Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
On February 11, 2022, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of Lyell Immunopharma, Inc. (the “Company”) approved the matters set forth below.
1. Amended Officer Severance Plan
The amended Officer Severance Plan (the “Amended Plan”), which amends and restates in its entirety the Company’s Officer Severance Plan that became effective on July 29, 2019 (the “Previous Plan”).
The Amended Plan, which is administered by the Compensation Committee, provides severance and/or accelerated vesting benefits to certain eligible employees of the Company who hold the title of vice president or above (other than the Company’s Chief Executive Officer) (the “Eligible Employees”) whose employment with the Company terminates under certain prescribed circumstances, as described in more detail below.
Under the terms of the Amended Plan, if the Company terminates an Eligible Employee’s employment without Cause (as defined in the Amended Plan) (excluding by reason of death or disability) or the Eligible Employee resigns for Good Reason (as defined in the Amended Plan) (each, a “Qualifying Termination”) and the Eligible Employee timely executes a general release of claims in favor of the Company, the Eligible Employee will receive the following severance benefits: (1) if such Qualifying Termination occurs outside the Change in Control Protection Period (as defined below): (a) cash payments equal to the sum of (i) an amount ranging from six to twelve months of the Eligible Employee’s annual base salary, depending on the Eligible Employee’s position and (ii) for Tier I Employees (as defined in the Amended Plan), a pro-rated annual target bonus for the year in which the Qualifying Termination occurs and (b) payment of the employer portion of premiums for coverage under COBRA for the Eligible Employee and the Eligible Employees dependents (if any) for up to six to twelve months following the Qualified Termination, depending on the Eligible Employee’s position; or (2) if such Qualifying Termination occurs during the Change in Control Protection Period (a) cash payments equal to the sum of (i) an amount ranging from nine to twelve months of the Eligible Employee’s annual base salary depending on the Eligible Employee’s position, (ii) for Tier I Employees, 100% of the annual target bonus for the Eligible Employee for the year in which the Qualifying Termination occurs, and (iii) any guaranteed or accrued bonus the Eligible Employee is eligible to receive as of the date of such Qualifying Termination, (b) payment of the employer portion of premiums for coverage under COBRA for the Eligible Employee and the Eligible Employee’s dependents (if any) for up to nine to twelve months following the Qualifying Termination, depending on the Eligible Employee’s position and (c) accelerated vesting of 100% of the Eligible Employee’s then outstanding and unvested equity awards which would otherwise become vested solely on the passage of time and such Eligible Employee’s continued service to the Company.
As used herein, “Change in Control Protection Period” means the period beginning on the date that is three months prior to the effective date of a Change in Control (as defined in the Amended Plan) and ending on the date that is the one-year anniversary of the effective date of such Change in Control.
The material differences between the Amended Plan and the Previous Plan are (i) the addition of pro-rated bonus severance for Tier I Employees that have a Qualifying Termination outside the Change in Control Protection Period, (ii) the addition of nine months’ base salary severance and payment of the employer portion of premiums for coverage under COBRA for up to nine months for Tier II Employees (as defined in the Amended Plan) that have a Qualifying Termination outside the Change in Control Protection Period, (iii) the addition of six months’ base salary severance and payment of the employer portion of premiums for coverage under COBRA for up to six months for Tier III Employees (as defined in the Amended Plan) that have a Qualifying Termination outside the Change in Control Protection Period, (iv) the addition of target annual bonus severance for Tier I Employees that have a Qualifying Termination during the Change in Control Protection Period, (v) the addition of vesting acceleration benefits for Tier III Employees that have a Qualifying Termination that occurs during the period within 3 months prior to the effective date of a Change in Control and (vi) the increase of the vesting acceleration percentage for Tier III Employees from 75% to 100%.
The foregoing is a summary only and does not purport to be a complete description of all of the terms, provisions and agreements contained in the Amended Plan, and is subject to and qualified in its entirety by reference to the complete text of the Amended Plan a copy of which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ending December 31, 2021.
