| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On October 30, 2023, the Board of Directors (the “Board”) of Spero Therapeutics, Inc. (the “Company”) appointed Esther Rajavelu as the Company’s Chief Financial Officer and Chief Business Officer.
Ms. Rajavelu, age 45, served as chief financial officer of Fulcrum Therapeutics, Inc. (“Fulcrum”) from January 2022 to April 2023. Prior to joining Fulcrum, Ms. Rajavelu’s career in the biotechnology sector includes her time as an equities research analyst, investment banker, and strategy consultant. She served as a senior equities research analyst at UBS Securities (“UBS”) from July 2020 to December 2021. Prior to joining UBS, Ms. Rajavelu served as a senior equities research analyst at Oppenheimer & Co. Inc. (“Oppenheimer”) from June 2018 to July 2020. Prior to joining Oppenheimer, Ms. Rajavelu served as an equities research analyst at Deutsche Bank from June 2014 to June 2018. Prior to joining Deutsche Bank, she served as vice president, life sciences M&A and capital & debt advisory at Ernst & Young Capital Advisors, LLC (“EY Capital Advisors”) from 2011 to 2014. Prior to joining EY Capital Advisors, she worked at Bank of America Merrill Lynch from 2006 to 2011 in the healthcare investment banking group where she focused on financing and strategic transactions in the biotechnology and medical devices sectors. Ms. Rajavelu received a MBA from The Wharton School of the University of Pennsylvania and a B.A. in Economics and International Relations from Wesleyan University.
In connection with Ms. Rajavelu’s appointment, she entered into an executive employment agreement (the “Agreement”) with the Company, effective as of November 6, 2023 (the “Effective Date”), setting forth her compensation and certain other terms. Pursuant to the Agreement, Ms. Rajavelu is entitled to receive an annual base salary of $475,000, a one-time sign-on bonus of $50,000, and an annual cash bonus commencing in fiscal year 2024 of up to 40% of her then-current base salary (the “Annual Performance Bonus”). The Annual Performance Bonus, if any, will be determined by the Company’s Board of Directors and will be based upon the achievement of corporate and individual performance objectives. Pursuant to the Agreement, on November 13, 2023, Ms. Rajavelu will be granted 300,000 restricted stock units (“RSUs”) (each RSU relating to one share of the Company’s common stock, par value $0.001 per share) under the Spero Therapeutics, Inc. 2019 Inducement Equity Incentive Plan, as amended (the “2019 Inducement Plan”). The RSUs will be granted as an inducement material to Ms. Rajavelu becoming an employee of the Company in accordance with Nasdaq Listing Rule 5635(c)(4). The RSUs will vest in four equal annual installments beginning on the first anniversary of the Effective Date, subject to Ms. Rajavelu’s continued employment with the Company on such vesting dates. The RSUs are subject to the terms and conditions of the 2019 Inducement Plan and the terms and conditions of a RSU agreement covering the grant.
The Agreement also provides for the following severance payments upon termination by the Company without Cause (as defined in the Agreement) or by Ms. Rajavelu for Good Reason (as defined in the Agreement): (i) payment of her then-current base salary for a period of nine months following termination; (ii) a pro-rated target bonus for the period during which Ms. Rajavelu was employed in the year of termination; and (iii) continued coverage under the Company’s group health insurance plan until the earlier of 12 months from termination or the date Ms. Rajavelu becomes eligible for medical benefits with another employer. Further, the Agreement provides that upon termination by the Company without Cause or by Ms. Rajavelu for Good Reason within 90 days prior to the earlier to occur of a Change of Control (as defined in the Agreement) or the execution of a definitive agreement the consummation of which would result in a Change of Control or one year following a Change of Control (a “Change of Control Termination”), Ms. Rajavelu will be entitled to receive: (i) a lump sum payment equal to 12 months of her then-current base salary plus her then-current target performance bonus; (ii) acceleration of all unvested equity awards as of the date of termination; and (iii) continued coverage under the Company’s group health insurance plan until the earlier of 12 months from termination or the date Ms. Rajavelu becomes eligible for medical benefits with another employer. Payment in each case is subject to Ms. Rajavelu’s execution of a release satisfactory to the Company following such termination. In addition, if Ms. Rajavelu’s employment terminates as a result of disability or death, she shall be entitled to receive a pro-rated target bonus for the period during which Ms. Rajavelu was employed in the year of termination.
The foregoing is only a summary of the Agreement and is qualified in its entirety by reference to the Agreement, which the Company intends to file as an exhibit to its Annual Report on Form 10-K for the year ending December 31, 2023.
The selection of Ms. Rajavelu to perform the functions of Chief Financial Officer and Chief Business Officer was not pursuant to any arrangement or understanding between Ms. Rajavelu and any other person. There are no family relationships between Ms. Rajavelu and any director or executive officer of the Company, and there are no transactions between Ms. Rajavelu and the Company that would be required to be reported under Item 404(a) of Regulation S-K.
