What changed in this filing

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Item 9A. Controls and Procedures

2021-03-18 compared with 2020-02-18 · 177 added, 99 removed, 640 unchanged (30% of the section changed)

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Directors, Executive Officers and Corporate Governance

Our directors, executive officers and key employees as of February 13, 2020 are as follows:

Our directors, executive officers and key employees as of March 1, 2021 are as follows:

President and Chief Executive Officer and Class II Director (4)

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Grais has served as a member of the Board of Directors since May 2007.

Grais has been a director of Ocera Therapeutics, Inc., a pub lic biopharmaceutical company, since January 2008 and became President and Chief Executive Officer of Ocera in June 2012, and served in that role until Ocera’s acquisition by Mallinckrodt Pharmaceuticals in December 2017.

Grais served as a Managing Mem ber at InterWest Partners, a venture capital firm from May 2005 until February 2011.

Grais has been a director of Ocera Therapeutics, Inc., a public biopharmaceutical company, since January 2008 and became President and Chief Executive Officer of Ocera in June 2012, and served in that role until Ocera’s acquisition by Mallinckrodt Pharmaceuticals in December 2017.

Grais served as a Managing Member at InterWest Partners, a venture capital firm from May 2005 until February 2011.

From July 1998 to July 2003, Dr.

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Before practicing law, Dr.

Grais worked as an assistant clinical professor of Internal Medicine and Critica l Care at the University of California, San Francisco.

Grais worked as an assistant clinical professor of Internal Medicine and Critical Care at the University of California, San Francisco.

Grais received a B.A.

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Grais has served on the board of PRA Health Sciences, a public contract research organization.

Grais also joined the boards of Corvus Pharmaceuticals and Zosano Pharma Corp., both publicly traded pharmaceutical companies, in January 2019.

Grais also joined the boards of Corvus Pharmaceuticals and Zosano Pharma Corp., both publicly traded pharmaceutical companies, in January 2019, and the board of Deerfield Healthcare Technology Acquisitions Corp., a publicly traded special purpose acquisition company, in June 2020.

We believe Dr.

Grais is an approp riate member of the Board of Directors because of her diverse training and experience as both a medical doctor and a lawyer, her experience as a founder and senior executive of a pharmaceutical company, and her experience as an investor in new life science s companies.

Grais is an appropriate member of the Board of Directors because of her diverse training and experience as both a medical doctor and a lawyer, her experience as a founder and senior executive of a pharmaceutical company, and her experience as an investor in new life sciences companies.

She also has extensive experience with and knowledge of the Company's business from her service on the Board of Directors of the Company since 2007 .

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Conway was appointed to the Board of Directors in September 2013, and has served as the Chairman of our Board of Directors since 2014.

Conway served as the Chief Executive Officer and member of the board of directors of Array Biopharma, a publicly traded pharmaceutical company, from 1999 to 2012.

Conway served as the Chief Executive Officer and member of the board of directors of Array Biopharma, a publicly traded biopharmaceutical company, from 1999 to 2012.

Prior to joining Array, Mr.

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Mitchell was appointed to the Board of Directors in February 2014.

He founded, and is a manager of Sequel Venture Partners, L.L.C., a venture capital firm formed in January 1997.

He founded, and was a manager of Sequel Venture Partners, L.L.C., a venture capital firm formed in January 1997.

Prior to founding Sequel Venture Partners, Mr.

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Hove was most recently a managing partner at Amzak Health from 2017 to 2019 and before that, a general partner of Venrock Associates, a venture capital firm, which he joined in 2004 and remained at through 2016.

H ove was a founder of Venrock Healthcare Capital Partners, Venrock’s public funds focused on small capitalization biotech companies and late-stage private companies.

Hove was a founder of Venrock Healthcare Capital Partners, Venrock’s public funds focused on small capitalization biotech companies and late-stage private companies.

From 1996 to 2004, Dr.

Hove was a fund manager at BB Biotech Fund, an investment firm, and from 2002 to 2003 he also served as Chief Executive Officer of Bellevue Asset Management, LLC, an investment company.

Hove previously held senior level positions in the medical, clinical and business operations of the pharmaceuticals division of Ciba-G eigy and Novartis.

Hove previously held senior level positions in the medical, clinical and business operations of the pharmaceuticals division of Ciba-Geigy and Novartis.

Hove was a member of the boards of directors of Anacor Pharmaceuticals, a publicly traded pharmaceutical company, from 2005 until its acquisition by Pfizer in June 2016, and Edge Therapeutics, a publicly traded biotechnology company, from 2015 to 2016.

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The Company’s Amended and Restated Certificate of Incorporation, as amended, provides that the Board of Directors is divided into three classes to provide for staggered terms and that each director will serve for a term of three years or less, depending on the class to which the Board of Directors has assigned a director not previously elected by the stockholders.

There are currently two Class II directors whose terms expire at the annual stockholders’ meeting in 2020, two Class III directors whose terms expire at the annual meeting in 2021 and two Class I directors whose terms expire at the annual stockholders’ meeting in 2022.

The two Class II directors, Dr.

Michael Bristow and Mr.

Robert Conway, are currently scheduled for re-election to the Board of Directors at the 2020 annual stockholders’ meeting, for a three-year term ending on the date of the annual meeting in 2023 or until their successors are duly elected and qualified or appointed.

There are currently two Class III directors whose terms expire at the annual meeting in 2021, two Class I directors whose terms expire at the annual stockholders’ meeting in 2022 and two Class II directors whose terms expire at the annual stockholders’ meeting in 2023.

The two Class III directors, Dr.

Woosley and Mr.

Mitchell, are currently scheduled for re-election to the Board of Directors at the 2021 annual stockholders’ meeting, for a three-year term ending on the date of the annual meeting in 2024 or until their successors are duly elected and qualified or appointed.

Our executive officers are appointed by and serve at the discretion of our Board of Directors.

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establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

and meets to review the Company’s annual audited financial statements and quarterly financial statements with management and the independent registered public accounting firm, including a review o f the Company’s disclosures under the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” discussion in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.

and meets to review the Company’s annual audited financial statements and quarterly financial statements with management and the independent registered public accounting firm, including a review of the Company’s disclosures under the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” discussion in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.

As of December 31, 2020, the Audit Committee was composed of three directors:

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The Audit Committee met f our times during the fiscal yea r.

The Board of Directors has adopted a written charter of the Audit Committee that is available to stockholders on the Co mpany’s website at www.arcabio.com.

The Board of Directors has adopted a written charter of the Audit Committee that is available to stockholders on the Company’s website at www.arcabio.com.

The Board of Directors reviews the Nasdaq listing standards definition of independence for audit committee members on an annual basis and has determined that all members of the Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii) of the Nasdaq listing standards).

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All members of the Compensation Committee are independent, as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards.

The Compensation Committee did not meet during the fiscal year.

In 2019, in an effort to conserve cash, there were no recommended changes to compensation, including base salary or annual option grants.

The Compensation Committee met two times during the fiscal year.

The Compensation Committee has adopted a written charter that is available to stockholders on the Company’s website at www.arcabio.com.

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reviewing and approving performance-based compensation plans or programs, including establishing goals and targets, applicable to the Chief Executive Officer and other members of the management team;

administering, reviewing, and approving all executive compensation programs or plans, and all of the Company’s incentive compensation and stock plans and awards thereunder of the Company, including amendments to the programs, plans or awards made thereunder;

The material in this report is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

preparing and approving the Report of the Compensation Committee to be included as part of the Company’s

annual meeting proxy statement, to the extent required.

preparing and approving the Report of the Compensation Committee to be included as part of the Company’s annual meeting proxy statement, to the extent required.

Compensation Committee Processes and Procedures

Typically, the Compensation Committee meets on a regular basis as it deems appropriate.

Typically, the Compensation Committee meets, as it deems appropriate.

The agenda for each meeting is usually developed by the Chair of the Compensation Committee.

The Compensation Committee meets regularly in executive session.

However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings.

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In general, the Compensation Committee has set executive compensation to be in line with peer companies identified by the Compensation Committee and to incentivize the Company’s executive officers in achieving the Company’s short- and long-term corporate goals.

In setting 2018 base salary and cash bonus award amounts for the Named Executive Officers (as defined below), the Compensation Committee considered peer group data and factors specific to the Company, and targeted cash compensation to be consistent with these metrics.

During 2019, no meetings of the Compensation Committee were held, as there were no material changes to the Company’s compensation practices in 2020.

In 2020, the Compensation and Nominating and Corporate Governance Committees of the Company reviewed the Company’s current employee and director compensation, including the Company’s 2013 Equity Incentive Plan.

As part of this review, the Committees considered certain changes to the ARCA 2013 Equity Incentive Plan that were included in the 2020 ARCA Equity Incentive Plan.

Both Committees recommended approval of the 2020 ARCA Equity Incentive Plan, and the Plan was subsequently approved by the Board of Directors and the Company’s stockholders on December 10, 2020.

The current compensation for the Named Executive Officers was set by the Compensation Committee and the Board in 2017.

In 2017, the Compensation Committee recommended, and the Board of Directors approved, a base salary of $304,219 for Dr.

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There were no changes made by the Compensation Committee to the Named Executive Officers’ salaries for 2018 or 2019.

Additionally, the Compensation Committee recommended that no bonuses be paid to the Named Executive Officers for performance in the fiscal year ended December 31, 2018 and has not approved a cash bonus plan for performance in the fiscal year ended December 31, 2019.

Additionally, the Compensation Committee recommended that no bonuses be paid to the Named Executive Officers for performance in the fiscal year ended December 31, 2018 and did not approve a cash bonus plan for performance in the fiscal year ended December 31, 2019.

In May 2019, the Named Executive Officers agreed to a voluntary 10% salary reduction for the remainder of 2019.

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Ozeroff, Secretary, Senior Vice President and General Counsel, $267,609.

The forgone portion of any Named Executive Officer’s salary shall not be paid without the prior approval of the Board of Directors, provided, that such forgone amounts shall be included in each Named Executive Officer’s base salary for purposes of calculating any severance amounts which may be owed in the future under the terms of such Named Executive Officer’s employment agreement with the Company.

On August 3, 2020, the Board of Directors approved revisions to the base salary amounts of the Named Executive Officers to return them to the salary amounts in effect prior to the voluntary salary reduction in 2019.

As a result, the base salary rate paid to the Named Executive Officers for the remainder of 2020 was as follows:

Bristow, President and Chief Executive Officer, $ 304,219 ;

Keuer, Chief Operating Officer, $ 303,000 ;

• Christopher D.

Ozeroff, Secretary, Senior Vice President and General Counsel, $ 297,343 .

On December 21, 2020, the Compensation Committee approved the following base salary compensation and target bonus percentages for the named executive officers and principal financial officer for the 2021 fiscal year:

Bristow, President and Chief Executive Officer, $345,000 base salary and target bonus of 50% of base salary;

Keuer, Chief Operating Officer, $340,000 base salary and target bonus of 40% of base salary;

Christopher D.

Ozeroff, Secretary, Senior Vice President and General Counsel, $304,000 base salary and target bonus of 35% of base salary;

Selby, Vice President, Finance, $270,000 base salary and target bonus of 30% of base salary.

Historically, the Compensation Committee has made most of the significant adjustments to annual compensation, determined bonus and equity awards and established new performance objectives at one or more meetings held during the first quarter of the year.

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If the compensation for the Chief Executive Officer or any other executive officer is governed by an employment agreement, the Compensation Committee approves such employment agreement and any amendments thereto.

For all executives as part of its delib erations, the Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels and current Company-wide compensation levels .

For all executives as part of its deliberations, the Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels and current Company-wide compensation levels.

The Compensation Committee also considers the results of any “say-on-pay” vote of the Company’s stockholders with regard to the compensation of the Company’s executive officers when making compensation decisions.

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All members of the Nominating and Corporate Governance Committee in 2020 were independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards).

The Nominating and Corporate Governance Committee acted by Unanimous Written Consent to nominate directors for the 2019 Annual Meeting, but did not meet during the 2019 fiscal year.

The Nominating and Corporate Governance Committee met two times during the 2020 fiscal year.

The Nominating and Corporate Governance Committee has adopted a written charter that is available to stockholders on the Company’s website at www.arcabio.com.

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Since adoption of this policy, the Nominating and Corporate Governance Committee has reviewed Director compensation on an annual basis and has not made any changes.

In 2020, the Nominating and Corporate Governance Committee (together with the Compensation Committee) engaged a consultant to evaluate the current compensation of the Company’s non-employee directors and make recommendations to the Nominating and Corporate Governance Committee.

The changes made as a result of this evaluation are discussed in “Director Compensation” below.

The Board of Directors has adopted a process for identifying and evaluating director nominees, including stockholder nominees.

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The Nominating and Corporate Governance Committee believes it is essential that Board of Directors members come from a variety of backgrounds and experiences.

In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall contributions to the Company and the Board of Directors during their terms, inclu ding level of attendance, level of participation, quality of performance and contribution to the Board of Directors’ responsibilities and actions, and any relationships and transactions that might impair the directors’ independence.

In the case of new dire ctor candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq and SEC purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations a nd the advice of counsel, if necessary.

In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall contributions to the Company and the Board of Directors during their terms, including level of attendance, level of participation, quality of performance and contribution to the Board of Directors’ responsibilities and actions, and any relationships and transactions that might impair the directors’ independence.

In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq and SEC purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary.

The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board of Directors.

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or by mail by following the directions as set forth on ARCA’s website at www.arcabio.com, under the section titled “Corporate Governance” and the subsection titled “Governance Documents”.

Communications sent in accordance with this process will be transmitted by the Company to the appropriate Board members.

Executive Compensation

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Secretary, Senior Vice President and General Counsel

The amounts reported under “Salary” in the above table represent the actual amounts paid during the calendar year, and thus the 2019 salary amounts reflect the voluntary 10% salary reduction commencing in May 2019, as described below.

The amounts reported under “Salary” in the above table represent the actual amounts paid during the calendar year, and thus the 2020 salary amounts reflect the restored amounts commencing in August 2020 and the 2019 salary amounts reflect the voluntary 10% salary reduction commencing in May 2019, as described below.

Because the Company’s actual pay dates do not always coincide with the first and last days of the year, these amounts may differ from the base salary amounts authorized by the Company’s Board of Directors.

The amounts reported under “Option Awards” in the above table reflect the grant date fair value of these awards as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation, excluding the effects of estimated forfeitures.

The vesting schedule for options included in the above table are included in the table of “Outstanding Equity Awards at Fiscal Year End” below.

The value of stock option awards was estimated using the Black-Scholes option-pricing model.

The valuation assumptions used in the valuation of option grants may be found in Note 8 to the Company’s financial statements included in this annual report on Form 10-K for the year ended December 31, 2020.

Represents cash bonuses earned under the 2020 Bonus Plan.

Cash bonuses earned and reported above in 2020 were paid in 2021.

No 2019 cash bonus plan was adopted for the 2019 fiscal year.

See “Executive Compensation” for descriptions of the 2020 Bonus Plan.

Represents 401(k) Company match, Health Savings Account contributions by the Company, group term life premiums, cell phone reimbursements and airline club dues.

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Bristow is entitled to receive an annual base salary of $200,000, subject to annual increases if approved by the Company’s Board of Directors or Compensation Committee and is eligible to receive an annual bonus as determined by the Board of Directors or Compensation Committee in its sole discretion.

In 2018 and 2019, there were no changes to the previously approved base salary of $304,219 for Dr.

In 2019, there were no changes to the previously approved base salary of $304,219 for Dr.

In May 2019, Dr.

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Bristow’s base salary for purposes of calculating any severance amounts which may be owed in the future under the terms of his employment agreement with the Company.

The Company did not put in place a bonus plan for its Named Executive Officers for services in 2018 or 2019.

The Company did not put in place a bonus plan for its Named Executive Officers for services in 2019.

As a result, the base salary rate paid to Dr.

Bristow for the remainder of 2020 was $304,219.

On December 21, 2020, the Compensation Committee approved a base salary of $345,000 and target bonus percentage of 50% of base salary for Dr.

Bristow for the 2021 fiscal year.

On January 29, 2021, the Compensation Committee approved a cash bonus of $144,000 for Dr.

The cash bonus was earned under the 2020 Bonus Plan for services rendered in 2020.

See “ Non-Equity Incentive Plan Compensation ” below for descriptions of the 2020 Bonus Plan.

If the Company terminates Dr.

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Bristow terminates his employment with “good reason” (as these terms are defined in his employment agreement), the Company has agreed to pay Dr.

that has been approved by the Board of Directors payable to him for the fiscal year in which his employment terminated to be paid at the same time that such incentive bonus would have been paid had the termination not occurred, and (iii) reimbursement to cover out-of-pocket costs to continue group health insurance benefits under COBRA for 6 months, whether he elects or is eligi ble to receive COBRA (provided, that even if he does not elect or is not eligible to receive COBRA, he will receive the equivalent of such out-of-pocket expenses paid by him not to exceed the costs that the benefits would equal under COBRA if he were so el igible).

Bristow a severance payment equivalent to (i) (a) 12 months of his base salary, if such termination occurs on the same day as or within 13 months after a change of control of the Company, or (b) six months of his base salary if such termination does not occur on the same day as or within 13 months after a change of control of the Company, (ii) a pro rata portion of any bonus compensation under any employee bonus plan that has been approved by the Board of Directors payable to him for the fiscal year in which his employment terminated to be paid at the same time that such incentive bonus would have been paid had the termination not occurred, and (iii) reimbursement to cover out-of-pocket costs to continue group health insurance benefits under COBRA for 6 months, whether he elects or is eligible to receive COBRA (provided, that even if he does not elect or is not eligible to receive COBRA, he will receive the equivalent of such out-of-pocket expenses paid by him not to exceed the costs that the benefits would equal under COBRA if he were so eligible).

In addition, ARCA may elect in its sole discretion, to pay additional severance equal to up to 6 months of base salary, which additional payment would extend the covenants and obligations under Dr.

Bristow’s Employee Intellectual Property, Confide ntiality and Non-Compete Agreement for such additional period.

Bristow’s Employee Intellectual Property, Confidentiality and Non-Compete Agreement for such additional period.

The severance payment is conditioned on the execution by Dr.

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refusal, unwillingness, failure, or inability to perform his material job duties or habitual absenteeism;

or violat ion of fiduciary duty, violation of any duty of loyalty, or material breach of any material term of his employment agreement or his Employee Intellectual Property, Confidentiality and Non-Compete Agreement, or any other agreement, with the Company.

“Good r eason” includes a relocation by us of Dr.

or violation of fiduciary duty, violation of any duty of loyalty, or material breach of any material term of his employment agreement or his Employee Intellectual Property, Confidentiality and Non-Compete Agreement, or any other agreement, with the Company.

“Good reason” includes a relocation by us of Dr.

Bristow’s normal work location greater than 30 miles;

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Keuer is entitled to receive an annual base salary of $280,000, subject to annual increases if approved by the Company’s Board of Directors or Compensation Committee and is eligible to receive an annual bonus as determined by the Board of Directors or Compensation Committee in its sole discretion.

In 2018 and 2019, there were no changes to the previously approved base salary of $303,000 for Mr.

In May 2019, Mr.

In 2019 , the re were no changes to the previously approved base salary of $303,000 for Mr.

I n May 2019 , Mr.

Keuer agreed to a voluntary 10% salary reduction for the remainder of 2019.

As a result of this reduction, the base salary paid to Mr.

Keuer for the remainder of 2019 was $272,700.

Keuer for the remainder of 2019 wa s $27 2 ,7 00.

The forgone portion of any of Mr.

Keuer’s salary shall not be paid without the prior approval of the Board of Directors, provided, that such forgone amount shall be included in Mr.

Keuer’s salary shall not be paid without the prior approval of the B oard of D irectors, prov ided, that such forgone amount shall be included in Mr.

Keuer base salary for purposes of calculating any severance amounts which may be owed in the future under the terms of his employment agreement with the Company .

The Company did not put in place a bonus plan for its Named Executive Officers for services in 2018 or 2019.

The Company did not put in place a bonus plan for its Named Executive Officers for services in 2019 .

As a result, the base salary rate paid to Mr.

Keuer for the remainder of 2020 was $303,000.

On December 21, 2020, the Compensation Committee approved a base salary of $340,000 and target bonus percentage of 40% of base salary for Mr.

Keuer for the 2021 fiscal year.

On January 29, 2021, the Compensation Committee approved a cash bonus of $98,000 for Mr.

The cash bonus was earned under the 2020 Bonus Plan for services rendered in 2020.

See “ Non-Equity Incentive Plan Compensation ” below for descriptions of the 2020 Bonus Plan.

If the Company terminates Mr.

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Ozeroff is entitled to receive an annual base salary of $259,000, subject to annual increases if approved by the Company’s Board of Directors or Compensation Committee and is eligible to receive an annual bonus as determined by the Board of Directors or Compensation Committee in its sole discretion.

In 201 8 and 2019 , the re were no changes to the previously approved base salary of $297,343 for Mr.

I n May 2019 , Mr.

Ozeroff agreed to a voluntary 10% salary reduc tion for the remainder of 2019.

In 2019, there were no changes to the previously approved base salary of $297,343 for Mr.

In May 2019, Mr.

Ozeroff agreed to a voluntary 10% salary reduction for the remainder of 2019.

As a result of this reduction, the base salary paid to Mr.

Ozeroff for the remainder of 2019 wa s $2 6 7, 609.

Ozeroff for the remainder of 2019 was $267,609.

The forgone portion of any of Mr.

Ozeroff ’s salary shall not be paid without the prior approval of the B oard of D irectors, prov ided, that such forgone amount shall be included in Mr.

Ozeroff’s salary shall not be paid without the prior approval of the Board of Directors, provided, that such forgone amount shall be included in Mr.

Ozeroff’s base salary for purposes of calculating any severance amounts which may be owed in the future under the terms of his employment agreement with the Company.

The Company did not put in place a bonus plan for its Named Executive Officers for services in 2018 or 2019 .

The Company did not put in place a bonus plan for its Named Executive Officers for services in 2019.

As a result, the base salary rate paid to Mr.

Ozeroff for the remainder of 2020 was $297,343.

On December 21, 2020, the Compensation Committee approved a base salary of $304,000 and target bonus percentage of 35% of base salary for Mr.

Ozeroff for the 2021 fiscal year.

On January 29, 2021, the Compensation Committee approved a cash bonus of $84,000 for Mr.

The cash bonus was earned under the 2020 Bonus Plan for services rendered in 2020.

See “ Non-Equity Incentive Plan Compensation ” below for descriptions of the 2020 Bonus Plan.

If the Company terminates Mr.

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The Compensation Committee retained discretion to change the bonus structure and the bonus payment amounts as it considered appropriate.

In order to conserve cash, the Compensation Committee and Board of Directors did not approve a bonus structure for 2018 or 2019.

As such, the Company did not pay any cash bonuses to its Named Executive Officers in 2019 for performance in the 2018 fiscal year and does not anticipate paying any cash bonuses in 2020 for performance in 2019.

Due to the fact that no bonus plans were put in place in 2018 or 2019, the Board of Directors also did not approve any bonus-related corporate goals for these years.

2020 Cash Bonus Plan

On January 29, 2021, the Compensation Committee approved cash bonuses for certain employees.

The cash bonuses were paid in 2021for performance in 2020, including attainment of the Company’s 2020 Goals under its 2020 Cash Bonus Plan (the “2020 Goals”), as determined by the Compensation Committee.

The 2020 bonuses were based on the Board of Directors’ determination with respect to the Company’s achievement of the 2020 Goals.

The 2020 Goals were based on (1) obtaining additional financing (2) rNAPc2 (AB201) IND approval, and (3) enrollment of rNAPc2 (AB201) clinical trial.

In order to conserve cash, the Compensation Committee and Board of Directors did not approve a bonus structure for 2019.

As such, the Company did not pay any cash bonuses to its Named Executive Officers in 2020 for performance in the 2019 fiscal year.

Due to the fact that no bonus plans were put in place in 2019, the Board of Directors also did not approve any bonus-related corporate goals for 2019.

Other Elements of Executive Compensation Program

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The following table shows for the fiscal year ended December 31, 2020, certain information regarding outstanding equity awards at fiscal year end for the Named Executive Officers.

On April 3, 2019, we completed a 1-for-18 reverse stock split of our common stock.

All common share and per common share amounts included herein have been adjusted retroactively to reflect the effects of this action.

A description of the equity incentive plans we maintain is set forth in Note 8 to the Company’s financial statements included in this Annual Report on Form 10-K.

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Bristow, President and Chief Executive Officer

190,000 (1)(2)

Keuer, Chief Operating Officer

70,000 (1)(2)

Christopher Ozeroff, Secretary, Senior Vice President and General Counsel

(1) Options vest in 36 monthly installments measured from February 16, 2017.

55,000 (1)(2)

(1) Options vest in 48 monthly installments measured from December 21, 2020.

(2) In the event of a change in control of the Company, 50% of the unvested shares subject to this award shall become fully and immediately vested upon the closing date of such change in control, provided, however, that on the earlier of (i) the one-year anniversary of the closing date or (ii) involuntary termination, any options that remain unvested on such earlier date shall become fully and immediately vested.

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The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2020, for Dr.

Grais was 1,667, after giving effect to the 18-for-1 reverse stock split effected on April 3, 2019, of which all shares were fully vested.

Grais was 1,654, of which all shares were fully vested.

The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2020, for Dr.

Woosley was 1,611, after giving effect to the 18-for-1 reverse stock split effected on April 3, 2019, of which all shares were fully vested.

Woosley was 1,611, of which all shares were fully vested.

The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2020, for Mr.

Conway, Chairman of the Board of Directors, was 1,604, after giving effect to the 18-for-1 reverse stock split effected on April 3, 2019, of which all shares were fully vested.

Conway, Chairman of the Board of Directors, was 1,604, of which all shares were fully vested.

The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2020, for Mr.

Mitchell was 1,577, after giving effect to the 18-for-1 reverse stock split effected on April 3, 2019, of which all shares were fully vested.

Mitchell was 1,577, of which all shares were fully vested.

The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2020, for Dr.

Hove was 999, after giving effect to the 18 for-1 reverse stock split effected on April 3, 2019, of which all shares were fully vested.

Hove was 999, of which all shares were fully vested.

In 2016, the Company revised its compensation plan for non-employee directors to provide that non-employee directors will be compensated for their service on the Board of Directors , as follows:

Each non-employee director will receive an annual retainer fee of $35,000;

As additional compensation for their services, each non-employee director will receive (i), upon joining the Board of Directors , an initial option grant to purchase 556 shares of the Company’s Common Stock under the Amended and Restated ARCA 2013 Equity Incentive Plan, as amended, or the Amended 2013 Plan and (ii), on an annual basis, an annual option grant to purchase 444 shares of the Company’s Common Stock under the Amended 2013 Plan;

As additional compensation for their services, each non-employee director will receive (i), upon joining the Board of Directors , an initial option grant to purchase 556 shares of the Company’s Common Stock under the ARCA 2020 Equity Incentive Plan, or the 2020 Plan and (ii), on an annual basis, an annual option grant to purchase 444 shares of the Company’s Common Stock under the 2020 Plan;

The Chairman of the Board of Directors will receive an additional annual retainer fee of $25,000;

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Each non-chair member of the Compensation Committee and the Nominating and Corporate Governance Committees will receive an additional annual retainer fee of $5,000.

In an effort to conserve shares available for future issuance under the Amended 2013 Plan, the Board of Directors chose not to award annual option grants to directors during 2019.

In an effort to conserve shares available for future issuance under the Amended and Restated ARCA 2013 Equity Incentive Plan, the Board of Directors chose not to award annual option grants to directors during 2019.

At the January 12, 2021 meeting of the Compensation Committee, the Company’s non-employee directors were awarded stock option grants.

Mitchell, Dr.

Conway and Dr.

Hove each were granted options to purchase 12,000 shares of Common Stock under the 2020 Plan vesting over three years.

The purchase price for the options issued on January 12, 2021, was $4.31 per share, which was equal to the closing price of the Company’s Common Stock on Nasdaq on the date of the grant.

If the non-employee director’s service terminates in connection with or at any time following a change in control, then any unexpired options that remain unvested shall become fully vested.

Also, beginning in 2021, the non-employee director annual retainer fee increased from $35,000 to $40,000 and the Chairman of the Board of Directors additional annual retainer fee increased from $25,000 to $30,000.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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Equity compensation plans not approved by security holders

On September 17, 2013, our stockholders approved the ARCA biopharma, Inc.

On December 10, 2020, our stockholders approved the ARCA biopharma, Inc.

2020 Equity Incentive Plan, or the 2020 Plan, at the Company’s 2020 annual meeting of stockholders.

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2013 Equity Incentive Plan, or the 2013 Plan.

A description of the 2020 Plan is set forth in Note 8 to the Company’s financial statements included in this annual report on Form 10-K.

The 2020 Plan only has options outstanding as of December 31, 2020, no warrants or rights are outstanding under this plan;

therefore, all values in the above table relate solely to the outstanding options.

On September 17, 2013, our stockholders approved the 2013 Plan at the Company’s 2013 annual meeting of stockholders.

The 2013 Plan is the successor to the Amended and Restated ARCA biopharma, Inc.

2004 Equity Incentive Plan, or the 2004 Plan.

On June 9, 2016, our stockholders approved the Amended 2013 Plan.

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The multi-year vesting of equity awards properly accounts for the time horizon of risk.

In 2019 and 2018, in an effort to conserve cash, compensation was allocated only to base salary.

In 2019, in an effort to conserve cash, compensation was allocated only to base salary.

Furthermore, the Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking on an annual basis.

Security Ownership of Certain Beneficial Owners

The following table sets forth certain information regarding the ownership of the Company’s Common Stock as of February 13, 2020, by:

The following table sets forth certain information regarding the ownership of the Company’s Common Stock as of March 1, 2021, by:

(i) each director, (ii) each of our named executive officers, (iii) all executive officers and directors of the Company as a group and (iv) all those known by the Company to be beneficial owners of more than five percent of its Common Stock.

Unless otherwise noted below, the address of each beneficial owner listed on the table is c/o ARCA biopharma, Inc., 11080 CirclePoint Road, Suite 140, Westminster, Colorado, 80020.

Unless otherwise noted below, the address of each beneficial owner listed on the table is c/o ARCA biopharma, Inc., 10170 Church Ranch Way, Suite 100, Westminster, Colorado, 80021.

We have determined beneficial ownership in accordance with the rules of the SEC.

Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of Common Stock that they beneficially own, subject to applicable community property laws.

Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting

and investment power with respect to all shares of Common Stock that they beneficially own, subject to applicable community property laws.

The table is based upon information supplied by officers, directors and principal stockholders and Schedules 13G or 13D , Form 4s or other ownership reports filed with the SEC.

For purposes of this table, certain of our outstanding warrants that may be exercisable for fractional shares have been rounded down to the nearest whole number.

In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of Common Stock subject to options, restricted stock units, or warrants held by that person that are currently exercisable or exercisable within 60 days of February 1 3 , 20 20 .

In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of Common Stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 1, 2021.

We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.

The percentages below are based on 1,594,070 shares of our Common Stock outstanding as of February 13, 2020.

The percentages below are based on 14,410,143 shares of our Common Stock outstanding as of March 1, 2021.

Beneficial Owner

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All current directors and executive officers as a group (9 persons) (9)

5% Stockholders

Renaissance Technologies LLC (10)

Represents beneficial ownership of less than 1% of our Common Stock.

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(ii) 1,414 shares owned by NFS as Custodian for Michael Bristow’s IRA;

and (iii) options to purchase 6,761 shares that are exercisable within 60 days of February 13, 2020.

Includes options to purchase 2,837 shares that are exercisable within 60 days of February 13, 2020.

Includes options to purchase 2,712 shares that are exercisable within 60 days of February 13, 2020.

Includes options to purchase 1,654 shares that are exercisable within 60 days of February 13, 2020.

Includes options to purchase 1,604 shares that are exercisable within 60 days of February 13, 2020.

Includes options to purchase 1,611 shares that are exercisable within 60 days of February 13, 2020.

Includes options to purchase 1,577 shares that are exercisable within 60 days of February 13, 2020.

Includes options to purchase 999 shares that are exercisable within 60 days of February 13, 2020.

and (iii) options to purchase 22,574 shares that are exercisable within 60 days of March 1, 2021.

Includes options to purchase 8,661 shares that are exercisable within 60 days of March 1, 2021.

Includes options to purchase 7,288 shares that are exercisable within 60 days of March 1, 2021.

Includes options to purchase 2,988 shares that are exercisable within 60 days of March 1, 2021.

Includes options to purchase 2,938 shares that are exercisable within 60 days of March 1, 2021.

Includes options to purchase 2,945 shares that are exercisable within 60 days of March 1, 2021.

Includes options to purchase 2,911 shares that are exercisable within 60 days of March 1, 2021.

Includes options to purchase 2,333 shares that are exercisable within 60 days of March 1, 2021.

See Notes (1) through (8) above.

Also, includes additional options to purchase 2,558 shares that are exercisable within 60 days of February 13, 2020 beneficially owned by our executive officers not listed by name in the table above.

Based upon a Schedule 13G filed with the SEC on February 13, 2020.

Renaissance Technologies Holdings Corporation is deemed to beneficially own the shares owned by Renaissance Technologies LLC, because of Renaissance Technologies Holdings Corporation’s majority ownership of Renaissance Technologies LLC.

The address for Renaissance Technologies Holdings Corporation and Renaissance Technologies LLC is 800 Third Avenue, New York, NY 10022.

Also, includes additional options to purchase 7,138 shares that are exercisable within 60 days of March 1, 2021 beneficially owned by our executive officers not listed by name in the table above.

Certain Relationships and Related Transactions, and Director Independence

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Funding of any unrestricted research grants is contingent upon the Company’s financial condition, and can be deferred or terminated at the Company’s discretion.

Total expense under these arrangements for the years ended December 31, 2019 and 2018 was approximately $286,000 and $325,000, respectively, of which $111,000 was unpaid and included in Accrued expenses and other liabilities as of December 31, 2018.

Total expense under these arrangements for the years ended December 31, 2020 and 2019 was approximately $356,000 and $286,000, respectively.

Policies and Procedures for Related Party Transactions

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The following table represents aggregate fees billed, or expected to be billed, to us for the fiscal years ended December 31, 2020 and December 31, 2019, by KPMG LLP, our independent registered public accounting firm.

Fiscal Year Ended 2019

Fiscal Year Ended 2018

Audit Fees (1)

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All Other Fees

Audit Fees include fees for the (i) audit of the financial statements included in our Form 10-K for

our fiscal years ended December 31, 2020, and December 31, 2019, (ii) review of interim financial statements included on Forms 10-Q and (iii) attest, consent and review services normally provided by the accountant in connection with SEC filings.

Audit-related Fees include fees for accounting consultations.

All fees described above were approved by the Audit Committee.

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Reference is made to Exhibits 3.1, 3.1(a), 3.1(b) and 3.2

Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.

Description of Registered Securities (Incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-K filed on February 18, 2020) .

License and Sublicense Agreement, dated October 28, 2003, by and between ARCA Discovery, Inc.

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and JonesTrading Institutional Services LLC .

Amendment No.

7 to Capital on Demand TM Sales Agreement, dated July 2, 2020, by and between ARCA biopharma, Inc.

and JonesTrading Institutional Services LLC .

Amendment No.

8 to Capital on Demand TM Sales Agreement, dated July 14, 2020, by and between ARCA biopharma, Inc.

and JonesTrading Institutional Services LLC .

Capital on Demand TM Sales Agreement, dated July 22, 2020, by and between ARCA biopharma, Inc.

and JonesTrading Institutional Services LLC .

Amended and Restated Exclusive License Agreement, dated August 12, 2011, by and between the Regents of the University of Colorado and ARCA biopharma, Inc .

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and Dawson James Securities, Inc., dated January 21, 2014 .

Incorporated by Reference

Amendment No.

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Securities Purchase Agreement by and among the Company and the purchasers identified therein, dated June 10, 2015 .

Form of Stock Purchase Agreement between the Company and the Purchasers, dated as of June 2, 2020 .

Office Lease Agreement by and between ARCA biopharma, Inc.

and Circle Point Properties, LLC, effective August 1, 2013 .

Incorporated by Reference

Amendment to Office Lease Agreement by and between ARCA biopharma, Inc.

2 unchanged sentences

and CIO Circle Point Limited Partnership, dated October 10, 2019 .

Third Amendment to Office Lease Agreement, effective February 24, 2020, between ARCA biopharma, Inc.

and CIO Circle Point, Limited Partnership .

Office Lease Agreement, effective August 7, 2020, between ARCA biopharma, Inc.

and Potens Partners LLC .

Amendment Agreement by and between ARCA biopharma, Inc.

14 unchanged sentences

and Thomas A.

ARCA biopharma, Inc.

2020 Equity Incentive Plan .

Incorporated by Reference

Form of Stock Option Agreement and Option Grant Notice under 2020 Equity Incentive Plan (Standard) .

Form of Stock Option Agreement and Option Grant Notice under 2020 Equity Incentive Plan (Officer) .

Form of Stock Option Agreement and Option Grant Notice under 2020 Equity Incentive Plan (Director) .

Form of Restricted Stock Unit Award Agreement and Notice of Grant Award under 2020 Equity Incentive Plan (Standard) .

Form of Restricted Stock Unit Award Agreement and Notice of Grant Award under 2020 Equity Incentive Plan (Officer) .

Consent of KPMG LLP, Independent Registered Public Accounting Firm .

5 unchanged sentences

XBRL Instance Document (filed electronically herewith)

Incorporated by Reference

XBRL Taxonomy Extension Schema Document (filed electronically herewith)

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(Principal Financial Officer and Principal Accounting Officer)

February 18, 2020

March 18, 2021

POWER OF ATTORNEY

5 unchanged sentences

President and Chief Executive

February 18, 2020

March 18, 2021

Officer and Director

2 unchanged sentences

Vice President, Finance

February 18, 2020

March 18, 2021

(Principal Financial Officer and Principal Accounting Officer)

/ S / Linda Grais

February 18, 2020

March 18, 2021

/s/ Raymond Woosley

February 18, 2020

March 18, 2021

Raymond Woosley

/s/ Robert Conway

February 18, 2020

March 18, 2021

Robert Conway

/s/ Daniel Mitchell

February 18, 2020

March 18, 2021

Daniel Mitchell

/s/ Anders Hove

February 18, 2020

March 18, 2021

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures