Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Amendments to Employment Arrangements
On February 10, 2020, the Compensation Committee of the Board of Directors of X4 Pharmaceuticals, Inc. (the “Company”) reviewed the Company’s existing employment arrangements as part of its ongoing evaluation of the Company’s executive compensation programs. After its review, the Compensation Committee decided that it was in the best interests of the Company and its stockholders to make modifications to such arrangements in order to update its severance and change of control protection arrangements with certain eligible executives after reviewing current market practices related to severance arrangements and benefit levels related thereto both in connection with and in the absence of a change of control of the Company.
The Compensation Committee approved the material terms for amendments to the existing employment arrangements between the Company and Paula S. Ragan, Ph.D., the Company’s President and Chief Executive Officer, and between the Company and Adam S. Mostafa, the Company’s Chief Financial Officer and Treasurer. These amendments modify certain of the provisions of Dr. Ragan’s and Mr. Mostafa’s employment agreements, respectively, related to severance and change of control arrangements.
Under this amendment to Dr. Ragan’s amended and restated executive employment agreement, in the event of termination of Dr. Ragan’s employment by the Company without “Cause” or by Dr. Ragan with “Good Reason” (as such terms are defined in Dr. Ragan’s employment agreement) within twelve (12) months of a “Change of Control” of the Company (as such term is defined in Dr. Ragan’s amended and restated executive employment agreement), Dr. Ragan’s severance period shall be increased to an eighteen (18) month period from the date of termination. Such severance period reflects an increase from the prior twelve (12) month period.
Under this amendment to Mr. Mostafa’s amended and restated executive employment agreement, in the event of termination of Mr. Mostafa’s employment by the Company without “Cause” or by Mr. Mostafa with “Good Reason” (as such terms are defined in Mr. Mostafa’s employment agreement) within twelve (12) months of a “Change of Control” of the Company (as such term is defined in Mr. Mostafa’s amended and restated executive employment agreement), Mr. Mostafa’s severance period shall be increased to a twelve (12) month period from the date of termination. Such severance period reflects an increase from the prior six (6) month period.
Additionally, under these amendments, in the event of a termination by the Company without “Cause” or
by Dr. Ragan or Mr. Mostafa, respectively, with “Good Reason” following a Change of Control, each of Dr. Ragan and Mr. Mostafa shall be entitled to receive 100% of her or his Annual Bonus (as such term is defined in Dr. Ragan’s or Mr. Mostafa’s respective employment agreement) for the calendar year in which the termination occurs, rather than a pro-rata portion of such Annual Bonus based on the period worked during such calendar year prior to termination.
The Compensation Committee also approved the framework for severance and change of control arrangements for certain eligible executives, who are defined to be an employee of the Company having the position of Senior Vice President or higher. These severance benefits will not be applicable to certain executive officers, including Dr. Ragan and Mr. Mostafa, who have separate individual severance and change of control benefits contained in their employment arrangements.