Foundation Medicine, Inc. (NASDAQ:FMI) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item5.02. Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
Summary
On January6, 2017, Foundation Medicine, Inc. (the Company),
announced the appointment of Troy Cox as the new Chief Executive
Officer of the Company, effective February6, 2017 (the
Commencement Date). Upon the recommendation of the Nominating and
Corporate Governance Committee of the Board of Directors of the
Company (the Board), the Board increased the size of the Board to
10 directors and elected Mr.Cox to become a member of the Board
effective as of the Commencement Date, to serve until the
Companys 2017 annual meeting of stockholders or his earlier
death, resignation, retirement or removal. Michael Pellini, M.D.
will resign as Chief Executive Officer of the Company, effective
as of the Commencement Date. Dr.Pellini will remain a member of
the Board and will serve as Chairman of the Board as of the
Commencement Date. Alexis Borisy will relinquish his position as
Chairman of the Board, but will continue to serve on the Board of
Directors following the Commencement Date.
Troy Cox
Mr.Cox, age 52, joins the Company from Genentech, Inc.
(Genentech) where he has worked since February 2010, most
recently as a Senior Vice President, BioOncology Sales Marketing.
Before joining Genentech, Mr.Cox was employed by UCB S.A. (UCB
BioPharma), as the President, CNS Operations with responsibility
for developing and commercializing therapeutics for diseases
primarily related to the central nervous system. Prior to UCB
BioPharma, Mr.Cox held senior commercial leadership roles with
Sanofi-Aventis and Schering-Plough. Mr.Cox received a bachelors
degree in business administration in finance from the University
of Kentucky, as well as a masters degree in business
administration from the University of Missouri.
In connection with his appointment, the Company and Mr.Cox have
entered into a written employment agreement (the Employment
Agreement), which provides for the following compensation terms
for Mr.Cox. Mr.Cox will receive a base salary of approximately
$550,000 per year and will be eligible to participate in the
Companys performance-based cash incentive bonus program, with a
target annual bonus equal to 70% of his base salary. Mr.Cox will
also receive a one-time sign-on payment of $324,000 and an equity
award of restricted stock units of the Company with an aggregate
value of $4,750,000 to the Companys 2013 Stock Option and
Incentive Plan (the Plan). The equity award will vestover a
four-year period as follows:25% will vest on the first
anniversary of the grant date, and an additional 6.25% will vest
on the first day of each subsequent quarter thereafter until all
of the restricted stock united have vested. Mr.Cox is eligible to
participate in the Companys employee benefit plans as in effect
from time to time on the same basis as generally made available
to other senior executives of the Company.
In addition, the Employment Agreement also provides for certain
payments and benefits in the event of a termination of his
employment under specific circumstances. If Mr.Coxs employment is
terminated by the Company without Cause at any time or by Mr.Cox
for Good Reason within 18 months following a Change of Control
(each as defined in the Employment Agreement), he would be
entitled to (1)continuation of his base salary at the rate in
effect immediately prior to the termination date for 18 months
following the termination date, (2)continuation of coverage of
medical insurance benefits that he would otherwise be eligible to
receive as an active employee of the Company for 18 months
following the termination date, and (3)a lump sum payment equal
to a pro-rated portion of his annual bonus as calculated based on
the number of days worked in the year in which termination
occurs. If Mr.Cox becomes entitled to such termination payments
within 18 months following a Change of Control, then any
outstanding unvested time-based equity awards will also vest in
full. Mr.Coxs receipt of such termination payments and benefits
is contingent upon execution of a general release of claims in
favor of the Company.
Other than the Employment Agreement, Mr.Cox is not a party to any
transaction with the Company that would require disclosure under
Item 404(a) of Regulation S-K, and there are no arrangements or
understandings between Mr.Cox and any other persons to which he
was selected as a director or as Chief Executive Officer;
provided that Mr.Coxs appointment as Chief Executive Officer was
approved in accordance with Section 2.05(a) of that certain
Investor Rights Agreement between the Company, Roche Holdings,
Inc. (Roche) and certain other parties, dated January11, 2015
(the Rights Agreement).
Michael Pellini, M.D.
In connection with Mr.Coxs appointment, Michael Pellini, M.D.
will resign as Chief Executive Officer of the Company, effective
as of the Commencement Date. Dr.Pellini will remain a member of
the Board and will serve as Chairman of the Board effective as of
the Commencement Date. On January5, 2017, the Company and
Dr.Pellini entered into a letter agreement (the Chairman
Agreement), which provides for the following compensation terms
for Dr.Pellini. As of the Commencement Date, Dr.Pellini will no
longer receive the salary or benefits referenced in his Amended
and Restated Offer Letter, dated September9, 2013, but he will be
eligible to receive an annual performance bonus for calendar year
2016. For service to the Chairman Agreement, Dr.Pellini will
receive $250,000 for the first year following the Commencement
Date, and $125,000 for the second year following the Commencement
Date. Dr.Pellinis performance-based restricted stock units will
continue to vest as long as he serves on the Board. His
restricted stock units that are not performance-based will
continue to vest until the earlier of the date he no longer
serves on the Board and December31, 2017. Dr.Pellinis vested
stock options will remain exercisable until the later of
February6, 2020 and one year after Dr.Pellini no longer serves on
the Board. Commencing as of the Companys 2018 annual meeting of
stockholders, Dr.Pellini will also be eligible to receive annual
equity awards for Board members in accordance with the Companys
Non-Employee Director Compensation Policy.
Steven Kafka, Ph.D.
On January5, 2017, the Company entered into a letter agreement
with Steven Kafka, Ph.D., the Companys President and Chief
Operating Officer (the Retention Agreement) to provide cash and
equity award retention payments to Dr.Kafka in order to further
encourage Dr.Kafka to remain employed by the Company for at least
12 months following the Commencement Date (the Retention Period).
to the Retention Agreement, Dr.Kafka is eligible to receive a
lump sum cash payment of up to $676,478 (the Cash Retention
Payment), payable in two equal installments of $338,239 on the
six month anniversary of the Commencement Date and the last day
of the Retention Period, in each case so long as Dr.Kafka remains
employed by the Company on such dates. Dr.Kafka will also receive
an equity award of restricted stock units of the Company with an
aggregate value of $1,000,000 to the Plan (the Retention Equity
Award), which Retention Equity Award will vest in full on the
last day of the Retention Period if Dr.Kafka is employed by the
Company on that date. If Dr.Kafka is terminated by the Company
without Cause (as defined in Dr.Kafkas employment agreement with
the Company) during the Retention Period, he will receive any
remaining unpaid amount of the Cash Retention Payment and the
Retention Equity Award will vest in full, in each case contingent
upon execution of a general release of claims by Dr.Kafka in
favor of the Company.
Investor Rights Agreement
In connection with Mr.Coxs appointment as Chief Executive Officer
and election to the Board, Dr.Pellinis appointment as Chairman of
the Board and the increase in the size of the Board to 10
directors, the Company entered into a Waiver and Consent with
Roche, the Companys majority stockholder (the Waiver and Consent)
under the Rights Agreement. In the Waiver and Consent, Roche
waived its right under Section 2.02(a) of the Rights Agreement to
designate a minimum one-third of the directors of
the Company, effective until the conclusion of the Companys 2017
annual meeting of stockholders, consented to the appointment of
Mr.Cox as Chief Executive Officer under Section 2.05(a) of the
Rights Agreement and consented to Dr.Pellinis appointment and
continued service on the Board notwithstanding that Dr.Pellini
will no longer be Chief Executive Officer and will not satisfy
the criteria to qualify as an Independent Director (as defined in
the Rights Agreement) under Section 2.02(a) of the Rights
Agreement.
Each of the
foregoing descriptions of the Employment Agreement, the Chairman
Agreement, the Retention Agreement and the Waiver and Consent is
a summary and is qualified in its entirety by reference to the
Employment Agreement, the Chairman Agreement, the Retention
Agreement and the Waiver and Consent, which are attached hereto
as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, and are
incorporated by reference herein. A copy of the press release
issued by the Company announcing the foregoing activities is
attached hereto as Exhibit99.1 and is incorporated herein by
reference.
Item9.01.
Financial Statements and Exhibits.
(d)
Exhibits
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| 10.1 |
Employment Agreement by and between Foundation Medicine, Inc. and Troy Cox, dated January5, 2017 |
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| 10.2 |
Letter Agreement by and between Foundation Medicine, Inc. and Michael Pellini, M.D., dated January5, 2017 |
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| 10.3 |
Retention Agreement by and between Foundation Medicine, Inc. and Steven Kafka, Ph.D., dated January5, 2017 |
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| 10.4 |
Waiver and Consent by and between Foundation Medicine, Inc. and Roche Holdings, Inc., dated January5, 2017 |
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| 99.1 |
Press release issued by Foundation Medicine, Inc. dated January6, 2017, furnished hereto |
About Foundation Medicine, Inc. (NASDAQ:FMI)
Foundation Medicine, Inc. is a molecular information company. The Company sells products that are enabled by its molecular information platform to physicians and biopharmaceutical companies. The Company’s segment is the business of delivering molecular information about cancer to its customers. Its products provide genomic information about each patient’s individual cancer, enabling physicians to optimize treatments in clinical practice and biopharmaceutical companies to develop targeted oncology therapies. Its flagship clinical molecular information products, FoundationOne for solid tumors, and FoundationOne Heme for blood-based cancers or hematologic malignancies, including leukemia, lymphoma, myeloma and advanced sarcomas, are genomic profiles designed for use in the routine care of patients with cancer. Its other products include FoundationACT (Assay for Circulating Tumor deoxyribonucleic acid (DNA)), GeneKit, FoundationCORE, FoundationICE and the SmartTrials program. Foundation Medicine, Inc. (NASDAQ:FMI) Recent Trading Information
Foundation Medicine, Inc. (NASDAQ:FMI) closed its last trading session up +1.00 at 19.30 with 125,012 shares trading hands.