Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)Amended and Restated Employment Agreements for Neal Walker and Frank Ruffo
On January 12, 2022, Aclaris Therapeutics, Inc. (the “Company”) entered into amended and restated employment agreements with each of Neal Walker, its President and Chief Executive Officer, and Frank Ruffo, its Chief Financial Officer (each, an “Amended Employment Agreement” and collectively the “Amended Employment Agreements”). The Amended Employment Agreements supersede each executive’s prior employment agreement (collectively, the “Prior Agreements”) and are based on terms recommended by the compensation consultant to the Compensation Committee of the Board of Directors (the “Board”) of the Company.
Base Salary and Target Bonus
Under the Amended Employment Agreements, the annual base salary and target bonus were updated to reflect each executive’s current salary and target bonus. Dr. Walker is entitled to an annual base salary of $566,500 and Mr. Ruffo is entitled to an annual base salary of $401,700, each of which may be increased by the Board in its sole discretion. The target bonus is 60% of base salary for Dr. Walker and 40% of base salary for Mr. Ruffo.
Severance Upon Qualifying Termination Unrelated to a Change of Control
Each Amended Employment Agreement continues to provide for payments in the event the executive’s employment is terminated due to death or “Disability”, or in the event the Company terminates the executive’s employment “Without Cause” or if the executive resigns for “Good Reason” (each as defined in the Amended Employment Agreements), provided that the executive executes and does not revoke a release of claims (each, a “Qualifying Termination”).
If a Qualifying Termination occurs, the Company has agreed to provide each executive with the following severance benefits:
| ● | continued payment of his then-current base salary for a period of 12 months following termination (the “Severance Period”), in each case payable in accordance with normal payroll practices; |
| ● | a lump sum payment of any approved but unpaid bonuses or portion thereof for the preceding year or the year of termination; and |
| ● | a direct payment by the Company to the applicable healthcare provider of 100% of the medical, vision and dental coverage premiums due to maintain any COBRA coverage for which he is eligible and has appropriately elected for a period of 12 months after the effective date of termination (the “COBRA Payment Period”). |
Dr. Walker was provided the same severance benefits under his Prior Agreement. Compared to his Prior Agreement, Mr. Ruffo also was provided the same severance benefits, except that his Severance Period and COBRA Payment Period was increased from nine months to 12 months.
Severance Upon Qualifying Termination Related to a Change of Control
If a Qualifying Termination occurs on or within three months prior to, or within 12 months following, a “Change of Control” (as defined in the Amended Employment Agreements), the Company has agreed to provide each executive, as applicable, with the following additional severance benefits (in addition to the severance benefits noted above):
| ● | for Dr. Walker only, continuation of his base salary for six additional months following the end of the Severance Period; |
| ● | an additional lump sum payment equal to the target bonus for Mr. Ruffo and 1.5 times the target bonus for Dr. Walker; |
| ● | for Dr. Walker only, continued payment of 100% of his COBRA premiums for six months following the end of the COBRA Payment Period; and |
| ● | if the termination occurs on or within three months prior to the Change of Control, all of Dr. Walker’s and Mr. Ruffo’s unvested stock options and other equity awards outstanding on the effective date of termination will become fully vested on the effective date of the Change of Control, or if the termination |
