MNKD 2018 Proxy Statement

that the number of shares available for issuance is sufficient to allow us to continue to attract and retain the services of talented individuals essential to our long-term growth and financial success. To date, we have relied significantly on equity incentives in the form of stock option awards and restricted stock unit awards to attract and retain key employees, and we believe that equity incentives are necessary for us to remain competitive in the marketplace for executive talent and other employees. The adoption of the 2018 Plan and new share reserve of 12,000,000 shares will address the depletion to the 2013 Plan’s available share reserve that has occurred as a result of the recent corporate developments discussed above. In particular, an immediate increase to the share reserve will provide the Board with flexibility to make annual equity awards to eligible employees and new hires through the next two years. We Manage Our Equity Incentive Award Use Carefully, and Dilution Is Reasonable Our compensation philosophy reflects broad-based eligibility for equity incentive awards, and we grant awards to substantially all of our employees. However, we recognize that equity awards dilute existing stockholders, and, therefore, we must responsibly manage the growth of our equity compensation program. We are committed to effectively monitoring our equity compensation share reserve, including our “burn rate,” to ensure that we maximize stockholders’ value by granting the appropriate number of equity incentive awards necessary to attract, reward, and retain employees and non-employee directors. The tables below show our responsible overhang and burn rate percentages. The Size of Our Share Reserve Request Is Reasonable If the 2018 Plan is approved by our stockholders, we expect to have approximately 13,388,179 shares available for grant after our annual meeting (based on shares available as of March 19, 2018), which we anticipate being a pool of shares sufficient for grants through mid-2020, and necessary to provide a predictable amount of equity for attracting, retaining, and motivating employees. Our overall shares available to grant plus prior awards granted represent a market-aligned 18% of shares outstanding, where many of the outstanding awards are in the form of stock options where any management value derived has been directly aligned with shareholders. The size of our request is also reasonable in light of the equity granted to our employees and directors over the past year. Key Plan Features The 2018 Plan includes provisions that are designed to protect our stockholders’ interests and to reflect corporate governance best practices including: • No single trigger accelerated vesting upon change in control . The 2018 Plan does not provide for any automatic mandatory vesting of awards upon a change in control. • No liberal share counting or recycling of appreciation awards . The following shares will not become available again for issuance under the 2018 Plan: (i) shares underlying stock options or stock appreciation rights that are reacquired or withheld (or not issued) by us to satisfy the exercise or purchase price of a stock award; (ii) shares underlying stock options or stock appreciation rights that are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with a stock award; and (iii) any shares repurchased by us on the open market with the proceeds of the exercise or purchase price of a stock option or a stock appreciation right. • Fungible share counting. The 2018 Plan contains a “fungible share counting” structure, whereby the number of shares of our common stock available for issuance under the 2018 Plan will be reduced by (i) one share for each share issued pursuant to a stock option or stock appreciation right with an exercise price that is at least 100% of the fair market value of our common stock on the date of grant (an “Appreciation Award”) granted under the 2018 Plan and (ii) 1.1 shares for each share issued pursuant to a stock award that is not an Appreciation Award (a “Full Value Award”) granted under the 17