Steven Quay
ATOSSA THERAPEUTICSAbout Steven Quay
Steven C. Quay, M.D., Ph.D. (age 74) is Chairman, President, and CEO of Atossa Therapeutics, serving since the company’s April 2009 incorporation and standing for re-election as a Class I director at the 2025 annual meeting . He is board-certified in anatomic pathology, trained at Massachusetts General Hospital (Harvard), a former Stanford medical school faculty member, and named inventor on 91 U.S. patents with 907 published U.S./international applications and patents covering seven FDA-approved products . Shareholder returns during recent years have been challenged: the proxy’s pay-versus-performance table shows the value of a hypothetical $100 TSR investment fell to $2 by 2024, alongside net losses of $25.5m (2024), $30.1m (2023), and $27.0m (2022) . He holds ~7.2% beneficial ownership, primarily via options exercisable within 60 days, signaling high equity alignment but also significant option overhang .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Atossa Therapeutics | Founder; Chairman, President & CEO | 2009–Present | Founder-operator leadership; directs clinical strategy and R&D |
| Stanford University School of Medicine | Faculty, Department of Pathology | Not disclosed | Academic/clinical expertise in pathology |
| Massachusetts General Hospital (Harvard) | Internship/Residency (Anatomic Pathology) | Not disclosed | Clinical training; board certification |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Taipei-American School | Director; Chair, Governance Committee | Not disclosed | Governance leadership; external network |
Fixed Compensation
| Year | Base Salary ($) | Target Bonus (% of Salary) | Actual Cash Bonus ($) | Notes |
|---|---|---|---|---|
| 2024 | 705,910 | 55% (target) | 529,433 (125% of target) | Bonus tied to clinical/program milestones |
| 2023 | 705,910 | 55% (target) | 469,783 (121% of target) | Bonus tied to clinical/program milestones |
Performance Compensation
- Annual cash incentive goals emphasize clinical and pipeline milestones, not traditional financial KPIs. For 2024: (1) Endoxifen top-line strategy; (2) PK run-in cohort for Evangeline P2; (3) new program acquisition/development; (4) commence additional studies; (5) “stretch goals.” Payout: 125% of target . For 2023, similar goals; payout 121% of target .
| Year | Metric | Weighting | Target | Actual | Payout |
|---|---|---|---|---|---|
| 2024 | Endoxifen top-line strategy | Not disclosed | Qualitative | Achieved (committee determination) | 125% of target overall |
| 2024 | Evangeline P2 PK run-in | Not disclosed | Qualitative | Achieved (committee determination) | Included in overall |
| 2024 | Additional programs; new studies; stretch goals | Not disclosed | Qualitative | Achieved (committee determination) | Included in overall |
| 2023 | Comparable clinical/program goals | Not disclosed | Qualitative | Achieved (committee determination) | 121% of target overall |
Equity awards are predominantly stock options, typically vesting quarterly over two years from grant .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 10,001,747 shares (7.2% of class as of 3/17/2025) |
| Composition | 2,659 direct; 22,254 via Ensisheim Partners LLC; 9,974,561 options exercisable within 60 days; 8 shares of Series B Preferred (2,273 common on as-converted) |
| Vested vs. unvested (illustrative grants) | 3/2/2023 grant: 1,638,963 exercisable / 234,137 unexercisable @ $0.72, exp. 3/2/2033; 6/27/2024 grant: 448,778 exercisable / 1,346,322 unexercisable @ $1.05, exp. 6/27/2034; prior large option tranches at $1.36 (2019), $1.48 (2020), $2.90 (2021), $1.25 (2022) |
| Option vesting cadence | Generally quarterly over two years from grant |
| Hedging/pledging | Hedging/shorts prohibited; pledging prohibited unless approved by Audit Committee; no margin use |
| Clawback | Nasdaq 10D-1-compliant clawback for three prior fiscal years upon restatement (excess incentive-based comp) |
Implication: Very high option exposure creates potential selling pressure as tranches vest; in-the-money value depends on prevailing stock price (not disclosed here) .
Employment Terms
| Term | Quay Employment Agreement |
|---|---|
| Current role start | CEO since Sept. 27, 2010; continuing through 2024–2025 with $705,910 salary |
| Target bonus | Up to 55% of base salary |
| Non-compete | 12 months post-termination (U.S.) |
| Severance (no change-in-control) | If terminated without cause or resigns for good reason: accrued pay + pro-rated bonus; 12 months base salary; full acceleration of all unvested options; options remain exercisable for full term; installments over ~6 months post 30-day release period |
| Change-in-control (CIC) | One-time payment of 2.9x base salary; full acceleration of all outstanding equity awards upon CIC (single-trigger) |
Governance note: Single-trigger full acceleration and 2.9x salary at CIC are shareholder-unfriendly vs. double-trigger market practice in many issuers .
Board Service and Governance
- Roles: Chairman of the Board and CEO; Board combines roles, with H. Lawrence Remmel serving as Lead Independent Director to provide independent oversight (agenda approval, info flow, investor liaison, executive sessions) .
- Independence: Board determined Quay (management) and Dr. Shu-Chih Chen (spouse) are not independent; all other directors independent under Nasdaq; committees composed solely of independent directors .
- Committees: Audit (Steinhart, Chair; Finn; Remmel; Galli), Compensation (Remmel, Chair; Steinhart; Galli), Nominating & Governance (Galli, Chair; Cigler; Finn; Remmel) .
- Attendance: In 2024, Board met seven times; each director attended at least 95% of Board/committee meetings .
- Employee director pay: Employee directors receive no additional pay for Board service .
Director Compensation (Context)
Non-employee directors receive $50,000 cash retainer, $50,000 initial fee upon joining, and annual options for 125,000 shares (vesting quarterly over one year). Committee and lead director cash premia apply; e.g., Lead Independent Director +$30,000; Audit Chair +$20,000 .
Pay Versus Performance (Context)
| Year | CEO SCT Total ($) | CEO Compensation Actually Paid ($) | Non-PEO NEOs CAP ($) | Value of $100 TSR | Net Loss ($) |
|---|---|---|---|---|---|
| 2024 | 2,764,082 | 3,018,458 | 1,238,488 | 2 | (25,504,000) |
| 2023 | 2,356,220 | 2,653,763 | 715,616 | (7) | (30,094,000) |
| 2022 | 3,160,876 | 2,971,123 | 1,445,374 | (44) | (26,960,000) |
The company emphasizes long-term equity and clinical progress, but TSR outcomes have been negative over the disclosed horizon .
Compensation Structure Analysis
- Heavy equity option emphasis: Multi-year, large option grants vesting quarterly over two years; latest grant-date fair value $1.49m in 2024 for 1,795,100 options at $1.05 exercise; vesting cadence may create periodic selling windows .
- Cash vs equity mix: Equity dominates CEO total comp (option awards $1.49m in 2024 vs. salary ~$706k) .
- Performance metrics: Annual bonus based on clinical/program milestones (non-financial KPIs); results-driven (121%–125% of target) but metrics and weightings not disclosed, limiting external pay-for-performance calibration .
- CIC economics: Single-trigger 2.9x base salary plus full acceleration raises governance concerns (payouts not tied to termination) .
- Risk controls: Robust insider trading policy (no shorting, derivatives, margin; pledging only with Audit Committee approval) and clawback policy aligned with Nasdaq Rule 10D-1 .
Risk Indicators & Red Flags
- Dual role and independence: CEO is also Board Chair; spouse (Dr. Chen) on Board; mitigated by lead independent director structure and independent committee composition, but independence optics remain a concern .
- Single-trigger CIC acceleration and 2.9x salary multiple: Above many double-trigger norms; potential misalignment in change-of-control scenarios .
- Option overhang and selling pressure: 9,974,561 options exercisable within 60 days in CEO beneficial ownership and ongoing two-year vesting schedules may add supply overhang as tranches vest; valuation depends on stock price .
- Sustained losses: Reported net losses across 2022–2024 per pay-versus-performance table .
Related-Party Transactions
None disclosed since January 1, 2023, other than compensation arrangements .
Compensation Committee Analysis
- Members: Remmel (Chair), Steinhart, Galli (all independent) .
- Consultant: Aon engaged in 2024 to advise on executive and director compensation .
- Interlocks: None reported in prior three years .
Equity Plan and Capacity
- As of 12/31/2024: 20,691,571 securities to be issued upon exercise of outstanding awards; 12,991,925 shares remaining available under plans; weighted average exercise price $1.60 .
- 2024 Plan amendments: Increased 2020 Plan pool to 30,000,000 shares; extended term to June 27, 2034 .
Board Governance (Director Service, Committees, Independence)
| Topic | Detail |
|---|---|
| Years of service on Board | Director since 2009; current Class I term up in 2025; nominated for re-election through 2028 if elected |
| Committee roles | As an employee director, not on independent committees; Board Chair |
| Independence status | Not independent (management); spouse on Board also not independent |
| Lead Independent Director | H. Lawrence Remmel, Esq.; responsibilities include presiding executive sessions, agenda/info approval, investor liaison |
| Board meeting attendance | ≥95% attendance for all directors in 2024 |
Investment Implications
- Alignment and retention: Substantial equity ownership and ongoing option vesting align incentives but create potential incremental selling pressure as tranches vest; strong anti-hedging/pledging and clawback policies mitigate risk-taking concerns .
- Pay-for-performance calibration: Cash bonuses tied to clinical milestones (not traditional financial metrics), with above-target payouts; investors should monitor milestone transparency and the linkage to value creation given multi-year negative TSR and losses .
- Governance: Combined CEO/Chair roles and family member on Board increase independence risk; lead independent director structure and independent committees partially mitigate; CIC benefits (single-trigger, 2.9x salary) are a governance overhang .
- Trading signals: Watch Form 4 filings for exercises/sales around quarterly vest dates and option expirations (e.g., 2015–2017 legacy grants) as potential supply catalysts; significant exercisable options within 60 days noted in beneficial ownership .