DENALI THERAPEUTICS INC (DNLI)
Sector: Health Care
2026 Annual Meeting Analysis
DENALI THERAPEUTICS INC · Meeting: June 3, 2026
Directors FOR
0
Directors AGAINST
3
Say on Pay
FOR
Auditor
FOR
Director Elections
Election of Three Class III Directors
Against Analysis
Ms. Cook has served on the board since 2018, meaning her tenure fully overlaps the 3-year period during which Denali's stock fell 21.2% while the company-disclosed peer group median rose 2.3% — a gap of 23.5 percentage points, which exceeds the 20-point threshold required to trigger a vote against under our policy for companies with negative absolute stock returns; the 5-year check (DNLI -63.4% vs. peer median -52.4%, gap of only -11.0pp) does not meet the 20pp threshold needed to apply the mitigant, so the against vote stands.
Dr. Schenkein has served on the board since 2015, making him fully accountable for the 3-year period in which Denali's stock declined 21.2% while the company-disclosed peer group median gained 2.3% — a shortfall of 23.5 percentage points that exceeds our 20-point policy threshold; the 5-year comparison (DNLI -63.4% vs. peer median -52.4%, an 11-point gap) falls below the 20-point threshold required to override the 3-year trigger, so the against vote is upheld.
Dr. Watts is both CEO and a director, and our policy applies the TSR underperformance trigger equally to executive directors — over the past 3 years Denali's stock lost 21.2% while the company-disclosed peer group median gained 2.3%, a gap of 23.5 percentage points that exceeds the 20-point threshold for companies with negative absolute returns; the 5-year gap of 11 points falls short of the 20-point override threshold, so the against vote is maintained independent of the separate Say on Pay evaluation.
For Analysis
All three Class III nominees — Jennifer Cook, David Schenkein, and Ryan Watts — receive AGAINST votes because Denali's 3-year stock return of -21.2% trails the company-disclosed compensation peer group median by 23.5 percentage points, exceeding the 20-point policy threshold that applies when a company's absolute 3-year return is negative; the 5-year comparison (an 11-point gap vs. peers) does not reach the 20-point level needed to override the 3-year trigger, so the against votes stand for all three directors whose tenures fully overlap the underperformance period.
Say on Pay
✓ FORCEO
Ryan J. Watts, Ph.D.
Total Comp
$4,751,515
Prior Support
90.5%%
CEO total compensation of $4,751,515 is within a reasonable range for a biotech CEO at a $3.2 billion company, and the prior year's Say on Pay vote received strong support of approximately 90.5%, reflecting shareholder satisfaction with the pay structure; the pay mix is heavily variable — base salary of $718,000 represents only about 15% of total compensation, with the remaining 85% in at-risk equity and performance bonus, well exceeding the 50-60% variable pay threshold our policy requires; the annual bonus was tied to measurable pipeline and clinical milestones (83-85% goal achievement funding a 145% payout), the company has a clawback policy in place, and while stock performance has lagged peers, the incentive structure itself has meaningful performance conditions rather than guaranteed payouts, so the pay program structure passes the policy screens.
Auditor Ratification
✓ FORAuditor
Ernst & Young LLP
Tenure
11 yrs
Audit Fees
$2,810,000
Non-Audit Fees
$0
Ernst & Young LLP has audited Denali since 2015 (approximately 11 years), which is well below the 25-year tenure threshold that would raise independence concerns; all fees paid were pure audit fees with zero non-audit or tax fees, meaning the non-audit fee ratio is 0% — far below the 50% threshold — and EY is a Big 4 firm fully appropriate for a $3.2 billion market-cap company.
Overall Assessment
We vote AGAINST all three Class III director nominees — Jennifer Cook, David Schenkein, and Ryan Watts — because Denali's stock has declined 21.2% over three years while the company's own compensation peer group gained 2.3% on average, a gap of 23.5 percentage points that exceeds our policy's 20-point threshold, with no 5-year mitigant available; we vote FOR auditor ratification (Ernst & Young, clean fee structure, 11-year tenure) and FOR Say on Pay (CEO pay within reasonable range, strong variable pay mix, meaningful performance conditions, and 90.5% prior-year shareholder support).
Compensation Peer Group
23 companies disclosed in 2026 proxy filing