There have been no material changes to the procedures by which security holders may recommend nominees to our Board.

The Compensation Committee is composed entirely of directors who are not our current or former employees, each of whom meets the applicable definition of "independent" as defined by the rules of NASDAQ. None of the members of the Compensation Committee during fiscal 2016 (i) had any relationships requiring disclosure by us under the SEC's rules requiring disclosure of related party transactions or (ii) was an executive officer of a company of which one of our executive officers is a director. The current members of the Compensation Committee are Dennis Langer, M.D. J.D. (Chairman), Tasos Konidaris, and Gabriel Leung.

Under its charter, the Compensation Committee's responsibilities include:

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• Analyzing and making recommendations to our Board regarding director compensation and benefits for service on our Board and any committees thereof.
• Conducting an annual performance evaluation of the Compensation Committee.

The current members of the Audit Committee of the Board (the Audit Committee) are Tasos Konidaris (Chairman), Dennis Langer, M.D. J.D., and Gabriel Leung. Our Board has determined that Mr. Konidaris is an "audit committee financial expert" as defined in applicable SEC rules and that each member of the Audit Committee meets the criteria for independence set forth in Rule 10A-3(b)(1) promulgated under the Exchange Act. The Audit Committee reviews our financial reporting process on behalf of our Board.  Management has the primary responsibility for the preparation of our consolidated financial statements and our filings, including the design and implementation of our internal controls.  The Audit Committee oversees the integrity of our financial statements, reports, and other financial information, our compliance with legal and regulatory requirements, and the independent registered public accounting firm's qualifications, independence, and performance.  The Committee regularly reports to the Board, making such recommendations as are appropriate, and may also hold executive sessions with our independent public registered accounting firm, internal auditors and management with such frequency it determines appropriate.

Our Audit Committee operates under a written charter, which is available on our website under "Investors - Corporate Governance - Documents & Charters." Under its charter, the Audit Committee's responsibilities include:

• Appointing, retaining, evaluating, approving the compensation of, and assessing the independence of, our independent registered public accounting firm.
• Overseeing the work of our independent registered public accounting firm, including the experience and qualifications of the senior members of such firm and the proposed scope and approach of the annual audit.
• Ensuring that the lead partner of our independent registered public accounting firm having responsibility for our audit and the audit review partner are each rotated at least every five years.
• Reviewing and pre-approving all auditing services and non-audit services to be performed by our independent registered public accounting firm.
• Reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures.
• Overseeing the integrity, adequacy and effectiveness of our financial reporting processes, internal control over financial reporting and disclosure controls and procedures and our Code of Business Conduct and Ethics.
• Overseeing our risk assessment and risk management policies.
• Establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns.
• Meeting independently with our internal auditing staff, our independent registered public accounting firm and management.
• Reviewing and approving or ratifying any related person transactions and ensuring our independent registered public accounting firm is informed of any significant relationships we have with any related parties.
• Preparing the audit committee report required by SEC rules and reviewing any control disclosures and management certifications that are required by applicable SEC rules.
• Conducting an annual performance evaluation of the Audit Committee and the charter of the Audit Committee.

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ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth the total compensation awarded to, earned by, or paid to each of our named executive officers for the fiscal years ended December 31, 2016 and 2015. Our named executive officers for 2016 are John A. Sedor, our Chief Executive Officer, Graham G. Miao, Ph.D., our President and Chief Financial Officer, Douglas Drysdale, our former Chief Executive Officer and Barry Siegel, our former General Counsel.

1. Mr. Sedor was appointed as our Interim Chief Executive Officer and as Chairman of the Board on May 9, 2016, and was appointed as our Chief Executive Officer on July 26, 2016; therefore, no data is provided for him for fiscal 2015.
2. Dr. Miao was appointed as our President and Chief Financial Officer on July 26, 2016; therefore, no data is provided for him for fiscal 2015.
3. Mr. Drysdale was hired as our Chief Executive Officer on February 5, 2014 and served in this position until his resignation on May 9, 2016.
4. Until his resignation effective on July 26, 2016, Mr. Siegel served as our General Counsel.
5. This amount reflects the annual cash bonus earned by Mr. Sedor for 2016, which was $411,762. The amount of Mr. Sedor's annual cash bonus for 2016 was determined by the Compensation Committee based solely on the achievement of certain company performance objectives.
6. This amount reflects the annual cash bonus earned by Dr. Miao for 2016, which was $270,540. The amount of Dr. Miao's annual cash bonus for 2016 was determined by the Compensation Committee based solely on the achievement of certain company performance objectives.
7. Amounts reflect the payment of an annual cash bonus awarded to each of Messrs. Drysdale and Siegel in respect of fiscal year 2015. Each such named executive officer's annual cash bonus was based on a target percentage of his base salary for the fiscal year (75% for Mr. Drysdale and 40% for Mr. Siegel) and then adjusted based on the achievement of pre-established company performance objectives and individual performance, except for our former chief executive officer whose 2015 annual bonus was determined solely based on the achievement of company performance objectives.
8. The amounts in this column represent the aggregate grant date fair value of restricted stock units granted to the named executive officers computed in accordance with FASB ASC Topic 718. See Note 17 to our consolidated financial statements in our Original Form 10-K for the assumptions used in determining the grant date fair values of equity awards. These amounts may not correspond to the actual value that may be recognized by such named executive officers in respect of these awards.
9. The amounts in this column represent the aggregate grant date fair value of stock options granted to our named executive officers in the applicable fiscal year computed in accordance with FASB ASC Topic 718. See Note 17 to our consolidated financial statements in our Original Form 10-K for the assumptions used in determining the grant date fair values of equity awards. These amounts do not correspond to the actual value that may be realized by our named executive officers in respect of these options.

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10. This amount reflects a sign-on bonus of $125,000, which was paid to Mr. Sedor pursuant to his employment agreement with us, entered into on November 3, 2016. Mr. Sedor earned the sign-on bonus in 2016 by achieving certain performance milestones set forth in his employment agreement.
11. This amount reflects a sign-on bonus of $100,000, which was paid to Dr. Miao pursuant to his employment agreement with us, entered into on November 3, 2016. Dr. Miao earned the sign-on bonus in 2016 by achieving certain performance milestones set forth in his employment agreement.
12. This amount includes the aggregate monthly housing allowance that was paid to Mr. Sedor during fiscal 2016 ($24,672) and the cash fees that were paid to Mr. Sedor during fiscal 2016 for his services as a non-employee director on our Board prior to his appointment as our Interim Chief Executive Officer on May 9, 2016 ($26,225).
13. Amounts reflect $741,009 in severance payments related to Mr. Drysdale's resignation in 2016, a monthly car allowance of $1,500 paid to Mr. Drysdale under the terms of his employment agreement, in 2016 and 2015 and payments made for health insurance coverage of Mr. Drysdale and his family members, in 2016 and 2015.
14. Amounts reflect $147,642 in severance payments related to Mr. Siegel's resignation in 2016, a monthly car allowance of $700 paid to Mr. Siegel under the terms of his employment agreement, in 2016 and 2015 and 401(k) matching contributions pursuant to our 401(k) plan, in 2016 and 2015.

On February 25, 2016, we granted Mr. Drysdale options to purchase 45,000 shares of our common stock and Mr. Siegel options to purchase 20,000 shares of our common stock under our 2015 Omnibus Incentive Plan (such share numbers reflecting the 1-for-10 reverse stock split we effected in October 2016 (the Reverse Stock Split)). The exercise price for the options granted to Messrs. Drysdale and Siegel was $21.40 (which price reflects the Reverse Stock Split). The options were scheduled to vest in equal annual installments on each of the first four anniversaries of the grant date. The options were forfeited by Mr. Siegel upon his resignation from us on July 26, 2016.

On May 9, 2016, we granted Mr. Sedor options to purchase 21,000 shares of our common stock under our 2015 Omnibus Incentive Plan (such share number reflecting the Reverse Stock Split). The exercise price for the options is $5.20 per share (which price reflects the Reverse Stock Split). The options vest in equal annual installments on each of the first four anniversaries of the grant date, subject to the continued employment of Mr. Sedor on each such vesting date.

On November 3, 2016, we granted Mr. Sedor options to purchase 150,000 shares of our common stock under our 2009 Stock Incentive Plan and options to purchase 40,000 shares of our common stock under our 2015 Omnibus Incentive Plan, and we granted Dr. Miao options to purchase 95,000 shares of our common stock under our 2009 Stock Incentive Plan. The exercise prices for the options granted to Mr. Sedor and Dr. Miao are $3.15 per share for the options granted under the 2009 Stock Incentive Plan and $3.36 per share for the options granted under the 2015 Omnibus Incentive Plan. In addition, we granted Mr. Sedor 131,100 restricted stock units and Dr. Miao 65,500 restricted stock units under our 2015 Omnibus Incentive Plan. One-third of the common stock underlying the options and one-third of the restricted stock units granted to Mr. Sedor and Dr. Miao will vest per year, commencing on each anniversary of July 26, 2016, subject to the continued employment of Mr. Sedor and Dr. Miao, respectively, on each such vesting date.

John Sedor and Graham Miao. On November 3 2016, we entered into employment agreements with Mr. Sedor and Dr. Miao. Each of these agreements provides for an initial 3-year term of employment and will thereafter continue until either we or the named executive officer provides notice of termination in accordance with the terms of the agreement. In addition, each employment agreement contains non-competition, non-solicitation, confidentiality and assignment provisions which prohibit each of Mr. Sedor and Dr. Miao from competing with us, soliciting our employees and customers and disclosing confidential information during the term of his employment and for a specified time thereafter.

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Under the terms of the respective employment agreements, Mr. Sedor is entitled to receive an annual base salary of $610,000 and Dr. Miao is entitled to receive an annual base salary of $501,000, which base salaries may be increased (but not decreased) annually by the Board or the Compensation Committee. Each executive was paid a sign-on bonus in December 2016 ($125,000 for Mr. Sedor and $100,000 for Dr. Miao) based on the achievement of certain performance milestones set forth in their respective employment agreements. Each executive is eligible to receive an annual bonus with respect to each calendar year, commencing with calendar year 2016, which will be payable based upon the achievement of certain performance objectives established by the Compensation Committee in consultation with the executive. Mr. Sedor's target annual bonus is equal to 75% of his base salary and Dr. Miao's target annual bonus is equal to 60% of his base salary. The maximum bonus that each executive may earn for any calendar year is 200% of his target annual bonus. Commencing with calendar year 2017, each executive will be eligible to receive annual equity awards based on our and the executive's actual performance, as determined by the Board or the Compensation Committee. Commencing on November 1, 2016 and continuing until the earlier of September 1, 2018 or the end of the term of his employment agreement, we will pay Mr. Sedor a housing allowance of $6,300 per month for a residence located within 50 miles of our offices in Morristown, NJ.

Under the terms of the respective employment agreements, Mr. Sedor and Dr. Miao and their respective dependents are covered, at our expense, under our health, dental and vision insurance programs. Each of Mr. Sedor and Dr. Miao are entitled to participate in any life and accidental death and dismemberment insurance policies offered to our other senior executives and are eligible to participate in all employee benefit plans, practices and programs maintained by us on a basis no less favorable than is provided to our other senior executives.

Douglas Drysdale. Douglas Drysdale was our Chief Executive Officer until May 9, 2016 when he resigned from all of his positions with us, including Chief Executive Officer, President and Chairman of the Board. Pursuant to our employment agreement with Mr. Drysdale and the determination of our Board, Mr. Drysdale was entitled to an annual base salary of $610,018 for the 2016 fiscal year.

We provided Mr. Drysdale a car allowance of $1,500 per month, and his dependents were covered, at our expense, under our health, dental and vision insurance programs. Mr. Drysdale was entitled to participate in any life and accidental death and dismemberment insurance policies offered to our other senior executives. Mr. Drysdale was eligible to participate in all other welfare, savings and retirement and other employee benefit plans, practices, policies and programs applicable generally to our other senior executives.

Barry J. Siegel. Barry J. Siegel was our General Counsel until July 26, 2016 when he resigned from all of his positions with us, including Senior Vice President and General Counsel. Pursuant to our employment agreement with Mr. Siegel and the determination of our Board, Mr. Siegel was entitled to an annual base salary of $344,793 for the 2016 fiscal year.

Mr. Siegel and his dependents were covered, at our expense, under our health, dental and vision insurance programs and he was entitled to participate in any life and accidental death and dismemberment insurance policies offered to our other senior executives. Mr. Siegel was eligible to participate in all other welfare, savings and retirement and other employee benefit plans, practices, policies and programs applicable generally to our other senior executives.

For a description of the severance entitlements of Mr. Sedor and Dr. Miao pursuant to their respective employment agreements and the severance benefits paid to Messrs. Drysdale and Siegel in connection with their resignations from the Company on May 9, 2016 and July 26, 2016, respectively, see the section below entitled "Executive Compensation - Additional Narrative Disclosure - Potential Payments Upon Termination or Change in Control."

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Outstanding Equity Awards at Fiscal Year End

The following table sets forth information for each named executive officer regarding our outstanding stock options on December 31, 2016 (reflecting the Reverse Stock Split (where applicable):

1. These options vest in equal annual installments on the first four anniversaries of the date of grant.
2. These options vest in equal annual installments on the first three anniversaries of July 26, 2016.
3. These awards consist of restricted stock units that vest in equal annual installments on the first three anniversaries of July 26, 2016.
4. The market value of unvested restricted stock units was calculated by multiplying the number of units by $1.94, the closing sales price of our common stock on December 30, 2016 (the last business day of 2016).

Upon execution and effectiveness of a release of claims, each of our named executive officers will be entitled to severance payments if his employment is terminated under specified circumstances.

John. Sedor. Pursuant to his employment agreement, which is described above in the section entitled "Executive Compensation - Narrative Disclosure to Summary Compensation Table - Employment Agreements with Named Executive Officers," if Mr. Sedor's employment is terminated by us without "cause," by Mr. Sedor for "good reason" or due to our election not to renew his employment agreement, in each case absent a "change in control" (as each such term is defined in his employment agreement), we are obligated to pay Mr. Sedor (i) an amount equal to the sum of (x) 150% of his base salary in effect at the time of the termination of his employment, and (y) 150% of his target bonus amount, payable in substantially equal installments over an 18-month period, (ii) an amount equal to the annual cash bonus, if any, that Mr. Sedor would have earned in respect of the calendar year of his termination of employment based on the achievement of the applicable performance objectives for such year, pro-rated to reflect the number of days he was employed with us during such year, and (iii) reimbursements equal to 150% of the monthly health care coverage premium under the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) that Mr. Sedor pays for him and his eligible dependents to continue participating in our medical, dental, vision and prescription drug plans for a period of up to 18 months.

If Mr. Sedor's employment terminates for any of the reasons set forth in the preceding paragraph within 6 months prior to, or 24 months following, a change in control Mr. Sedor will instead be entitled to (i) an amount equal to two times the sum of his base salary and target bonus in effect at the time of the termination of his employment, payable in a lump sum, (ii) an amount equal to his target bonus, pro-rated to reflect the number of days he was employed with us during such year, (iii) reimbursements equal to 150% of the monthly COBRA premium that Mr. Sedor pays for him and his eligible

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dependents to continue participating in our medical, dental, vision and prescription drug plans for a period of up to 18 months, and (iv) a lump sum cash payment equal to the product of (x) six and (y) an amount equal to 150% of the monthly COBRA premium that would be charged to similarly situated former senior executives of the Company, payable following the eighteen month anniversary of Mr. Sedor's termination of employment, provided that he is not then eligible to receive coverage from another employer.

In addition to the payments set forth in the preceding two paragraphs, if Mr. Sedor's employment is terminated by us without cause, by Mr. Sedor for good reason or due to our election not to renew his employment agreement, all of Mr. Sedor's outstanding equity awards will become fully vested as of the date his employment terminates. Mr. Sedor also will be entitled to receive any earned or accrued amounts and vested benefits that remain unpaid as of the date of his termination of employment.

Graham Miao. Pursuant to his employment agreement, which is described above in the section entitled "Executive Compensation - Narrative Disclosure to Summary Compensation Table - Employment Agreements with Named Executive Officers," if Dr. Miao's employment is terminated by us without "cause," by Dr. Miao for "good reason" or due to our election not to renew his employment agreement, in each case absent a "change in control" (as each such term is defined in his employment agreement), we are obligated to pay Dr. Miao (i) an amount equal to the sum of (x) 100% of his base salary in effect at the time of the termination of his employment, and (y) 100% of his target bonus amount, payable in substantially equal installments over an 12-month period, (ii) an amount equal to the annual cash bonus, if any, that Dr. Miao would have earned in respect of the calendar year of his termination of employment based on the achievement of the applicable performance objectives for such year, pro-rated to reflect the number of days he was employed with us during such year, and (iii) reimbursements equal to 150% of the monthly COBRA premium that Dr. Miao pays for him and his eligible dependents to continue participating in our medical, dental, vision and prescription drug plans for a period of up to 18 months.

If Dr. Miao's employment terminates for any of the reasons set forth in the preceding paragraph within 6 months prior to, or 24 months following, a change in control, Dr. Miao will instead be entitled to (i) an amount equal to two times the sum of his base salary and target bonus in effect at the time of the termination of his employment, payable in a lump sum, (ii) an amount equal to his target bonus, pro-rated to reflect the number of days he was employed with us during such year, (iii) reimbursements equal to 150% of the monthly COBRA premium that Dr. Miao pays for him and his eligible dependents to continue participating in our medical, dental, vision and prescription drug plans for a period of up to 18 months, and (iv) a lump sum cash payment equal to the product of (x) six and (y) an amount equal to 150% of the monthly COBRA premium that would be charged to similarly situated former senior executives of the Company, payable following the eighteen month anniversary of Dr. Miao's termination of employment, provided that he is not then eligible to receive coverage from another employer.

In addition to the payments set forth in the preceding two paragraphs, if Dr. Miao's employment is terminated by us without cause, by Dr. Miao for good reason or due to our election not to renew his employment agreement, all of Dr. Miao's outstanding equity awards will become fully vested as of the date his employment terminates. Dr. Miao also will be entitled to receive any earned or accrued amounts and vested benefits that remain unpaid as of the date of his termination of employment.

If Dr. Miao's employment is terminated by us for cause, by Dr. Miao without good reason or by reason of Dr. Miao's death or "disability" (as such term is defined in the employment agreement), Dr. Miao (or his estate or beneficiaries, as applicable) will be entitled to receive any earned or accrued amounts and vested benefits that remain unpaid as of the date of his termination of employment.

Douglas Drysdale. In connection with his resignation, Mr. Drysdale received $741,009, an amount equal to the payments and benefits to which he was entitled for a termination without cause as set forth in his employment agreement, which is described above in the section entitled "Executive Compensation - Narrative Disclosure to Summary Compensation Table - Employment Agreements with Named Executive Officers."

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In addition, we agreed that all vested options to purchase our common stock owned by Mr. Drysdale would remain exercisable until November 5, 2016 and an additional 187,500 options to purchase our common stock at an exercise price of $2.09 and 90,000 options to purchase our common stock at an exercise price of $4.70 would vest and remain exercisable until November 5, 2016.

Barry J. Siegel. On July 26, 2016, we entered into a Resignation and Release Agreement with Mr. Siegel (the Resignation Agreement), which provided for the payment of certain severance benefits to Mr. Siegel, including the following: (a) 6 months' salary continuation at Mr. Siegel's base salary rate immediately prior to July 26, 2016 (the Separation Date), less all applicable taxes and withholdings; and (b) the continuation of health and certain other fringe benefits for 6 months following the Separation Date. The Resignation Agreement also contained, among other things, a customary release by Mr. Siegel, mutual non-disparagement provisions and a restrictive covenant provision.

We maintain a tax-qualified employee savings and retirement plan (401(k) Plan) covering all of our full-time employees in the United States, including our named executive officers. The 401(k) Plan permits, but does not require, matching contributions to the 401(k) Plan by us on behalf of all participants. During the years ended December 31, 2016 and 2015, we matched 100% of employee contributions up to 3% of employee pre-tax contributions and 50% of employee contributions over 3% and up to 5% of employee pre-tax contributions.

The following table sets forth the total compensation paid or accrued during the year ended December 31, 2016 to our non-employee members of our Board:

1. The amounts in these columns represent the aggregate grant date fair value of option awards granted to the director during 2016 computed in accordance with FASB ASC Topic 718. See Note 17 to our consolidated financial statements in our Original Form 10-K for the assumptions made by us in determining the grant date fair value of our equity awards.
2. Steve Elms resigned from the Board on November 28, 2016.

We provide our non-employee directors with the following annual cash compensation, which is paid in equal quarterly installments:

• $40,000 per director;

• additional $40,000 for the non-executive Chairman of the Board;

• additional $12,000 for each non-chair member of the Audit Committee, $7,500 for each non-chair member of the Compensation Committee and $7,000 for each non-chair member of the Nominating Committee; and

• additional $24,000 for the Chairman of the Audit Committee, $15,000 for the Chairman of the Compensation Committee and $10,000 for the Chairman of the Nominating Committee.

We also provide our non-employee directors with an annual grant of options to purchase 4,000 shares of our common stock, which vests in equal annual installments on the first four anniversaries of the applicable grant date.

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We reimburse each non-employee director for travel expenses incurred in connection with attendance at board meetings. Employee directors do not receive additional compensation for service on the Board or its committees. John Sedor served as a non-employee member of our Board during 2016 until his appointment as our Interim Chief Executive Officer on May 9, 2016. The cash fees earned by Mr. Sedor for his services as a non-employee member of our Board are reflected in the "Summary Compensation Table" above.

We have entered into indemnification agreements with each of our directors and officers. The indemnification agreements and our articles of incorporation and bylaws require us to indemnify our directors and officers to the fullest extent permitted by Maryland law. We also provide our directors and officers with director and officer insurance.

During 2016, each of Mr. Sedor, Dr. Langer, Mr. Elms, Mr. Konidaris and Mr. Leung served as members of our Compensation Committee. Mr. Sedor, our current Chief Executive Officer, resigned from the Compensation Committee on May 9, 2016, the date on which he was appointed as our interim Chief Executive Officer. All members of the Compensation Committee are independent directors, and none of them are present or past employees or officers of ours. With the exception of Steven A. Elms, who resigned as a member of our Board and of the Compensation Committee on November 28, 2017, no member of the Compensation Committee had any relationship with us requiring disclosure under Item 404 of Regulation S-K under the Exchange Act. Mr. Elm's relationship with us is described more fully under the section entitled "Certain Relationships and Related Transactions, and Director Independence - Certain Relationships and Transactions" below. None of our executive officers has served on the Board or compensation committee (or other committee serving an equivalent function) of any other entity which has one of their executive officers who served on our Board or Compensation Committee.

The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 31, 2017, by:

• our named executive officers;

• each of our directors/director nominees;

• all of our current directors and executive officers as a group; and

• each stockholder known by us to own beneficially more than five percent of our common stock.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Shares of common stock that may be acquired by an individual or group within 60 days of March 31, 2017, pursuant to derivative securities, such as options, warrants or restricted stock units, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Number and percentage of ownership is based on an aggregate of 10,015,641 shares of common stock outstanding as of March 31, 2017 and reflects the 1-for-10 reverse stock split effected in October 2016.

Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each director and executive officer is: c/o Pernix Therapeutics Holdings, Inc., 10 North Park Place, Suite 201, Morristown, NJ 07960.

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The following table sets forth information regarding our equity compensation plans as of December 31, 2016 (in each case reflecting the 1-for-10 reverse stock split effected in October 2016):