MNKD 2018 Proxy Statement

COMPENSATION OF DIRECTORS Annual Retainers Each of our non-employee directors receives an annual retainer for service on the Board of Directors and an additional retainer for his service on one of our three standing committees, as described below under the subheading “Non-Employee Director Compensation Program”. In 2017, non-employee directors had an option to receive their annual retainer in cash or common stock of the Company pursuant to our director compensation program, subject to limits described below, as discussed below under the subheading “Non-Employee Director Compensation Program”. In the fiscal year ended December 31, 2017, the total annual retainer earned by non-employee directors was $405,500, of which $207,500 was paid in cash and $198,000 was received in the form of stock options. Equity Awards Each non-employee director of the Company also receives annual equity awards under our 2013 Equity Incentive Plan (“the 2013 Plan”) pursuant to our non-employee director compensation program, as described below under the subheading “Non-Employee Director Compensation Program.” The following table sets forth information concerning director compensation received for the fiscal year ended December 31, 2017 by our non-employee directors. Director Compensation Table Name Fees Earned or Paid in Cash ($) Option Awards ($)(1) Restricted Stock Awards ($)(2) Total ($) Ronald J. Consiglio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 33,000 — 113,000 Michael A. Friedman, M.D. . . . . . . . . . . . . . . . . . . . . . 67,500 33,000 — 100,500 Kent Kresa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 33,000 — 33,000 David H. MacCallum . . . . . . . . . . . . . . . . . . . . . . . . . . . — 33,000 — 33,000 Henry L. Nordhoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 33,000 — 93,000 James S. Shannon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 33,000 — 33,000 (1) These amounts reflect the grant date fair value of all option grants to non-employee directors in 2017. The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of non-employee director stock options. Option valuation models require the input of assumptions, including the expected life of the stock-based awards, the estimated stock price volatility, the risk-free interest rate and the expected dividend yield. The expected volatility assumption is based on an assessment of the historical volatility, with consideration of implied volatility, derived from an analysis of historical trade activity. Reference Note 13 “Stock award plans” in the notes to our financial statements for the period ended December 31, 2017, included in Part IV of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC on February 27, 2018, which identifies the assumptions made in the valuation of option. All non-employee directors received a stock option to purchase 30,000 shares of our common stock upon re-election to the Board of Directors on May 18, 2017, which is the maximum award permitted under the 2013 Plan. Options granted to these non-employee directors vest monthly over a period of three years. The exercise price per share represents the fair market value of our common stock on the date of each grant (based on the closing sales price reported on the Nasdaq Global Market on the date of grant). We have no consulting agreements with any of our directors pursuant to which stock awards were issued. As of December 31, 2017, our non-employee directors had option grants outstanding to purchase 389,345 shares of our common stock as follows: Ronald J. Consiglio, 63,541 shares; Michael A. Friedman, M.D. 44