22nd Century Group Announces Reduction in Board Compensation
22nd Century Group, Inc. (XXII) announces a reduction in board compensation expenses expected to save over $1 million annually in 2024. The company aims to align the board with a lean operating commitment, focusing on efficiency and value.
The decision by 22nd Century Group to significantly reduce board compensation is a strategic move that can have material implications on the company's cost structure. By cutting annual expenses by over $1 million, the company is effectively increasing its net income by the same amount, assuming all other factors remain constant. This action could be perceived positively by investors as it demonstrates a commitment to cost management and shareholder value . However, it is essential to assess this against the backdrop of the company's overall financial health. For instance, if these savings represent a substantial percentage of the company's operating expenses or net losses, the impact could be more significant than if they are a smaller portion of the financials.
Moreover, the reduction in compensation could be a double-edged sword. While it aligns with a lean operating philosophy, it might also affect the board's ability to attract and retain high-caliber directors. The long-term implications of this could potentially offset the short-term financial benefits if board effectiveness and governance quality are compromised.
Aligning the board with a corporate-wide lean operating commitment could signify a cultural shift towards fiscal responsibility within 22nd Century Group. The substantial decrease in board compensation, particularly for independent directors, audit, compensation and nominating & governance chairs, reflects a prioritization of operational efficiency over governance incentives. This move could be seen as an effort to realign director incentives with the interests of shareholders, potentially leading to more prudent decision-making and oversight.
However, it's important to consider the potential risks associated with such a significant decrease in compensation. It may impact the company's ability to attract and retain qualified board members who can provide valuable oversight and strategic guidance. The balance between cost savings and maintaining a highly skilled and experienced board is crucial for effective corporate governance and long-term success.
The announcement by 22nd Century Group may resonate positively with current and potential investors, as it reflects a proactive approach to cost reduction and profitability. The biotechnology sector often requires significant investment in research and development and companies that can demonstrate effective cost management may gain a competitive edge. By reducing board compensation, 22nd Century Group is sending a signal to the market that it is serious about improving its margin and becoming self-sustaining.
However, it will be important to monitor the market's reaction to these changes, particularly how they compare to industry norms for board compensation. If 22nd Century's approach is seen as too aggressive, it could potentially lead to negative perceptions about the company's stability or its ability to govern effectively. Continuous market analysis will be necessary to gauge the long-term effects of this strategy on the company's brand reputation and stock performance .
02/13/2024 - 04:15 PM
Reduced Cost Structure Expected to Save more than $1Million Annually in 2024, Aligns Board with Corporate-Wide Lean Operating Commitment
Mocksville, North Carolina--(Newsfile Corp. - February 13, 2024) - 22nd Century Group, Inc. (NASDAQ: XXII) (the "Company" or "22nd Century"), a biotechnology company focused on utilizing advanced plant technologies to improve health and wellness, today announced a reduction in board compensation expenses expected to save more than $1 million in annual cost for 2024. In addition to the newly reduced cash compensation structure going forward, the board has also waived any cash compensation due to non-employee directors for the fourth quarter of 2023 and the first quarter of 2024 and voted to forgo any equity compensation grants for directors in 2024.
"We continue to build on our progress over the past two months as we rapidly turn 22nd Century into a lean operating tobacco business focused on efficiency and value in everything we do," said Larry Firestone, Chairman and Chief Executive Officer of 22nd Century. "These latest changes not only reduce the cash and total compensation cost related to our board, they align the board with our operating philosophy as we seek to become a self-sustaining business through a combination of sales growth, margin improvement and cost reduction."
Under the revised compensation structure, adopted with immediate effect, annual independent director compensation will decline from $75,000 t o $20,000 , Audit Chair compensation from $20,000 t o $10,000 , and Compensation and Nominating & Governance Chair compensation from $20,000 t o $5,000. Compensation for independent directors serving on these committees will be reduced from $10,000 per year to $5,000 per year, and Independent Board Chair compensation, which was previously $50,000 per year, will be replaced with a lead director fee of $20,000 annually. Non-independent members of the board do not receive additional cash compensation for their board service.
About 22nd Century Group, Inc. FDA's Comprehensive Plan to address the widespread death and disease caused by smoking. The Company received the first and only FDA Modified Risk Tobacco Product (MRTP) authorization for a combustible cigarette in December 2021. 22nd Century uses modern plant breeding technologies, including genetic engineering, gene-editing, and molecular breeding to deliver solutions for the life science and consumer products industries by creating new, proprietary plants with optimized alkaloid and flavonoid profiles as well as improved yields and valuable agronomic traits.
Learn more at xxiicentury.com , on Twitter , on LinkedIn , and on YouTube .
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Cautionary Note Regarding Forward-Looking Statements
Investor Relations & Media Contact mkreps@xxiicentury.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/197824
What cost savings is 22nd Century Group, Inc. (XXII) expecting annually in 2024?
22nd Century Group, Inc. (XXII) is expecting to save more than $1 million annually in 2024 through a reduction in board compensation expenses.
What is the focus of 22nd Century Group, Inc. (XXII) in terms of operating philosophy?
22nd Century Group, Inc. (XXII) is focusing on efficiency and value in everything they do to become a self-sustaining business through sales growth, margin improvement, and cost reduction.
What changes were made to the board compensation structure by 22nd Century Group, Inc. (XXII)?
22nd Century Group, Inc. (XXII) reduced annual independent director compensation from $75,000 to $20,000, Audit Chair compensation from $20,000 to $10,000, and Compensation and Nominating & Governance Chair compensation from $20,000 to $5,000.
