📄 What This Document Is

This is a Definitive Proxy Statement (DEF 14A) for Avalo Therapeutics. Think of it as an invitation and information packet for the company's big annual shareholder meeting. It explains what will be voted on, who is running the company, and how much the leaders get paid.

🏢 What The Company Does

👉 In simple terms, Avalo Therapeutics is a clinical-stage biopharmaceutical company. They discover and develop medicines, primarily focused on treating rare diseases and conditions related to the immune system.

🗳️ What You're Voting On (The Annual Meeting)

The virtual meeting is on Tuesday, June 2, 2026, at 8:30 a.m. ET. Shareholders will vote on three main proposals:

Election of 7 Directors: Vote "For" or "Withhold" for each nominee.
Approval of an Employee Stock Purchase Plan (ESPP): Vote "For," "Against," or "Abstain."
Ratification of Auditors: Approve Ernst & Young LLP as the company's accountants for 2026.

👉 The key date was April 6, 2026 (the "Record Date"). If you owned shares then, you get to vote. There were 26,714,337 shares eligible.

👥 The People In Charge: Board Nominees

The board is shrinking from 9 to 7 members as two directors are stepping down. The 7 nominees are:

Michael Heffernan (Chairman): Seasoned biopharma exec, founder of Collegium Pharmaceutical.
Garry Neil, M.D. (CEO): Company leader since 2022, extensive R&D background.
Rita Jain, M.D.: Rheumatologist and former CMO at ChemoCentryx.
Aaron Kantoff: Venture capitalist in life sciences.
Gilla Kaplan, Ph.D.: Research scientist with expertise in immunology.
Kevin Lind: Former CEO of Longboard Pharmaceuticals, finance expert.
Samantha Truex: Biotech exec with business development experience.

👉 Two board seats are reserved for investors who bought special "Series D" and "Series E" stock in 2024. One seat (Mr. Kantoff) is filled; the other is currently empty.

💰 How Directors Get Paid

Non-employee directors earn cash fees and stock options for their service.

Base Cash Retainer: $40,000/year ($80,000 for the Chairman).
Committee Fees: Extra cash for serving on committees (e.g., Audit Committee pays $10,000).
Stock Option Grants: Initial grant upon joining (~40,200 options) and an annual grant (~20,100 options). These vest over 1-3 years.

👉 For 2025, director compensation ranged from about $127,000 to $510,000, heavily influenced by the value of stock option grants.

📈 Employee Stock Purchase Plan (ESPP) Update

The company wants to amend its employee stock plan. Here’s what it means:

The Ask: Approve a new version that adds a cap on the number of new shares added each year and extends the plan's life to 2036.
Why? To keep the plan's tax-advantaged status under IRS rules.
How it Works: Employees can buy company stock at a 15% discount via payroll deductions during regular "offering periods."
Who Can Join: About 35 eligible employees as of April 2026.

👉 This is a common employee benefit designed to help staff become shareholders.

💼 Executive Compensation

This section details pay for the top executives, like the CEO.

Focus: It uses a mix of salary, annual bonuses, and long-term stock awards to align pay with company performance.
Pay-for-Performance: A new "Pay Versus Performance" table shows how executive compensation correlates with the company's financial results and shareholder returns over time.
Key Agreements: Outlines potential payouts if executives are terminated or the company is sold (so-called "golden parachute" payments).

👉 The goal is to tie executive rewards directly to the company's success and stock price.

⚖️ Big Picture: Strengths & Risks

Strengths (👍): A refreshed, experienced board with deep biopharma, clinical, and financial expertise. A clear governance structure and plans to motivate employees through stock ownership.
Risks (⚠️): As a clinical-stage biotech, the company is likely not yet profitable and depends on successfully developing and commercializing its drug pipeline. Executive and director compensation is significant and must be justified by future results.

🧠 The Analogy

This proxy statement is like the agenda and report for a homeowners' association (HOA) annual meeting. You're reviewing the proposed board members (the "nominees"), being asked to approve changes to a community benefit plan (the "ESPP"), and checking the budget (auditors' fees). The detailed compensation sections are like seeing what the HOA manager and board members are paid for their work.

🧩 Final Takeaway

Shareholders are being asked to vote on the future leadership of Avalo Therapeutics, approve an updated employee stock plan, and endorse the company's auditors. The document provides the necessary details on the nominees, compensation, and proposals to make an informed decision before the virtual meeting on June 2, 2026.

Avalo Therapeutics, Inc. — DEF 14A Filing