DEF 14A 1 vcel3982361-def14a.htm DEFINITIVE PROXY STATEMENT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

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☐		Preliminary Proxy Statement
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☑		Definitive Proxy Statement
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Vericel Corporation

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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☐		Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

Table of Contents

2022 Notice of Virtual
Annual Meeting of
Shareholders and
Proxy Statement

Table of Contents

Message from the President and Chief Executive Officer

		Dear Shareholder:

		We are very pleased that Vericel delivered another year of strong revenue and operating cash flow growth in 2021 despite the continued impacts of COVID-19 throughout the year. The Company generated record total revenue for the year and delivered record product volumes and revenue for both MACI^®and Epicel^®in 2021. In addition to this strong revenue performance, the Company generated significant cash flow as we reported positive adjusted EBITDA for the fourth consecutive year and increased operating cash flow over 60% vs. 2020. Most importantly, our continued growth has helped more patients benefit from our innovative advanced cell therapy products as we pursue our passion of helping treat those suffering from cartilage and severe burn injuries. MACI is the leading restorative cartilage repair product used by orthopedic surgeons to treat patients with large symptomatic focal cartilage defects in the knee. In its fifth year on the market, we continued to see significant growth in the MACI surgeon base with approximately 1,800 surgeons taking MACI biopsies in 2021, an increase of 20% from 2020. Overall biopsies increased by 30% in 2021, driven both by the growth in biopsy surgeons and higher penetration within each surgeon’s practice. MACI revenue grew 18% to $111.6 million in 2021, an increase of over 20% compared to pre-pandemic levels in 2019, while we estimate the overall cartilage repair market declined during that period. Our expectation is that MACI’s growth rate will increase in 2022, driven by continued growth in surgeons taking biopsies, further gains in penetration of surgical practices and improving biopsy conversion rates as we move beyond the significant COVID-19 impacts over the past two years. More broadly, given the potential $2 billion addressable market, the continued strength in MACI’s underlying growth drivers, and its strong reimbursement profile, we believe that MACI is well positioned to continue its strong growth trajectory in 2022 and beyond. In addition, we continue to advance important lifecycle management initiatives for MACI. We expect to meet with the U.S. Food & Drug Administration (FDA) later this year to discuss the clinical development program for our custom arthroscopic delivery system, which we believe offers the potential to make MACI an even simpler and less invasive procedure for surgeons and patients and to expand the use of MACI for the treatment of cartilage defects in the knee. We also continue to advance our MACI ankle indication program, which we believe could increase our overall MACI addressable market to approximately $3 billion. Epicel is a potentially life-saving product used by burn surgeons to treat patients with large total body surface area burns. Epicel revenue grew over 50% to $41.5 million in 2021. This strong performance was driven by growth in the number of burn centers using Epicel, an increase in the number of patients treated, and higher graft utilization per patient. We believe that this strength across key growth drivers will continue to help drive further pentetration into Epicel’s $200 million plus addressable market in the years ahead, given the significant opportunity to grow the number of centers using Epicel, and to continue to drive additional utilization within the current user base.

“Most importantly, our continued growth has helped more patients benefit from our innovative advanced cell therapy products as we pursue our passion of helping treat those suffering from cartilage and severe burn injuries.”

2022 Proxy Statement

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Message from the President and Chief Executive Officer

In May 2019, we entered into exclusive license and supply agreements with MediWound Ltd. to commercialize NexoBrid^®in North America. NexoBrid is a topically administered biologic product that enzymatically removes nonviable burn tissue, or eschar, in patients with deep partial- and full-thickness thermal burns within four hours of application and without harming viable tissue. NexoBrid is approved in the European Union and other international markets and has been designated as an orphan biologic in the United States. We remain on track for a resubmission of the NexoBrid Biologics License Application (BLA) to the FDA in mid-2022 which, if approved, would position NexoBrid for a potential commercial launch in the first half of 2023.

Extensive pre-commercialization activities are underway to support the planned launch of NexoBrid. In addition to the ongoing disease state awareness campaign, we continue to advance our commercial launch plans, including a number of brand development and market access initiatives. Our medical affairs team remains engaged with burn centers in training and educational initiatives through the NEXT expanded access protocol, which we believe will be important for NexoBrid, once approved, to potentially replace surgical excision as the standard of care for removing eschar in patients with severe burns.

Finally, we are very pleased to have announced plans earlier this year for a new state-of-the-art advanced cell therapy manufacturing and corporate headquarters facility in the Boston area. The new facility, which is expected to begin commercial manufacturing in 2025, will significantly increase our manufacturing capacity and demonstrates our confidence in the continued growth trajectory of MACI and Epicel in the years ahead. In addition, the campus that Vericel will be a part of is designed and operated in accordance with existing LEED Gold and Fitwel Level 2 certifications and we are very pleased to locate our new facility in a campus focused on developing and managing environmentally responsible real estate.

In 2021, Vericel recognized full-year revenue of $156.2 million, an increase of approximately 26% over 2020, which was consistent with our compounded annual revenue growth rate (CAGR) since we launched MACI in 2017. The Company also generated strong cash flow in 2021, reporting approximately $29 million in adjusted EBITDA and operating cash flow. As a result, we increased our cash and investments by approximately $29 million to $129 million at the end of 2021, further strengthening our balance sheet while enhancing our overall financial position and strategic flexibility moving forward.

Looking ahead, in addition to delivering top-tier revenue growth, which we expect to be in the 20%+ CAGR range over the next several years, we expect to further enhance our profitability profile by delivering on our financial goals of approximately 70% gross margins and an adjusted EBITDA margin of approximately 30%. Despite the challenges since early 2020, we enter 2022 in a stronger position than ever and we are confident in our ability to deliver on these goals. We would not be in this strong position without the dedication of our employees and the support of our collaborators and shareholders, and we thank all of you for your continued support.

Sincerely,

Dominick C. Colangelo

President and Chief Executive Officer

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Notice of Virtual Annual Meeting
of Shareholders

Dear Shareholder of Vericel Corporation:

You are cordially invited to attend the Virtual Annual Meeting of Shareholders of Vericel Corporation (the “Annual Meeting”), a Michigan corporation. The Annual Meeting will be held on Wednesday, April 27, 2022, at 9:00 a.m. Eastern Time, via a live audio webcast at www.virtualshareholdermeeting.com/VCEL2022. A list of shareholders entitled to vote at the Annual Meeting will be available for inspection by any shareholder at our offices in Cambridge, Massachusetts during ordinary business hours for a period of 10 days prior to the meeting. This list will also be available for shareholders to view online at the time of the meeting.

Voting Items

Proposal		Board Voting Recommendation	For Further Details
1	To elect eight (8) directors, each to serve a term of one year expiring at the 2023 annual meeting	FOR each director nominee	Page 17
2	To approve, on an advisory basis, the compensation of our named executive officers	FOR	Page 37
3	To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022	FOR	Page 58
4	To approve the adoption of our 2022 Omnibus Incentive Plan	FOR	Page 61

Shareholders will also consider such other business as may properly come before the Annual Meeting and any adjournment thereof.

By Order of the Board of Directors,

Sean C. Flynn

Senior Vice President, General Counsel and Secretary
Cambridge, Massachusetts
March 17, 2022

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE VERICEL 2022 VIRTUAL ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 27, 2022

The Notice of Virtual Annual Meeting of Shareholders, Proxy Statement, proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, are available at www.vcel.com by following the link for “Investor Relations.” To obtain more information concerning how to attend the Annual Meeting via the live audio webcast, please contact Vericel Corporation at (617) 588-5555.

Whether or not you plan to attend the Annual Meeting, please promptly complete your proxy as indicated above in order to ensure representation of your shares. For specific instructions on how to vote your shares, please review the instructions for each of these voting options as detailed in your Notice and in this Proxy Statement.

BACKGROUND

	Date and Time April 27, 2022, at 9:00 a.m. Eastern Time

	Location Via a live audio webcast at www.virtualshareholder meeting.com/VCEL2022

	Who Can Vote You may vote at the Annual Meeting if you were a shareholder of record at the close of business on March 3, 2022

VOTING METHODS

	Internet or Telephone Follow the instructions on your proxy card and on www.proxyvote.com

	Mail Vote, sign and return the proxy card to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, New York 11717

	Online at the Annual Meeting www.virtualshareholder meeting.com/VCEL2022 If you attend the Annual Meeting, you may vote during the meeting even if you have previously voted via the Internet, by telephone, or by returning your proxy card


2022 Proxy Statement	3

Table of Contents

Message from the President and Chief Executive Officer	1

Notice of Virtual Annual Meeting of Shareholders	3

Proxy Overview	5

Corporate Governance	17

Proposal 1: Election of Directors	17

Board’s Skills and Experience	18

Board’s Role and Responsibilities	26

Board Structure	30

Board Practices, Policies and Processes	33

Compensation of Directors	35

Executive Compensation	37

Proposal 2: Advisory Vote to Approve the Compensation of Our Named Executive Officers	37

Vericel’s Executive Officers	38

Compensation Discussion and Analysis	39

Compensation Committee Report	50

Executive Compensation Tables	51

CEO Pay Ratio	57

Audit Matters	58

Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm	58

Fees of Independent Registered Public Accounting Firm	59

Pre-Approval Policy	59

Report of the Audit Committee of the Board of Directors	59

Proposal 4: To Approve the Adoption of Our 2022 Omnibus Incentive Plan	61

Information about Stock Ownership	69

Additional Information	71


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Table of Contents

Proxy Overview

This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors of Vericel Corporation (the “Board of Directors” or the “Board”), a Michigan corporation, for use at the Annual Meeting of Shareholders to be held on Wednesday, April 27, 2022, at 9:00 a.m. Eastern Time, via a live audio webcast at www.virtualshareholdermeeting.com/VCEL2022, or at any adjournments or postponements thereof. An Annual Report to Shareholders, containing financial statements for the year ended December 31, 2021, and this Proxy Statement are being made available to all shareholders entitled to vote at the Annual Meeting. This Proxy Statement and the form of proxy were first made available to shareholders on or about March 17, 2022. Unless the context requires otherwise, references to “we,” “us,” “our,” and “Vericel” refer to Vericel Corporation.

This overview highlights certain information contained elsewhere in this Proxy Statement and does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting. For more information about our business and 2021 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (“SEC”) on February 24, 2022.

2022 Proxy Statement

Table of Contents

About Vericel

Advanced Therapies for the Sports Medicine and Severe Burn Care Markets

Vericel is a leader in advanced therapies for the sports medicine and severe burn care markets. We have a portfolio of highly innovative advanced cell therapies and specialty biologics that are focused on changing the standard of care for patients with cartilage damage and severe burns. We currently market two advanced cell therapy products in the United States, MACI^®and Epicel^®, which are approved and regulated by the FDA as combination biologic/device products, with the biologic component being the use of a patient’s own cells to repair damaged tissue and restore function. In line with our business development strategy to add products to our portfolio that are synergistic with our existing commercial business, in 2019 we added a complimentary product to our burn care franchise when we entered into exclusive license and supply agreements with MediWound Ltd. (“MediWound”) for North American rights to NexoBrid^®, a biological orphan product for removing burn tissue, or eschar, in patients with severe thermal burns.

Our Products

		Our lead product is MACI (autologous cultured chrondocytes on porcine collagen membrane), which we launched in 2017 for the treatment of cartilage defects in the knee. MACI is the leading restorative cartilage repair product in the sports medicine market and the only product approved by the FDA in its class. MACI is the first FDA-approved tissue-engineered cellularized scaffold product that uses a patient’s own cells and is indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee in adult patients. MACI is produced from a patient’s own cartilage cells, which are obtained from a biopsy of healthy cartilage, expanded and uniformly seeded onto a resorbable collagen membrane, and implanted into the cartilage defect through a minimally-invasive outpatient surgical procedure.

		There are more than three-quarters-of-a-million knee cartilage repair surgical procedures performed each year in the U.S. Of these, approximately 315,000 patients are consistent with the current MACI label. Based on defect characteristics, doctors that have implanted MACI consider approximately 125,000 of these patients clinically appropriate for MACI. Approximately 60,000 of the eligible patients have larger lesions and are likely to secure insurance authorization for MACI, resulting in a potential market opportunity for MACI of more than $2 billion per year.

		Epicel (cultured epidermal autografts), our second commercial product, is the only cultured epidermal autograft product approved by the FDA for the treatment of adult and pediatric patients with deep dermal or full-thickness burns greater than or equal to 30% of total body surface area. Epicel is a permanent skin replacement produced from a patient’s own skin cells, which are obtained from a small biopsy of healthy skin, expanded to form skin grafts, and placed onto the burn wound site.

		Epicel is an important and potentially life-saving treatment option for patients with severe burns who may not be candidates for autografts due to the severity and extent of their burns. We estimate that there are approximately 600 surviving patients in the U.S. each year with full-thickness burns greater than 40% of total body surface area that are candidates for treatment with Epicel, representing a potential market opportunity of more than $200 million per year.

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About Vericel

		NexoBrid (concentrate of proteolytic enzymes enriched in bromelain), is a topically-administered biological orphan product candidate that enzymatically removes nonviable burn tissue, or eschar, in patients with deep partial- and full-thickness thermal burns within four hours of application, without harming viable tissue. NexoBrid is highly synergistic with our existing burn care franchise and we believe that, if approved, NexoBrid will provide burn surgeons with an important new treatment option with significant advantages over the current standard of care, surgical eschar removal, and significantly expand Vericel’s presence in the burn care market. We estimate that there are approximately 40,000 hospitalized burn patients in the U.S. each year, the majority of whom will require eschar removal, representing a potential market opportunity of over $200 million per year.

		Vericel is continuing to work closely with MediWound and plans to resubmit the NexoBrid BLA to the FDA in mid-2022 seeking the approval of NexoBrid in the United States.

2022 Proxy Statement

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About Vericel

Strong Performance Across Several Financial Measures in 2021 Despite the Continued Impact of the COVID-19 Pandemic

We believe that our highly innovative portfolio with significant barriers to entry will allow us to continue to generate sustained top-tier revenue growth in our large underpenetrated markets for many years. In addition, we believe that our business model, which is built on commercializing high-value products with concentrated call points, will continue to generate strong profits and operating cash flow in the years ahead.

Strong Track Record of Revenue and Profit Growth

Top-Tier Revenue Growth	Robust Profitability Profile

●	Multiple years of top-tier revenue growth
●	Diversified across two franchises
●	More than 12,000 patients treated with Vericel products

●	Converting strong revenue growth into cash flow generation
●	~$129 million in cash and investments as of 12/31/21
●	~1% Free Cash Flow yield


2021 FINANCIAL HIGHLIGHTS			2021 BUSINESS HIGHLIGHTS
● Record full-year total net revenue ● Record full-year net revenue for both MACI and Epicel ● Gross margin of 68% ● Non-GAAP adjusted EBITDA of $29.5 million* ● Operating cash flow of $29 million ● Approximately $129 million in cash and investments as of December 31, 2021, and no debt			● Record product volumes for both MACI implants and Epicel grafts ● Total net revenue growth of 26% for 2021, in line with the Company’s compounded annual growth rate since the launch of MACI in 2017 ● Achieved 20% growth in surgeons taking MACI biopsies and 30% growth in MACI biopsies for the year ● Achieved over 30% growth in both Epicel biopsies and burn centers treating patients with Epicel for the year ● Announced plans for a new state-of-the-art cell therapy manufacturing facility and corporate headquarters to support long-term growth

*	For more information concerning Vericel’s presentation of non-GAAP measures, including a reconciliation of reported net (loss) income (GAAP) to adjusted EBITDA, please refer to the Company’s discussion of “GAAP versus non-GAAP Measures”, on page 75 of this Proxy Statement.

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About Vericel

Track Record of Creating Significant Shareholder Value

We are pleased that our performance and execution on our strategic and operational goals over the past five years has translated into significant value for our shareholders. Indeed, between 2016 and 2020, an investment in our Company’s common stock has yielded a return of 1,189%, with a 27% return in 2021.

The graph above depicts the total shareholder return from December 31, 2016, through December 31, 2021, for (i) our common stock, (ii) the Nasdaq Composite Index (U.S.), and (iii) the Nasdaq Biotechnology Index. Pursuant to applicable SEC rules, all values assume reinvestment of the full amount of all dividends, however, no dividends have been declared on our common stock to date. The shareholder return shown on the graph above is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns.

2022 Proxy Statement

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About Vericel

Corporate Governance Highlights


Board Independence and Composition ● 7 out of 8 directors are independent 7/8 independent directors ● 2 out of 8 directors (25%) are women 2/8 female directors ● 100% independent committee members 100% independent commitee members ● Executive sessions of independent directors at each meeting ● Board and committees may engage outside advisers independently of management ● Independent Chairman of the Board with clearly delineated duties and robust authority SPOTLIGHT ON OUR NEWEST DIRECTOR Lisa Wright is President and Chief Executive Officer of Community Health Choice, Inc., a managed care organization with approximately 430,000 members and a provider community consisting of over 10,000 physicians and 100 hospitals in the greater Houston, Texas area. She is an accomplished healthcare executive with a track record of strong strategic, operations and financial performance across a number of leading healthcare organizations. Ms. Wright brings to the Vericel Board key expertise in the payer and provider aspects of the healthcare system, which is bolstered by her deep understanding of healthcare economics and the full healthcare ecosystem. Her experiences will be valuable to Vericel as we continue our journey as a high-growth commercial business with multiple products and product candidates with varied reimbursement models.	Board Performance Oversight Role ● Oversight of key risk areas and certain aspects of risk management efforts, such as strategic plan development and execution, executive succession planning, cybersecurity, human capital management and the overall management process ● Oversight of executive compensation programs to align with long-term strategies Board and Committee Meetings Attendance ● 100% director attendance at our 2021 annual meeting of shareholders ● All directors then in office attended at least 85% of the meetings of the Board during 2021 ● All directors then in office attended 100% of the meetings of the committees on which he or she served during 2021 Other Board Practices ● Annual Board and committee self-evaluations ● Board education on key topics, including Environmental, Social and Governance (“ESG”) issues and cybersecurity	Shareholder Rights ● Annual election of directors ● No shareholder rights plan or “poison pill” (Termination of pre-existing plan was unanimously approved by our Board during 2021) Policies, Programs and Guidelines ● Comprehensive Code of Conduct and Business Ethics ● Policy preventing the hedging or pledging of our shares by directors and executive officers ● Commitment to diversity of the Board in terms of specific skills and characteristics (including expertise, race, ethnicity and gender) ● Adoption of robust Stock Ownership Guidelines for all officers and directors during 2021 ● Implementation of comprehensive Corporate Governance Guidelines during 2021 ● Implementation of a Compensation Clawback Policy in 2022 covering both cash and equity and allowing for recoupment of executive compensation if financial results are subsequently restated as a result of misconduct

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About Vericel

Proposal 1: Election of Directors

To elect eight (8) directors, each to serve a term of one year expiring at the 2023 annual meeting of shareholders.

See page 17

The Board recommends a vote FOR each director nominee.

Board of Directors

2022 Proxy Statement

Table of Contents

About Vericel

Board Snapshot

Independence	Age	Tenure

Skills and Experience


Prior Board Experience	Industry Experience
	BioPharma	Complex Biologics	Medical Technologies



Functional Expertise
CEO/GM	Marketing/Sales	Business Development	Finance



Research & Development	Chief Operating Officer	Technical Operations	Healthcare Operations



Payer

Shareholder Engagement


	In 2021, our shareholder engagement included participation in multiple investor conferences and numerous individual investor meetings and calls on a variety of topics, such as business performance, Company strategy, and ESG matters.		Vericel greatly values the perspectives that we gain through direct engagement with our shareholders.

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About Vericel

Proposal 2: Advisory Vote to Approve the Compensation of our Named Executive Officers

To vote on an advisory resolution to approve the compensation of Vericel’s named executive officers.

See page 37

The Board recommends a vote FOR this proposal

2021 Financial Performance

$156.2 million	68%	$41.5 million
Total net revenue, representing 26% year-over-year growth	Gross margin	Epicel net revenue, representing 51% year-over-year growth

$29.5 million*	$29 million	$129 million
Non-GAAP adjusted EBITDA	Operating cash flow generated during 2021	Cash and investments of as of December 31, 2021, and no debt

Executive Compensation Objectives and Philosophy

We have designed our executive compensation program to attract, retain and motivate the executive talent necessary to advance our business of developing and commercializing advanced therapies for the sports medicine and severe burn care markets and to increase shareholder value. Our compensation program is aligned with our business strategy and priorities, encourages executive officers to work for meaningful shareholder returns and reflects a pay-for-performance philosophy. It does not encourage our executive officers to assume excessive risks or result in excessive pay levels. We achieve our pay objectives by providing short-term cash bonuses tied to our annual financial, product development and operational goals and by granting long-term equity awards. To this end, our compensation programs for executive officers are designed to achieve the following objectives:

●	To maintain a culture of “pay for performance”
●	To attract talented and experienced executives to join Vericel
●	To motivate, reward and retain executives whose knowledge, skills and performance are critical to our success
●	To ensure fairness among the executive management team by recognizing the contributions each executive makes to our success
●	To focus executive behavior on the achievement of our corporate mission and short-term and long-term corporate objectives and strategy
●	To align the interests of management and shareholders by providing management with longer-term incentives through equity ownership
*	For more information concerning Vericel’s presentation of non-GAAP measures, including a reconciliation of reported net (loss) income (GAAP) to adjusted EBITDA, please refer to the Company’s discussion of “GAAP versus non-GAAP Measures”, on page 75 of this Proxy Statement.


2022 Proxy Statement	13

Table of Contents

About Vericel

Elements of Compensation

The primary components of our executive officer compensation program are: (i) annual base salary; (ii) annual non-equity incentive compensation, which is based on the achievement of specified Company goals; and (iii) long-term equity incentive compensation in the form of periodic stock option and restricted stock unit (“RSU”) grants, with the objective of aligning the executive officers’ long-term interests with those of our shareholders.

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About Vericel

Performance Against Our Metrics

Our Goals	Our Metrics	Our Performance
	Generate total net revenue of $173.0 million	●	Total net revenue fell short of our goal, largely as a result of disruptions caused by the COVID-19 pandemic, including periodic restrictions on the performance of elective surgical procedures, healthcare staffing shortages, and disruptions to the overall healthcare infrastructure throughout the United States during 2021
	Achieve budget expense target of $131.4 million	●	Budget expense target achieved in 2021 as the result of Company’s continued fiscal discipline, and resulting in the generation of $29 million in operating cash flow

	Achieve budgeted MACI surgeon engagement goals of increasing number of biopsy surgeons and biopsies per surgeon	●	Partially achieved biopsy surgeon goals
	Complete MACI, Epicel and NexoBrid long-term brand development initiatives	●	Exceeded target with respect to brand development initiative goals
	Obtain FDA approval of NexoBrid BLA	●	NexoBrid approval goal not achieved, with BLA resubmission to FDA planned for mid-year 2022

	Complete manufacturing facility and key manufacturing/IT efficiency improvement initiatives	●	Achieved manufacturing facility and key manufacturing/IT efficiency improvement initiatives at target

	Complete ESG goals	●	Achieved ESG goals during 2021 at target

	Execute high-quality business development transaction	●	Company chose not to execute any business development transaction during 2021

Governance Features of Our Executive Compensation Program


2022 Proxy Statement	15

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About Vericel

Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm

To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2022.

See page 58

The Board recommends a vote FOR this proposal.

The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) as Vericel’s independent registered public accounting firm to audit the consolidated financial statements of Vericel for the fiscal year ending December 31, 2022. PwC has acted in such capacity since its appointment in fiscal year 1996.

As part of its duties, the Audit Committee considered the provision of services, other than audit services, during the fiscal year ended December 31, 2021 by PwC, our independent registered public accounting firm for that period, to ensure the firm maintains its independence. The following table sets forth the aggregate fees accrued by Vericel for the fiscal years ended December 31, 2020 and 2021, respectively, for PwC:

Name	Fiscal Year Ended December 31, 2020 ($)			Fiscal Year Ended December 31, 2021 ($)
Audit Fees		991,000	⁽¹⁾		1,215,608	⁽¹⁾
Audit Related Fees		—			—
Tax Fees		20,893	⁽²⁾		—	⁽²⁾
All Other Fees		2,000	⁽³⁾		2,700	⁽³⁾
Total		1,013,893			1,218,308

⁽¹⁾	The Audit Fees for the years ended December 31, 2020 and 2021 were for professional services rendered for the audits and reviews of the consolidated financial statements of Vericel, professional services rendered for issuance of consents, comfort letters, assistance with review of documents filed with the SEC and out-of-pocket expenses incurred.
⁽²⁾	The Tax Fees were for professional tax consulting services rendered.
⁽³⁾	All other Fees represent an annual license fee for technical accounting research software and the use of accounting disclosure checklists.


	Proposal 4: To Approve the Adoption of our 2022 Omnibus Incentive Plan The Board of Directors recommends that Vericel shareholders approve the adoption of our 2022 Omnibus Incentive Plan, which is intended to provide flexibility to the organization in its ability to motivate, attract, and retain the services of directors, officers, and employees upon whose judgment, interest, and special effort the successful conduct of Vericel’s operations are largely dependent. See page 61		The Board recommends a vote FOR this proposal.

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Corporate Governance

Proposal 1: Election of Directors

The Board of Directors recommends that shareholders vote FOR the election of each nominee.

Overview

The Vericel Board of Directors provides oversight of, and strategic guidance to, our Company’s senior management. The core responsibility of a director is to fulfill his or her duties of care and loyalty and otherwise exercise his or her business judgment in the best interests of the Company and its shareholders. The Board is responsible for overseeing the Company’s officers, including the President and Chief Executive Officer, and for ensuring that management advances the interests of the shareholders through the operation of the Company’s business. The Board recognizes that it is management’s responsibility to carry out the policies and strategies approved by the Board and to manage and carry out the operation of the Company’s business. Our Board is committed to legal and ethical conduct in fulfilling its responsibilities and it expects all directors, as well as officers and employees of the Company, to adhere to Vericel’s Code of Business Conduct and Ethics, a copy of which is available on the Company’s website.

Throughout 2021, our Board was keenly focused on its commitment to important ESG initiatives and bolstering the Company’s overall corporate governance framework. This past year the Board continued its practice of receiving robust education from outside experts on ESG topics specific to the biotechnology industry and, for the first time, approved and oversaw the accomplishment of a set of ESG-related goals for our management team. Management executed on those objectives, which were focused on diversity and inclusion at both the Board and Company level and the enhancement of the Board’s policies and procedures. Our Board has designated the Governance and Nominating Committee (the “Governance Committee”) to periodically review and oversee management of the Company’s strategy, initiatives, risks, opportunities and related reporting with respect to significant ESG matters.

Building on its longstanding commitment to diversity at all levels of the organization, after an extensive nationwide search the Vericel Board refreshed its ranks during 2021 with the addition of a new diverse director, Lisa Wright. Ms. Wright is President and Chief Executive Officer of Community Health Choice, Inc., a managed care organization in the greater Houston, Texas area. She is an accomplished healthcare executive with a track record of strong strategic, operations and financial performance across a number of leading healthcare organizations. She brings to the Vericel Board key expertise in the payer and provider aspects of the healthcare system, and her experiences will be valuable to Vericel as we aim to continue to be a high-growth commercial business with multiple products and product candidates with varied reimbursement models. During 2021, Vericel also established a Company-wide Diversity and Inclusion Advisory Committee with a mandate to integrate best practices for diversity, equity and inclusion into corporate initiatives, policies and programs throughout the organization.

This past year our Board also focused on enhancing our governance policies for the benefit of shareholders. In February 2021, the Board unanimously approved the termination of the Company’s pre-existing shareholder rights agreement, commonly referred to as a “poison pill.” The Board also implemented comprehensive Corporate Governance Guidelines, which clarify for our investors the leadership exercised by each of the Board’s standing committees and their chairpersons and which serve as a flexible framework within which the Board conducts its oversight of our organization. Additionally, in furtherance of its belief that the Company’s senior leadership should have a meaningful ownership stake in the Company, in 2021 the Board adopted formal stock ownership guidelines for named executive officers and non-employee directors, which serve to further solidify the alignment of interests between senior leadership and our shareholders.

Our Company’s Bylaws provide that the Board of Directors will consist of not less than five nor more than nine members, as fixed from time-to-time by a resolution of the Board, and that all directors will be elected annually. The Board currently consists of eight (8) directors. The persons named below as nominees for director will, if elected, each serve a term of one year expiring at the 2023 annual meeting of shareholders or until their successors are elected and qualified.

2022 Proxy Statement

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Corporate Governance

Vote Required

The affirmative vote of a plurality of the total shares of common stock entitled to vote and represented in person or by proxy is required for the election of each of the nominees. It is the intention of the persons named as proxies to vote such proxy FOR the election of all nominees, unless otherwise directed by the shareholder. The Board of Directors knows of no reason why any of the nominees would be unable or unwilling to serve, but if any nominee should for any reason be unable or unwilling to serve, the proxies will be voted for the election of such other person for the office of director as the Board may recommend in place of such nominee.

Shares present or represented and not so marked as to withhold authority to vote for a particular nominee will be voted in favor of a particular nominee and will be counted toward such nominee’s achievement of a plurality. Shares present at the meeting or represented by proxy where the shareholder properly withholds authority to vote for such nominee in accordance with the proxy instructions and “broker non-votes” will not be counted toward such nominee’s achievement of a plurality.

Board’s Skills and Experience

Selection of Directors

The Company regularly examines the experience and expertise of our Board as a whole to ensure alignment between the Board’s abilities and our strategic priorities and long-range plan. We seek directors who will bring to the Board a deep and wide range of experiences in the business world and diverse problem-solving talents. The Company believes that the Board should represent an appropriate and relevant mix of skills, industry experience, backgrounds, ages and diversity (inclusive of race, gender and ethnicity). Typically, directors will be individuals who have demonstrated high achievement in business or another field, enabling them to provide strategic support and guidance to the Company. Particular areas of expertise include corporate strategy and development, commercial sales and marketing, commercial operations and execution, research and development, technical operations, familiarity with manufacturing biotechnology and medical device products, knowledge of the legal and compliance issues facing the life science industry, experience concerning the policies and procedures of public and private payers in the medical technology and biopharmaceutical space, corporate finance, financial and/or accounting expertise, organizational leadership, development and management, public company management and disclosure, and corporate risk assessment and prior experience in the medical technology, biopharmaceutical and complex biologics industries.

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All of our director nominees exhibit high integrity, sound business judgment, innovative thinking, collegiality and a knowledge of corporate governance requirements and practices. As a group, our director nominees bring a balance of relevant skills and experience to our boardroom, including those listed below:

	Robert L. Zerbe, M.D.	Dominick C. Colangelo	Heidi Hagen	Alan L. Rubino	Kevin F. McLaughlin	Steven C. Gilman, Ph.D.	Paul K. Wotton, Ph.D.	Lisa Wright
Prior BOD Experience
Industry Experience
Medical Technologies
BioPharma
Complex Biologics
Payer
Healthcare Operations
Functional Expertise
CEO/GM
Finance
Chief Operating Officer
Marketing/Sales
Research and Development
Technical Operations
Business Development
Geography
North America
Asia/Middle East
Europe
Demographics
Age	71	58	53	67	65	69	61	47
Tenure	2006	2013	2013	2005	2015	2015	2015	2021
Male/Female	M	M	F	M	M	M	M	F

Board Diversity Matrix (As of January 21, 2022)

Total Number of Directors: 8

	Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors	2	6	0	0
Part II: Demographic Background
African American or Black	1	0	0	0
Alaskan Native or Native American	0	0	0	0
Asian	0	0	0	0
Hispanic or Latinx	0	0	0	0
Native Hawaiian or Pacific Islander	0	0	0	0
White	1	6	0	0
Two or More Races or Ethnicities	0	0	0	0
LGBTQ+	0	0	0	0
Did Not Disclose Demographic Background	0	0	0	0

Directors who are Military Veterans: 0

Directors with Disabilities: 0

Directors who Identify as Middle Eastern: 0

2022 Proxy Statement

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Corporate Governance

Director Nominees for Election at the 2022 Annual Meeting of Shareholders

The biographical description below for each director nominee includes the specific experiences, qualifications, attributes and skills that led to the conclusion by the Board of Directors that such person should serve as a director of Vericel.

Age: 71

Director Since: 2006

Other Current
Public Company Directorships:

None

Vericel Board
committee(s):

Audit Committee

Robert L. Zerbe, M.D. Independent

Chairman of the Board

Retired Chief Executive Officer, QUATRx Pharmaceuticals Company

PROFESSIONAL HIGHLIGHTS

Robert L. Zerbe, M.D. has served as a director of Vericel since January 2006 and as the Chairman of our Board of Directors since October 2012. Until July 2016, Dr. Zerbe served as the Chief Executive Officer of QUATRx Pharmaceuticals Company, a venture-backed drug development company which he co-founded in 2000. Prior to his role at QUATRx, Dr. Zerbe held several senior executive management positions with major pharmaceutical companies, including Eli Lilly and Company (from 1982 to 1993) and Pfizer (formerly Parke-Davis) (from 1993 to 2000). During his tenure at Eli Lilly, Dr. Zerbe’s clinical research and development positions included Managing Director, Lilly Research Center U.K., and Vice President of Clinical Investigation and Regulatory Affairs. He joined Parke-Davis in 1993, becoming Senior Vice President of Worldwide Clinical Research and Development. In that capacity, he led the clinical development programs for a number of key products, including Lipitor and Neurontin.

OTHER LEADERSHIP POSITIONS AND EXPERIENCES

Dr. Zerbe also serves on the board of directors of Metabolic Solutions Development Company and Cirius Therapeutics, both private companies focusing on metabolic diseases.

QUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL

Dr. Zerbe received his M.D. from Indiana University School of Medicine, and has completed post-doctoral work in internal medicine, endocrinology and neuroendocrinology at Indiana University and the National Institutes of Health. The Board of Directors believes Dr. Zerbe’s qualifications to serve on our Board include his senior management positions at major pharmaceutical companies and his clinical development experience.

Age: 58

Director Since: 2013

Other Current Public Company Directorships:

Trevi Therapeutics, Inc.

Vericel Board committee(s):

None

Dominick C. Colangelo

President and Chief Executive Officer, Vericel

PROFESSIONAL HIGHLIGHTS

Dominick C. Colangelo has served as a director and as Vericel’s President and Chief Executive Officer since March 2013. Mr. Colangelo has more than 20 years of executive management and corporate development experience in the biopharmaceutical industry, including nearly a decade with Eli Lilly and Company. During his career, he has held a variety of executive positions of increasing responsibility in product development, pharmaceutical operations, sales and marketing, and corporate development. He has extensive experience in the acquisition, development and commercialization of products across a variety of therapeutic areas. During his tenure at Eli Lilly, Mr. Colangelo held positions as Director of Strategy and Business Development for Eli Lilly’s Diabetes Product Group and also served as a founding Managing Director of Lilly Ventures.

OTHER LEADERSHIP POSITIONS AND EXPERIENCES

Mr. Colangelo also serves on the board of directors of Trevi Therapeutics, Inc., a publicly-traded clinical-stage biopharmaceutical company focused on the development and commercialization of treatments for serious neurologically-mediated conditions. Mr. Colangelo is a member of both the Audit and Compensation Committees of the Trevi Therapeutics board.

QUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL

Mr. Colangelo received his B.S.B.A. in Accounting, Magna Cum Laude, from the State University of New York at Buffalo and a J.D. degree, with honors, from the Duke University School of Law. The Board of Directors believes Mr. Colangelo’s qualifications to serve on our Board of Directors include his significant contributions within the biopharmaceutical industry, as well as the experiences developed through his legal and accounting backgrounds.


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Age: 53

Director Since: 2013

Other Current Public Company Directorships:

None

Vericel Board committee(s):

Compensation and Governance and Nominating (Chair) Committees

Heidi Hagen Independent

Chief Technical Officer, Sonoma Biotherapeutics

PROFESSIONAL HIGHLIGHTS

Heidi Hagen has been a member of the Vericel Board of Directors since 2013. She has extensive experience in operations management and commercializing innovative technologies, including more than 20 years in the cell and gene therapy industries. Currently, Ms. Hagen serves as Chief Technical Officer of Sonoma Biotherapeutics, a privately-held company leading the development of adoptive TREG cell therapies for autoimmune and inflammatory diseases. She also serves on the board of directors of Obsidian Therapeutics, a privately-held company dedicated to developing novel cell and gene therapies. From 2019 to 2021, she sat on the board of directors of Ziopharm Oncology, Inc., a publicly-traded company developing immune-oncology gene and cell therapies. She also served as Ziopharm’s interim CEO during 2021. Ms. Hagen is also co-founder and former Chief Strategy Officer of Vineti, Inc., a software platform company for cell and gene therapy supply chain management. Formerly, Ms. Hagen served as Global Chief Operating Officer at Sotio LLC, a biotechnology company developing new therapies for the treatment of cancer and autoimmune diseases using its immunotherapy platform and proprietary cell-based technologies, and as Vice President of Operations for Dendreon Corporation. She began her career at Immunex Corporation where she held positions in drug development, supply chain and operations.

OTHER LEADERSHIP POSITIONS AND EXPERIENCES

In addition to previously serving on the Ziopharm Oncology board of directors, Ms. Hagen previously served as a member of the board of directors of Lykan Biosciences, a privately-held company focused on cell and gene manufacturing.

QUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL

Ms. Hagen earned a B.S. in cell and molecular biology, M.S. in bioengineering, and M.B.A. at the University of Washington. The Board of Directors believes Ms. Hagen’s qualifications to serve on our Board include her leadership roles in the biotechnology industry in a wide range of positions, as well as her significant expertise in manufacturing, quality and other technical operations in the biotechnology and pharmaceutical space.


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Age: 67

Director Since: 2005

Other Current Public Company Directorships:

None

Vericel Board committee(s):

Audit and Compensation (Chair) Committees

Alan L. Rubino Independent

Former Chief Executive Officer, Emisphere Technologies, Inc.

PROFESSIONAL HIGHLIGHTS

A Vericel Board member since 2005, Alan Rubino possesses a wealth of experience spanning nearly 40 years across a multitude of disciplines within the biotechnology and pharmaceutical industries. He recently served seven years as CEO of Emisphere Technologies, Inc., a successful publicly-held drug delivery company, which was acquired by Novo Nordisk for $1.8B. He also was President and CEO of RenovaCare, a publicly held biotechnology company, as well as CEO and co-founder of New American Therapeutics, Inc., which acquired Denavir from Novartis. New American was subsequently sold to Renaissance Pharma, LLC for a 49% IRR to investors. Prior to that, he was CEO and a co-founder of Akrimax Pharmaceuticals, LLC, where he in-licensed Tirosint from IBSA Institut Biochimique SA for the U.S. market. Mr. Rubino also spent 24 years with Roche where he served as a member of the U.S. executive committee for ten years and presided over 30 product launches and brand marketing execution plans and had leading roles in the acquisitions of Syntex Labs and Boehringer-Mannheim. Throughout his career, Mr. Rubino has provided enterprise-wide leadership over corporate, marketing, sales, business operations, supply chain and human resource management functions.

OTHER LEADERSHIP POSITIONS AND EXPERIENCES

Mr. Rubino has previously served on the boards of directors of numerous public and privately-held organizations, including SANUWAVE Health, Inc. and Genisphere, Inc., a privately-held company that provides a nanotechnology platform for targeted drug delivery. Since 2021, Mr. Rubino has served as the chairman of the board of directors of AMO Pharma Limited, a privately-held UK-based company developing therapies for rare genetic disorders including congenital myotonic dystrophy.

QUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL

Mr. Rubino received a B.A. degree in economics from Rutgers University with a minor in biology/chemistry and also completed post-graduate educational programs at the University of Lausanne and Harvard Business School. The Board of Directors believes Mr. Rubino’s qualifications to serve on our Board include his financial acumen as well as his leadership roles in the life sciences industry in a wide range of positions, including those focused on sales and marketing and SEC matters. Additionally, Mr. Rubino possesses significant expertise in human resources, compensation and business development matters.

Age: 65

Director Since: 2015

Other Current Public Company Directorships:

Stealth Biotherapeutics Corp.

Vericel Board committee(s):

Audit (Chair) Committee

Kevin F. McLaughlin Independent

Former Senior Vice President, Chief Financial Officer and Treasurer, Acceleron Pharma Inc.

PROFESSIONAL HIGHLIGHTS

Kevin F. McLaughlin has served as a Vericel Board member and the chair of its Audit Committee since 2015. Between 2010 and 2021, Mr. McLaughlin served as Senior Vice President, Chief Financial Officer and Treasurer of Acceleron Pharma Inc. prior to its acquisition by Merck & Co., Inc. in December 2021. Previously, he served as Senior Vice President and Chief Financial Officer of Qteros, Inc., a cellulosic biofuels company. He also was Chief Operating Officer and a director of Aptius Education, Inc., a publishing services company, which he co-founded in 2007. From 1996 through 2007, Mr. McLaughlin held several executive positions with PRAECIS Pharmaceuticals, Inc. He joined PRAECIS as their first Chief Financial Officer and later became Chief Operating Officer, and then President and Chief Executive Officer, while serving as a member of the board of directors. In this capacity, he was responsible for negotiating the sale of the company to GlaxoSmithKline. He began his career in senior financial roles at Prime Computer and Computervision Corporation.

OTHER LEADERSHIP POSITIONS AND EXPERIENCES

Mr. McLaughlin is a member of the board of directors and Chairman of the audit committee of Stealth Biotherapeutics Corp.

QUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL

Mr. McLaughlin received a B.S. in business from Northeastern University and an M.B.A. from Babson College. The Board of Directors believes Mr. McLaughlin’s qualifications to serve on our Board include his leadership roles in the biopharmaceutical industry in a wide range of positions and his expertise handling financial and accounting matters.


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Age: 69

Director Since: 2015

Other Current Public Company Directorships:

● ContraFect Corporation

● SCYNEXIS, Inc.

● Akebia Therapeutics, Inc.

Vericel Board committee(s):

Compensation Committee

Steven C. Gilman, Ph.D. Independent

Retired Chairman and Chief Executive Officer, ContraFect Corporation

PROFESSIONAL HIGHLIGHTS

Steven C. Gilman, Ph.D., a director since January 2015, served as the Chairman of the board of directors and Chief Executive Officer of ContraFect Corporation until his retirement in April 2019. He previously served as the Executive Vice President, Research & Development and Chief Scientific Officer at Cubist Pharmaceuticals from September 2010 until its acquisition by Merck & Co. in January 2015. Prior to joining Cubist, Dr. Gilman served as Chairman of the board of directors and Chief Executive Officer of ActivBiotics, Inc., a privately-held biopharmaceutical company, from March 2004 to October 2007. Previously, Dr. Gilman worked at Millennium Pharmaceuticals, Inc., where he held a number of senior leadership roles, including Vice President and General Manager, Inflammation. Prior to Millennium, he was Group Director at Pfizer Global Research and Development and has also held scientific, business, and academic appointments at Wyeth Pharmaceuticals, Inc., Cytogen Corporation, Temple Medical School, and Connecticut College.

OTHER LEADERSHIP POSITIONS AND EXPERIENCES

Dr. Gilman currently serves on the boards of directors of ContraFect Corporation, SCYNEXIS, Inc. and Akebia Therapeutics, Inc., and previously served on the board of directors of Momenta Pharmaceuticals, Inc. Dr. Gilman has also served on the board of directors of the Massachusetts Biotechnology Association and held advisory roles on the Penn State University biotechnology board and the Northeastern University drug discovery board.

QUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL

Dr. Gilman received his B.A. in microbiology from Miami University of Ohio and Ph.D. and M.S. degrees in microbiology from Pennsylvania State University. Dr. Gilman performed his post-doctoral training at Scripps Clinic and Research Foundation. The Board of Directors believes Dr. Gilman’s qualifications to serve on our Board include his leadership roles in the biopharmaceutical industry in a wide range of positions.

Age: 61

Director Since: 2015

Other Current Public Company Directorships:

Cynata Therapeutics Limited

Vericel Board committee(s):

Governance and Nominating Committee

Paul K. Wotton, Ph.D. Independent

Chief Executive Officer, Obsidian Therapeutics, Inc.

PROFESSIONAL HIGHLIGHTS

Paul K. Wotton, Ph.D., a director since January 2015, currently serves on the board of directors and is the Chief Executive Officer of Obsidian Therapeutics, Inc., a position he has held since April 2019. Previously, he was the founding President and Chief Executive Officer of Sigilon Therapeutics, Inc., a cell therapeutics company started in May 2016. Prior to that, he served as the President and Chief Executive Officer and as a member of the board of directors of Ocata Therapeutics, Inc. from July 2014 until its acquisition by Astellas Pharma US, Inc. in February 2016, where he also served as the Co-Chairman of the Integration Management Office from February 2016 until May 2016. Prior to Ocata, Dr. Wotton served as President and Chief Executive Officer and as a member of the board of directors of Antares Pharma, Inc. from October 2008 to June 2014. Prior to joining Antares, Dr. Wotton was the Chief Executive Officer of Topigen Pharmaceuticals. Prior to Topigen, he was the Global Head of Business Development of SkyePharma PLC. Earlier in his career, Dr. Wotton held senior level positions at Eurand International BV, Penwest Pharmaceuticals, Abbott Laboratories and Merck, Sharp and Dohme.

OTHER LEADERSHIP POSITIONS AND EXPERIENCES

Dr. Wotton serves as a member of the board of directors of Cynata Therapeutics Limited and, previously, was a member of the board of directors and Chairman of the compensation committee of Veloxis Pharmaceuticals A/S, until its acquisition by Asahi Kasei in January 2020. Dr. Wotton is also past Chairman of the Emerging Companies Advisory Board of BIOTEC Canada and was named Ernst & Young Entrepreneur of the Year for Life Sciences, New Jersey, in 2014.

QUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL

Dr. Wotton received his Bachelor’s in Pharmacy, with honors, from University College London, his Ph.D. in pharmaceutical sciences from the University of Nottingham and his M.B.A. from Kingston Business School. The Board of Directors believes Dr. Wotton’s qualifications to serve on our Board of Directors include his leadership roles in the life sciences industry in a wide range of positions.


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Corporate Governance

Age: 47

Director Since: 2021

Other Current Public Company Directorships:

None

Vericel Board committee(s):

Governance and Nominating Committee

Lisa Wright Independent

President and Chief Executive Officer, Community Health Choice, Inc.

PROFESSIONAL HIGHLIGHTS

A member of the Vericel Board of Directors since 2021, Lisa Wright is President and Chief Executive Officer of Community Health Choice, Inc., a position she has held since May 2020. Community Health Choice is a local, non-profit, Managed Care Organization (MCO), offering Children’s Medicaid (STAR), CHIP (Children’s Health Insurance Plan) and DSNP (Dual Special Needs Plan), and is a participant in the Health Insurance Marketplace. Ms. Wright oversees all aspects of the company located in Houston, Texas. Before joining Community Health Choice, Ms. Wright served as North Regional Medicare President for WellCare Health Plans from 2018 to 2020, where she was responsible for directing and leading the execution of business strategies for a billion dollar plus region that included New York, New Jersey, Connecticut, Maine, Kentucky, North Carolina, and New Hampshire.

Prior to WellCare, Ms. Wright held several positions at UnitedHealthcare between 2014 and 2018, including President of the Dual Special Needs Plan, Medicare-Medicaid Plan and Nursing Facilities lines of business in Texas. In that capacity, she was responsible for the strategic direction that led to double-digit growth in revenue, risk-adjustment optimization and overall operational excellence. Ms. Wright began her career in a variety of roles of increasing responsibility at Anthem.

OTHER LEADERSHIP POSITIONS AND EXPERIENCES

Ms. Wright currently serves on the boards of directors of several non-profit organizations in the greater Houston area.

QUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL

Ms. Wright received a B.A. in Communication from the University of Kentucky and a M.B.A. from the University of Maryland. The Board of Directors believes Ms. Wright’s qualifications to serve on our Board include her strong strategic, operational and financial performance across a number of leading healthcare organizations as well as her deep expertise in the payer and provider aspects of the healthcare system.

Identifying and Evaluating Candidates for Director

The Governance Committee evaluates and recommends to the Board of Directors the nominees for each election of directors. Both the Governance Committee and the Board use a variety of methods for identifying and evaluating such nominees, and the Governance Committee, in consultation with the Chairman and other Board members, regularly assesses the composition of the Board and each committee to evaluate their effectiveness and whether or not changes should be considered. The full Board annually determines the diversity of specific skills and characteristics that could improve the overall quality and ability of the Board to carry out its oversight of the Company and other functions.

The Governance Committee’s goal is to assemble a Board of Directors that brings to Vericel a variety of perspectives and skills derived from high quality business and professional experience, while considering the appropriate size of both the Board and its committees. In doing so, the Governance Committee also considers candidates with appropriate non-business backgrounds. In general, the Governance Committee seeks director nominees with the talents and backgrounds that provide the Board with an appropriate mix of knowledge, skills and experience for the needs of Vericel’s business. There are no stated minimum criteria for director nominees, and the Governance Committee may consider such other factors as it deems are in the best interests of Vericel and its shareholders. In general, and given Vericel’s position as a leader in the biotechnology and medical technology space, the Board believes it should be comprised of persons with skills and experience in areas such as:

●	Corporate strategy and development
●	Commercial sales and marketing
●	Commercial operations and execution
●	Research and development
●	Technical operations
●	Manufacturing of biotechnology and medical device products
●	Knowledge of the legal and compliance issues facing the life science industry
●	Experience concerning the policies and procedures of public and private payers in the medical technology and biopharmaceutical space
●	Corporate finance
●	Financial and/or accounting expertise and experience with regulatory and SEC requirements applicable to public companies

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●	Organizational leadership, development and management
●	Public company management and disclosure
●	Corporate risk assessment, management, and prior experience in the medical technology, biopharmaceutical and complex biologics industries

The Governance Committee also actively seeks out highly-qualified diverse candidates. In February 2020, the Board formalized its longstanding practice of considering women and minority candidates for open director positions by amending the Charter of the Governance Committee and its Director Nominations Policy to clearly state that in filling each open director position the Governance Committee will endeavor to actively seek out highly-qualified diverse candidates (including diversity on the basis of gender, race and ethnicity) to include in the pool from which director nominees are chosen. Additionally, in situations where the Governance Committee engages a third-party search firm to assist in a Board member search, the policy requires that the search firm actively seek out highly qualified female and racially/ethnically diverse candidates, as well as individuals with diverse backgrounds, skills and experiences, to include in the candidate pool. The Board most recently added a member in 2021, when it conducted a nationwide search for a new director that resulted in the appointment of Lisa Wright on June 1, 2021.

The Governance Committee recognizes that under applicable regulatory requirements at least one member of the Board of Directors must, and believes that it is preferable that more than one member of the Board of Directors should, meet the criteria for an “audit committee financial expert” as defined by SEC rules, and that at least a majority of the members of the Board must meet the definition of “independent director” under the Nasdaq listing standards or the listing standards of any other applicable self-regulatory organization that Vericel is subject to or governed by. The Governance Committee also believes that it is appropriate for at least one member of Vericel’s management to participate as a member of the Board.

The Governance Committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board of Directors that is up for re-election at an upcoming annual meeting of shareholders does not wish to continue in service, the Governance Committee identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Governance Committee and the Board are polled for suggestions as to individuals meeting the criteria of the Governance Committee. Research may also be performed to identify qualified individuals. If the Governance Committee believes that the Board requires additional candidates for nomination, the Governance Committee may explore alternative sources for identifying additional candidates. This may include engaging, as appropriate, a third-party search firm to assist in identifying qualified candidates.

Shareholder Recommendations

The Governance Committee will evaluate any recommendation for director nominees proposed by a shareholder who (i) has continuously held at least 1% of the outstanding shares of our common stock entitled to vote at the annual meeting for at least one year by the date the shareholder makes the recommendation, and (ii) undertakes to continue to hold the common stock through the date of the meeting. In order to be evaluated in connection with Vericel’s established procedures for evaluating potential director nominees, any recommendation for a director nominee submitted by a qualifying shareholder must be received by Vericel no later than 120 days prior to the anniversary of the date proxy statements were made available to shareholders in connection with the prior year’s annual meeting. Any shareholder recommendation for a director nominee must be submitted to the General Counsel and Secretary, in writing, at 64 Sidney St., Cambridge, Massachusetts 02139, and must contain the following information:

●	A statement by the shareholder that he/she is the holder of at least 1% of our common stock and that the stock has been held for at least one year prior to the date of the submission and that the shareholder will continue to hold the shares through the date of the annual meeting
●	The candidate’s name, age, contact information and current principal occupation or employment
●	A description of the candidate’s qualifications and business experience during, at a minimum, the last five years, including the candidate’s principal occupation and employment and the name and principal business of any corporation or other organization at which the candidate was employed
●	The candidate’s resume

The Governance Committee will evaluate recommendations for director nominees submitted by directors, management or qualifying shareholders in the same manner, using the criteria stated above.

All directors and director nominees will submit a completed director and officer questionnaire as part of the nominating process. The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Governance Committee.

2022 Proxy Statement

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Corporate Governance

Board’s Role and Responsibilities

Overall Role of the Board of Directors

The Board is elected by the shareholders to oversee their interests in the long-term success of the Company. The Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the shareholders. The core responsibility of a director is to fulfill his or her duties of care and loyalty and to otherwise exercise sound business judgment in the best interests of Vericel and its shareholders. The Board oversees the proper safeguarding of the Company’s assets, the maintenance of appropriate financial and other internal controls and the Company’s compliance with applicable laws and regulations and proper governance. The Board selects the Chief Executive Officer and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.

Key Responsibilites of the Board

Oversight of Corporate Strategy

Oversight of Risk Management

Human Capital Management

● The Board oversees and monitors strategic and long-range planning

● The Board and its committees routinely engage with senior management on critical business matters that are tied to the Company’s long-term strategy

● Senior management is tasked with executing business strategy and providing regular updates to the Board

● The Board oversees risk management

● The Board’s individual committees play key roles in monitoring and managing risk areas particular to Vericel’s core business

● Senior management is charged with managing risk, through the development and implementation of robust internal processes and effective internal controls

● The Board oversees the creation and retention of a talented employee base

● The Board maintains responsibility for succession planning for the CEO and other key members of the senior management team

● The Board, through the Governance Committee, oversees management of the Company’s strategy, initiatives, opportunities and reporting on material ESG matters, including diversity and inclusion

Oversight of Corporate Strategy

Our Board actively oversees management’s establishment and execution of corporate strategy, including major business and organizational initiatives, annual budget and long-term strategic plans, capital allocation priorities and corporate development opportunities. Our Board also reviews and approves strategic transactions, including significant investments, acquisitions and collaborations. At the Board and committee meetings and throughout the year, our Board regularly receives information and formal updates from our management and actively engages with the senior leadership team with respect to our corporate strategy. The Board’s independent directors also hold regularly scheduled executive sessions at which strategic matters are discussed.

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Board’s Role in Risk Management/Oversight

Vericel management is responsible for assessing and managing risk to the Company, subject to the oversight of the Board. The Board exercises its oversight responsibility directly and through its committees. The Board considers specific risk topics directly, such as risks associated with the Company’s overall strategy, including clinical, product development, and financing strategies, business continuity, crisis preparedness and corporate reputational risks. The Board is kept informed of the committees’ risk oversight activities through periodic reports to the Board. The Board and its committees meet regularly with members of management responsible for managing risk.

The committees of the Board of Directors execute their oversight responsibility for risk management as follows:

The Audit Committee has primary responsibility for overseeing risk associated with:

● the Company’s financial and accounting systems, as well as the work performed by Vericel’s independent registered public accounting firm and internal audit team

● accounting policies

● investment strategies

● finance-related reporting

● regulatory compliance, and risks associated with the manufacturing and production of the Company’s approved products

● the Company’s data security and information systems and technology, including cybersecurity

The Audit Committee also reviews transactions between Vericel and its officers, directors, affiliates of officers and directors or other related parties for conflicts of interest. The Audit Committee also receives regular reports and feedback from the Vericel Compliance Officer concerning the health of the Company’s Compliance Program as well as management’s Enterprise Risk assessment of the organization.

The Compensation Committee is responsible for overseeing risks related to Vericel’s cash and equity-based compensation programs and practices, and ensuring that executive and employee compensation plans are appropriately structured so that they do not incentivize excessive risk-taking and are not reasonably likely to have a material adverse effect on Vericel.

The Governance Committee is responsible for overseeing risks related to the composition and structure of the Board of Directors, its committees and our corporate governance, and works to ensure that our corporate governance does not encourage or promote excessive risk-taking on the part of the Board of Directors or by Vericel employees.

CYBERSECURITY RISK MANAGEMENT

The Board is particularly focused on cybersecurity. Although specific responsibility for cybersecurity risk is delegated to the Audit Committee, the Board of Directors receives regular reports from management on both the cybersecurity risks facing the Company and various mitigation and protective measures that are currently being implemented across the organization. Additionally, as part of its continuing education initiatives, the Board receives training on cybersecurity matters from outside experts in the field.

Human Capital Management

The Board is actively engaged in overseeing the Company’s people and culture strategy. Our Board believes that human capital management and succession planning, including diversity and inclusion initiatives, are vital to Vericel’s continued success. Our Board’s involvement in leadership development and succession planning is ongoing, and the Board provides input on important decisions in each of these areas. Our Board, with leadership from our Chairman, has primary responsibility for succession planning for the Chief Executive Officer and in talent retention and development programs for members of senior management. Our Compensation Committee performs an annual formal evaluation of the Chief Executive Officer, and our CEO, in consultation with the Governance Committee, recommends to the Board an emergency succession plan that covers such matters as the unexpected departure, disability or death of the CEO or other key members of senior management.

2022 Proxy Statement

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Corporate Governance

During 2021, the Board approved a specific ESG-related corporate goal for management, which was focused, in part, on enhancing diversity and inclusion initiatives at all levels of the organization. The Company executed on the Board’s direction during the past year, increasing diversity at the Board level, conducting robust diversity and inclusion training for our officers and managers, and establishing a Diversity and Inclusion Advisory Committee, with a direct line of communication to our Executive Leadership Team.

Human Capital Management Focus Areas

Benefits Programs and Employee Wellness

Vericel offers competitive and comprehensive benefits plans designed to meet the needs of our employees and their families. We strive to provide employees with a comprehensive offering of programs to support health and wellness, including healthcare, dental and vision insurance, flexible spending accounts, life and accidental death and dismemberment insurance, employee assistance counseling and education programs, company contributions to employee 401(k) accounts, paid time off and leave programs, tuition assistance, fitness membership subsidies and other programs designed to foster employee health and well-being.

Workforce Diversity Through Recruitment and Development

Vericel commits significant time and resources towards initiatives that enable us to successfully recruit talented individuals who represent a broad range of personal and professional backgrounds that enrich our culture, drive our success, and support our Company’s mission. We are proud of our diversity and believe that diversity, equity, and inclusion foster an environment that promotes the collaboration, innovation and perspectives necessary to effectively and successfully serve our patients, business partners and communities. We offer our employees internal development and advancement opportunities and encourage continued learning through internal and external programs and educational institutions.

Compensation and Rewards Program Philosophy

Vericel’s compensation programs are designed to attract, reward and retain talented employees at all levels of the organization whose knowledge and skills are critical to the success of our business. Pay equity is a core tenet of our compensation philosophy, and internal analyses are conducted regularly to maintain consistency in the administration of these programs. Components of the compensation and rewards programs include competitive base salary, performance-based bonus targets to incentivize individuals towards the achievement of personal and corporate goals, long-term equity incentive compensation in the form of stock option and RSU grants, and additional employee appreciation programs and events.

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Corporate Governance

Management Succession Planning

At least annually, the Governance Committee meets with our CEO to discuss succession planning for the executive management team. The Governance Committee also considers the procedure for timely and efficient transfer of CEO responsibilities in the event of an emergency or the sudden incapacity, death, resignation or retirement of Mr. Colangelo, or the occurrence of any other event that would have a material impact on Mr. Colangelo’s ability to fulfill his job duties.

Oversight of Environmental, Social and Governance Matters

Our Governance Committee periodically reviews and oversees management of Vericel’s strategy, initiatives, risks, opportunities and related reporting with respect to significant ESG matters. In that connection, the Governance Committee oversees corporate ESG matters as they pertain to the Company’s business and long-term strategy and identifies emerging trends and issues that may affect our operations, performance and external stakeholder relationships. Importantly, the Governance Committee periodically receives updates on the Company’s ongoing and future ESG programs, products and disclosures, the Company’s progress and performance against ESG goals and the Company’s corporate social responsibility and diversity and inclusion programs and activities.

Code of Ethics

The Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors as well as a separate Code of Ethics for Senior Financial Officers. These documents are available on the Investor Relations page of our website, www.vcel.com. We will also make information related to any amendments to, or waivers from, these Codes of Ethics available on the website as required by law.

2022 Proxy Statement

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Corporate Governance

Board Structure

Board Leadership Structure

The Board of Directors does not have a formal policy on whether the positions of CEO and Chairperson of the Board should be separate or united, but rather will make that determination from time to time in its judgment. The Chairperson of the Board is currently an independent director, but if the Chairperson of the Board is not independent, the Board will appoint an independent lead director. The Chairperson of the Board shall preside at all meetings of the Board and the shareholders, and shall perform such other duties, and exercise such powers, as prescribed by the Bylaws or by the Board from time to time. If the Chairperson of the Board is not independent and a lead director has been appointed, he or she shall preside at executive sessions of the independent directors and will bear such further responsibilities as the Board may designate from time to time. Currently, Dr. Zerbe serves as the Board’s independent Chairman.

The independent members of the Board of Directors have periodically reviewed this leadership structure and believe it is appropriate for Vericel at the current time. The CEO is responsible for setting the strategic direction for Vericel, as well as the day-to-day leadership and performance of the Company, while the Chairman of the Board of Directors provides guidance to the CEO and sets the agenda for, and presides over, meetings of the full Board of Directors. The CEO and Chairman of the Board of Directors provide leadership to the Board and work with it to define its structure and activities in the fulfillment of its responsibilities. The Chairman of the Board of Directors presides over executive sessions and ensures that no conflict of interest arises between management and the functions of the Board of Directors and facilitates communication among the directors. The Chairman of the Board and the CEO work together to provide an appropriate information flow to the Board, and the Chairman works with other Board members to provide strong, independent oversight of Vericel’s management and affairs. Thus, the Board of Directors believes that the current structure balances the needs for the CEO to run Vericel on a day-to-day basis with the benefit provided to Vericel by significant involvement and leadership of an independent Chairman of the Board of Directors.

Board Independence

The Board of Directors has affirmatively determined that all of the members of the Board and each director nominee, other than Mr. Colangelo, are independent within the meaning of the director independence standards of Nasdaq and the SEC. Mr. Colangelo is not considered independent because of his current employment as the President and CEO of Vericel. There are no family relationships between any of our directors and any of our executive officers.

Executive Sessions

Applicable Nasdaq listing standards require that the independent directors meet from time-to-time in executive session. In fiscal year 2021, our independent directors met in regularly scheduled executive sessions with only independent directors present at each Board and committee meeting.

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Corporate Governance

Committees of the Board

Audit Committee

Chairperson

Kevin F. McLaughlin

Members

Alan L. Rubino

Robert L. Zerbe, M.D.

RESPONSIBILITIES

Under the terms of its current Charter, the Audit Committee’s responsibilities include, in part:

● Reviewing with Vericel’s independent accountants and management the annual financial statements and independent accountants’ opinion

● Reviewing the scope and results of the examination of Vericel’s financial statements by the independent accountants

● Reviewing all professional services performed by, and related fees of, the independent accountants

● Approving the retention of the independent accountants

● Periodically reviewing Vericel’s accounting policies and internal accounting and financial controls

The Audit Committee may delegate duties or responsibilities to subcommittees or to one member of the Audit Committee. During the fiscal year ended December 31, 2021, the Audit Committee held six (6) meetings. All members of our Audit Committee are independent (as independence is defined in Rule 5605(a)(2) and as required under Rule 5605(c)(2) of the Nasdaq listing standards). Since March 2015, Mr. McLaughlin, an independent director, has been designated as an audit committee financial expert as defined in the rules of the SEC. The Audit Committee acts pursuant to a written charter, a current copy of which is available on the Investor Relations page of our website, www.vcel.com. For additional information concerning the Audit Committee, see “Report of the Audit Committee of the Board of Directors.”

PAST-YEAR HIGHLIGHTS

In addition to its important oversight of Vericel’s financial statements and of our independent registered public accounting firm, during 2021 the Audit Committee implemented certain amendments to the Company’s Insider Trading Policy and continued its important oversight of risk management activities at the organization level.

Compensation Committee

Chairperson

Alan L. Rubino

Members

Heidi Hagen

Steven C. Gilman, Ph.D.

RESPONSIBILITIES

Under the terms of its current Charter, the Compensation Committee’s responsibilities include, in part:

● Determining and approving salary and bonus levels and equity award grants with respect to executive officers, and making recommendations to the Board of Directors regarding Mr. Colangelo’s compensation

● Determining and approving equity award grants with respect to all employees

● Reviewing and proposing to the Board of Directors changes in director compensation

● Retaining and approving the compensation of any compensation advisers and evaluating the independence of any such compensation advisers

In carrying out these responsibilities, the Compensation Committee reviews all components of executive officer compensation for consistency with the Committee’s compensation philosophy and strategy as well as relevant compensation guidelines. The Compensation Committee may delegate duties or responsibilities to subcommittees or to one member of the Committee. During the fiscal year ended December 31, 2021, the Compensation Committee held five (5) meetings. All members of our Compensation Committee are independent (as independence is defined in Rule 5605(a)(2) of the Nasdaq listing standards). The Compensation Committee acts pursuant to a written Charter, a current copy of which is available on the Investor Relations page of our website, www.vcel.com.


2022 Proxy Statement	31

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Corporate Governance

Governance and Nominating Committee

Chairperson

Heidi Hagen

Members

Lisa Wright

Paul K. Wotton, Ph.D.

RESPONSIBILITIES

Under the terms of its current Charter, the Governance Committee’s responsibilities include, in part:

● Assisting Vericel’s Board of Directors in fulfilling its responsibilities by reviewing and reporting to the Board of Directors on (i) corporate governance compliance mechanisms, (ii) corporate governance roles amongst management and directors, and (iii) establishing a process for identifying and evaluating nominees for the Board of Directors

● Considering qualified candidates for appointment and nomination for election to the Board of Directors and making recommendations concerning such candidates

Consistent with this function, the Governance Committee encourages continuous improvement of, and fosters adherence to, our corporate governance policies, procedures and practices at all levels. The Governance Committee may delegate duties or responsibilities to subcommittees or to one member of the Governance Committee. During the fiscal year ended December 31, 2021, the Governance Committee held four (4) meetings. All members of the Governance Committee are independent (as independence is defined in Rule 5605(a)(2) of the Nasdaq listing standards). The Governance Committee acts pursuant to a written charter, a current copy of which is available on the Investor Relations page of our website, www. vcel.com.

PAST-YEAR HIGHLIGHTS

As part of the Board’s regular governance enhancement process, the Governance Committee determined that terminating the Company’s existing shareholder rights plan was in the best interests of the Company’s shareholders. The Governance Committee recommended to the Board that it terminate the plan and the Board subsequently terminated the plan in February of 2021. During 2021, the Governance Committee also oversaw a nationwide search for a new independent director for the Vericel Board. That search, which was conducted in accordance with the committee’s charter and the Company’s Director Nominations Policy, resulted in the appointment of Lisa Wight to our Board in June 2021. Recognizing the need for effective and centralized oversight of the Company’s ESG strategies, opportunities and risks, earlier this year the Governance Committee amended its charter to memorialize its oversight responsibility for ESG matters, including important corporate responsibility and diversity and inclusion initiatives.


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Corporate Governance

Board Practices, Policies and Processes

History of Commitment to Good Governance Practices

Board Practices

Board Enhancement

Shareholder Rights

● Non-employee members meet in executive session without management at each regularly scheduled Board meeting

● 7 of 8 director nominees are independent

● Director education programs

● As of April 2021, maintain robust stock ownership guidelines that apply to our directors and named executive officers

● Board performance evaluations and assessment of needed skills

● Commitment to diversity and Board refreshment

● New board member added in 2021 with expertise in healthcare operations and payer matters

● Removal of active Shareholder Rights Plan in February 2021

NEW CORPORATE GOVERNANCE GUIDELINES

As part of its continued enhancement of Vericel’s governance policies and procedures, during 2021 the Board of Directors approved comprehensive Corporate Governance Guidelines for the Board and the organization. These guidelines memorialize for our investors the flexible framework within which the Board may conduct its business and oversight of the Company and, we believe, help facilitate effective, transparent and prudent management of the organization, which will help ensure the long-term success of the Company. Information regarding our Corporate Governance Guidelines can be found on our website at www.vcel.com.

Board Meetings and Committees

During the fiscal year ended December 31, 2021, the Board of Directors held eight (8) meetings. Each director serving on the Board of Directors during 2021 attended at least 85% of the meetings of the full Board and 100% of the meetings of the committees on which he or she served.

Director Attendance at Annual Meetings

The Board of Directors has adopted a Board Member Attendance at Annual Meetings Policy. This policy is available on the Investor Relations page of our website, www.vcel.com. All of the directors then in office attended our 2021 annual meeting of shareholders, which was held in April 2021 and conducted in a virtual, audio webcast format due to restrictions related to the COVID-19 pandemic.

Shareholder Communications with Directors

Our relationship with our shareholders is an important part of our corporate governance program. Engaging with shareholders helps us to understand how they view the Company, set goals and expectations for our performance and identify emerging issues that may affect our strategies, corporate governance, compensation practices or other aspects of our operations. The Board of Directors has adopted a Shareholder Communications with Directors Policy to inform shareholders how they may pose questions or communicate their views to our Board of Directors. The Shareholder Communications with Directors Policy is available on the Investor Relations page of our website, www.vcel.com.

2022 Proxy Statement

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Corporate Governance

Director Continuing Education

The Board of Directors recognizes the importance of ensuring that its members are continuously updated on matters of importance to its oversight of the Company from both an internal and external perspective. The Governance Committee maintains responsibility for determining issues and subject matter areas that require further education for Board members, whether because of external developments or changes in Company direction. During 2021, the Board of Directors received education from Vericel’s General Counsel and outside advisors in the areas of cybersecurity, sustainability, and ESG matters.

Certain Relationships and Related-Party Transactions

The Board of Directors is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related-party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, and as a general matter, it is Vericel’s preference to avoid related-party transactions.

Our Audit Committee has primary responsibility for reviewing and approving in advance, or ratifying, all related-party transactions. In conformance with SEC regulations, we define related persons to include our executive officers, our directors and nominees to become directors of our Company, any person who is known to us to be a beneficial owner of more than 5% of any class of our voting securities, any immediate family member of any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is employed, is a general partner or in which such a person has a 5% or greater beneficial ownership interest.

We have several processes that we use to ensure that we identify and review all related-party transactions. First, each executive officer is required to notify either our General Counsel or Chief Financial Officer of any potential transaction that could create a conflict of interest, and the General Counsel or Chief Financial Officer is required to notify the Audit Committee of the potential conflict. The directors, President and Chief Executive Officer, Chief Financial Officer and General Counsel are required to notify the Audit Committee of any potential transaction that could create a conflict of interest. Second, each year, we require our directors and executive officers to complete directors’ and officers’ questionnaires identifying any transactions with us in which the executive officer or director or their family members have an interest.

The Audit Committee reviews related-party transactions due to the potential for such transactions to create a conflict of interest. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, with our interests. Our Board and its committees only approve a related-party transaction if it is determined that a transaction is in the best interests of shareholders or is at least not inconsistent with those interests. This includes situations where the Company may obtain products or services of a nature, quantity or quality, or on other terms, that are not readily available from alternative sources or when the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated party. There were no such reportable relationships or related party transactions during the fiscal year ended December 31, 2021.

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Corporate Governance

Compensation of Directors

Our directors play a critical role in guiding our strategic direction and overseeing the management of Vericel. The many responsibilities and risks and the substantial time commitment of being a director require that we provide adequate compensation commensurate with our directors’ workload and opportunity costs. Our philosophy is to provide competitive compensation necessary to attract and retain high-quality non-employee directors and appropriately compensate them for the time, expertise and effort required to serve as a director of a commercial stage, publicly-traded company that operates in a dynamic and highly-regulated industry. Non-employee directors receive a combination of annual cash retainers and stock option and RSU grants in amounts that correlate to their responsibilities and levels of Board participation, including service on Board committees. At least every three years, the Compensation Committee engages an independent consultant to perform an analysis of the non-employee director compensation program. In 2021, the Compensation Committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”) to perform an independent review of the compensation program for non-employee directors.

The director compensation table reflects all compensation awarded to, earned by or paid to our non-employee directors for the fiscal year ended December 31, 2021.

Name		Fees Earned or Paid in Cash ($)		Stock Awards ($)⁽¹⁾		Option Awards ($)⁽²⁾		Total ($)

Element

Target Mix

Strategy and Performance Alignment

Base Salary

Base salaries are established in-part based on the individual experience, skills and expected contributions of our executives, their performance during the prior year, and a comparison of projected cash compensation against peer group benchmarks.

Annual Non-Equity Incentive Compensation

The determination of annual incentives for our executives is tied to achieving our financial targets, advancing our commercial and development-stage products, accomplishing operational goals, and advancing ESG initiatives.

Long-Term Equity Incentive Compensation

Long-term incentive compensation aligns employees with shareholders and further incentivizes our executive officers to drive stock price growth and allows them to share in any appreciation in the value of our common stock.

SEC Form DEF 14A filed by Vericel Corporation