Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Chief Operating Officer
On September 11, 2018, we announced the appointment of Dr. Shawn A. Scranton, as our Sr. Vice President, Chief Operating Officer, effective as of his first day of employment with us, which is expected to be October 1, 2018.
Dr. Scranton, age 54, previously served as Chief Scientific Consultant for Sentynl Therapeutics, Inc. a wholly owned subsidiarity of Zydus-Cadila, a pharmaceutical company, from 2017 to 2018. From 2015 to 2017, Dr. Scranton served as Senior Vice President, Chief Scientific Officer at Sentynl Therapeutics, Inc., a pharmaceutical company. Prior to Sentynl, Dr. Scranton served as Consultant, Managing Director at Strategic Therapeutic Solutions, LLC, a pharmaceutical consulting company, and from 2007 to 2012, Dr. Scranton served as VP, Scientific Operations at Victory Pharma, Inc., a specialty pharmaceutical company. Dr. Scranton served as Sr. Director of Translational Medicine at Kalypsys, Inc., a pharmaceutical company, from 2005 to 2007, and as Director of Clinical Research/Program Director at Salmedix Corporation, a drug development company, from 2001 to 2005. From 1998 to 2000, Dr. Scranton served as Senior Clinical Research Scientist, Clinical Development at Dura Pharmaceuticals, Inc., a pharmaceutical company. Dr. Scranton holds a Doctor of Pharmacy from the University of the Pacific School of Pharmacy (1994) and a B.A. in Animal Physiology from the University of California, San Diego (1988).
Compensation Arrangements
We entered into an executive employment agreement with Dr. Scranton effective as of his first day of employment with us, which is expected to be October 1, 2018. The executive employment agreement does not have a term and may be terminated by us or Dr. Scranton at any time.
Pursuant to the executive employment agreement, Dr. Scranton will receive a base salary of $300,000 per year, less applicable withholdings, and he will be eligible to earn an annual target bonus of up to 35% of his base salary upon achievement of performance objectives to be determined by our board of directors in its sole discretion. Dr. Scranton is also eligible to participate in the employee benefit plans sponsored by us of general applicability to other of our senior executives.
In connection with his employment, we have agreed to grant Dr. Scranton an option to purchase 82,000 shares of our common stock at an exercise price per share equal to the fair market value of our shares on the date of grant, pursuant to an equity incentive plan and subject to approval by our board of directors. The shares subject to the option award will be scheduled to vest as follows, subject to Dr. Scranton’s continued service through each applicable vesting date: 25% of the shares will vest on the first anniversary of the date on which Dr. Scranton commences employment with us and thereafter 1/48th of the shares subject to the option will vest on each monthly anniversary of the date on which Dr. Scranton commences employment with us, such that the option will be fully vested on the fourth anniversary of the date on which Dr. Scranton commences employment with us.
The executive employment agreement also provides benefits in connection with a termination of Dr. Scranton’s employment under specified circumstances. Under the terms of the executive employment agreement, if we terminate Dr. Scranton’s employment other than for “cause,” death, or “disability,” or Dr. Scranton terminates his employment for “good reason,” in either case, during the period beginning three months prior to a change of control and ending twelve months following a “change of control” (as such terms are defined in the executive employment agreement) (the “Change of Control Period”), Dr. Scranton will be entitled to receive, subject to his timely execution andnon-revocation of a separation agreement and release of claims in a form reasonably satisfactory to us and his continued adherence to the nonsolicitation provision of the executive employment agreement, (i) a lump sum severance payment equal to 150% of the sum of (x) his then-current base salary, as then in effect or, if greater, at the level in effect immediately prior to the change of control, plus (y) his target bonus for the fiscal year in which the termination occurs; (ii) reimbursements for Dr. Scranton’s and his eligible dependents’ COBRA premiums for up to 18 months; and (iii) accelerated vesting as to 100% of Dr. Scranton’s then-outstanding equity awards.
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