DEF 14A 1 tm2312922d2_def14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

Filed by the Registrant x
Filed by a Party other than the Registrant ¨
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¨	Preliminary Proxy Statement
¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6I(2))
x	Definitive Proxy Statement
¨	Definitive Additional Materials
¨	Soliciting Material Pursuant to §240.14a-12

22nd Century Group, Inc.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x No fee required.

¨ Fee paid previously with preliminary materials.

¨ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

April 25, 2023

Dear Fellow 22nd Century Group Stockholders,

On behalf of the Board of Directors, I’d like to thank you for your investment and confidence in 22nd Century Group, Inc. I am pleased to report that 2022 was a transformative year for the Company, allowing us to successfully launch full commercial operations for VLN®, the highly anticipated, first and only FDA authorized, combustible, reduced nicotine content, modified risk tobacco product. Not only this, but we were also able to commence commercial operations for our industry-leading hemp/cannabis ingredients and CDMO business. These breakthroughs, alongside our continued focus on the use of, and our expanded expertise within, plant-science to improve human health, have left us uniquely positioned to generate broad-based growth across our business lines in 2023. With sales of VLN® and hemp/cannabis ingredients well underway, we plan to strategically expand our cannabis and hemp business lines to better synergize with existing value chains and to strategically cultivate and enlarge our already extensive plant biotech portfolio.

I am confident in our ability to generate sustained results in the next year and those that follow, especially in light of significant growth opportunities we continue to survey across business lines; the differentiated business model assumed by our business lines; and our demonstrated success in acquiring and engaging key cannabis and hemp entities, which serve as vehicles for bringing tangible, health-focused products to consumers.

Advancing Into New Markets

Management has pioneered an exclusive and novel arena within the tobacco space by making VLN® available to buyers in key domestic markets, while forging ahead with plans for distribution in international markets. Additionally, the acquisition of GVB Biopharma dramatically expanded our global-scale hemp/cannabis capabilities, providing a comprehensive ingredient and CDMO commercial platform, and significantly complemented our existing value chains. The acquisition of RX Pharmatech Ltd in early 2023 further served to establish us as the leader in key international isolate markets.

Amid this success, the management team has continued to develop its broad plant biotech portfolio through carefully selected programs we are confident will facilitate new opportunities in health and wellness products for life sciences, consumer products, and pharmaceutical end-use markets. These opportunities will enable us to improve the lives of people across the globe.

It should be noted that, in 2022, we enhanced the senior executive team through the lens of facilitating future growth. The success created through our exceptional business model allowed us to attract and retain seasoned executives, all of whom have relevant expertise and key relationships across our industries, which we are confident will benefit the Company.

Board Succession and Refreshment

We view Board refreshment as essential to robust and forward-thinking corporate governance. The Board continues to assess director succession planning with a careful eye toward bringing new expertise in-house to better support the Company’s continued progress while ensuring our independent governing body remains comprised of individuals with comprehensive and varied experiences, credentials, proficiencies, and attributes. We make it a priority to seek out diverse viewpoints by examining each candidate’s skills, gender, age, race, ethnicity, background, and professional experience as a part of our review and nomination processes.

2023 PROXY STATEMENT | i

The Board recently expanded from seven to eight members, concurrently broadening its diversity, by electing Lucille S. Salhany, a highly accomplished media executive, as an independent director. Lucie brings extensive media, consumer, and corporate strategy insight to the board, having been a founding partner of Echo Bridge Entertainment, as well as CEO & President of LifeFX Networks, Inc. As the first woman chair of a major broadcast company, Lucie’s unparalleled track record of successful growth and expansion is certain to benefit the Company. Lucie serves on the Compensation and Corporate Governance and Nominating Committees.

Stockholder Engagement

The Board, in continuing its robust stockholder outreach program, proactively solicited feedback from shareholders in 2022 and in 2023. Topics discussed with shareholders included those related to governance, compensation strategy and philosophy, and corporate responsibility. The input obtained from these conversations has informed our decision-making processes and resulted in a renewed focus on best practices in these areas. Continuing stockholder engagement remains a priority and will undoubtedly continue to influence policies and practices as we move forward.

Strong Governance and Board Independence

The Board remains keen on maintaining robust independent governance practices and impartial oversight as we support the Company and assist in continued execution of its strategy. As a Board, we realize you have placed your trust in us to help lead the Company in a way that facilitates trust and sustained, long-term value. We remain committed to doing just that, and to focusing on the critical processes and governance practices essential to effective performance of our duties.

Environmental, Social, and Sustainability Focus

We believe biotechnology can be used to help address some of the biggest issues currently facing humanity and recognize its significance in our vision to improve human health. With this in mind, we have created policies that incorporate Environmental, Social, and Sustainability practices in a more meaningful way. As part of this effort, we have launched proactive commitments to ensure our products are responsibly marketed; pledged to use sustainable agricultural practices in our growing processes; invested, and continue to invest, in hemp plant lines to promote the restorative impact of hemp; and selected machines in our facilities which reduce both waste and total energy consumption. We are also committed to enriching the lives of our workforce and do so by offering career development and tuition reimbursement packages, robust insurance coverage options, and comprehensive benefit packages, all meant to provide for the professional and personal success of our employees. We continue to improve our understanding of corporate responsibility in this evolving corporate climate so we may construct effective and advised policies. We hope to challenge and inspire others to do the same, and to inspire you, our valued shareholders, to collaborate with us as we do so.

We are excited for the opportunities that lie ahead in 2023 and beyond. On behalf of our Board, I thank you for your investment in 22nd Century Group, Inc. We remain steadfast in our service to you, our shareholders, and are grateful for your confidence and support, as well as the opportunity to oversee your interests.

Sincerely,

Nora B. Sullivan

Independent Board Chair

2023 PROXY STATEMENT | ii

500 Seneca Street, Suite 507, Buffalo, New York 14204

Notice of 2023 Annual Meeting of Stockholders and Proxy Statement

TO THE HOLDERS OF COMMON STOCK:

PLEASE TAKE NOTICE that the Annual Meeting of stockholders of 22nd Century Group, Inc. (the “Company”) will be held at the Company’s Corporate Headquarters, 500 Seneca Street, Suite 507, Buffalo, NY 14202 on Friday, June 16, 2023, beginning at 10:00 A.M., Eastern Time.

The meeting will be held for the following purposes:

To elect as directors the two (2) director nominees named in the attached proxy statement as Class III directors to serve for a three-year period until the Annual Meeting of stockholders in the year 2026 and, in each instance, until their respective successors have been elected and qualified.

To approve an advisory resolution approving executive compensation for fiscal year 2022.

To approve an amendment to our Articles of Incorporation, as amended, to increase the number of authorized shares of common stock from three hundred million (300,000,000) to five hundred million (500,000,000).

To approve the amendment and restatement of the 22nd Century Group, Inc. 2021 Omnibus Incentive Plan which shall increase the number of shares authorized for issuance by three million, five hundred thousand (3,500,000).

To ratify the appointment of Freed Maxick CPAs, P.C. as our independent registered public accountants for fiscal year 2023.

To approve the adjournment of the meeting, if necessary or advisable, to solicit additional proxies in favor of the amendment to our Articles of Incorporation (Proposal 3) or the amendment and restatement of our 2021 Omnibus Incentive Plan (Proposal 4).

To transact such other business as may properly come before the meeting or any adjournment.

MEETING INFORMATION:
DATE:	Friday, June 16, 2023

TIME:	10:00 A.M., Eastern Time

PLACE:	The meeting will be held at the Company’s Corporate Headquarters, 500 Seneca Street, Suite 507, Buffalo, NY 14202.

HOW TO VOTE:

Your vote is important. You are eligible to vote if you were a stockholder of record at the close of business on April 21, 2023.


	BY INTERNET
	www.proxyvote.com


	BY PHONE
	Call 1.800.690.6903


	BY MAIL
	Complete, sign and return by free post


	IN PERSON
	Attend the Annual Meeting

The stockholders of record at the close of business on April 21, 2023 will be entitled to vote at the Annual Meeting.

By Order of the Board of Directors,

Peter Ferola

Chief Legal Officer and Corporate Secretary

Dated: April 25, 2023

2023 PROXY STATEMENT | iii

Table of Contents

Notice of Annual Meeting	iii
Table of Contents	iv
Proxy Summary	1
Voting Matters	1
About 22nd Century Group, Inc.	2
Corporate Governance Highlights	2
Stockholder Outreach	3
Environmental, Social and Governance (ESG) Practices	5
Highlights of Key Corporate Sustainability Practices:	7
Characteristics of Directors and Director Nominees	8
Our Directors and Director Nominees	9
Proposal One: Election of Directors	12
Director Nominees	12
Nominees and Director Qualifications	12
Commitment to Corporate Governance	16
Board of Directors	16
Independent Directors	16
Board Leadership Structure	16
Board Membership Criteria	17
Director Nominee Selection Process	17
Stockholder Recommendations for Potential Director Nominees	18
Meetings of Board of Directors	18
Executive Sessions of Independent Directors	18
Corporate Governance Guidelines	18
Standing Committees	18
Audit Committee	19
Compensation Committee	19
Corporate Governance and Nominating Committee	20
Scientific Advisory Board	20
Code of Business Conduct and Corporate Ethics	21
Insider Trading Policy	21
Risk Oversight	21
Compensation Policies and Practices and Risk Management	21
Compensation Committee Interlocks and Insider Participation	21
Compensation of Directors	22
Elements of 2022 Non-Employee Director Compensation	22
Proposal Two: Advisory Vote on Executive Compensation	24
Compensation Discussion and Analysis	25
Our Named Executive Officers	25
Our Executive Compensation Philosophy and Design	26
Our Pay for Performance Philosophy	26
Roles and Responsibilities	26
Our Say-on-Pay Vote; Stockholder Outreach	27
Elements of Executive Compensation	29
CEO Pay Decisions Made in 2022	32
Stock Ownership Policy	33
Retirement and Other Benefits	34
Compensation on Termination of Employment	34
Policy on Hedging Transactions	34
Recoupment/Clawback Policies	34
Compensation Committee Report	34
Executive Compensation	35
CEO Pay Ratio	35
Grants of Plan-Based Awards	36
Outstanding Equity Awards	36
Option Exercises and Stock Vested in 2022	37
Pay versus Performance	37
Analysis of the Information Presented in the Pay Versus Performance Table	38
Employment Agreements with Named Executive Officers	39
Compensation on Termination of Employment	39
Estimated Additional Compensation Triggered by Termination of Employment If Termination on the Last Business Day of 2022	40
Audit Committee Report	41
Proposal Three: Approval of an Increase in the Number of Shares of Authorized Common Stock from Three Hundred Million (300,000,000) to Five Hundred Million (500,000,000)	42
General	42
Purpose of the Increase in Authorized Shares	42
Rights of Additional Authorized Shares	42
Potential Adverse Effects	43
Risks of Not Approving This Proposal	43
Proposal Four: Approval of the Amendment and Restatement of the 22nd Century Group, Inc. 2021 Omnibus Incentive Plan	44
Updated Share Information, Authorized Shares and Stock Price	44
Summary of the Terms of the Plan	45
Purpose and Effective Date	45
Administration and Eligibility	45
Types of Awards	45
Stock Subject to the Plan and Award Limits	45
Options	46
Stock Appreciation Rights	46
Performance and Stock Awards	47
Incentive Awards	47
Dividend Equivalents and Dividends	47
Other Stock-Based Awards	47
Minimum Vesting and Discretion to Accelerate	47
Performance Goals	48
Effect of Termination of Employment or Service on Awards	48
Transferability of Awards	48
Adjustments	48
Change of Control	49
Termination and Amendment	50
Cancellation, Disgorgement and Recoupment of Awards	51
Repricing Prohibited	51
Backdating Prohibited	51
Foreign Participation	51
Certain Federal Income Tax Consequences	52
New Plan Benefits	54
Equity Compensation Plan Information	55
Proposal Five: Ratification of Appointment of Freed Maxick CPAs, P.C. as the Company’s Independent Registered Public Accounting Firm	56
Proposal Six: The Adjournment of the Meeting, if Necessary or Advisable, to Solicit Additional Proxies in Favor of the Amendment to our Articles of Incorporation or the Amendment and Restatement of our 2021 Omnibus Incentive Plan.	57
Beneficial Ownership	58
Related Party Transactions	59
Stockholder Proposals and Communications with the Board of Directors	60
Frequently Asked Questions Regarding Annual Meeting Procedures	61

2023 PROXY STATEMENT | iv

Proxy Summary

Here we present an overview of information that you will find throughout this proxy statement. As this is only a summary, we encourage you to read the entire proxy statement for more information about these topics prior to voting.

Annual Meeting of Stockholders

Time and Date:		10:00 A.M., Eastern Time, June 16, 2023

Place:		The meeting will be held at the Company’s Corporate Headquarters, 500 Seneca Street, Suite 507, Buffalo, NY 14202.

Record Date:		April 21, 2023

This proxy statement and the accompanying form of proxy are first being sent or made available to our stockholders on or about April 25, 2023 in connection with the solicitation by our Board of Directors of proxies to be used at our 2023 Annual Meeting of Stockholders.

Voting Matters

The following table summarizes the proposals to be voted on prior to or at our 2023 Annual Meeting of Stockholders and the Board’s voting recommendations with respect to each proposal.

	BOARD’S VOTING	PAGE
PROPOSAL	RECOMMENDATION	REFERENCE
Proposal 1:	FOR each nominee	12
Election of two (2) directors to serve for a three-year period until the Annual Meeting of stockholders in the year 2026.

Proposal 2:	FOR	24
Advisory Approval on the Company’s 2022 Executive Compensation.

Proposal 3:	FOR	42
Approval of an amendment to the Company’s Articles of Incorporation, as amended, to increase the number of shares of authorized common stock from three hundred million (300,000,000) to five hundred million (500,000,000).

Proposal 4:	FOR	44
Approval of the Amendment and Restatement of the 2021 Omnibus Incentive Plan to increase the number of shares authorized by three million, five hundred thousand (3,500,000).

Proposal 5:	FOR	56
Ratification of Appointment of Freed Maxick CPAs, P.C. as the Company’s Independent Registered Public Accounting Firm for 2023.

Proposal 6:	FOR	57
Adjournment of the meeting, if necessary or advisable, to solicit additional proxies in favor of the amendment to our Articles of Incorporation (Proposal 3) or the amendment and restatement of our 2021 Omnibus Incentive Plan (Proposal 4).

2023 PROXY STATEMENT | 1

Proxy Summary

About 22nd Century Group, Inc.

22nd Century Group, Inc. (Nasdaq: XXII) is a leading agricultural biotechnology company focused on tobacco harm reduction, reduced nicotine tobacco and improving health and wellness through plant science. With dozens of patents allowing us to control nicotine biosynthesis in the tobacco plant, we have developed proprietary, reduced nicotine content (RNC) tobacco plants and cigarettes, which have become the cornerstone of the FDA’s Comprehensive Plan to address the widespread death and disease caused by smoking. We received the first and only FDA Modified Risk Tobacco Product (MRTP) authorization of a combustible cigarette in December 2021. In tobacco, hemp/cannabis, and hop plants, we use 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, improved yields, and valuable agronomic traits.

Corporate Governance Highlights

Following are highlights of our key governance practices and policies:

Board Structure
and Independence

ü Separate Chair and CEO

ü Independent Board Chair

ü 5 of our 6 continuing directors are independent

ü Audit, Compensation and Corporate Governance & Nominating Committees each comprised entirely of independent directors

ü Regular executive sessions of only independent directors

ü Diverse Board with two female directors and one ethnically diverse director

ü No familial relationships among Board members

ü Limits on other board service to no more than two other public companies

Board Oversight

ü Structured oversight of the Company’s corporate strategy and risk management

ü Corporate responsibility (ESG) strategy and initiatives and ethics and compliance program oversight by Corporate Governance & Nominating Committee

ü Cybersecurity risk oversight by Audit Committee

ü Review of compensation risk by Compensation Committee

ü Annual self-assessment of Board and Board committee performance

Accountability
and Governance
Practices

ü Annual say-on-pay advisory vote

ü Robust stockholder outreach in 2021, 2022, and into 2023 regarding executive compensation practices

ü Compensation Committee made no adjustments to executive compensation practices because of the COVID-19 pandemic

ü Prohibition of hedging and pledging Company stock by officers and directors

ü Code of Business Conduct and Ethics for directors, officers, and employees

2023 PROXY STATEMENT | 2

Proxy Summary

Stockholder Outreach

The Board and Compensation Committee are committed to soliciting feedback to inform the Board’s decisions and guide our compensation program. Our stockholder outreach in 2021, 2022, and into 2023 provided the Board with valuable insight into our stockholders’ perspectives on our executive compensation program and other matters of importance. We are committed to sound compensation and governance practices and will continue to consider our compensation program as a result of any stockholder input.

We have followed a consistent approach to the design of our executive compensation program for many years. The history of our say-on-pay results before 2020 generally demonstrated stockholder support for our program over several years. At our 2022 Annual Meeting of Stockholders, approximately 10.5% of our outstanding shares voted against our 2022 executive compensation resolution. As noted below, we conducted a Board-driven stockholder outreach and engaged with our top shareholders to better understand their concerns.

Following the 2021 Annual Meeting of Stockholders, the Compensation Committee commenced a stockholder outreach program. This outreach focused on better understanding the perspectives of our stockholders with regard to our executive compensation program structures and best practices in aligning executive compensation to the interests of our stockholders.

The executive compensation outreach initiative is in addition to our regular ongoing stockholder engagement. As part of our ongoing outreach efforts to inform our corporate policies in 2022, the Company proactively reached out to filing institutional stockholders to discuss the Company’s executive compensation philosophy, goals, and plans and to obtain an understanding of our stockholders’ concerns in advance of this filing. Approximately 19.4% of the Company’s outstanding shares of common stock were owned by filing institutional stockholders in 2022.

By The Numbers: Stockholder Engagement

We contacted 15 of our top institutional stockholders, representing approximately 10% of our total shares outstanding and approximately 53% of our shares held by institutional stockholders, with invitations to meet with our management and directors. These institutional stockholders represent the majority of our institutional investors at this time.

Our Independent Board Chair and Chair of our Compensation Committee participated in all of the stockholder engagement meetings.

Feedback from Stockholder Engagement

We heard a range of perspectives on our executive compensation program from stockholders during our outreach, all of which were considered by our Compensation Committee and the Board.

We received positive feedback about our overall outreach program and support for our management team and our Board in general. Our commitment to board refreshment, diversity, and succession planning was recognized and well received. Additionally, our stockholders agreed on the importance of having a stable, senior leadership team with the knowledge and expertise needed to successfully execute on our business strategy and priorities over the long-term.

Stockholders provided insightful feedback about the continuing need to evaluate board composition in light of the Company’s evolving business and strategies, and to consider whether new skill sets or experiences could contribute to the Board’s ability to guide the Company in the future. Certain stockholders recommended we specifically evaluate the Board’s existing skill sets and expertise while contemporaneously considering potential future needs that should be incorporated into search efforts as directors rotate off the Board in future periods. Our stockholders expressed a continuing desire to understand the specifics behind our executive compensation plan design including rationale, key performance indicators, and qualitative metrics that align to both the short, mid, and long-term strategy of the Company. In addition, our stockholders expressed a desire to see continued forward evolution of disclosures around our Environmental, Social and Governance (“ESG”) efforts, particularly disclosures which speak to where we are in our journey and our plans for the future. A summary of what we heard and how we responded is set forth below:

2023 PROXY STATEMENT | 3

Proxy Summary

Our work to solicit stockholder feedback into our executive compensation program continues.

2023 PROXY STATEMENT | 4

Proxy Summary

Following each Annual Meeting of stockholders, our Compensation Committee will review the say-on-pay results and engage with our stockholders to solicit feedback on our compensation program. Our Compensation Committee will use the stockholder feedback to inform and guide its compensation decisions for the following year. Our annual compensation cycle is generally as follows:

Environmental, Social and Governance (ESG) Practices

We strive to be a force for positive change. As we serve our stakeholders and investors, we realize that in this service, our actions impact our employees, business partners, suppliers, communities, governments, and the world around us.

As we work to effect positive change in the world around us, our Board is committed to corporate sustainability: a commitment to growing our Company in a strong and sustainable way; preserving and protecting our environment; valuing and challenging the talented men and women who comprise our workforce; and investing in and improving the communities where we live and work. We are committed to fostering a sustainable future.

We want to sell the last cigarette, help smokers across the globe
to “smoke less,” improve quit attempts, and reduce the societal
and health related harms of addictive tobacco products.

2023 PROXY STATEMENT | 5

Proxy Summary

The Board believes that our ESG practices must be integrated into the way we conduct our business. In 2021, the Board adopted a global ESG policy related to ESG matters, including:

This policy is available on the Company’s website at https://www.xxiicentury.com/investors/corporate-governance.

We have maintained our commitment to developing an ESG strategy with the help of our Board’s active engagement in overseeing both sustainability and human capital management initiatives. Over the past year, various Company stakeholders have worked together to advance discussions surrounding relevant environmental and social topics, including Company culture, resource management, and public health. Our continuous self-assessment allows the Company to integrate complex operations that require technical skills while building upon decades of industry experience and exposure. The refinement of our workplace in this conscious manner allows us to unlock the full potential of our priorities while simultaneously strengthening our attention to the relationship we hold with the environment at large. We believe that promoting appropriate measures of safety and risk management enables us to to pursue collaborative and meaningful strategies that ultimately align with the state of the world today. We anticipate providing additional detail regarding these areas of focus in the coming year on the Company’s website.

2023 PROXY STATEMENT | 6

Proxy Summary

Highlights of Key Corporate Sustainability Practices:

Public Health Impact and Responsible Marketing	●	Our VLN® products and our reduced nicotine intellectual property are intended to help existing smokers “smoke less.” It is our desire to sell the last cigarette, drastically lower the incidence of tobacco related lung cancer, and improve the quality and longevity of life across the globe.

	●	We ensure our products are responsibly marketed. We continue to implement internal processes to ensure our communications with potential and existing customers are both true and accurate in nature and to ensure our workforce complies with all relevant laws, guidelines and governance practices.

Environmental Resource Management	●	We actively engage in a supplier vetting process for our agricultural products – meeting and maintaining communication with each farmer who grows our VLN® tobacco to ensure sustainable agricultural practices are considered and implemented in the growing process as appropriate.

	●	We recognize the restorative impact of our hemp plant lines and its effect on sustainable agriculture. Hemp is a natural remediator of contaminated soil and can be used to convert otherwise contaminated, fallow farmland into airable soil ready for a new generation of crops. We believe that our continued investment in the development of our hemp franchise will yield new opportunities to develop sustainable agricultural practices across numerous industries beyond agriculture itself.

	●	We continue to explore ways of improving operating efficiency in our facilities, including the installation of one tobacco reclaimer at our Mocksville, North Carolina facility with two more reclaimers under construction. We are also planning the installation of a product reclaimer and bio-mass gasification machine in our Prineville, Oregon facility. These machines not only reduce the amount of waste produced at our plants, but also will help reduce our total energy consumption as well.

Human Capital Management and Workplace Health and Safety	●	Our business runs on talented personnel – our most important asset. In 2022, we approximately doubled the size of our workforce, largely as a result of the acquisition of GVB Biopharma. As our business continues to grow, we are committed to recruiting and developing a diverse and talented workforce that will reflect our Company’s culture and flexible growth.

	●	In addition to robust insurance coverage options and comprehensive benefit packages, we also support career development opportunities; we offer tuition reimbursement packages and continue to explore ways of offering professional development training to our team members.

	●	We maintain robust safety procedures to ensure our manufacturing facilities are safe and compliant work environments for our associates. We adhere to widely recognized third-party standards and conduct regular trainings for our associates.

2023 PROXY STATEMENT | 7

Proxy Summary

Characteristics of Directors and Director Nominees

Board Diversity Matrix (as of April 25, 2023)¹
Total Number of Directors	6
	Female	Male
Part I: Gender Identity
Directors	2	4
Part II: Demographic Background
African American or Black	0	1
White	2	3
LGBTQ	None

¹ These characteristics were self-identified by the Directors

2023 PROXY STATEMENT | 8

Proxy Summary

Our Directors and Director Nominees

You are being asked to vote on the election of the director nominees listed below. Directors are elected by a plurality of the votes cast by the stockholders. Detailed information about each director and director nominee’s background, skills, and expertise can be found under Proposal One: Election of Directors. Each director nominee is independent. Upon election of these directors at the Annual Meeting of stockholders, the directors shall hold the committee memberships set forth below:

Director Nominees – Class III Director Nominees – Terms to Expire 2026

				Committee Membership
Name and Primary Occupation	Age as of April 25, 2023	Director Since	Independent Director	Audit	Compensation	Corporate Governance and Nominating	Scientific Advisory Board
Lucille S. Salhany President and CEO of JH Media	76	2022	Yes		l	l
Anthony Johnson President and CEO of Kodikaz Therapeutic Solutions	47	2021	Yes	l		C	l

2023 PROXY STATEMENT | 9

Proxy Summary

Directors Continuing in Office - Class I Directors — Terms Expiring 2024

				Committee Membership
Name and Primary Occupation	Age as of April 25, 2023	Director Since	Independent Director	Audit	Compensation	Corporate Governance and Nominating	Scientific Advisory Board
Richard M. Sanders General Partner of Phase One Ventures, LLC	70	2013	Yes	l	C
Dr. Michael Koganov President and Co-Founder of Intellebio LLC	72	2020	Yes		l		C

Member

Committee Chair

2023 PROXY STATEMENT | 10

Proxy Summary

Directors Continuing in Office - Class II Directors — Terms Expiring 2025

				Committee Membership
Name and Primary Occupation	Age as of April 25, 2023	Director Since	Independent Director	Audit	Compensation	Corporate Governance and Nominating	Scientific Advisory Board
James A. Mish Chief Executive Officer and Director of 22nd Century	59	2022	No				l
Nora B. Sullivan President of Sullivan Capital Partners	65	2015	Yes	C ¨	l	l

Member

Committee Chair

Financial Expert

2023 PROXY STATEMENT | 11

Proposal One: Election of Directors

Director Nominees

The Company’s Board of Directors is classified into three classes of directors, with one class of directors being elected at each Annual Meeting of stockholders of the Company to serve for a term of three years or until the earlier of: (i) expiration of the term of their class of directors; or (ii) until their successors are elected and take office as provided below. To maintain the staggered terms of election of directors, stockholders of the Company are voting upon the election of Lucille S. Salhany and Anthony Johnson as Class III directors to serve for a three-year period until the Annual Meeting of Stockholders in the year 2026.

The Bylaws of the Company provide that the Board will determine the number of directors to serve on the Board. The number of authorized directors of the Company as of the date of this proxy statement is eight, with eight persons currently serving as directors. Our Board has nominated Lucille S. Salhany and Anthony Johnson to be elected as Class III directors. Mr. Johnson was nominated as a Class III director (he is currently a Class II director) in order to keep the classes even at two directors in each of the classes following the meeting. Information about each director nominee is set forth below.

Clifford B. Fleet and Roger D. O’Brien did not stand for re-election for director. Accordingly, their respective terms as director will expire at this Annual Meeting of Stockholders. Mr. Fleet and Mr. O’Brien have been valuable members of the Company’s Board of Directors and the Company wishes them the best in their future endeavors.

The nominees for director have each indicated to the Company that they will be available to serve as a director. If a nominee named herein for election as a director should for any reason become unavailable to serve prior to the 2023 Annual Meeting of stockholders, then the Board may, prior to the Annual Meeting, (i) reduce the size of the Board to eliminate the position for which that person was nominated, (ii) nominate a new candidate in place of such person or (iii) leave the position vacant to be filled at a later time.

The individuals named as proxy voters in the accompanying proxy, or their substitutes, will vote “FOR” each of the director nominees with respect to all proxies we receive unless instructions to the contrary are provided. If any nominee for director becomes unavailable for any reason, the votes will be cast for a substitute nominee designated by our Board. We have no reason to believe that any nominee for director will be unable to serve if elected. We strongly encourage our directors to attend our 2023 Annual Meeting. All of our continuing directors attended our 2022 Annual Meeting virtually.

The following sets forth certain information, as of April 25, 2023, about the Board’s nominees for election at the Annual Meeting and each director whose term will continue after our Annual Meeting.

Our Board of Directors recommends a vote “FOR” the election of each of its nominees.

Nominees and Director Qualifications

The following biographies of our nominees contain information regarding the person’s service as a director, business experience, other director positions held currently or at any time during at least the last five years, and information regarding involvement in certain legal or administrative proceedings, if applicable. The biographies reflect the committee memberships the nominees shall hold upon their election.

We believe that each nominee possesses the core competencies that are expected of all directors, namely, independence, integrity, sound business judgment, and a willingness to represent the long-term interests of all stockholders. The experiences, qualifications, attributes, and skills, as shown below, that caused the Corporate Governance and Nominating Committee and the Board to determine that the person should serve as a director of our Company are described in each nominee’s biography.

2023 PROXY STATEMENT | 12

Proposal One: Election of Directors

Director Nominees – Class III Director Nominees – Terms to Expire 2026

Lucille S. Salhany

Age: 76

Director Since: 2022

Principal Occupation

President and Chief Executive Officer of JHMedia, a consulting company she founded, since 1997.

Recent Business Experience

Former Chairperson of Fox Broadcasting.

Founding partner of Echo Bridge Entertainment and CEO & President of LifeFX Networks, Inc.

Former Chief Executive Officer and President of United Paramount Network (UPN).

Previously served on the Board of Directors for Echo Bridge Entertainment, Compaq / Hewlett-Packard, Fox, Inc., Avid Technologies, and American Media, Inc.

Education

Trustee of Emerson College and Lasell College, where she received Honorary Doctorates.

Board Committees

Compensation and Corporate Governance & Nominating

Other Public Company Boards

None.

Key Qualifications for Service as a Director

Well-established track record of success in growing businesses

Strong background in and knowledge of the media industry

Anthony Johnson

Age: 47

Director Since: 2021

Principal Occupation

Co-founder, President and CEO of Kodikaz Therapeutic Solutions, Inc., a world-class next-generation non-viral gene therapy company, since 2019

Recent Business Experience

Founding partner of Buffalo Biosciences in 2006, a life science strategic business management firm that supports the evaluation and commercialization of bioscience technologies from concept to market.

President and Chief Executive Officer of Empire Genetics, an oncology molecular testing company, from 2006 - 2019.

Aspen Institute Health Innovation Fellow and a member of the Aspen Global Leadership Network.

Education

M.B.A. from Manchester Business School, Manchester, UK

Bachelor of Arts in Biology from Fisk University

Board Committees

Corporate Governance & Nominating Chair and Audit

Other Public Company Boards

None

Key Qualifications for Service as a Director

Experience commercializing bioscience technologies

Life sciences experience

2023 PROXY STATEMENT | 13

Proposal One: Election of Directors

Directors Continuing in Office - Class I Directors — Terms Expiring 2024

Richard M. Sanders

Age: 70

Director Since: 2013

Principal Occupation

General Partner of Phase One Ventures, LLC, a venture capital firm which focuses on nanotechnology and biotechnology start-up opportunities in New Mexico and surrounding states, since August 2009.

Recent Business Experience

From January 2002 until June 2009, Mr. Sanders served as President and CEO of Santa Fe Natural Tobacco Company (“SFNTC”), a division of Reynolds American, Inc., which manufactures and markets the Natural American Spirit cigarette brand. While at SFNTC, he more than tripled sales and earnings and rapidly expanded the company’s international business.

Prior to directing SFNTC’s robust growth, Mr. Sanders worked for R.J. Reynolds Tobacco Company where he began his career in marketing in 1977. From 1987 to 2002, he served in a wide spectrum of executive positions including, among others, Senior Vice President of Marketing, Vice President of Marketing and Sales Operations, Vice President of Sales and President of Sports Marketing Enterprises.

Education

Bachelor’s Degree in political science from Hamline University

M.B.A. in Marketing from Washington University in St. Louis, Missouri

Board Committees

Audit and Compensation

Other Public Company Boards

None

Key Qualifications for Service as a Director

Deep experience in the tobacco industry

Expertise in management and marketing

Dr. Michael Koganov

Age: 72

Director Since: 2020

Principal Occupation

President and Co-Founder of Intellebio LLC, a consulting and testing firm focused on the development of novel technologies, advanced test methods, and breakthrough products in the life science field, since 2019.

Recent Business Experience

Dr. Michael Koganov is recognized as a leading expert in the development of natural products using plant biotechnology and has achieved considerable accomplishments in physico-chemistry, bio-chemistry, bioelectrochemistry, and biotechnology. He has written more than 70 publications, secured over 100 granted patents, and is the author of two books.

From 2015 to 2018, served as the Vice President of Biomaterials at Ashland Global Holdings, Inc.

Education

Master of Science in Biochemistry from the State University, Dnipropetrovsk, USSR

Ph.D. in Bioelectrochemistry from Institute of Chemical Technology, Dnipropetrovsk, USSR

Full Doctor of Sciences (Sc.D.) degree in biotechnology from the Higher Attestation Commission of the USSR’s Council of Ministers

Board Committees

Compensation

Other Public Company Boards

None

Key Qualifications for Service as a Director

Expertise in the area of plant biotechnology

Experience developing novel technologies

2023 PROXY STATEMENT | 14

Proposal One: Election of Directors

Directors Continuing in Office — Class II Directors — Terms Expiring 2025

James A. Mish

Age: 59

Director Since: 2022

Principal Occupation

Our Chief Executive Officer since June 2020

Recent Business Experience

President and Chief Executive Officer of Purisys, Advanced Cannabinoids, a synthetic cannabinoid API, ingredients and solutions provider to pharmaceutical and consumer products companies, from 2019 to 2020.

President and Chief Executive Officer of Noramco, Inc., a global leader in the production of controlled substances for the pharmaceutical industry, from 2016 to 2019.

President of Ashland Specialty Ingredients, a division of Ashland Corporation, a premier, global specialty materials company serving customers in a wide range of consumer and industrial markets, from 2008 - 2016.

Education

M.B.A. from The Wharton School of the University of Pennsylvania

Bachelor of Science in Physics and Chemistry from Pennsylvania State University

Board Committees

None

Other Public Company Boards

None

Key Qualifications for Service as a Director

Strong leadership skills

Pharmaceutical and consumer products experience

International business experience

R&D/Innovation expertise

Nora B. Sullivan

Age: 65

Director Since: 2015

Independent Chair of the Board Since: 2020

Principal Occupation

President and Founder of Sullivan Capital Partners, a financial services company providing investment banking and consulting services, since 2004.

Recent Business Experience

From 2000 to 2004, worked for Citigroup Private Bank, providing capital markets and wealth management services to high-net-worth individuals and institutional clients.

From 1995 to 1999, Executive Vice President of Rand Capital Corporation (NASDAQ: RAND), an investment management company providing capital and managerial expertise to small and mid-size businesses.

Member of the Boards of Directors of Evans Bancorp, Inc. (NYSE American: EVBN), and Rosina Food Products.

Vice Chair of the Investment Committee of the Patrick P Lee Foundation, Chairman of the Technology Transfer Committee of the Roswell Park Comprehensive Cancer Center, and Vice Chair of the Board of Directors of the Cortland College Foundation.

Education

M.B.A. in Finance and International Business from Columbia University Graduate School of Business

Juris Doctor degree from the University of Buffalo School of Law

Board Committees

Audit, Compensation and Corporate Governance & Nominating

Other Public Company Boards

Evans Bancorp, Inc. (NYSE American: EVBN)

Key Qualifications for Service as a Director

Expertise in finance and corporate governance

Experience with mergers and acquisitions

Status as an audit committee financial expert

2023 PROXY STATEMENT | 15

Proposal One: Election of Directors

Commitment to Corporate Governance

Board of Directors

Our Board of Directors represents the best interests of our stockholders by overseeing the business and affairs of the Company. Members of the Board participate in quarterly Board and Committee meetings, engage with senior management of the Company, review, provide input, and approve the Company’s strategic plan and principal issues, and discuss feedback from stockholders and other stakeholders.

Directors hold office for a term ending on the date of the third annual stockholders’ meeting following the Annual Meeting at which such director’s class was most recently elected until the earlier of their death, resignation, removal or until their successors have been duly elected and qualified. There are no family relationships among our directors. Our bylaws provide that the number of members of our Board of Directors may be changed from time to time by resolutions adopted by the Board of Directors. Our Board of Directors currently consists of eight (8) members with no vacancies. Following the meeting, the Board will consist of six (6) members with two (2) directors in each class and no vacancies, assuming the election of the director nominees.

Independent Directors

Our Board of Directors has determined that Anthony Johnson, Dr. Michael Koganov, Roger D. O’Brien, Lucille S. Salhany, Richard M. Sanders, Nora B. Sullivan, and Clifford Fleet are “independent” as defined by applicable Nasdaq Stock Market listing standards. The Board annually reviews all business and other relationships of directors and determines whether directors meet these categorical independence tests.

Board Leadership Structure

Our Board of Directors does not have a policy on whether the roles of Chief Executive Officer and chairperson of the Board should be separate. Our Board reserves the right to assign the responsibilities of the Chief Executive Officer and chair position as determined by our Board to be in the best interest of our Company. In the circumstance where the responsibilities of the Chief Executive Officer and chair are vested in the same individual or in other circumstances when deemed appropriate, the Board will designate a lead independent director from among the independent directors to preside at the meetings of the non-employee director executive sessions. The positions of Chief Executive Officer and chair have been separate positions since October 25, 2014.

Since January 2020, Nora Sullivan has served as our independent Board Chair given her history with the Company, business, financial, accounting, and legal expertise, while James Mish serves as Chief Executive Officer and as a member of the Board.

Our Board reviews our leadership structure annually and retains the authority to modify this structure to best address our Company’s unique circumstances as and when appropriate.

2023 PROXY STATEMENT | 16

Proposal One: Election of Directors

Board Membership Criteria

The Corporate Governance and Nominating Committee assists the Board in establishing criteria and qualifications for potential Board members. The Committee identifies individuals who meet such criteria and qualifications to become Board members and recommends to the Board such individuals as nominees for election to the Board. Since 2020, we have added four (4) new directors – adding a wide range of skill sets and diverse viewpoints.

The Corporate Governance and Nominating Committee works with the Board of Directors to determine the appropriate characteristics, skills, and experiences for both individual directors and the Board as a whole. The objective is to have a Board with diverse backgrounds and experience in relevant areas for the benefit of the Company. Characteristics expected of all directors include independence, highest personal and ethical standards, integrity, sound business judgment and willingness to represent the long-term interests of all stockholders. In evaluating the suitability of individuals as Board members, the Committee takes into account many factors but does not have a policy that focuses on any one factor. The factors considered by the Committee include:

In addition, the Committee looks for skills and experience that will complement and enhance the Board’s existing make-up, including length of anticipated or possible service to assist with Board succession and transitions. The Committee evaluates each individual in the context of the Board as a whole, to recommend a group that can best perpetuate the success of our business. Currently, there are no age restrictions or mandatory retirements for director service.

Director Nominee Selection Process

Our Corporate Governance and Nominating Committee evaluates the specific personal and professional attributes of each director candidate versus those of existing Board members to ensure diversity of competencies, experience, personal history and background, thought, skills, and expertise across the full Board. In the evaluation of director candidates, our Corporate Governance and Nominating Committee considers diversity in terms of gender, ethnic background, age, and other similar attributes that could contribute to Board perspective and effectiveness. The Corporate Governance and Nominating Committee also assesses diversity through its annual assessment of Board structure and composition and annual Board and committee performance self-assessment process. We believe that fostering Board diversity best serves the needs of the Company and the interests of its stockholders, and is one of the many factors considered when identifying individuals for Board membership. We believe that diversity with respect to gender, ethnicity, tenure, experience, and expertise is important to provide both fresh perspectives and deep experience and knowledge of the Company.

When vacancies develop, the Corporate Governance and Nominating Committee solicits input regarding potential new candidates from a variety of sources, including existing directors and senior management. From time to time, we have used an executive search firm in search of candidates that have diversity in experience, skills, and perspective. Through these and other means, the Board has continued to refresh the Board by adding directors who bring a sufficient range of different perspectives, generate appropriate challenge and discussion, and fulfill its oversight responsibilities to foster significant value creation for our stockholders. The Committee evaluates potential candidates based on their background, experiences, and qualifications, and also arranges personal interviews of qualified candidates by one or more committee member(s), other Board members and senior management.

2023 PROXY STATEMENT | 17

Proposal One: Election of Directors

Stockholder Recommendations for Potential Director Nominees

Nominations of persons for election to the Board at the Annual Meeting may also be made by any stockholder entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in our Bylaws. Such nominations by any stockholder shall be made pursuant to timely notice in writing to the Secretary. To be timely, a stockholder’s notice shall be delivered to the Secretary at our principal executive offices not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such Annual Meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such Annual Meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made.

Meetings of Board of Directors

Our Board held eight (8) meetings throughout 2022. All directors attended at least 75% of meetings of the Board and Board committees on which they served in 2022.

We do not have a formal policy requiring directors to attend Annual Meetings of stockholders. However, all of our continuing directors attended our 2022 Annual Meeting virtually and we anticipate that all continuing directors will attend the 2023 Annual Meeting.

All directors attended at least 75% of meetings of the Board and Board committees on which they served in 2022.

Executive Sessions of Independent Directors

The independent directors hold regularly scheduled executive sessions of the Board and its committees without senior management present. The independent directors met in executive session at all of the regularly scheduled Board and committee meetings held in 2022.

Corporate Governance Guidelines

Our Board has adopted a set of Corporate Governance Guidelines, which describe the Board’s responsibility for oversight of the business and affairs of the Company as well as guidelines for determining director independence and consideration of potential nominees to the Board. The Board, directly and through its Corporate Governance and Nominating Committee, regularly reviews developments in corporate governance and best practices and annually reviews its Corporate Governance Guidelines, committee charters, and other key governance documents, policies, and practices. Our Corporate Governance Guidelines provide:

•

Limits on Board Service. We do not allow “over-boarding,” or a director serving on an excessive number of public company boards. Excessive board commitments can lead to a director being unable to appropriately fulfill his or her duties to the Company and its shareholders. Our Corporate Governance Guidelines have long limited our directors to no more than two (2) other public company boards.

•

Board Self-Assessment and Evaluation. We conduct an annual self-evaluation and assessment of our individual Board performance to help ensure that the Board and its committees function effectively and in the best interest of our stockholders. This process promotes good governance and helps set expectations about the relationship and interaction of and between the Board and management.

Standing Committees

Our Board of Directors currently has three (3) standing committees: (i) an Audit Committee, (ii) a Compensation Committee, and (iii) a Corporate Governance and Nominating Committee. Each of these Board committees are described below. Members of these committees are elected annually by the Board. The charters of each committee are each available on the investor relations section of our website at www.xxiicentury.com. In addition, we have a Scientific Advisory Board which is chaired by Dr. Michael Koganov.

2023 PROXY STATEMENT | 18

Proposal One: Election of Directors

Audit Committee

MEMBERS

KEY RESPONSIBILITIES

Nora B. Sullivan*, Chair

Anthony Johnson

Richard M. Sanders

Dr. Michael Koganov

The Board has determined that each member of the Audit Committee is independent as defined under the applicable listing standards of the Nasdaq Stock Market and Rule 10A-3 under the Securities Exchange Act of 1934, as amended.

The Committee met four (4) times in 2022

◾  Assists the Board in monitoring the integrity of financial statements and compliance with legal and regulatory requirements;

◾  Reviews the independence and performance of internal and external auditors;

◾  Has the ultimate authority and responsibility to select, evaluate, terminate, and replace our independent registered public accounting firm;

◾  Has oversight of the Company’s policies with respect to risk assessment and risk management; and

◾  Approves the Audit Committee Report as shown on page 43. The report further details the Audit Committee’s responsibilities.

*Audit Committee Financial Expert: Our Board has determined that Ms. Sullivan qualifies as an “audit committee financial expert” as defined by the rules of the Securities and Exchange Commission. Furthermore, all members of the Audit Committee meet the financial literacy requirements of the Nasdaq Stock Market and no members of the Audit Committee serves on the Audit Committee of more than three public companies.

Compensation Committee

MEMBERS

KEY RESPONSIBILITIES

Richard M. Sanders, Chair

Nora B. Sullivan

Dr. Michael Koganov

Lucille Salhany

The Board has determined that each member of the Compensation Committee is independent within the meaning of the Company’s independence standards and applicable listing standards of the Nasdaq Stock Market.

The Committee met seven (7) times in 2022

◾ Establishes and regularly reviews our compensation and benefits philosophy and program in a manner consistent with corporate financial goals and objectives;

◾ Approves compensation arrangements for senior management, including annual incentive and long-term compensation;

◾ Administers grants under our equity incentive plans;

◾ Evaluates our CEO’s performance; and

◾ Reviews leadership development and succession planning.

The Committee retains Pay Governance as its compensation consultant.

2023 PROXY STATEMENT | 19

Proposal One: Election of Directors

Corporate Governance and Nominating Committee

MEMBERS

KEY RESPONSIBILITIES

Anthony Johnson, Chair

Nora B. Sullivan

Lucille Salhany

The Board has determined that each member of the Corporate Governance and Nominating Committee is independent within the meaning of the Company’s independence standards and applicable listing standards of the Nasdaq Stock Market.

The Committee met six (6) times in 2022

◾ Assists our Board in establishing criteria and qualifications for potential Board members;

◾ Identifies high quality individuals who have the core competencies, characteristics and experience to become members of our Board;

◾ Establishes corporate governance practices in compliance with applicable regulatory requirements and consistent with the highest standards, and recommends to the Board the corporate governance guidelines applicable to us;

◾ Leads the Board in its annual review of the Board’s performance;

◾ Recommends nominees for each committee of the Board; and

◾ Oversees the Company’s Environmental Social and Governance (“ESG”) policies and practices.

Scientific Advisory Board

MEMBERS

KEY RESPONSIBILITIES

Dr. Michael Koganov, Chair

James A. Mish

Anthony Johnson

The Scientific Advisory Board met one (1) time in 2022

Provides advice and recommendations to the Board regarding:

◾ Company scientific research, technology and innovation strategies;

◾ Opportunities including potential partnerships and M&A; and

◾ Emerging science and technology issues and trends.

2023 PROXY STATEMENT | 20

Proposal One: Election of Directors 

Code of Business Conduct and Corporate Ethics

Our Board of Directors has long maintained a Code of Ethics that applies to all our directors, officers, and employees. A copy of our Code of Ethics is available on our website at http://www.xxiicentury.com.

Insider Trading Policy

Our directors, executive officers, and employees are required to comply with the 22nd Century Group, Inc. Insider Trading Policy and may not engage in any transaction (such as short-selling) to hedge against the potential decline in value of any of our securities.

Risk Oversight

Our Board is actively involved in oversight of risks that could affect the Company. Our Board has assigned responsibility for addressing certain risks, and the steps management has taken to monitor, control and report such risk, to our Audit Committee, including risks relating to execution of our growth strategy, with appropriate reporting to the full Board. Our Board relies on our Compensation Committee to address significant risk exposures facing our Company with respect to compensation. Our Board receives reports by each committee chair regarding the applicable committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within the Company.

Compensation Policies and Practices and Risk Management

The Compensation Committee considers, in establishing and reviewing our compensation philosophy and programs, whether such programs encourage unnecessary or excessive risk taking. Base salaries are fixed in amount and consequently the Compensation Committee does not see them as encouraging risk taking. We also provide executive officers with equity awards to help further align their interests with those of our stockholders. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk taking since the awards are generally provided at the beginning of an employee’s tenure or at various intervals to award achievements or provide additional incentive to build long-term value and are subject to vesting schedules to help ensure that executives have significant value tied to our long-term corporate success and performance.

The Compensation Committee believes that our compensation philosophy and programs encourage employees to strive to achieve both short- and long-term goals that are important to our success and building stockholder value, without promoting unnecessary or excessive risk taking. The Compensation Committee has concluded that our compensation philosophy and practices are not reasonably likely to have a material adverse effect on us.

Compensation Committee Interlocks and Insider Participation

During the last fiscal year, no member of the Compensation Committee had a relationship with us that required disclosure under Item 404 of Regulation S-K. During the past fiscal year, none of our executive officers served as a member of the Board of Directors or Compensation Committee, or other committee serving an equivalent function, for any entity that has one (1) or more executive officers who served as members of our Board of Directors or our Compensation Committee. None of the members of our Compensation Committee is an officer or employee of our Company, nor have they ever been an officer or employee of our Company.

2023 PROXY STATEMENT | 21

Compensation of Directors

Elements of 2022 Non-Employee Director Compensation

Non-employee directors are compensated for their service on our Board as shown below. Directors who are employees of the Company receive no additional compensation for serving as directors. The Compensation Committee periodically reviews the compensation of our non-employee directors and considers market practices. In February 2021, the Compensation Committee retained Korn Ferry (“KF”) to conduct an independent assessment of our director compensation versus the competitive market and the “fit” of our compensation program to our pay philosophy. To establish the competitive market for directors, KF identified a comparator group of seventeen (17) publicly traded companies in the United States and Canada within the biotechnology and pharmaceuticals industries with median revenues of $95 million and median market capitalizations of $1.2 billion. Based on the KF review, the Compensation Committee recommended, and the Board approved, the following director compensation for 2022:

Annual cash retainer:	$	75,000
Chair of the Board	$	50,000
Chair of a Board Committee	$	20,000
Member of a Board Committee	$	10,000
Annual RSU award value:	$	135,000

During 2022, the Compensation Committee retained Pay Governance LLC (“Pay Governance”) to conduct an independent assessment of our director compensation versus a peer group that was developed (see “Compensation Discussion and Analysis – Peer Group” for a discussion of our peer group). Based on the Pay Governance review, the Compensation Committee recommended, and the Board approved, maintaining the 2022 level of non-employee director compensation for 2023.

As with many small cap companies, our stock price has been volatile historically. For example, between January 1, 2019 and December 31, 2022, our stock price ranged from a low of $0.55 per share to a high of $6.07 per share. To eliminate some of the volatility from our stock price when making equity awards, our Compensation Committee decided to implement a three-year policy to determine the number of RSUs to issue for annual awards by dividing the annual RSU award value approved by the Compensation Committee ($135,000) with the average closing stock price over the six (6) months prior to the date of the award. As a result of this policy, the grant date fair value of our RSU awards reported in our Director Compensation table below will vary (up or down) from the annual RSU award value approved by the Compensation Committee depending on the closing market price on the date of the award and the average market price over the prior six (6) months. Our Compensation Committee expects to adhere to this policy for director RSU awards made during 2023 and will evaluate the policy annually.

2023 PROXY STATEMENT | 22

Compensation of Directors

NON-EMPLOYEE DIRECTOR COMPENSATION FOR 2022

Name	Fees earned or paid in cash		Option Awards		Restricted Stock Unit Awards⁽¹⁾		All Other Compensation		Total
Clifford B. Fleet	$	105,000	$	—	$	113,460	$	—	$	218,460
Anthony Johnson	$	105,000	$	—	$	113,460	$	—	$	218,460
Michael Koganov	$	105,000	$	—	$	113,460	$	—	$	218,460
Roger D. O’Brien	$	127,500	$	—	$	113,460	$	—	$	240,960
Richard M. Sanders	$	135,000	$	—	$	113,460	$	—	$	248,460
Lucille S. Salhany⁽²⁾	$	30,014	$	—	$	28,440	$	—	$	58,454
Nora B. Sullivan	$	195,000	$	—	$	113,460	$	—	$	308,460

(1)

The fair value of each restricted stock unit is based on the stock price of the Company’s common stock on the grant date of the award.

(2)

Ms. Salhany was appointed as a director on September 7, 2022 and received pro rata compensation for service during 2022.

2023 PROXY STATEMENT | 23

Proposal Two: Advisory Vote on Executive Compensation

We design our executive officer compensation programs with the intent to attract, motivate, and retain industry-leading executives capable of achieving our key strategic goals. Our compensation programs are designed to be competitive with comparable employers and to align the interests of management with long-term stockholders by creating incentives for the achievement of specific key objectives. We encourage you to closely review our “Compensation Discussion and Analysis” and “Executive Compensation” sections, including our stockholder outreach conducted in response to our say on pay voting results.

In accordance with SEC rules, you are being asked to approve an advisory resolution on the compensation of our named executive officers. This proposal, commonly known as a “say on pay” proposal, gives you the opportunity to endorse or not endorse our fiscal year 2022 compensation program and policies for our named executive officers. Although this advisory vote is non-binding, our Board and Compensation Committee will review and consider voting results in making future decisions about executive compensation programs.

RESOLVED:

That the stockholders of 22nd Century Group, Inc. approve, on an advisory basis, the compensation paid to the Company’s named executive officers as described in this proxy statement under the headings “Compensation Discussion and Analysis” and “Executive Compensation.”

Our Board recommends a vote “FOR” approval, on an advisory basis, the 2022 compensation of the Company’s named executive officers as described in this proxy statement under the headings “Compensation Discussion and Analysis” and “Executive Compensation.”

2023 PROXY STATEMENT | 24

Compensation Discussion and Analysis

This compensation discussion and analysis describes the material elements of compensation awarded to, earned by, or paid to each of our named executive officers, whom we refer to as our “NEOs,” during 2022 and describes our policies and decisions made with respect to the information contained in the following tables, related footnotes, and narrative for 2022. The NEOs are identified below under “Our Named Executive Officers.” In this compensation discussion and analysis, we also describe various actions regarding NEO compensation taken before or after 2022 when we believe it enhances the understanding of our executive compensation program.

Our Named Executive Officers

James A. Mish

Chief Executive Officer

R. Hugh Kinsman

Chief Financial Officer

John J. Miller

President of Tobacco

John Franzino

Chief Administrative Officer

For information with respect to Mr. Mish, please refer to the Election of Directors section.

R. Hugh Kinsman, age 56, Chief Financial Officer. Mr. Kinsman has served as our Chief Financial Officer since June 2022. Prior to that time, he served as Chief Financial Officer of GVB Biopharma from March 2020 through June 2022. Between 2017 and 2020, Mr. Kinsman has was a Director at TerraNova Capital Partners, a boutique investment banking firm, where he has acted as CFO of several portfolio companies including iQ International, a leading manufacturer and distributor of highly efficient lead acid batteries for the global automotive and storage markets. Previously, Mr. Kinsman served as a member of the Structured Finance group at GE Capital (NYSE: GE). Mr. Kinsman was also a senior accountant at Asher & Company, CPAs (now BDO). Mr. Kinsman received his B.S. in Finance from Pennsylvania State University and his Master’s in Business Administration from Cornell University.

John J. Miller, age 58, President of Tobacco. Mr. Miller has served as our President of Tobacco since November 2022. Prior to that time, he was the President and CEO of Swisher International, Inc., a manufacturer and exporter of cigars and smokeless tobacco products in the U.S. Mr. Miller joined Swisher in November of 2012 as Senior Vice President of Sales & Marketing, was promoted to President in 2017, and thereafter named CEO in March 2021 until his retirement in September 2021. Mr. Miller’s experience also includes more than twenty (20) years in various management positions at US Smokeless Tobacco Co. Mr. Miller holds a Bachelor of Science Degree in Finance from University of Nevada Las Vegas and earned an MBA from Pepperdine University, The George L. Graziadio School of Business Management.

John Franzino, age 66, Chief Administrative Officer. Mr. Franzino served as our Chief Financial Officer from June 3, 2020 until November 2021, at which time he transitioned to Chief Administrative Officer. He has a successful track record of strategic financial leadership in high-growth, highly regulated, consumer-facing industries as well as not-for-profit, higher education organizations. Most recently, Mr. Franzino served as Chief Financial Officer of the West Point Association of Graduates, which supports the U.S. Military Academy at West Point. Prior to his experience in higher education, Mr. Franzino served as Chief Financial Officer of Santa Fe Natural Tobacco Company, a subsidiary of Reynolds American, Inc., and as Chief Financial Officer of Labatt USA, a subsidiary of Anheuser-Busch. In both roles, he was responsible for financial planning and control functions as well as information systems and technology. Mr. Franzino is a certified public accountant and holds a Master of Business Administration from Fairleigh Dickinson University and a Bachelor of Arts degree from the University of Maine at Farmington. On April 17, 2023, the Company and John Franzino agreed that Mr. Franzino would leave the Company as a result of his officer position being eliminated. The Board of Directors thanks Mr. Franzino for his years of service with the Company.

2023 PROXY STATEMENT | 25

Compensation Discussion and Analysis

Our Executive Compensation Philosophy and Design

We employ a number of practices that reflect our pay-for-performance compensation philosophy and related approach to executive compensation.

What we do

What we don’t do

• Directly link pay of senior management to performance

• Maintain robust stock ownership guidelines for executive officers and our directors

• Require a “double-trigger” for change in control severance benefits

• Retain an independent compensation consultant

• No hedging by executive officers

• No excise tax “gross-up” related to change in control

• No supplemental company-paid retirement benefits designed for executive officers

• No excessive severance or change in control benefits

Our executive compensation programs are driven by a pay-for-performance philosophy that is directly linked to our business strategies and company-wide goals. Prior to the FDA’s authorization of the marketing of our VLN^® King and VLN^® Menthol King reduced nicotine content cigarettes as modified risk tobacco products (MRTPs) in December 2021 and our May 2022 acquisition of GVB Biopharma, our business had historically been focused on developing products through research and development and securing regulatory approval to market and sell such products. While we had limited revenues through the sale of SPECTRUM^® research cigarettes and contract manufacturing of cigarettes and filtered cigars, we believe the primary driver of stockholder value was derived from the success of our rollout of our new our VLN^® King and VLN^® Menthol King reduced nicotine content cigarettes as well as the development of disruptive, plant-based solutions for the life science, consumer product, and pharmaceutical markets that we license to third-parties and/or manufacture and sell. Accordingly, our compensation program has historically focused less on objective financial metrics typically applicable to revenue generating companies. As our Company transitions from a research and development based platform to a revenue based model, the Compensation Committee, intends to adjust the compensation program for 2023 for further alignment with long-term interests of stockholders. Specifically, metrics to assess performance of the named executive officers will be based on more objective quantitative metrics.

Our Pay for Performance Philosophy

Our Compensation Committee seeks to attract and retain executive officers who have the experience, talents, and convictions to drive our future success. Our compensation program is designed to:

•

motivate our executives by providing compensation that is directly linked to both our short- and long-term performance;

•

tightly align their incentives and economic interests with our stockholders to build long-term stockholder value by delivering a substantial portion of our executive officer’s compensation through equity awards; and

•

ensure that our executive compensation program is designed and administered in a manner that appropriately manages risk to safeguard the interests of our stockholders’, as well as our employees’.

We have designed our executive compensation program with specific features to help achieve these goals and to promote related objectives that are important to our long-term success.

Roles and Responsibilities

Our Compensation Committee has primary responsibility for, among other things, determining our compensation philosophy, evaluating the performance of our executive officers, setting the compensation and other benefits of our executive officers, overseeing the Company’s response to the outcome of the advisory votes of stockholders on executive compensation (as discussed below), assessing the relative enterprise risk of our compensation program and administering our incentive compensation plans.

2023 PROXY STATEMENT | 26

Compensation Discussion and Analysis

Our Board, our Compensation Committee and our CEO each play a role in setting the compensation of our NEOs. Our Board appoints the members of our Compensation Committee and delegates to the Compensation Committee direct responsibility for overseeing the design and administration of our executive compensation program. Our Board and our Compensation Committee value the opinions of our stockholders and are committed to ongoing engagement with our stockholders on executive compensation practices. As discussed below, the Compensation Committee specifically considers the results from the annual stockholder advisory vote on executive compensation in making compensation decisions.

In February 2022, our Compensation Committee engaged the governance consulting firm of Morrow Sodali to assist with say-on-pay and the election of new directors.

In August 2022, our Compensation Committee engaged the compensation consulting firm of Pay Governance to assist the Committee in developing a peer group to benchmark executive compensation against other biotechnology, pharmaceutical, and life science companies with similar revenues and market capitalizations. Pay Governance then reviewed our current executive compensation program and made recommendations with respect to the design of our compensation program and future compensation decisions.

To assure independence, the Compensation Committee pre-approves all other work unrelated to executive compensation proposed to be provided by any compensation consultant it engages and considers all factors relevant to their independence from management, including, but not limited to, the following factors:

•

The provision of other services that the consultant provides to us;

•

The amount of fees received from us as a percentage of the consultant’s total revenue;

•

The consultant’s policies and procedures designed to prevent conflicts of interest;

•

Business or personal relationships of the consultant with our Compensation Committee members;

•

The amount of our stock owned by the consultant; and

•

Business or personal relationships of the consultant with our executive officers.

Our Say-on-Pay Vote; Stockholder Outreach

The Board and Compensation Committee are committed to soliciting feedback to inform the Board’s decisions and guide our compensation program. Our stockholder outreach in 2021, 2022, and going into 2023 provided the Board with valuable insight into our stockholders’ perspectives on our executive compensation. We are committed to sound compensation practices and will continue to enhance our compensation program as a result of stockholder input.

Following the 2022 Annual Meeting of Stockholders, the Compensation Committee continued the stockholder outreach program. This outreach focused on better understanding the perspectives of our stockholders regarding our executive compensation program structures and best practices in aligning executive compensation to the interests of our stockholders.

The executive compensation outreach initiative is in addition to our regular ongoing stockholder engagement. As part of our ongoing outreach efforts to inform our corporate policies, the Company proactively reached out to filing institutional stockholders to discuss the Company’s executive compensation philosophy, goals, and plans and to obtain an understanding of our stockholders’ concerns in advance of this filing. Approximately 19.4% of the Company’s outstanding shares of common stock were owned by filing institutional stockholders in 2022. Please see the “Shareholder Outreach” section on page 4 for a more fulsome disclosure on our shareholder outreach efforts.

2023 PROXY STATEMENT | 27

Compensation Discussion and Analysis

By The Numbers: Stockholder Engagement

Our Independent Board Chair and Chair of our Compensation Committee participated in all of the stockholder engagement meetings.

Feedback from Stockholder Engagement

We heard a range of perspectives on our executive compensation program from stockholders during our outreach, all of which were considered by our Compensation Committee and the Board.

Our stockholders expressed a continuing desire to understand the specifics behind our executive compensation plan design including, rationale, key performance indicators, and qualitative metrics that align to both the short, mid and long-term strategy of the Company.

Our work to solicit stockholder feedback into our executive compensation program continues.

2023 PROXY STATEMENT | 28

Compensation Discussion and Analysis

Elements of Executive Compensation

Our compensation program consists of the following three (3) primary elements:

(1)

Base Salary. We provide a base salary for each NEO based on their job description and the scope of responsibilities for that position. We target a base salary generally at the median of our peer group (discussed below) for each NEO position.

(2)

Annual Cash Bonus Opportunity. The annual cash bonus is our primary short-term performance incentive. Our NEO target bonus awards range from 75% to 150% of their base salary, representing the “at risk” portion of the NEO’s total cash compensation. Our philosophy is to have a significant portion of each NEO’s total cash compensation “at-risk.” The Compensation Committee sets performance goals for cash bonuses that align pay with performance. Prior to 2022, our Compensation Committee prioritized the accomplishment of critical strategic and operational milestones. With the Company entering into its revenue generating phase, given the roll-out of its VLN® cigarettes and acquisition of GVB Biopharma, the Compensation Committee modified the compensation structure for 2022 cash bonuses to focus on a combination of measurable company financial and business objectives along with individual performance ratings.

(3)

Long-Term Incentive Awards. Long-term incentive awards are our primary retention tool and serve to provide for the continuity of key executives with incentives that align our executives’ interests with those of our stockholders’. For 2021 and 2022, these long-term incentive awards were generally comprised of restricted stock units with multi-year vesting. As of 2023, a portion of Long-Term Incentive Awards made to NEOs include performance-based metrics.

2023 PROXY STATEMENT | 29

Compensation Discussion and Analysis

Peer Group

We endeavor to set target total compensation, which consists of base salary, annual cash bonuses, and long-term incentives generally at the median of peer companies. Adjustments to the median depend on various factors, including the experience level of the individual executive and competitive market conditions. We use our peer group median compensation values to help determine the market compensation mix and as a general guide to determine salary recommendations, target annual cash bonus opportunity, and target annual long-term incentive value for each executive position. Compensation for top executives can be highly variable due to heavy weighting toward incentive compensation rather than fixed components.

With the assistance of Pay Governance in 2022, our Compensation Committee established a peer group consisting primarily of similarly situated biotechnology, pharmaceutical, and life science companies with revenues and a market capitalization similar to ours. The peer group established consists of the following companies:

Achieve Life Sciences	AquaBounty Technologies	Avid Bioservices	Benson Hill	Charlotte’s Web Holdings
ChromaDex Corporation	Cronos Group	GreenLight Biosciences	Hawkins	Jushi Holdings
Laird Superfood	Landec Corporation	Pear Therapeutics	PRECIGEN	Societal CDMO
The Valens Company	TILT Holdings	Village Farms International	Zynerba Pharmaceuticals

Base Salary

We pay our NEOs a base salary to compensate them for services rendered and to provide them with a steady source of income for living expenses throughout the year. We have historically determined the base salary of each NEO based on the job description and scope of responsibilities of that position and assign each position a target annual salary generally at median for a comparable role among peer group companies. Once a base salary is set, we have historically provided a base salary increase of 0% - 5% annually depending on the performance of the NEO during the prior year and taking into account any other factors, such as recent salary increases, alignment with market bonuses or other compensation.

For 2022, we took the following actions with respect to the base salaries of our NEOs:

•

James Mish’s base salary increased from $450,000 to $472,500, a 4% increase.

•

John Franzino’s base salary increased from $315,000 to $330,750, a 5% increase.

•

John Miller joined the Company in 2022 with a base salary of $425,000.

•

R. Hugh Kinsman joined the Company in 2022 with a base salary of $290,000.

In February 2023, our Compensation Committee reviewed the 2022 base salaries of our NEOs in connection with the establishment of the new peer group set forth above. Mr. Mish and Mr. Kinsman received a base salary increase for 2023 because their 2022 base salaries were below the peer group median described above for their respective positions. The other NEOs did not receive a salary increase because their 2022 base salaries approximated the peer group median. The base salaries of each of our NEOs for 2023 is as follows:

Name	2023 Base Salary		Percentage Increase Over 2022 Base Salary
James A. Mish	$	486,675		3	%
John Franzino	$	330,750		0	%
John Miller	$	425,000		0	%
R. Hugh Kinsman	$	370,000		28	%

2023 PROXY STATEMENT | 30

Compensation Discussion and Analysis

2022 Annual Cash Bonus Opportunity

In general, our NEO target bonus awards range from 75% - 150% of an NEOs base salary depending on their position. The Compensation Committee aims to set performance goals for cash bonuses that align pay with performance. A number of factors are considered when calibrating goals, including the Company’s business strategies and company-wide goals. Prior to entering into its revenue phase, our Compensation Committee believed that the primary driver of stockholder value was derived from the research in and development of disruptive, plant-based solutions for the life science, consumer product, and pharmaceutical markets that we license to third-parties and/or manufacture and sell. Accordingly, our compensation program has historically focused less on objective metrics typically applicable to other revenue generating companies. In 2023, with the Company entering into its revenue phase, given the roll-out of its VLN^® cigarettes and acquisition of GVB Biopharma, the Compensation Committee will focus on quantitative performance measures such as revenue and other financial metrics for a direct link to executive pay, along with an assessment of individual performance.

For 2022, our Compensation Committee generally weighted financial and business objectives versus individual objectives 80%/20% for the CEO and 60%/40% for most other executive officers. However, our cash bonus awards included an element of discretion as relegated to the Compensation Committee in order to compensate NEOs that performed extraordinarily well and incentivize and motivate our NEOs.

For 2022, our Compensation Committee challenged our NEOs with a number of strategic goals and objectives for 2022, including but not limited to:

•

Launch of VLN^® reduced nicotine content cigarettes internationally;

•

Launch of VLN^® reduced nicotine content cigarettes nationally following the successful pilot launch;

•

Increase of gross profit for cigar and cigarette contract manufacturing operations by $1,000,000;

•

Advancement of VLN^® through securing strategic partnerships;

•

Increase of regulatory and legislative advocacy for VLN^®, as well as within the hemp and cannabis business units;

•

Development of intellectual property for next generation VLN^® blends;

•

Development of merger & acquisition strategy and business plan for hemp/cannabis division;

•

Development innovative intellectual property for hemp cannabis, tobacco and hops products;

•

Increase of cash position though capital markets activities;

•

Enhancement of operational finance process/reports;

•

Improvement of human resources and IT functions and processes; and

•

Establishment of compensation benchmarking.

At the end of the year, the Compensation Committee reviews each NEO’s individual performance objectives and goals against their performance throughout that same year, which performance is rated by both the individual NEO through a self-assessment as well as a review of performance by the CEO (for NEOs other than himself) and the Compensation Committee. Overcall, cash bonuses paid for 2022 performance were 36% lower than cash bonuses paid for 2021 performance. See section “CEO Pay Decisions Made in 2022” for additional details regarding how the Committee determined 2022 bonus earned for Mr. Mish. The target cash bonus amounts (and percentage of base salary) and the actual cash bonuses earned by our NEOs for 2022 are as follows:

Name	Target Cash Bonus (and percentage of Base Salary)	Actual Cash Bonus Earned		Bonus Earned as a % of Target
James A. Mish	$708,750 (150%)	$	481,950		68	%
John Franzino	$248,062 (75%)	$	238,140		96	%
R. Hugh Kinsman	$217,500 (75%)	$	90,575		42	%
John Miller	$318,750 (75%)	$	160,000		50	%

2022 Long-Term Incentive Program Awards

Our Compensation Committee strongly believes that using equity awards with multi-year vesting periods reinforces the alignment of the interests of executives with those of stockholders and assists us to retain our executives. We maintain our omnibus incentive plan for the purpose of granting various types of equity awards, including restricted stock units, to provide incentives for management to increase stockholder value. In addition, the multi-year nature of the vesting periods encourages executives to stay with the Company, which is important to us in light of the competitive labor market for talented executives.

2023 PROXY STATEMENT | 31

Compensation Discussion and Analysis

Our Compensation Committee has authority to determine eligible participants, the types of awards, and the terms and conditions of awards. As part of their total compensation package, each NEO is assigned an annual dollar value target for these long-term incentive plan awards which is adjusted up or down depending on the individual’s and the Company’s actual performance during the prior year. For 2021 and 2022, NEOs were generally awarded restricted stock units with a three-year vesting period, subject to continued service with us. The number of restricted stock units for each award is determined by converting the dollar value into a number of shares based on our average closing stock price during the six (6) months preceding the award date. The Compensation Committee expects to continue this practice in 2023.

During 2022, Mr. Miller received an award of seven hundred and fifty thousand (750,000) performance shares, with one-third of such shares to vest annually in 2023, 2024, and 2025 provided our tobacco business plan revenue objectives and other measurable performance requirements are satisfied. The performance shares were issued to incentivize Mr. Miller to successfully roll-out our VLN^® pilot program. In order for Mr. Miller to receive all two hundred and fifty thousand (250,000) shares in the first tranche, the Company’s business plan revenue objective for the tobacco business unit for the prior twelve (12) month period must have been met, and at least four (4) senior level strategic partnership discussions must have been initiated. Mr. Miller initiated at least four (4) senior level strategic partnership discussions but did not fully meet the revenue objectives for the tobacco business unit. Based on the predetermined metrics, the Compensation Committee determined that Mr. Miller earned one hundred and fifty thousand (150,000) of the initial one-third tranche of the performance shares.

The long-term incentive plan awards are used to motivate and retain employees as well as promote employee stock ownership. We do not issue the shares until the vesting conditions have been satisfied. We currently do not use stock options as part of our compensation package. Since we grant fewer shares with these types of awards than we would have granted in the form of options, stock grants help us manage dilution that we would otherwise experience in granting options.

As we continue to grow, our Compensation Committee is committed to exploring ways to further and more directly tie future long-term incentive plan award vesting to performance and the achievement of future company and individual goals. As part of this process, the Compensation Committee is shifting its focus on granting long-term incentive awards on a backward-looking basis (i.e., how executive performed in the prior years) to granting long-term incentive awards on a forwarding-looking basis with a portion that is performance-based.

For 2022, we awarded our NEOs the following RSUs:

Name	RSU Grant Value		Number of Shares
James A. Mish⁽¹⁾	$	3,025,989		1,381,730
John Franzino	$	264,736		120,884
John Miller⁽²⁾	$	982,500		750,000	⁽²⁾
R. Hugh Kinsman⁽³⁾		N/A		N/A

(1)

Comprises an RSU grant of 950,000 vesting 50% over two (2) years to reflect performance since becoming CEO and an annual grant of 431,730 vesting over three (3) years to reflect 2022 performance.

(2)

Represents performance shares, as discussed above.

(3)

Due to the timing of his appointment, Mr. Kinsman was not awarded a long-term equity incentive award during 2022.

CEO Pay Decisions Made in 2022

In 2022, Mr. Mish’s base salary was increased by 4% to four hundred and seventy-two thousand, five hundred dollars ($472,500). In 2023 , Mr. Mish’s salary was increased by 3% to four hundred and eighty-six thousand, six hundred and seventy-five dollars ($486,675). In both instances, Mr. Mish’s salary was increased because it was below the peer group median determined at the time of the increase.

2023 PROXY STATEMENT | 32

Compensation Discussion and Analysis

Mr. Mish received a cash bonus of four hundred and eighty-one thousand, nine hundred and fifty dollars ($481,950) for his 2022 performance, which is -21% lower than his cash bonus of six hundred and eight thousand dollars ($608,000) for his 2021 performance. As CEO, the Compensation Committee determined 80% of Mr. Mish’s cash bonus amount based on the Company’s achievement of financial and business objectives while the other 20% was determined using individual objectives. The Compensation Committee determined that the Company realized approximately 60% of its financial and business objectives, while Mr. Mish completed 100% of his individual objectives. Thus, it was determined Mr. Mish would receive 68% of his target cash bonus.

In March 2022, Mr. Mish received an annual award of four hundred and thirty-one, seven hundred and thirty (431,730) restricted stock units (“RSUs”) vesting over three (3) years, plus an award of nine hundred and fifty thousand (950,000) RSUs vesting of two (2) years. The nine hundred and fifty thousand (950,000) RSUs were issued to Mr. Mish on a backward-looking basis and in consideration of his performance since becoming CEO of the Company. Beginning in 2023, the Compensation Committee is shifting its focus on granting long-term incentive awards on a backward-looking basis to a forwarding-looking basis with a portion that is performance-based.

The following table presents additional information about the compensation of our CEO during fiscal years 2020, 2021, and 2022 that differs from the Summary Compensation Table shown on page 36 and is intended to illustrate the backward-looking nature of the equity awards granted to our CEO. The following table presents, in the “Stock Awards” column, how the Compensation Committee intended the 950,000 RSUs valued at $2,080,500 to be aligned with his performance since becoming CEO in 2020 rather than fully in 2022. This table is not intended to be a substitute for the Summary Compensation Table shown on page 36.

Name and										Non-Equity
Principal						Option		Stock		Incentive Plan		All Other
Position	Year	Salary		Bonus		Awards		Awards		Compensation		Compensation		Total
James A. Mish	2022	$	470,976	$	—	$	—	$	1,777,689	$	481,950	$	32,179	$	2,762,794
Chief Executive Officer	2021	$	452,763	$	—	$	—	$	2,272,200	$	608,000	$	33,721	$	3,366,684
	2020	$	241,093	$	—	$	—	$	534,330	$	675,000	$	8,760	$	1,459,183

Stock Ownership Policy

We strongly encourage our officers and directors to own shares of our common stock in order to align their interests with those of stockholders’. Our stock ownership policy is designed to focus our senior officers and directors on long-term stockholder value creation. Our policy sets stock ownership targets for senior officers as a multiple of base salary and for non-employee directors as a multiple of their annual retainer (exclusive of chair fees).

Executive officers and non-employee directors are expected to meet their target ownership level by the later of the fifth anniversary of their appointment to their position and the fifth anniversary of the effective date of the policy. Individuals who have not achieved their target ownership level by the applicable deadline will be expected to retain all of their equity awards, net of the amount of shares sufficient to cover any taxes or exercise price due in connection with such equity awards, until the target ownership level is met.

2023 PROXY STATEMENT | 33

Compensation Discussion and Analysis

Retirement and Other Benefits

We are strongly committed to encouraging all employees to save for retirement. To provide employees with the opportunity to save for retirement on a tax-deferred basis, we sponsor a 401(k)-plan pursuant to which we make a safe harbor non-elective contribution of 3% of the employee’s annual compensation—subject to certain wage maximums. We also provide health and dental insurance, group-term life insurance, and long-term disability insurance to the employees. We do not maintain any pension or non-qualified deferred compensation plans.

Compensation on Termination of Employment

Each of our NEOs has an employment agreement that provides for severance in the event they are terminated without cause or they leave for good reason. We believe these agreements are important to attract and retain NEOs since many companies we compete with offer severance compensation. For additional information on compensation on termination of employment, see “Executive Compensation — Employment Agreements with Named Executive Officers” and “Executive Compensation — Compensation on Termination of Employment.”

Policy on Hedging Transactions

We prohibit our officers and directors from engaging in hedging transactions or arrangements designed to lock in the value of their company securities. This prevents our officers and directors from continuing to own company securities without having the full risks and rewards of ownership.

Recoupment/Clawback Policies

The Sarbanes-Oxley Act of 2002 subjects incentive compensation and stock sale profits of our CEO and CFO to forfeiture in the event of an accounting restatement resulting from any non-compliance, as a result of misconduct, with any financial reporting requirement under GAAP and SEC rules. We acknowledge the SEC’s new Rule 10D-1 regarding clawback policies and NASDAQ’s Proposed Listing Rule 5608(a). Once final, we will comply accordingly.

Compensation Committee Report

For the year ended December 31, 2022, the Compensation Committee reviewed and discussed the CD&A with our management. Based on this review and discussion, the Compensation Committee recommended to our Board of directors that the CD&A be included in this proxy statement.

Richard M. Sanders, Chair

Roger O’Brien

Anthony Johnson

Nora B. Sullivan

2023 PROXY STATEMENT | 34

Audit Committee Report

Executive Compensation

SUMMARY COMPENSATION TABLE FOR 2022

The following table summarizes the compensation of our NEOs for 2022. The amounts reported for stock awards may not represent the amounts that the NEOs will actually realize from the awards. Whether, and to what extent, a named executive officer realizes value will depend on our performance, stock price and continued employment.

Name and Principal Position	Year	Salary		Bonus		Option Awards (1)		Stock Awards (2)		Non-Equity Incentive Plan Compensation		All Other Compensation (3)		Total
James A. Mish	2022	$	470,976	$	—	$	—	$	3,025,989	$	481,950	$	32,179	$	4,011,094
Chief Executive Officer	2021	$	452,763	$	—	$	—	$	1,440,000	$	608,000	$	33,721	$	2,534,484
	2020	$	241,093	$	—	$	—	$	118,230	$	675,000	$	8,760	$	1,043,083
R. Hugh Kinsman (4)	2022	$	160,033	$	—	$	—	$	—	$	90,575	$	4,646	$	255,254
Chief Financial Officer
John J. Miller (5)	2022	$	277,836	$	—	$	—	$	982,500	$	160,000	$	19,625	$	1,439,961
President of Tobacco
John Franzino	2022	$	294,606	$	—	$	—	$	264,736	$	238,140	$	30,323	$	827,805
Chief Administrative Officer	2021	$	308,849	$	—	$	—	$	576,000	$	200,813	$	26,179	$	1,111,841
	2020	$	158,213	$	—	$	—	$	142,005	$	125,000	$	10,030	$	435,248
Michael J. Zercher	2022	$	291,923	$	—	$	—	$	461,525	$	—	$	726,962	$	1,479,909
Former President and Chief Operating Officer	2021	$	368,060	$	—	$	192,950	$	1,440,000	$	638,100	$	33,721	$	2,672,831
	2020	$	366,431	$	—	$	—	$	447,831	$	366,100	$	31,970	$	1,212,332
Richard Fitzgerald	2022	$	159,892	$	—	$	—	$	273,141	$	—	$	4,473	$	437,505
Former Chief Financial Officer	2021	$	43,860	$	—	$	—	$	—	$	75,000	$	807	$	119,667

(1)

Represents the grant date fair value computed in accordance with FASB ASC 718. The assumptions used for the option awards are set forth in Note 15 “Equity Based Compensation” of the Notes to the Consolidated Financial Statements contained in Item 8 of this report.

(2)

The fair value of each restricted stock unit is based on the stock price of the Company’s common stock on the grant date of the award.

(3)

All Other Compensation consists of the following:

Employer

SEC Form DEF 14A filed by 22nd Century Group Inc.