📜 What This Document Is 🗓️

This document is a Proxy Statement (DEF 14A), which is essentially the company's official rulebook and agenda for its annual meeting of stockholders. It is not a financial results report, but rather a comprehensive legal filing that tells you exactly what decisions the company needs its owners (the stockholders) to vote on.

The purpose of this filing is to inform you about corporate governance, executive compensation, and proposed changes to the company's stock incentive plans. It outlines the rules by which the company is governed and how the management plans to pay its leaders.

👉 Key Takeaway: When you read this, you are learning how the company makes decisions, who is responsible for overseeing it, and how much executive pay is being proposed.

🏢 Verrica Pharmaceuticals Overview 🧪

Verrica Pharmaceuticals Inc. is a company operating in the highly complex and critical field of pharmaceuticals. While the filing does not provide a deep business overview, its existence as a publicly traded life sciences company means its success relies on the research, development, and eventual sale of drugs.

The entire corporate structure and governing documents contained here are designed to manage the massive risks and investments inherent in the drug development process.

🗓️ Annual Meeting Logistics and Voting 🗳️

This section tells you how and when you can participate in Verrica’s annual meeting. Understanding these dates is crucial because your ability to vote is tied directly to the "record date."

• Meeting Date: The annual meeting is scheduled for Friday, June 5, 2026, at 10:00 a.m. local time.
• Record Date: To be counted as a stockholder entitled to vote, your shares must be registered on the record date of April 8, 2026, at the close of business.
• Voting Methods: Stockholders have multiple ways to cast their vote:
  • Online at www.proxyvote.com.
  • By telephone at the toll-free number 1-800-690-6903.
  • By returning a physical proxy card via mail.
• Important Note: The proxy vote must be received by 11:59 p.m. Eastern Time on June 4, 2026, to be counted.

📣 Proposal 1: Election of Directors 🧑‍💼

The board of directors is the group of people elected by the stockholders to oversee the company's management. This proposal asks stockholders to vote for the election of the board's nominees.

The board is proposing the election of two directors for a three-year term: Paul B. Manning and Lawrence Eichenfield.

• What it means: By voting for these nominees, stockholders are electing the individuals who will help guide Verrica's operations over the next few years.
• Governance Focus: The board structure emphasizes good corporate governance, noting that the Board Chairman, Mr. Manning, has substantial authority, and they believe keeping the Board Chairman role separate from the CEO role enhances oversight.

💸 Proposal 2: Executive Compensation (Say-on-Pay) 💰

This proposal concerns the pay packages for Verrica's named executive officers. It is referred to as a "say-on-pay" vote.

• What is "Say-on-Pay"? It is a non-binding (advisory) vote. This means the vote does not legally force the board to change anything, but management and the Board pay close attention to the results.
• Board Recommendation: The Board of Directors recommends voting "FOR" the compensation of the named executive officers.
• Why it matters: Stockholders use this vote to signal whether they approve of the overall compensation philosophy—whether they feel the pay packages are reasonable and aligned with the company’s performance.

📋 Proposal 3: Ratification of Independent Auditor 🔎

This proposal asks stockholders to approve the selection of KPMG LLP as the company's independent registered public accounting firm for the year ending December 31, 2026.

• Process: The Audit Committee recommends KPMG LLP, even though company bylaws do not strictly require stockholder ratification. This is considered a matter of "good corporate practice."
• Fees for Services (in USD): The filing provides the aggregate fees for KPMG LLP:
  • 2025 Total Fees: $698,840
  • 2024 Total Fees: $773,861
• Why it matters: The independent auditor is responsible for reviewing Verrica's financial books to ensure they are accurate and comply with federal laws. The fees show how much the company is budgeting for these essential financial checks.

✨ Proposal 4: Amendment and Restatement of 2018 Plan (Equity Plan) 🔄

This is the most detailed section and addresses the rules for how the company grants stock and other incentives to employees and directors. The company is asking for the approval of the "Amended 2018 Plan."

• Why the Change? Verrica argues that the original plan was not accounting for shares issued through mechanisms like pre-funded warrants. If the plan isn't updated, the company may be "limited in our ability to continue to issue awards... sufficient to attract and motivate highly skilled employees."
• Key Changes Proposed:
  • The maximum number of shares issuable under the plan will be increased to 4,000,000 shares of Common Stock.
  • The maximum shares eligible for Incentive Stock Options (ISOs) is set at 12,000,000 shares.
  • The "Share Refresh" (the automatic annual increase in the share pool) is changing from 4% to 5% of the outstanding shares, and it will include shares from settled pre-funded warrants.
• The Impact: If approved, the Amended 2018 Plan is expected to provide approximately 2,763,366 million shares available for issuance after the meeting, which the company believes will cover its near-term equity needs.

💼 Board Governance & Committees 🏛️

The board’s corporate governance section is critical because it explains who is overseeing the company and how they govern themselves.

• Board Independence: The Board determined that five of the eight directors—Mr. Prygocki, Dr. Nguyen, Dr. Eichenfield, Dr. Corcoran, and Dr. Frantzreb—are "independent directors." This means they have no material relationship with the company that could compromise their judgment.
• Committee Structure: The board utilizes three specialized committees, each with defined duties:
  • Audit Committee: Chaired by Mr. Prygocki, this committee oversees the company’s financial accounting and reporting processes. They have the authority to review and approve the independent auditors.
  • Compensation Committee: Chaired by Dr. Nguyen, this committee sets compensation and other employment terms for the named executive officers.
  • Nominating and Corporate Governance Committee: Chaired by Dr. Eichenfield, this committee handles identifying potential board members, evaluating existing directors, and reviewing the company’s overall governance policies.

📜 Company Policies and Oversight 🔐

This section details the rules the company has implemented to protect itself and its shareholders.

• Insider Trading Policy: This policy prohibits directors, officers, and employees from engaging in several types of risky trading, including derivatives securities, hedging transactions, or pledging common stock as collateral for loans, without explicit Board approval.
• Clawback Policy: The company has a mandatory Dodd-Frank Act-compliant clawback policy. If the company must restate its financial results due to misconduct, the CEO and CFO may be required to reimburse the Company for any incentive-based or equity-based compensation they received.
• Code of Conduct: The company has adopted a written Code of Business Conduct and Ethics, available on its website, which all employees, officers, and directors must follow.

💡 Why Corporate Governance Matters 🌟

Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled. A robust governance structure means that the company is accountable, transparent, and managed ethically.

• Oversight: The Board's roles (Audit, Comp, Nom/Corp) ensure that multiple layers of oversight are in place. For example, the Compensation Committee recommends pay, but the full Board must approve it.
• Risk Management: The Board’s role is to provide "informed oversight" of risks, including strategic, financial, and cybersecurity risks, ensuring no single group is solely responsible for identifying major threats.

💌 Key Dates and Contact Information 📞

If you have specific questions about the meeting or the filings, the following contacts and dates are provided:

• Meeting Location: Company’s headquarters at 44 W. Gay St., Suite 400, West Chester, Pennsylvania 19380.
• Corporate Secretary: Verrica Pharmaceuticals Inc., 44 W. Gay St., Suite 400, West Chester, Pennsylvania 19380.
• Voting Instruction Hotline: 1-800-690-6903.
• Online Voting Portal: www.proxyvote.com.

🧠 The Analogy — 🏠 Running a Building 🏚️

Think of Verrica's governance structure like running a large, complex apartment building. The CEO is the Chief Tenant (running daily operations), but the Board of Directors is the Homeowners Association (HOA). The three committees (Audit, Compensation, Nominating) are specialized committees within the HOA—one handles the budget (Audit), one handles the maintenance contracts and resident perks (Compensation), and one handles finding and vetting new board members (Nominating). The proxy statement is the HOA's annual meeting agenda, where they vote on who runs the building next year, how much the service charges are, and what rules need to be updated (like the equity plan).

🧩 Final Takeaway — 🚦

The annual proxy statement is a deep dive into company structure and internal rules, rather than recent revenue figures. The key messages are that the board is fulfilling its fiduciary duty through rigorous committee oversight, and the biggest ask is for stockholder approval to update the highly critical stock incentive plan to ensure the company can continue recruiting top talent.