Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignation of Chief Executive Officer and Director
On September 11, 2019, Gregory Went, Ph.D., the Chairman of the Board and Chief Executive Officer of Adamas Pharmaceuticals, Inc. (“Adamas”), resigned as an employee, officer and director of Adamas effective as of the first day of employment of Neil McFarlane as Adamas’s new Chief Executive Officer, as described below.
In connection with Dr. Went’s resignation, the Board of Directors (the “Board”) of Adamas appointed David Mahoney, a member of the Board, as Adamas’s Chairman of the Board. As non-executive Chairman of the Board, Mr. Mahoney will receive additional compensation for acting in such capacity as follows: (i) an incremental annual cash retainer of $60,000 and (ii) an initial stock option grant in the amount of 40,000 shares, vesting in annual installments over three years.
Appointment of New Chief Executive Officer and Director
On September 11, 2019, the Board appointed Neil McFarlane as Adamas’s new Chief Executive Officer and as a member of the Board, effective on his first day of employment with Adamas. Mr. McFarlane will serve as a Class II director, the term of which class expires at the 2022 Annual Meeting of Stockholders.
Mr. McFarlane has served as the Chief Operating Officer of Retrophin, Inc., a biopharmaceutical company, from August 2016 until May 2019, in which position he was responsible for global commercial operations, corporate development, patient services, and program and alliance management. Previously, Mr. McFarlane served as the Vice President, Bone business unit for UCB, Inc., a biopharmaceutical company, since 2013, in which role he was responsible for leading the global collaboration with Amgen, and from 2011 to 2013, Mr. McFarlane was the Vice President and General Manager of the US Immunology business unit at UCB, Inc. Prior to his positions at UCB, Mr. McFarlane held positions of increasing responsibility with Genzyme Corporation, a biotechnology company, and Sangstat Medical Corporation prior to its acquisition by Genzyme. Mr. McFarlane served in the United States Army Reserves and received his B.S. and M.S. in Nursing from the University of Florida. Adamas believes Mr. McFarlane’s position as our Chief Executive Officer and his extensive knowledge of the pharmaceutical industry qualifies him to serve on the Board.
On September 11, 2019, Adamas and Mr. McFarlane entered into an employment agreement pursuant to which Mr. McFarlane will receive compensation for his service as Adamas’s Chief Executive Officer as follows: (i) a base salary of $625,000; (ii) a target bonus of 60% of his base salary; (iii) an initial grant of an option to purchase 250,000 shares of Adamas common stock with an exercise price per share equal to the closing price for a share of Adamas common stock on the date of grant, and a restricted stock unit award to acquire 125,000 shares of Adamas common stock, in each case vesting over four years; (iii) additional equity grants in the first calendar quarter of 2020 in an amount no less than options to purchase 100,000 shares of Adamas common stock and a restricted stock unit award of 50,000 shares of Adamas common stock; (iv) commute expenses for 18 months with a gross up for the tax impact of this benefit not to exceed 75% of the expense total; (v) relocation assistance in an amount of $350,000, subject to certain conditions related to relocation and continued employment; and (vi) the right to receive severance under certain conditions as set forth in Adamas’s Amended and Restated Executive Severance Plan. Mr. McFarlane will also enter into Adamas’s standard form of indemnification agreement between Adamas and its directors and executive officers.
Transition and Consulting Agreement with Dr. Went
On September 11, 2019, Adamas and Dr. Went entered into a transition and consulting agreement pursuant to which Dr. Went will: (i) continue employment as Adamas’s Chief Executive Officer until Mr. McFarlane becomes Chief Executive Officer; (ii) receive a severance payment in the amount of $852,500 plus COBRA coverage (or similar reimbursement) for the duration of his consulting relationship, described below; (iii) receive a pro rata bonus for services as Chief Executive Officer during 2019, to be paid in the first quarter of 2020 based on Adamas’s achievement of its corporate objectives for 2019 as determined by the Compensation Committee; (iv) continue in the role as a consultant (with a title of Founder and strategic advisor) commencing upon the termination of his employment and continuing through December 31, 2021, unless extended by Adamas through December 31, 2022 (with Dr. Went having the right to terminate earlier in the event of a Change in Control of Adamas), not to exceed one-half time; (v) consulting compensation at the rate of $425,000 per year with continued vesting of equity grants received as an employee and eligibility for the receipt of additional equity grants in the discretion of the Compensation Committee, with accelerated
vesting in the event of a Change in Control (and vesting for calendar year 2022 in the event the Company does not extend the consulting period beyond December 31, 2021); and (vi) payment of Dr. Went’s attorney fees in connection with the foregoing agreement (not to exceed $25,000). The transition and consulting agreement provides that the foregoing is conditioned upon Dr. Went signing a release of claims against Adamas, and contains mutual non-disparagement provisions.