and keep in
force and affect such insurance within the above parameters.
Indemnification and Release
The Company awards, and shall continue
to award, indemnification and release undertakings to Directors and Officers as may be from time to time, subject to the approvals required
in accordance with the provisions of the Companies Law.
3.13.Immaterial
change in terms of employment
An Immaterial Change in the terms of
employment of an Officer, other than the Chief Executive Officer, may be approved by the Chief Executive Officer, and an Immaterial Change
in the terms of employment of the Chief Executive Officer, as may be approved by the Board and Compensation Committee, provided that the
amended terms of employment are in accordance with this Compensation Policy. An “Immaterial Change in the Terms of Employment”
means a change in the terms of employment/services of an Officer within annual total cost to the Company not exceeding an amount equal
20% of the annual compensation (i.e., Fixed Compensation and Variable Compensation) of such Officer.
9