Pluri Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We conducted an evaluation under the supervision of our CEO and Chief Financial Officer, or CFO (our principal executive officer and principal financial officer, respectively), regarding the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2020. Based on the aforementioned evaluation, management has concluded that our disclosure controls and procedures were effective as of June 30, 2020. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting on June 30, 2020. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework, or COSO, in Internal Control—Integrated Framework . Based on that assessment under those criteria, management has determined that, as of June 30, 2020, our internal control over financial reporting was effective. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of fiscal year 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 47 Item 9B. Other Information. Executive Employment Agreements Amended and Restated Employment Agreement of Yaky Yanay On September 10, 2020, the Company entered into an amended and restated employment agreement with Mr. Yanay, our CEO and President, which supersedes his existing employment agreement. Pursuant to the agreement, we have agreed to pay Mr. Yanay a monthly salary of 80,000 NIS, increasing to 99,000 NIS commencing on January 1, 2021. Pursuant to the agreement, we have also agreed to provide Mr. Yanay with a company car, cellular phone reimbursement and reimbursement for certain other expenses. In the event of termination of Mr. Yanay’s employment, he will be entitled to a payment equal to a month’s compensation for each twelve-month period of employment or otherwise providing services to the Company, and an additional adjustment fee that equals the monthly salary amount multiplied by 6, plus the number of years the employment agreement remains in force from September 12, 2018, but in any event no more than a 9 months’ adjustment period in the aggregate, as well as a notice period of 6 months. Mr. Yanay is also entitled to an acceleration of the vesting of any unvested awards in the following circumstances: (1) if we terminate his employment, he will be entitled to acceleration of 100% of any unvested award and (2) if he resigns, he will be entitled to acceleration of 50% of any unvested awards . Mr. Yanay will also be entitled to a target bonus of up to seven times his monthly salary, subject to achievement of milestones and performance targets that will be set by our Compensation Committee or by the Board. In addition, he will be eligible for a bonus equal to 1.5% of amounts received by us from strategic deals or up to the equivalent of three times his monthly salary at the discretion of the Board for extraordinary performance or achievements. In the event of a change in control of the Company, Mr. Yanay will be eligible for the immediate acceleration of his unvested awards, and, in the event of a change of control of the Company and up to 12 months thereafter, in the event of a material adverse change to Mr. Yanay’s employment terms as a result of such change of control, or if Mr. Yanay’s employment agreement is terminated as a result of such change in control , a notice period of 6 months, as well as the adjustment fee that equals his monthly salary amount multiplied by 6, plus the number of years the employment agreement remains in force from September 12, 2018, but in any event no more than a 9 months’ adjustment period in the aggregate. In addition, Mr. Yanay will be entitled to receive equity awards as awarded by our Board at its sole discretion. Amended and Restated Employment Agreement of Chen Franco-Yehuda On September 10, 2020, the Company entered into an employment agreement with Ms. Franco-Yehuda, our CFO, Secretary and Treasurer, which supersedes the existing employment agreement with Ms. Franco-Yehuda. Pursuant to the agreement, we have agreed to pay Ms. Franco-Yehuda a monthly salary of 42,000 NIS, increasing to 65,000 NIS commencing on January 1, 2021. Pursuant to the agreement, we have also agreed to provide Ms. Franco-Yehuda with a company car, or a fixed amount of NIS 4,000, cellular phone reimbursement and reimbursement for certain other expenses. In the event of termination of Mrs. Franco-Yehuda’s employment, she is entitled to a severance payment pursuant to Section 14 of the Israeli Severance Pay Law, and in addition, she will be entitled to receive an adjustment fee that equals her monthly salary amount multiplied by three, plus the number of years the employment agreement remains in force from June 30, 2020, but in any event no more than a 6 months’ adjustment period in the aggregate. Mrs. Franco-Yehuda is also entitled to an acceleration of the vesting of any unvested awards in the following circumstances: (1) if we terminate her employment, she will be entitled to acceleration of 100% of any unvested award and (2) if she resigns, she will be entitled to acceleration of 50% of any unvested awards. Mrs. Franco-Yehuda will also be entitled to a target bonus of up to five and a half times her monthly salary, subject to milestones and performance targets that will be set by our Compensation Committee. In addition, she will be eligible for a bonus equal to 0.5% of amounts received by us from strategic deals or up to the equivalent of three times her salary at the discretion of the Board for extraordinary performance or achievements. 48 In the event of a change in control of the Company, Mrs. Franco-Yehuda will be eligible for the immediate acceleration of her unvested awards, and, in the event of a change of control of the Company and up to 12 months thereafter, in the event of a material adverse change to Mrs. Franco-Yehuda’s employment terms as a result of such change of control, or if Mrs. Franco-Yehuda is terminated as a result of such change in control, a notice period of 3 months, as well as the adjustment fee that equals her monthly salary amount multiplied by three, plus the number of years the employment agreement remains in force from June 30, 2020, but in any event no more than a six months’ adjustment period in the aggregate. In addition, Mrs. Franco-Yehuda will be entitled to receive equity awards as awarded by our Board at its sole discretion. Amended and Restated Consulting Agreement with Rose Hitech Ltd. On September 10, 2020, the Company entered into an amended and restated consulting agreement with Rose Hitech Ltd., pursuant to which we compensate Mr. Aberman, our Executive Chairman, and which supersedes the existing consulting agreement with Rose Hitech Ltd. Pursuant to the agreement, we have agreed to pay Mr. Aberman, or an entity he controls, a monthly fee of 149,500 NIS, decreasing to 142,250 NIS commencing on January 1, 2021 and effective through the earlier of December 31, 2021 or the filing of a BLA. Upon the expiration of the consulting agreement, we intend to enter into a new consulting agreement with Mr. Aberman or an entity which he controls. In addition, we have agreed to pay a special bonus of 1.5% of the sums actually received by us from strategic deals. Pursuant to the agreement, we have also agreed to provide Mr. Aberman with a monthly car expenses reimbursement, cellular phone and reimbursement for certain other expenses. The agreement may be terminated by us or Mr. Aberman with ninety days’ prior notice. While the agreement will be terminated on the earlier of December 31, 2021 or upon the filing of a BLA, we have agreed to pay Mr. Aberman an adjustment fee as provided above, but only during the period between January 1, 2021 and December 31, 2021, or in the event of a change of control equal to nine months of consulting fees; provided, however that such adjustment fees shall be paid in two installments as follows: (i) 38,250 NIS on January 1, 2021, and 1,307,250 NIS on December 31, 2021. Mr. Aberman will also be subject to standard confidentiality, intellectual property assignment and non-compete provisions. In addition, Mr. Aberman will be entitled to receive equity awards as awarded by our Board at its sole discretion. Any awards issued to Mr. Aberman will be entitled to acceleration subject to the following terms: (i) in the case of our termination of the agreement, 100% of any unvested award, (ii) in the case of the termination of the agreement by Mr. Aberman, 50% of any unvested award, and (iii) in the event of a change of control transaction (as defined in the agreement), 100% of any unvested awards. In the event of a change in control of the Company, and up to 12 months thereafter, in the event of a material adverse change to Mr. Aberman’s consulting terms as a result of such change of control, or if the consulting agreement is terminated as a result of such change in control, an adjustment fee that equals his monthly salary amount multiplied by nine, and a notice period of 90 days. 49 Equity Grants Our Board approved a grant of 1,000,000 RSUs to Mr. Yanay and 1,000,000 RSUs to Mr. Aberman. For each of Messrs. Yanay and Aberman, 500,000 RSUs vest over four years as follows: 12.5% shall vest on the 6 month anniversary of the date of grant and the remaining shares vest in 14 equal installments every 3 months the thereafter. The remaining 500,000 RSUs vest in full upon milestone achievement of increasing market capitalization of our Common Stock on the Nasdaq Capital Market to $550 million within no more than 3 years from the date of grant. Our Board also approved a grant of 100,000 RSUs to Mrs. Franco-Yehuda. Such RSUs vest over four years as follows: 12.5% shall vest on the 6 month anniversary of the date of grant and the remaining shares vest in 14 equal installments every 3 months thereafter. Director Grants and Bonus On September 10, 2020, we agreed to issue a grant of 20,000 RSUs to each of our non-executive directors. Each such RSU vests over four years as follows: 12.5% shall vest on the 6 month anniversary of the date of grant and the remaining shares vest in 14 equal installments every 3 months thereafter. Amended and Restated Bylaws On September 10, 2020, the Board approved Amended and Restated Bylaws, or the Bylaws. The Bylaws were revised as follows: (i) Article I, Section 2 of the Bylaws provides that a holder of a majority of the issued and outstanding equity securities of the Company may call a special meeting of stockholders, (ii) Article II, Section 2 clarifies that each director shall serve his or her term until his or her successor is duly elected or until his or her office has been declared vacant in the manner provided in Bylaws, (iii) Article II, Section 6 has been revised to remove the ability of a Vice President to call a meeting of the Board, and (iv) Article VI, Section 7 includes a forum selection clause that limits certain types of lawsuits that may be brought against the Company to Federal courts located in the State of Nevada. 50 PART III Item 10. Directors, Executive Officers and Corporate Governance. Our directors and executive officers, their ages, positions currently held, and duration of such, are as follows: Name Position Held With Company Age Date First Elected or Appointed Zami Aberman Executive Chairman 66 June 23, 2019 Yaky Yanay President Director Chief Executive Officer 49 February 4, 2014 February 5, 2015 June 23, 2019 Chen Franco-Yehuda Chief Financial Officer, Treasurer and Secretary 37 March 14, 2019 Doron Shorrer Director 67 October 2, 2003 Isaac Braun Director 67 July 6, 2005 Mark Germain Director 70 May 17, 2007 Moria Kwiat Director 41 May 15, 2012 Business Experience The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person’s principal occupation during the period, and the name and principal business of the organization by which they were employed. Zami Aberman Mr. Aberman joined the Company in September 2005 and has served as our Executive Chairman since June 2019, as our Co-Chief Executive Officer from March 2017 until June 2019, as our CEO from November 2005 until March 2017, and as President of the Company from September 2005 until February 2014. He changed the Company’s strategy towards cellular therapeutics. Mr. Aberman’s vision to use the maternal section of the Placenta (Decidua) as a source for cell therapy, combined with the Company’s 3D culturing technology, led to the development of our products. Since November 2005, Mr. Aberman has served as a director of the Company, and since April 2006, as Chairman of the Board, or the Board. Since October 2015, he has served as a Director of The Alliance for Regenerative Medicine. He has 25 years of experience in marketing and management in the high technology industry. Mr. Aberman has held the CEO and Chairman positions of various companies located in Israel, the United States, Europe, Japan and Korea. 51 Mr. Aberman has operated within high-tech global companies in the fields of automatic optical inspection, network security, video over IP, software, chip design and robotics. He serves as the chairman of Rose Hitech Ltd., a private investment company. He previously served as the chairman of VLScom Ltd., a private company specializing in video compression for HDTV and video over IP and as a director of Ori Software Ltd., a company involved in data management. Prior to holding those positions, Mr. Aberman served as the President and CEO of Elbit Vision System Ltd. (EVSNF.OB), a company engaged in automatic optical inspection. Before joining the Company, Mr. Aberman served as President and CEO of Netect Ltd., a company specializing in the field of internet security software and was the co-founder, President and CEO of Associative Computing Ltd., which developed an associative parallel processor for real-time video processing. He also served as Chairman of Display Inspection Systems Inc., specializing in laser based inspection machines and as President and CEO of Robomatix Technologies Ltd. In 1992, Mr. Aberman was awarded the Rothschild Prize for excellence in his field from the President of the State of Israel. Mr. Aberman holds a B.Sc. in Mechanical Engineering from Ben Gurion University in Israel. We believe that Mr. Aberman’s qualifications to sit on our Board include his unique multidisciplinary innovative approach, years of experience in the financial markets in Israel and globally, as well as his experience in serving as the CEO of publicly traded entities. Yaky Yanay Mr. Yanay became a director of the Company in February 2015. He has served as our President from February 2014 and as our CEO from June 2019, previously serving as Co-CEO from March 2017. Mr. Yanay has served in variety of executive positions in Pluristem since 2006 including as our Chief Financial Officer from November 2006 until February 2014 and from February 2015 until March 2017. He also served as our Chief Operating Officer from February 2014 until March 2017. From November 2006 to February 2014, he served as our Secretary and served as our Executive Vice President from March 2013 until February 2014. From 2015 to 2018, Mr. Yanay served as the Co-Chairman of Israel Advanced Technology Industries (IATI), the largest umbrella organization representing Israel’s high tech and life science industries and since August 2012 has continually served as a Director of IATI, representing Israel’s life sciences industry. Prior to joining the Company, Mr. Yanay founded and served as Chairman of “The Israeli Life Science Forum” and also served as the CFO of Elbit Vision Systems Ltd., a public company. In addition, from July 2010 to April 2018, he served on the board of directors of Elbit Vision Systems Ltd. Prior to these positions, Mr. Yanay served as manager of audit groups of the technology sector at Ernst & Young Israel. Mr. Yanay holds a bachelor’s degree with honors in business administration and accounting from the College of Management Academic Studies of Rishon LeZion and is a Certified Public Accountant in Israel. We believe that Mr. Yanay’s qualifications to sit on our Board include his years of experience in the medical technology industry, his vast skill and expertise in accounting and economics, as well as his knowledge and familiarity with corporate finance. 52 Doron Shorrer Mr. Shorrer became a director of the Company in October 2003. Mr. Shorrer was one of the Company’s founders and served as its first Chairman until 2006. Since 1998, Mr. Shorrer has served as the Chairman and CEO of Shorrer International Ltd., an investment and financial consulting company. Mr. Shorrer also serves as a director at each of Sigma Mutual Funds Ltd., Food Save Ltd. and G.D.M. Investments Ltd. Mr. Shorrer has served as a director of Provident Fund for employees of the Israel Electric Company Ltd. and between 1999 and 2004 he was Chairman of the board of directors of Phoenix Insurance Company, one of the largest insurance companies in Israel, and of Mivtachim Pension Funds Group, the largest pension fund in Israel. Prior to serving in these positions, Mr. Shorrer held senior positions that included Arbitrator at the Claims Resolution Tribunal for Dormant Accounts in Switzerland; Economic and Financial Advisor, Commissioner of Insurance and Capital Markets for the State of Israel; Member of the board of directors of “Nechasim” of the State of Israel; Member Committee for the Examination of Structural Changes in the Capital Market (The Brodet Committee); General Director of the Ministry of Transport; founder and managing partner of an accounting firm with offices in Jerusalem, Tel-Aviv and Haifa; Member of the Lecture Staff of the Hebrew University Business Administration School; Chairman of Amal School Chain; Chairman of a Public Committee for Telecommunications; and Economic Consultant to the Ministry of Energy. In addition, Mr. Shorrer served as a director of Hebrew University employees and Massad Bank from the International Bank group from 2009 to 2018. Among his many areas of expertise, Mr. Shorrer formulates, implements and administers business planning in the private and institutional sector, in addition to consulting on economic, accounting and taxation issues to a diverse audience ranging from private concerns to government ministries. Mr. Shorrer holds a B.A. in Economics and Accounting and an M.B.A. in Business Administration (specialization in finance and banking) from the Hebrew University of Jerusalem and is a Certified Public Accountant in Israel. We believe that Mr. Shorrer’s qualifications to sit on our Board include his years of experience in the high-tech industry, his vast skill and expertise in accounting and economics, as well as his knowledge and familiarity with corporate finance. Isaac Braun Mr. Braun became a director of the Company in July 2005. Mr. Braun is a business veteran with entrepreneurial, industrial and manufacturing experience. He has co-founded and served as a board member of several high-tech start-ups in the areas of e-commerce, security, messaging, search engines and biotechnology. Mr. Braun is involved with advising private companies in the areas of capital raising and business development. We believe that Mr. Braun’s qualifications to sit on our Board include his years of experience in the high-tech industry, as well as his knowledge and familiarity with corporate finance. Mark Germain Mr. Germain became a director of the Company in May 2007. Between May 2007 and February 2009, Mr. Germain served as Co-Chairman of our Board. Mr. Germain has been a merchant banker serving primarily the biotech and life sciences industries for over five years. He has been involved as a founder, director, chairman of the board of, and/or investor in, over twenty companies in the biotech field and assisted many of them in arranging corporate partnerships, acquiring technology, entering into mergers and acquisitions, and executing financings and going public transactions. He graduated from New York University School of Law in 1975, Order of the Coif, and was a partner in a New York law firm practicing corporate and securities law before leaving in 1986. Since then, and until he entered the biotech field in 1991, he served in senior executive capacities, including as president of a public company that was sold in 1991. In addition to being a director of the Company, Mr. Germain is a Managing Director at The ÆNTIB Group, a boutique merchant bank. From June 2018 through September 2019, Mr. Germain also served as Vice Chairman of the board of BiondVax Pharmaceuticals Ltd., a company based in Israel engaging in a Phase III clinical trials for a universal flu vaccine, and, since September 2019 has served as the chairman of the board of BiondVax Pharmaceuticals Ltd. 53 Mr. Germain also serves or served as a director of the following companies that were reporting companies in the past: ChromaDex Inc., Stem Cell Innovations, Inc., Omnimmune Corp. and Collexis Holdings, Inc. He is also a co-founder and director of a number of private companies in and outside the biotech field. We believe that Mr. Germain’s qualifications to sit on our Board include his years of experience in the biotech industry, his experience serving as a director of public companies, as well as his knowledge and familiarity with corporate finance. Moria Kwiat Dr. Kwiat became a director of the Company in May 2012. Dr. Kwiat is an analyst at aMoon, a leading Israeli life sciences venture fund. Previously she was a consultant and analyst at Frost & Sullivan, producing equity research for public companies in the healthcare domain. Dr. Kwiat has a broad academic background and scientific experience in inter-disciplinary fields, with specific expertise in the interface between the biology and materials fields. She is the co-author of multiple scientific papers. Dr. Kwiat holds a Post-Doctoral degree in nanotechnology and material sciences, a Ph.D. in Chemistry and a M.Sc. and B.Sc. in Biotechnology, from Tel Aviv University. We believe that Dr. Kwiat’s qualifications to sit on our Board include her knowledge and experience as a scientist and a researcher in the fields of biotechnology and nanotechnology. Chen Franco-Yehuda Mrs. Franco-Yehuda was appointed as our CFO, effective as of March 17, 2019. Prior to being appointed as our Chief Financial Officer, or CFO, Mrs. Franco-Yehuda served as the Company’s Head of Accounting and Financial Reporting since July 2016 and, prior to that, the Company’s Controller since May 2013. Before joining the Company, from October 2008 to April 2013, Mrs. Franco-Yehuda served as a manager of audit groups relating to public and private companies in various industries at PricewaterhouseCoopers (PwC) and also as a lecturer of accounting classes at the Open University of Israel from 2009 to 2014. Mrs. Franco-Yehuda holds a bachelor’s degree in economics and accounting from Haifa University, and is a certified public accountant in Israel. There are no family relationships between any of the directors or officers named above. Audit Committee and Audit Committee Financial Expert Until June 30, 2020 the members of our Audit Committee were Doron Shorrer, Nachum Rosman and Israel Ben-Yoram. As a result of the voting outcome from the 2020 Annual Meeting, on June 30, 2020, each of Messrs. Ben-Yoram and Rosman resigned as members of the Board effective immediately. Messrs. Ben-Yoram’s and Rosman’s resignations as members of the Board also constituted their resignations as members of the Audit Committee. Effective July 1, 2020, the Board appointed Ms. Kwiat and Mr. Braun to serve on the Audit Committee and determined that Mr. Doron Shorrer is an Audit Committee financial expert. Doron Shorrer is the Chairman of the Audit Committee, and our Board has determined that all members of the Audit Committee are “independent” as defined by the rules of the SEC and the Nasdaq rules and regulations. The Audit Committee operates under a written charter that is posted on our website at www.pluristem.com. The information on our website is not incorporated by reference into this Annual Report. The primary responsibilities of our Audit Committee include: ● Appointing, compensating and retaining our registered independent public accounting firm; 54 ● Overseeing the work performed by any outside accounting firm; ● Assisting the Board in fulfilling its responsibilities by reviewing: (i) the financial report provided by us to the SEC, our stockholders or to the general public, and (ii) our internal financial and accounting controls; and ● Recommending, establishing and monitoring procedures designed to improve the quality and reliability of the disclosure of our financial condition and results of operations. Our Audit Committee held seven meetings from July 1, 2019 through June 30, 2020 (fiscal year 2020). Compensation Committee Until June 30, 2020 the members of our Compensation Committee were Doron Shorrer, Nachum Rosman and Israel Ben-Yoram. As a result of the voting outcome from the 2020 Annual Meeting, on June 30, 2020, Messrs. Israel Ben-Yoram and Rosman resigned as members of the Board, effective immediately. Messrs. Ben-Yoram’s and Rosman’s resignations as members of the Board also constituted their resignations as members of the Compensation Committee. Effective July 1, 2020, the Board appointed Mr. Braun to serve on the Compensation Committee. The Board has determined that all of the members of the Compensation Committee are “independent” as defined by the rules of the SEC and Nasdaq rules and regulations. The Compensation Committee operates under a written charter that is posted on our website at www.pluristem.com. The information on our website is not incorporated by reference into this Annual Report. The primary responsibilities of our Compensation Committee include: ● Reviewing and recommending to our Board of the annual base compensation, the annual incentive bonus, equity compensation, employment agreements and any other benefits of our executive officers; ● Administering our equity based plans and making recommendations to our Board with respect to our incentive–compensation plans and equity–based plans; and ● Annually reviewing and making recommendations to our Board with respect to the compensation policy for such other officers as directed by our Board. Our Compensation Committee held nine meetings during fiscal year 2020. The Compensation Committee did not receive advice from or retain any consultants during fiscal year 2020. Nominating Committee Until June 30, 2020 the members of our Nominating Committee were Mark Germain, Doron Shorrer and Nachum Rosman. As a result of the voting outcome from the 2020 Annual Meeting, on June 30, 2020, Mr. Rosman resigned as member of the Board, effective immediately. Nachum Rosman’s resignations as members of the Board also constituted his resignations as member of the Nominating Committee. Mr. Germain is the Chairman of the Nominating Committee. The Board has determined that all of the members of the Nominating Committee are “independent” as defined by the rules of the SEC and Nasdaq rules and regulations. The Nominating Committee operates under a written charter that is posted on the “Investors” section of our website, www.pluristem.com. The primary responsibilities of our Nominating Committee include: ● Overseeing the composition and size of the Board, developing qualification criteria for Board members and actively seeking, interviewing and screening individuals qualified to become Board members for recommendation to the Board; ● Recommending the composition of the Board for each annual meeting of stockholders; and ● Reviewing periodically with the Chairman of the Board and the Chief Executive Officer the succession plans relating to positions held by directors, and making recommendations to the Board with respect to the selection and development of individuals to occupy those positions. 55 Director Nominations The Nominating Committee is responsible for developing and approving criteria, with Board approval, for candidates for Board membership. The Nominating Committee is responsible for overseeing the composition and size of the Board, developing qualification criteria for Board members and actively seeking, interviewing and screening individuals qualified to become Board members for recommendation to the Board and for recommending the composition of the Board for each of the Company’s annual meetings. The Board as a whole is responsible for nominating individuals for election to the Board by the stockholders and for filling vacancies on the Board that may occur between annual meetings of the stockholders. Nominees for director will be selected on the basis of their integrity, business acumen, knowledge of our business and industry, age, experience, diligence, conflicts of interest and the ability to act in the interests of all stockholders. No particular criteria will be a prerequisite or will be assigned a specific weight, nor does the Company have a diversity policy. The Company believes that the backgrounds and qualifications of its directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities. We have never received communications from stockholders recommending individuals to any of our independent directors. Therefore we do not yet have a policy with regard to the consideration of any director candidates recommended by stockholders. In fiscal year 2020, we did not pay a fee to any third party to identify or evaluate, or assist in identifying or evaluating, potential nominees for our Board. We have not received any recommendations from stockholders for Board nominees. All of the nominees for election at the Meeting are current members of our Board. Code of Ethics Our Board has adopted a Code of Business Conduct and Ethics that applies to, among other persons, members of our Board, our officers including our CEO (being our principal executive officer) and our CFO (being our principal financial and accounting officer) and our employees. Our Code of Business Conduct and Ethics is posted on our Internet website at www.pluristem.com. The information on our website is not incorporated by reference into this Annual Report. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Conduct by posting such information on the website address specified above. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the SEC and to provide us with copies of those filings. We have reviewed all forms provided to us or filed with the SEC. Based on that review and on written information given to us by our executive officers and directors, we believe that all Section 16(a) filings during the past fiscal year were filed on a timely basis and that all directors, executive officers and 10% beneficial owners have fully complied with such requirements during the past fiscal year, except as follows: ● A Form 3, filed on June 29, 2020, was filed late by Clover Wolf Capital – Limited Partnership, which did not involve a transaction; and ● Two reports on Form 4, filed on June 29, 2020 and July 7, 2020, were filed late by Clover Wolf Capital – Limited Partnership, resulting in 11 transactions and 4 transactions, respectively, not being reported on a timely basis. 56 Item 11. Executive Compensation. Compensation Discussion and Analysis The Compensation Committee of our Board is comprised solely of independent directors as defined by Nasdaq and non-employee directors as defined by Rule 16b-3 under the Exchange Act. The Compensation Committee has the authority and responsibility to review and make recommendations to the Board regarding the compensation of our CEO, Executive Chairman and CFO. Our named executive officers for fiscal year 2020 are those three individuals listed in the 2020 “ Summary Compensation Table ” below. Other information concerning the structure, roles and responsibilities of our Compensation Committee is set forth in “ Board Meetings and Committees—Compensation Committee ” section of this Annual Report. At our 2019 shareholders meeting, we provided our shareholders with the opportunity to cast an advisory vote on our then named executive officers’ compensation. Over 70% of the votes cast on this “2019 say-on-pay vote” were voted in favor of the proposal. We have considered the 2019 say-on-pay vote and we believe that the support from our shareholders for the 2019 say-on-pay vote proposal indicates that our shareholders are supportive of our approach to executive compensation. At our 2019 shareholders meeting, our shareholders voted in favor of the proposal to hold say-on-pay votes every two years. We will continue to consider the outcome of our say-on-pay votes when making compensation decisions regarding our named executive officers. A discussion of the policies and decisions that shape our executive compensation program, including the specific objectives and elements, is set forth below. Executive Compensation Objectives and Philosophy The objective of our executive compensation program is to attract, retain and motivate talented executives who are critical for our continued growth and success and to align the interests of these executives with those of our shareholders. To this end, our compensation programs for executive officers are designed to achieve the following objectives: ● attract, hire, and retain talented and experienced executives; ● motivate, reward and retain executives whose knowledge, skills and performance are critical to our success; ● ensure fairness among the executive management team by recognizing the contributions each executive makes to our success and the tenure of each team member as a factor in achieving such success; ● focus executive behavior on achievement of our corporate objectives and strategy; ● build a mechanism of “pay for performance”; and ● align the interests of management and shareholders by providing management with longer-term incentives through equity ownership. The Compensation Committee reviews the allocation of compensation components regularly to ensure alignment with strategic and operating goals, competitive market practices and legislative changes. The Compensation Committee does not apply a specific formula to determine the allocation between cash and non-cash forms of compensation. Certain compensation components, such as base salaries, benefits and perquisites, are intended primarily to attract, hire, and retain well-qualified executives. Other compensation elements, such as long-term incentive opportunities, are designed to motivate and reward performance. Long-term incentives are intended to reward our long-term performance and executing our business strategy, and to strongly align named executive officers’ interests with those of shareholders. As such, from time to time, the Compensation Committee, and/or the Board, may engage external consultants to provide the Company with data that the Compensation Committee and/or Board may deem to be appropriate in determining the compensation of our executive officers, and the compensation, if any, paid to the members of the Board. 57 With respect to equity compensation, the Compensation Committee makes awards to executives under our equity compensation plans as approved by the Board. Executive compensation is paid or granted based on such matters as the Compensation Committee deems appropriate, including our financial and operating performance, the alignment of the interests of the executive officers and our shareholders, the performance of our common stock and our ability to attract and retain qualified individuals. Elements of Executive Officer Compensation Our executive officer compensation program is comprised of: (i) base salary or monthly compensation; (ii) performance based bonuses; (iii) long-term equity incentive compensation in the form of RSU grants; and (iv) benefits and perquisites. In establishing overall executive compensation levels and making specific compensation decisions for our executive officers in fiscal year 2020, the Compensation Committee considered a number of criteria, including the executive’s position, scope of responsibilities, prior base salary and annual incentive awards and expected contribution. In that regard, our Compensation Committee decided to provide our Executive Chairman, Mr. Aberman, and our CEO, Mr. Yanay, with base salaries, RSU awards, acceleration of such awards under certain circumstances, and performance based bonuses in their respective employment and/or consulting agreement, as opposed to certain terms contained in our CFO’s employment agreement, as amended, and compensation package, based on their respective positions, seniority and scope of responsibilities. Generally, our Compensation Committee reviews and, as appropriate, approves compensation arrangements for our named executive officers, from time to time but not less than once a year. The Compensation Committee also takes into consideration our CEO recommendations for the compensation of our CFO. Our CEO generally presents these recommendations at the time of our Compensation Committee’s review of executive compensation arrangements. On September 10, 2020, our Board, upon recommendation from our Compensation Committee, approved new compensation arrangements for our CEO, CFO and Executive Chairman as well as our non-executive directors. In that regard, the Compensation Committee recently engaged Deloitte Israel to review the Company’s existing compensation structure for its executive officers and non-executive directors. Such review included a benchmark analysis that evaluated the compensation that we pay our CEO, CFO, Executive Chairman and non-executive directors in comparison to our peer group. When evaluating the appropriateness of our compensation peer group, the Compensation Committee seeks to construct and approve a peer group of companies in similar industries of similar size to that of our Company. As a result, the Company has revised its compensation structure for its executive officers, Executive Chairman and non-executive directors as further described herein, which shall impact such compensation for the fiscal year ending June 30, 2021. Base Salary The Compensation Committee performs a review of base salaries / monthly compensation for our named executive officers from time to time as appropriate. In determining salaries, the Compensation Committee members also take into consideration their understanding of the compensation practices of comparable companies (based on size and stage of development), especially in Israel, where our named executive officers reside; independent third party market data such as compensation surveys to industry, including information relating to peer companies; individual experience and performance adjusted to reflect individual roles; and contribution to our clinical, regulatory, commercial and operational performance. None of the factors above has a dominant weight in determining the compensation of our executive officers, and our Compensation Committee considers the factors as a whole when considering such compensation. In addition, our Compensation Committee may, from time to time, use comparative data regarding compensation paid by peer companies in order to obtain a general understanding of current trends in compensation practices and ranges of amounts being awarded by other public companies, and not as part of an analysis or a formula. We may also change the base salary / monthly compensation of an executive officer at other times due to market conditions. We believe that a competitive base salary / monthly compensation is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives. We also believe that attractive base salaries can motivate and reward executives for their overall performance. 58 Base salaries and/or monthly compensation are established in part based on the individual experience, skills and expected contributions of our executives and our executives’ performance during the prior year. Compensation adjustments are made occasionally based on changes in an executive’s level of responsibility, Company progress or on changed local and specific executive employment market conditions. On June 30, 2019, the Board, upon the recommendation of our Compensation Committee, approved, as part of a comprehensive plan to reduce expenses, the reduction of the annual salary of our CEO and the annual compensation paid to our Executive Chairman, each by 25% from their current levels until the earlier of closing market capitalization on the Nasdaq Capital Market reaching $170 million; or (2) June 30, 2020. On February 6, 2020, the Board, upon the recommendation of our Compensation Committee, approved the increase of our CFO’s salary from NIS 36,000 per month to NIS 42,000 per month effective February 1, 2020. On March 26, 2020, the Board, upon the recommendation of our Compensation Committee, approved the reduction of the annual salary of the CEO, the annual compensation paid to the Executive Chairman, and the annual salary of the CFO each by 50% from their annual salaries as provided in their respective employment and consulting agreements with the Company, until such time as the Company obtains better clarity on the global impact of COVID-19, or the COVID-19 Executive Compensation Reductions. On May 7 ,2020, the Board approved, effective May 1, 2020, the partial reinstatement of the annual salary, paid monthly, to our CEO, the annual compensation, paid monthly, to our Executive Chairman, and the annual salary, paid monthly, of our CFO each up to 85% from their annual salaries, paid on a monthly basis, as provided in their respective employment and consulting agreements with the Company, or the Partial Salary Reinstatement. The Board also determined that effective on June 1, 2020, such annual fees, salaries and compensation, paid monthly, shall be reinstated at 100%, or the Full Salary Reinstatement. On September 10, 2020, at the recommendation of our Compensation Committee, our Board approved, effective as of January 1, 2021, on the one hand, an increase to the base salary of our CEO and CFO such that the respective salaries will increase to 99,000 NIS and 65,000NIS, and on the other hand, a decrease to the monthly consulting fee of our Executive Chairman to 142,250 NIS per month starting January 1, 2021 and effective through the earlier of December 31, 2021 or the filing of a BLA. Upon the expiration of the consulting agreement, we intend to enter into a new consulting agreement with Mr. Aberman or an entity which he controls. As a result of these changes, we entered into new employment and service agreements, as the case may be, with of each of our CEO, CFO and Executive Chairman. In this Annual Report, we refer to such base salary amendments as the 2021 Base Salary Adjustments. In addition, Mr. Aberman and Mr. Yanay are no longer eligible for annual director fees. 59 Performance Based Bonus Given the nature of our business, the determination of incentives for our executives is generally tied to success in promoting our Company’s development. We are continually seeking non-dilutive sources of funding. In addition, a key component of our strategy is to develop and manufacture cell therapy products for the treatment of multiple disorders through collaboration with other companies and entering into licensing agreements with such companies, such as our agreement with CHA. Therefore, in order to reward our Executive Chairman and CEO, each of Mr. Yanay and Mr. Aberman will be entitled to a bonus equal to 1.5% of amounts received by us from non-dilutive funding received, among other things, from corporate partnering and strategic deals. On September 10, 2020, our Board, upon recommendation by our Compensation Committee, approved a bonus for Mrs. Franco-Yehuda of 0.5% of amounts received by us from strategic deals or up to the equivalent of three times her monthly salary at the discretion of the Board. Mr. Yanay will also be eligible for a special bonus of up to three times his salary, payable at the discretion of the Board or the Compensation Committee. In addition, our Board approved a target bonus to our CEO, Mr. Yanay, equal to up to seven times his monthly salary and to our CFO, Mrs. Franco-Yehuda, of up to five and a half times her monthly salary, subject to milestones and performance targets that will be set by our Compensation Committee. The Board approved the changes to the performance based bonuses of our CEO and CFO in order to support our business strategy and to promote extraordinary performance and achievement. On May 7, 2020, the Board, upon the recommendation of our Compensation Committee, approved a one-time bonus to our CFO of NIS 50,000, or approximately $14,000 for her extraordinary efforts relating to the EIB Agreement. Long-Term Equity Incentive Compensation Long-term incentive compensation allows the executive officers to share in any appreciation in the value of our common stock. The Compensation Committee believes that stock participation aligns executive officers’ interests with those of our shareholders. The amounts of the awards are designed to reward past performance and create incentives to meet long-term objectives. Awards are made at a level expected to be competitive within the biotechnology industry, as well as with Israeli based companies. We do not have a formula relating to, and did not conduct any analysis of, the level of awards that is competitive within the biotechnology industry and Israeli based companies. In determining the amount of each grant, the Compensation Committee also takes into account the number of shares held by the executive prior to the grant. Awards are made on a discretionary basis and not pursuant to specific criteria set out in advance. RSU awards provide our executive officers with the right to purchase shares of our common stock at a par value of $0.00001, subject to continued employment with our Company. In recent years, we granted our executive officers RSU awards. We chose to grant RSU awards and not options because RSU awards, once vested, always have an immediate financial value to the holder thereof, unlike options where the exercise price might be below the current market price of the shares and therefore not have any intrinsic value to the holder thereof. Our Executive Chairman, CEO and CFO are entitled to acceleration of the vesting of their awards in the following circumstances: (1) if we terminate their employment, they will be entitled to acceleration of 100% of any unvested award and (2) if they resign, they will be entitled to acceleration of 50% of any unvested award. In addition, our Executive Chairman, CEO and CFO are entitled to an acceleration of 100% of any unvested RSUs in the event of a change in control as defined in their consulting or employment agreement. All grants are approved, upon receipt of recommendation by our Compensation Committee, by our Board. 60 Benefits and Perquisites Generally, benefits available to Mr. Yanay and Mrs. Franco-Yehuda are available to all employees on similar terms and include welfare benefits, paid time-off, life and disability insurance and other customary or mandatory social benefits in Israel. We provide our named executive officers with a phone and a Company car, or reimbursement for car or phone expenses, which are customary benefits in Israel to managers and officers. Our Executive Chairman and CEO are also entitled to receive, once a year, a fixed sum equal to the amount of the monthly compensation to such Executive Chairman and CEO. Subsequent to our fiscal year 2020, following the 2021 Base Salary Adjustments, this fixed sum payment will no longer be paid to our Executive Chairman or CEO. While the agreement will be terminated on the earlier of December 31, 2021 or upon the filing of a BLA, we have agreed to pay Mr. Aberman an adjustment fee as provided above, but only during the period between January 1, 2021 and December 31, 2021, or in the event of a change of control equal to nine months of consulting fees; provided, however that such adjustment fees shall be paid in two installments as follows: (i) 38,250 NIS on January 1, 2021, and 1,307,250 NIS on December 31, 2021. Mr. Yanay is entitled to a severance payment that equals a month’s compensation for each twelve-month period of employment or otherwise providing services to the Company, and an additional adjustment fee that equals the monthly salary amount multiplied by 6, plus the number of years the employment agreement remains in force from September 12, 2018, but in any event no more than 9 years in the aggregate. In conjunction with the 2021 Base Salary Adjustments, the employment agreement of our CFO was amended to also provide for an adjustment fee that equals her monthly salary amount multiplied by three, plus the number of years the employment agreement remained in force from June 30, 2020, but in any event no more than six months of adjustment fees in the aggregate. Mrs. Chen Franco-Yehuda is also entitled to severance pay upon termination of employment for any reason, including retirement, based on 8.333% of her monthly base salary, according to section 14 of the Severance Pay Law, 1963. We do not believe that the benefits and perquisites described above deviate materially from the customary practice for compensation of executive officers by other companies similar in size and stage of development in Israel. Summary Compensation Table The following table shows the particulars of compensation paid to our named executive officers for the fiscal years ended June 30, 2020 and 2019. We do not currently have any other executive officers. Name and Principal Position Fiscal Year Salary ($) (1) Stock-based Awards ($)(2) All Other Compensation ($)(3) Total ($) Zami Aberman 2020 439,704 (5) - 61,540 501,244 Executive Chairman 2019 (4) 551,137 (5) 478,500 66,857 1,096,494 Yaky Yanay 2020 320,911 (7) - 29,466 350,377 CEO 2019 (6) 396,632 (7) 461,100 29,253 886,985 Chen Franco-Yehuda 2020 179,229 - 28,461 207,690 CFO 2019 (8) 78,889 112,329 13,599 204,817 (1) Salary payments which were in NIS, were translated into US$ at the then current exchange rate for each payment. The salaries of Mr. Yanay and Mrs. Franco-Yehuda are comprised of base salaries and additional payments and provisions such as welfare benefits, paid time-off, life and disability insurance and other customary or mandatory social benefits to employees in Israel. 61 (2) The fair value recognized for the stock-based awards was determined as of the grant date in accordance with ASC 718. Assumptions used in the calculations for these amounts are included in Note 2(l) to our consolidated financial statements for fiscal year 2020 included elsewhere in this Annual Report. (3) Represents cost to us in connection with car or car expenses reimbursement and mobile phone expenses. The Company also pays our CEO and Executive Chairman the tax associated with this benefit, which is grossed up and included in the “all other compensation” column for Mr. Aberman. Mr. Yanay’s gross up is part of the amount in the Salary column in the table above. For our CFO “all other compensation” includes a onetime bonus of NIS 50,000, or approximately $14,000. (4) Mr. Aberman ceased to serve as our Co-CEO and commenced to serve solely in his capacity as Executive Chairman on June 24, 2019. The compensation reflects amounts received during the entire fiscal year. (5) Includes $18,486 and $23,068 paid to Mr. Aberman as compensation for services as a director in fiscal year 2020 and 2019 respectively. (6) Mr. Yanay ceased to serve as our Co-CEO and commenced to serve as the sole CEO on June 24, 2019. The compensation reflects amounts received during the entire fiscal year. (7) Includes $18,400 and $23,582 paid to Mr. Yanay as compensation for services as a director in fiscal year 2020 and 2019, respectively. (8) Mrs. Franco-Yehuda was appointed as our CFO on March 14, 2019. The compensation reflects amounts received during the entire fiscal year. During the fiscal year ended June 30, 2020, we had the following written agreements and other arrangements concerning compensation with our named executive officers: (a) Mr. Aberman is engaged with us as a consultant and currently receives a monthly consulting fee of 149,500 NIS (approximately $43,000 per month). In addition, Mr. Aberman is entitled once a year to receive an additional amount that equals the monthly consulting fee. All amounts above are paid plus value added tax. Mr. Aberman is also entitled to a performance based bonus of one and a half percent (1.5%) from amounts received by us from non-diluting funding and strategic deals. Mr. Aberman is entitled to car expenses reimbursement. In addition, Mr. Aberman received annual director fees of $20,000 (set at a rate of 4.25 NIS per U.S. dollar). On June 30, 2019, our Board, upon the recommendation of our Compensation Committee, approved the reduction of the annual compensation paid to Mr. Aberman, and his annual fees paid to him as a director, by 25% from his current levels until the earlier of closing market capitalization on the Nasdaq Capital Market reaching $170 million; or (2) June 30, 2020. On March 26, 2020, the Board, upon the recommendation of our Compensation Committee, approved the COVID-19 Executive Compensation Reduction. On May 7, 2020, the Board approved, effective May 1, 2020, the Partial Salary Reinstatement. In addition, effective June 1, 2020, the Full Salary Reinstatement took effect. 62 (b) Mr. Yanay received a monthly salary of 80,000 NIS, approximately $23,000 per month. In addition, Mr. Yanay was entitled once a year to receive an additional amount that equals his monthly salary. Mr. Yanay is provided with a cellular phone and a Company car pursuant to the terms of his agreement. Furthermore, Mr. Yanay was entitled to a performance based bonus of one percent (1.5%) from amounts received by us from non-diluting funding and strategic deals. Mr. Yanay received annual director fees of $20,000 (set at a rate of 4.25 NIS per U.S. dollar). On June 30, 2019, our Board, upon the recommendation of our Compensation Committee, approved the reduction of the annual salary of Mr. Yanay, and the annual fees paid to him as a director, by 25% from his current levels until the earlier of closing market capitalization on the Nasdaq Capital Market reaching $170 million; or (2) June 30, 2020. On March 26 ,2020, the Board, upon the recommendation of our Compensation Committee, approved the COVID-19 Executive Compensation Reduction. On May 7, 2020, the Board approved, effective May 1, 2020, the Partial Salary Reinstatement. In addition, effective June 1, 2020, the Full Salary Reinstatement took effect. (c) Mrs. Franco-Yehuda’s monthly salary was 42,000 NIS. Mrs. Franco-Yehuda receives car and cellular phone expense reimbursements pursuant to the terms of her agreement. On March 26, 2020, the Board, upon the recommendation of our Compensation Committee, approved the COVID-19 Executive Compensation Reduction. On May 7, 2020, the Board approved, effective May 1, 2020, the Partial Salary Reinstatement. In addition, effective June 1, 2020, the Full Salary Reinstatement took effect. Potential Payments Upon Termination or Change-in-Control We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change-in-control) or a change of responsibilities following a change-in-control, except for the following: (i) in the event of termination of Mr. Aberman’s Consulting Agreement, he will be entitled to receive an adjustment fee that equals the monthly consulting fees multiplied by nine; (ii) in the event of termination of Mr. Yanay employment, he is entitled to a severance payment, under Israeli law, that equals a month’s compensation for each twelve-month period of employment or otherwise providing services to the Company, and an additional adjustment fee that equals the monthly base salary multiplied by six, plus the number of years the employment agreement is in force from September 12, 2018, but in any event no more than nine months in the aggregate; and (iii) in the event of termination of Mrs. Franco-Yehuda’s employment, she is entitled to a severance payment, under Israeli law, that equals a month’s compensation for each twelve-month period of employment or otherwise providing services to the Company, and in addition, effective as September 10, 2020, she will be entitled to receive an adjustment fee that equals her monthly salary amount multiplied by three, plus the number of years the employment agreement remains in force from June 30, 2020, but in any event no more than six years in the aggregate. In addition, Mr. Aberman and Mr. Yanay are entitled to acceleration of the vesting of their stock options and restricted stock in the following circumstances: (1) if we terminate their employment, they will be entitled to acceleration of 100% of any unvested awards and (2) if they resign, they will be entitled to acceleration of 50% of any unvested award. In addition, Mr. Aberman, Mr. Yanay and Mrs. Franco-Yehuda are also entitled to acceleration of 100% of any unvested award in case of our change in control as defined in their respective consulting and employment agreements. Effective September 10, 2020, Mrs. Franco-Yehuda is also entitled to an acceleration of the vesting of any unvested awards in the following circumstances: (1) if we terminate her employment, she will be entitled to acceleration of 100% of any unvested award and (2) if she resigns, she will be entitled to acceleration of 50% of any unvested awards. 63 The following table displays the value of what our CEO, Executive Chairman and CFO would have received from us had their employment been terminated, or a change in control of us happened on June 30, 2020. Officer Salary Accelerated Vesting of RSUs (1) Total Zami Aberman Terminated due to officer resignation $ 388,200 $ 364,650 (2) $ 752,850 Terminated due to discharge of officer $ 388,200 $ 729,300 (3) $ 1,117,500 Change in control - $ 729,300 (4) $ 729,300 Yaky Yanay Terminated due to officer resignation $ 421,708 $ 362,440 (2) $ 784,148 Terminated due to discharge of officer $ 421,708 $ 724,880 (3) $ 1,146,588 Change in control - $ 724,880 (4) $ 724,880 Chen Franco Yehuda Terminated due to officer resignation $ 36,378 - $ 36,378 Terminated due to discharge of officer $ 36,378 - $ 36,378 Change in control - $ 77,129 (4) $ 77,129 (4) (1) Value shown represents the difference between the closing market price of our shares of common stock on June 30, 2020 of $8.84 per share and the applicable exercise price of each grant. (2) 50% of all unvested RSUs issued under the applicable equity incentive plans vest upon a termination without cause under the terms of those plans. (3) All unvested RSUs issued under the applicable equity incentive plans vest upon a termination due to discharge. (4) All unvested RSUs issued under the applicable equity incentive plans vest upon a change in control under the terms of those plans. Pension, Retirement or Similar Benefit Plans We have no arrangements or plans, except for those we are obligated to maintain pursuant to the Israeli law, under which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options, RSUs or restricted shares at the discretion of our Board in the future. Grants of Plan-Based Awards There were no grants of plan-based equity awards made to our named executive officers during the fiscal year ended June 30, 2020. 64 Outstanding Equity Awards at the End of Fiscal Year 2020 The following table presents the outstanding equity awards held as of June 30, 2020 by our named executive officers: Number of Securities Underlying Unexercised Stock Awards Name Number of shares that have not vested (#) Market value of shares that have not vested ($) Zami Aberman 50,000 (1) $ 442,000 32,500 (2) $ 287,300 Yaky Yanay 50,000 (1) $ 442,000 32,000 (3) $ 282,880 Chen Franco-Yehuda 625 (4) $ 5,525 1,850 (5) $ 16,354 6,250 (6) $ 55,250 (1) 50,000 RSUs vest in 4 equal installments of 12,500 on September 22, 2020 and every 3 months thereafter. (2) 32,500 RSUs vest as follows: a. 7,500 RSUs vest in 2 equal installments of 3,750 on September 19, 2020 and 3 months thereafter, and b. 25,000 RSUs vest in 8 equal installments of 3,125 on March 19, 2021 and every 3 months thereafter. (3) 32,500 RSUs vest as follows: a. 7,000 RSUs vest in 2 equal installments of 3,500 on September 19, 2020 and 3 months thereafter, and b. 25,000 RSUs vest in 8 equal installments of 3,125 on March 19, 2021 and every 3 months thereafter. (4) 625 RSUs vest as follows: a. 625 RSUs vest on June 14, 2021. (5) 1,850 RSUs vest as follows: a. 250 RSUs vest in 2 equal installments of 125 on September 19, 2020 and 3 months thereafter, b. 1,000 RSUs vest in 8 equal installments of 125 on March 19, 2021 and every 3 months thereafter, and c. 600 RSUs vest on December 19, 2022. (6) 6,250 RSUs vest as follows: a. 2,250 RSUs vest in 3 equal installments of 750 on September 28, 2020 and every 3 months thereafter, and b. 4,000 RSUs vest as follows: 12.5% vest on June 28, 2021 and the remaining shares vest in 8 equal installments every 3 months thereafter. 65 Option Exercises and Stock Vested Table The following table presents the named executive officers’ RSUs that vested during fiscal year 2020. Stock Awards Name Number of Shares Acquired on Vesting (#) Value Realized on Vesting ($) Zami Aberman 65,000 255,888 Yaky Yanay 64,000 251,120 Chen Yehuda-Franco 5,175 25,738 Long-Term Incentive Plans-Awards in Last Fiscal Year We have no long-term incentive plans, other than the 2016 Equity Compensation Plan, or the 2016 Plan, and the 2019 Equity Compensation Plan, or the 2019 Plan, described in Item 12 below. Compensation of Directors The following table provides information regarding compensation earned by, awarded or paid to each person for serving as a director who is not an executive officer during fiscal year 2020: Name Fees Earned or Paid in Cash ($) Stock-based Awards ($) (1) Total ($) Mark Germain 17,291 - 17,291 Nachum Rosman (2) 21,998 - 21,998 Doron Shorrer 22,479 - 22,479 Hava Meretzki (3) 19,233 - 19,233 Isaac Braun 20,630 - 20,630 Israel Ben-Yoram (2) 21,723 - 21,723 Moria Kwiat 20,105 - 20,105 (1) The fair value recognized for the stock-based awards was determined as of the grant date in accordance with ASC 718. Assumptions used in the calculations for these amounts are included in Note 2(l) to our consolidated financial statements for fiscal year 2020 included elsewhere in this Annual Report. (2) Effective as of June 29, 2020, and the result of the 2020 Annual Meeting, this director was not reappointed to serve on the Board. (3) Ms. Meretzki was not re-nominated as a director nominee, and therefore, effective as of June 29, 2020, Ms. Meretzki ceased to serve on the Board. 66 We reimburse our directors for expenses incurred in connection with attending board meetings according to a written and Board approved policy. We provided the following compensation for directors: annual cash compensation of $15,000; meeting participation fees of $935 per in-person meeting; and for meeting participation by telephone, $435 per meeting. The Board has determined that the dollar rate would be not less than 4.25 NIS per dollar. On September 10, 2020, our Board, upon the recommendation of our Compensation Committee, approved the change of their current compensation components to an annual fee of $35,000 and we will no longer pay additional payments based on meeting participation. In addition, members of our Board of Director committees shall be compensated as follows (i) the Chairman of our Audit Committee shall receive an additional annual fee of $10,000 and, in the event of an annual equity grant issued to directors, or an Annual Director Grant, an additional 10% of equity securities in addition to such grant, and each other member of the Audit Committee shall receive an additional annual fee of $3,000 and, in the event of an Annual Director Grant, an additional 3% of equity securities in addition to such grant; (ii) the Chairman of our Compensation Committee shall receive an additional annual fee of $4,000 and, in the event of an Annual Director Grant, an additional 4% of equity securities in addition to such grant, and each other member of the Compensation Committee shall receive an additional annual fee of $2,000 and, in the event of an Annual Director Grant, an additional 2% of equity securities in addition to such grant; and (iii) the Chairman of our Nominating Committee shall receive an additional annual fee of $4,000 and, in the event of an Annual Director Grant, an additional 4% of equity securities in addition to such grant, and each other member of the Nominating Committee shall receive an additional annual fee of $2,000 and, in the event of an Annual Director Grant, an additional 2% of equity securities in addition to such grant. On June 30, 2019, our Board, upon the recommendation of our Compensation Committee, approved the reduction of the annual fees paid to each of our directors by 25% from their current levels until the earlier of closing market capitalization on the Nasdaq Capital Market reaching $170 million; or (2) June 30, 2020. On March 26 ,2020, the Board, upon the recommendation of our Compensation Committee, approved the reduction of the annual fee paid to each director by an additional 25%, such that their annual fee was cut by 50%, until such time as the Company obtains better clarity on the global impact of COVID-19. On May 7, 2020, the Board approved, effective May 1, 2020, a partial reinstatement of the annual fee, paid monthly, to each non-executive director of the Company to 85% of such fee. In addition, effective June 1, 2020, the aforementioned compensation reductions no longer applied to the monthly fee of each director and their prior fees reverted back to their prior levels. The non-executive directors, as a group, were also entitled to two and a half percent (2.5%) in cash based on amounts received by us from non-diluting funding and strategic deals, as previously determined by the Board and/or the Compensation Committee; effective September 10, 2020, the non-executive directors are no longer entitled to any such bonuses, however in exceptional circumstances members of the Board may receive bonuses of up to $75,000 per year for extraordinary performance, as well as discretionary bonuses in special circumstances as the Board or the Compensation Committee may decide. During fiscal year 2020, we paid a total of $143,459 in cash to directors as compensation. This amount does not include compensation to Mr. Aberman and Mr. Yanay in their capacity as directors, which is reflected in the Summary Compensation Table for fiscal year 2020 above. As of June 30, 2020, we have outstanding grants to our non-executive directors aggregating 492,576 restricted shares and RSUs of which 365,861 were exercisable or vested, as the case may be, as follows: Name Total of Options, restricted shares and RSUs Granted Total of restricted shares and RSUs exercisable and vested Mark Germain 80,646 51,179 Nachum Rosman (1) 83,596 51,812 Doron Shorrer 87,596 76,036 Hava Meretzki (2) 58,621 50,691 Isaac Braun 58,621 50,691 Israel Ben-Yoram (1) 87,746 58,545 Moria Kwiat 35,750 26,907 Total 492,576 365,861 (1) Effective as of June 29, 2020, and the result of the 2020 Annual Meeting, this director was not reappointed to serve on the Board. (2) Ms. Meretzki was not re-nominated as a director nominee, and therefore, effective as of June 29, 2020, Ms. Meretzki ceased to serve on the Board. For all directors, the vesting of directors’ stock options, RSUs and restricted stock accelerates in the following circumstances: (1) if the director is not re-nominated to serve on the Board or the director is not re-elected by stockholders at a special or annual meeting, this will result in the acceleration of 100% of any unvested award and (2) the voluntary resignation of a director will result in the acceleration of 50% of any unvested award. In addition, a change in control will result in the acceleration of 100% of any unvested award of our directors. As a result of the voting outcome from the 2020 Annual Meeting, on June 30, 2020, unvested awards held by Messrs. Ben-Yoram and Rosman were accelerated on July 1, 2020 and resulted in the vesting of 11,221 RSUs for Mr. Ben Yoram and 11,560 RSUs for Mr. Rosman. Other than as described above, we have no present formal plan for compensating our directors for their service in their capacity as directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our Board as per policy approved by our Compensation Committee. The Board may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. Other than indicated above, no director received and/or accrued any compensation for his or her services as a director, including committee participation and/or special assignments during fiscal year 2020. 67 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters. The following table sets forth certain information, to the best knowledge and belief of the Company, as of September 4, 2020 (unless provided herein otherwise), with respect to holdings of our common stock by (1) each person known by us to be the beneficial owner of more than 5% of the total number of shares of our common stock outstanding as of such date; (2) each of our directors; (3) each of our named executive officers; and (4) all of our directors and our executive officers as a group. Unless otherwise indicated, the address of each person listed below is c/o Pluristem Therapeutics Inc., MATAM Advanced Technology Park, Building No. 5, Haifa, Israel, 3508409. Name of Beneficial Owner Beneficial Number of Shares(1) Percentage Directors and Named Executive Officers Zami Aberman Executive Chairman of the Board of Directors 446,005 (2) 1.7 % Yaky Yanay CEO, President and Director 373,098 (2) 1.5 % Chen Franco-Yehuda 9,866 * CFO Isaac Braun Director 61,845 (3) * Mark Germain Director 52,781 * Moria Kwiat Director 33,606 (4) * Doron Shorrer Director 80,516 (5) * Directors and Executive Officers as a group (7 persons) 1,269,686 (6) 5.0 % 5% Stockholders Clover Wolf Capital – Limited Partnership 3,729,737 (7) 14.6 % * = less than 1% (1) Based on 25,554,668 shares of common stock issued and outstanding as of September 4, 2020. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. 68 Shares of common stock subject to options, warrants or right to purchase or through the conversion of a security currently exercisable or convertible, or exercisable or convertible within 60 days, are reflected in the table above and are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person. (2) Includes a warrant to acquire up to 7,143 shares. (3) Includes a warrant to acquire up to 5,000 shares. (4) Includes a warrant to acquire up to 2,857 shares. (5) Includes a warrant to acquire up to 1,429 shares. (6) Includes warrants to acquire up to 30,715 shares. (7) Based solely on information contained in Form 4 filed with the SEC on August 3, 2020, and data provided by the holder. Clover Wolf Ltd. is the General Partner of Clover Wolf Capital – Limited Partnership. Adi Wolf is the Managing Member and Chief Executive Officer of Clover Wolf Capital – Limited Partnership and also the Chief Executive Officer of Clover Wolf Ltd. All investment decisions are made by Adi Wolf, and thus the power to vote or direct the votes of these shares of Common Stock, as well as the power to dispose or direct the disposition of such shares of Common Stock is held by Adi Wolf through Clover Wolf Capital – Limited Partnership and Clover Wolf Ltd. The address of Clover Wolf Capital – Limited Partnership is 24 Bodenhimer Street, Tel Aviv, Israel 6200838. Equity Compensation Plan Information At our annual meeting of our stockholders held on May 31, 2016, our stockholders approved the 2016 Plan. Under the 2016 Plan, options, restricted stock and RSUs may be granted to our officers, directors, employees and consultants or the officers, directors, employees and consultants of our subsidiary. Under the 2016 Plan, the plan administrator is authorized to grant awards to acquire shares of Common Stock, shares of restricted stock and RSUs, in each calendar year, in a number not exceeding two and three-quarters percent (2.75%) of the number of shares of our Common Stock issued and outstanding on a fully diluted basis on the immediately preceding December 31. In addition, at our annual meeting of our stockholders held on June 13, 2019, our stockholders approved the 2019 Plan. Under the 2019 Plan, options, restricted stock and RSUs may be granted to our officers, directors, employees and consultants or the officers, directors, employees and consultants of our subsidiary. Under the 2019 Plan, the plan administrator is authorized to grant options to acquire shares of common stock, shares of Restricted Stock and RSUs in a number not exceeding 16% of the number of shares of common stock issued and outstanding immediately prior to the grant of such awards on a fully diluted basis. The following table summarizes certain information regarding our equity compensation plans as of June 30, 2020: Plan Category Number of securities to be issued upon exercise of outstanding options Weighted-average exercise price of outstanding options Number of securities remaining available for future issuance under equity compensation plans (2016 Plan and 2019 Plan) Equity compensation plan approved by security holders 54,871 $ 0 5,256,387 69 Item 13. Certain Relationships and Related Transactions and Director Independence. Except for the arrangements described in Item 11 no director, executive officer, principal shareholder holding at least 5% of our common shares, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction, during fiscal year 2020, in which the amount involved in the transaction exceeded or exceeds $120,000. The Board has determined that Doron Shorrer, Isaac Braun, Moria Kwiat and Mark Germain are “independent” directors, as defined by the rules of the SEC and the Nasdaq rules and regulations. Item 14. Principal Accounting Fees and Services The fees for services provided by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, to the Company in the last two fiscal years were as follows: Twelve months ended on June 30, 2020 Twelve months ended on June 30, 2019 Audit Fees $ 110,041 $ 172,014 Audit-Related Fees None None Tax Fees $ 27,072 $ 19,831 All Other Fees None $ 26,231 Total Fees $ 137,113 $ 218,076 Audit Fees . These fees were comprised of (i) professional services rendered in connection with the audit of our consolidated financial statements for our Annual Report on Form 10-K and internal control over financial reporting, (ii) the review of our quarterly consolidated financial statements for our quarterly reports on Form 10-Q, (iii) audit services provided in connection with other regulatory or statutory fillings and (iv) fees related to the offering we closed in April 2019 and with respect to the Sales Agreement. Tax Fees. These fees relate to our tax compliance and tax advisory projects. All Other Fees . These fees were comprised of fees related to assistance in preparation of IIA as well as other grant applications. SEC rules require that before Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, is engaged by us to render any auditing or permitted non-audit related service, the engagement be: 1. pre-approved by our Audit Committee; or 2. entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service, and such policies and procedures do not include delegation of the Audit Committee’s responsibilities to management. The Audit Committee pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees were reviewed and approved by the Audit Committee before the services were rendered. The Audit Committee has considered the nature and amount of fees billed by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, and believes that the provision of services for activities unrelated to the audit is compatible with maintaining Kost Forer Gabbay & Kasierer’s independence. 70 PART IV Item 15. Exhibits. 3.1 Composite Copy of the Company’s Articles of Incorporation as amended on July 2, 2020 (incorporated by reference to Exhibit 4.1 of our registration statement on Form S-3 filed on July 16, 2020). 3.2 Composite Copy (marked) of the Company’s Articles of Incorporation as amended on July 2, 2020 (incorporated by reference to Exhibit 4.2 of our registration statement on Form S-3 filed on July 16, 2020). 3.3* Amended and Restated By-laws as amended on September 10, 2020. 3.4* Amended and Restated By-laws as amended on September 10, 2020 (marked). 4.1 Form of Common Stock Purchase Warrant dated January 25, 2017 (incorporated by reference to Exhibit 4.1 of our current report on Form 8-K filed on January 20, 2017). 4.2 Form of Common Stock Purchase Warrant dated April 2019 (incorporated by reference to Exhibit 4.1 of our current report on Form 8-K filed on April 5, 2019). 4.3* Description of Securities. 10.1 Summary of Lease Agreement dated January 22, 2003, by and between Pluristem Ltd. and MTM – Scientific Industries Center Haifa Ltd., as supplemented on December 11, 2005, June 12, 2007 and July 19, 2011 (incorporated by reference to Exhibit 10.2 of our annual report on Form 10-K filed September 12, 2011). 10.2 Summary of Supplement to the Lease Agreement by and between Pluristem Ltd. and MTM – Scientific Industries Center Haifa Ltd dated July 31, 2012 (incorporated by reference to Exhibit 10.3 of our annual report on Form 10-K filed on September 11, 2013). 10.3 Summary of Supplement to the Lease Agreement by and between Pluristem Ltd. and MTM – Scientific Industries Center Haifa Ltd dated December 31, 2012 (incorporated by reference to Exhibit 10.4 of our annual report on Form 10-K filed on September 11, 2013). 10.4 Summary of Supplement to the Lease Agreement by and between Pluristem Ltd. and MTM – Scientific Industries Center Haifa Ltd dated February 3, 2015 (incorporated by reference to Exhibit 10.1 of our quarterly report on Form 10-Q filed on May 6, 2015). 10.5 Assignment Agreement dated May 15, 2007 between Pluristem Therapeutics Inc. and each of Technion Research and Development Foundation Ltd., Shai Meretzki, Dr. Shoshana Merchav (incorporated by reference to Exhibit 10.1 of our current report on Form 8-K filed on May 24, 2007). 10.6 Assignment Agreement dated May 15, 2007 between Pluristem Therapeutics Inc. and Yeda Research and Development Ltd. (incorporated by reference to Exhibit 10.2 of our current report on Form 8-K filed on May 24, 2007). 10.7 Exclusive License and Commercialization Agreement dated June 26, 2013, between Pluristem Ltd. and CHA (incorporated by reference to Exhibit 10.8 of our annual report on Form 10-K filed on September 11, 2013). 10.8* Summary of Directors’ Ongoing Compensation. + 71 10.9 2016 Equity Compensation Plan (incorporated by reference to our Definitive Proxy Statement on Schedule 14A filed on April 4, 2016). + 10.10 Form of Stock Option Agreement under the 2016 Equity Compensation Plan (incorporated by reference to Exhibit 10.17 of our annual report on Form 10-K filed on September 7, 2016). + 10.11 Form of Restricted Stock Agreement under the 2016 Equity Compensation Plan (incorporated by reference to Exhibit 10.18 of our annual report on Form 10-K filed on September 7, 2016). + 10.12 Form of Restricted Stock Agreement (Israeli directors and officers) under the 2016 Equity Compensation Plan (incorporated by reference to Exhibit 10.19 of our annual report on Form 10-K filed on September 7, 2016). + 10.13 2019 Equity Compensation Plan (incorporated by reference to our Definitive Proxy Statement on Schedule 14A filed on April 25, 2019). + 10.14 Form of Stock Option Agreement under the 2019 Equity Compensation Plan (incorporated by reference to Exhibit 10.19 of our annual report on Form 10-K filed on September 12, 2019). + 10.15 Form of Restricted Stock Agreement under the 2019 Equity Compensation Plan (incorporated by reference to Exhibit 10.20 of our annual report on Form 10-K filed on September 12, 2019). + 10.16 Form of Restricted Stock Agreement (Israeli directors and officers) under the 2019 Equity Compensation Plan (incorporated by reference to Exhibit 10.21 of our annual report on Form 10-K filed on September 12, 2019). + 10.17* Amended and Restated Consulting Agreement between Pluristem Ltd. and Rose High Tech Ltd. dated September 10, 2020. + 10.18* Amended and Restated Employment Agreement between Pluristem Ltd. and Yaky Yanay dated September 10, 2020. + 10.19* Amended and Restated Employment Agreement between Pluristem Ltd. and Chen Franco-Yehuda dated September 10, 2020. + 10.20*^ Finance Contract between the European Investment Bank, as Lender, and Pluristem GmBH, as borrower, and Pluristem Therapeutics Inc. and Pluristem Ltd., as Original Guarantors, dated April 29, 2020. 10.21 Open Market Sales Agreement, dated July 16, 2020, between the Company and Jefferies LLC (incorporated by reference to Exhibit 1.2 of our registration statement on Form S-3 filed on July 16, 2020). 21.1* List of Subsidiaries of the Company. 72 23.1* Consent of Kost Forer Gabbay & Kasierer, A member of Ernst & Young Global. 31.1* Certification pursuant to Rule 13a-14(a)/15d-14(a) of Yaky Yanay. 31.2* Certification pursuant to Rule 13a-14(a)/15d-14(a) of Chen Franco-Yehuda. 32.1** Certification pursuant to 18 U.S.C. Section 1350 of Yaky Yanay. 32.2** Certification pursuant to 18 U.S.C. Section 1350 of Chen Franco-Yehuda. 101 * The following materials from our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements, tagged as blocks of text and in detail. * Filed herewith. ** Furnished herewith. + Management contract or compensation plan. ^ Certain identified information in the exhibit has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to Pluristem if publicly disclosed. Item 16. Form 10-K Summary. None. 73 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Pluristem Therapeutics Inc. By: /s/ Yaky Yanay Yaky Yanay, Chief Executive Officer and President Dated: September 10, 2020 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Yaky Yanay Yaky Yanay, Chief Executive Officer, President and Director (Principal Executive Officer) Dated: September 10, 2020 By: /s/ Chen Franco-Yehuda Chen Franco-Yehuda, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Dated: September 10, 2020 By: /s/ Zami Aberman Zami Aberman, Executive Chairman of the Board of Directors Dated: September 10, 2020 By: /s/ Isaac Braun Isaac Braun, Director Dated: September 10, 2020 By: /s/ Mark Germain Mark Germain, Director Dated: September 10, 2020 By: /s/ Moria Kwiat Moria Kwiat, Director Dated: September 10, 2020 By: /s/ Doron Shorrer Doron Shorrer, Director Dated: September 10, 2020 74