Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Chief Executive Officer Succession
On January 5, 2023, the Board of Directors (the "Board") of Novavax, Inc. (the
"Company") approved the appointment of John C. Jacobs, age 56, as President and
Chief Executive Officer and a member of the Board, effective as of January 23,
2023. Mr. Jacobs will succeed Stanley C. Erck, who provided the Board with
notice on January 5, 2023 of his decision to retire as President and Chief
Executive Officer and as a member of the Board, in each case effective as of
January 23, 2023. Mr. Jacobs will serve as a Class I director and his term will
expire at the Company's 2023 annual meeting of stockholders. Mr. Erck will
continue to provide consulting services to the Company following his retirement,
as further described below.
Mr. Jacobs served as the President and Chief Executive Officer and a member of
the board of directors at Harmony Biosciences Holdings, Inc. ("Harmony"), a
public pharmaceutical company, since June 2018, and was Executive Vice President
and Chief Commercial Officer of Harmony from October 2017 to June 2018. Prior to
joining Harmony, Mr. Jacobs served as the Senior Vice President and General
Manager of the Respiratory Business Unit of Teva Pharmaceuticals Industries Ltd.
("Teva"), a public pharmaceutical company, from September 2017 to October 2017.
He also served as Senior Vice President of Commercial Operations and Innovation
of Teva, from September 2016 to September 2017, and as Vice President and
General Manager of Teva's Branded Business in Canada from July 2014 to
September 2016. Mr. Jacobs has held positions of increasing scope and
responsibility at major pharmaceutical companies including Cephalon Inc., a
former public biopharmaceutical and biotechnology company, Wyeth, LLC, a public
pharmaceutical company, and Pfizer Inc., a public pharmaceutical and
biotechnology company. He has over 25 years of commercial, operations, business
and leadership experience across multiple therapeutic areas including central
nervous system, sleep disorders, pain care and respiratory, as well as rare
disease and other specialty markets. Mr. Jacobs received a B.S. in business from
the State University of New York College at Plattsburgh and an M.B.A. from the
State University of New York at Binghamton.
In connection with his appointment as President and Chief Executive Officer, the
Company and Mr. Jacobs entered into an employment agreement (the "Employment
Agreement") pursuant to which Mr. Jacobs is entitled to an annual base salary of
$700,000 and is eligible to receive an annual performance and incentive bonus,
with a target bonus of 75% of his base salary and with the actual amount of such
bonus based upon achievement of certain specified goals. The Company has also
agreed to provide a make-whole payment to Mr. Jacobs up to a specified amount in
the event that he fails to be paid certain amounts from his prior employer,
which, if paid, would be subject to repayment upon a termination of Mr. Jacobs'
employment for cause or a voluntary termination of his employment without good
reason (as such terms are defined in the Employment Agreement) within the
one-year period following his commencement of employment with the Company.
During Mr. Jacobs' employment, the Company will pay or reimburse Mr. Jacobs for
housing and commuting expenses in an amount not to exceed $100,000 per year in
the aggregate. The Company will also reimburse Mr. Jacobs for certain
professional and legal fees incurred in the negotiation of the Employment
Agreement up to a specified amount.
In connection with his appointment, Mr. Jacobs will be granted an option (the
"Inducement Option") to purchase the number of shares of Common Stock determined
by dividing $3,000,000 by the per-share Black-Scholes valuation of a share of
the Company's common stock, par value $0.01 per share ("Common Stock"), as of
the grant date (rounded to the nearest 10), such option to vest as to
one-quarter of the underlying shares on the first anniversary of the grant date,
and as to the remaining shares in equal monthly installments for 36 months
thereafter, in each case generally subject to Mr. Jacobs' continued employment
with the Company through the applicable vesting date. In connection with his
appointment, Mr. Jacobs will also be granted a restricted stock unit award (the
"Inducement Restricted Stock Units" and, together with the Inducement Option,
the "Initial Grant") with the number of restricted stock units determined by
dividing $3,000,000 by the trailing 30-day average of the closing price per
share of Common Stock as of the grant date (rounded to the nearest 10), such
restricted stock units to vest as to one-third of the shares underlying the
grant on each of the first three anniversaries of the grant date, in each case
generally subject to Mr. Jacobs' continued employment with the Company through
the applicable vesting date. The Initial Grant will be granted under, and
subject to the terms and conditions of, the 2023 Inducement Plan (as defined
below).
Under the terms of the Employment Agreement, if Mr. Jacobs' employment is
terminated by the Company without cause or if Mr. Jacobs terminates his
employment with the Company for good reason (as such terms are defined in the
Employment Agreement), subject to his execution of a release of claims in favor
of the Company, he will be entitled to (i) full accelerated vesting of the
Initial Grant, with any then-outstanding Inducement Options remaining
exercisable for 90 days following his termination of employment (or, if earlier,
until the expiration of the original term of such options) and (ii) a lump sum
payment equal to (A) 18 months' of his then-effective salary plus (B) the cost
of 18 months' of his full COBRA premiums. Mr. Jacobs will also be eligible to
receive severance payments and benefits under the Company's Amended and Restated
Change in Control Severance Benefit Plan (the "Change in Control Severance
Benefit Plan") upon a Qualifying Termination (as defined in the Change in
Control Severance Benefit Plan and without duplication with respect to any
severance benefits he is entitled to under the Employment Agreement).
Pursuant to the Employment Agreement, Mr. Jacobs has agreed to a perpetual
confidentiality covenant and an assignment of intellectual property covenant and
has agreed not to compete with the Company or solicit certain of the Company's
service providers, customers, and suppliers during Mr. Jacobs' employment and
for a period of 18 months following termination of his employment.
Mr. Jacobs and the Company will enter into an indemnification agreement in
substantially similar form as Exhibit 10.19 to the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission (the "SEC") on
March 16, 2010.
There is no arrangement or understanding between Mr. Jacobs and any other person
pursuant to which Mr. Jacobs was appointed as an officer or director of the
Company. There are no family relationships between Mr. Jacobs and any director
or officer of the Company. Mr. Jacobs has no material direct or indirect
interest in a related party transaction that requires disclosure.
In connection with his retirement from employment as President and Chief
Executive Officer, the Company and Mr. Erck entered into a consulting agreement
(the "Consulting Agreement") pursuant to which Mr. Erck will provide consulting
services to the Company following his retirement until April 30, 2024 (subject
to earlier termination, the "consulting period"). The Consulting Agreement
provides that Mr. Erck will receive a consulting fee (the "Consulting Fee") of
$50,000 per month in respect of his consulting services for the first six months
of the consulting period and $25,000 per month in respect of his consulting
services for the remaining nine months of the consulting period. Mr. Erck will
continue to be eligible to receive a 2022 annual bonus at the same time that
bonuses are paid to the Company's executive officers. The equity awards
previously granted to Mr. Erck will continue to be eligible to vest based on his
continued service during the consulting period in accordance with their existing
terms, and any stock options and stock appreciation rights that remain
outstanding and unexercised as of the last day of the consulting period will
remain exercisable until the earlier of (i) the end of the one-year period
following the last day of the consulting period and (ii) the stated expiration
date of such awards (collectively, the "Equity Treatment"). In the event of a
change in control (as defined in the Change in Control Severance Benefit Plan)
during the consulting period, Mr. Erck will be entitled to accelerated vesting
of 100% of his outstanding equity awards. The Company will also reimburse
Mr. Erck for certain attorneys' fees incurred in the negotiation of the
Consulting Agreement.
Under the terms of the Consulting Agreement, if Mr. Erck's service is terminated
by the Company without cause or if Mr. Erck terminates his service with the
Company for good reason (as such terms are defined in the Consulting Agreement)
prior to the end of the consulting period, the Company will pay Mr. Erck the
Consulting Fee through April 30, 2024 and his outstanding awards will remain
eligible for the Equity Treatment.
The post-termination period applicable to Mr. Erck's current non-competition and
non-solicitation covenants will commence upon his retirement with the Company.
The foregoing descriptions of the material terms of the Employment Agreement for
. . .
Item 7.01. Regulation FD Disclosure.
On January 9, 2023, the Company issued a press release regarding the Chief
Executive Officer succession. A copy of the press release is furnished as
Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 7.01, including Exhibit 99.1, is being furnished
and shall not be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section and shall not be deemed incorporated by reference
into any registration statement or other document filed pursuant to
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except as shall be expressly set forth by specific reference in such
filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Novavax, Inc. 2023 Inducement Plan.
10.2 Form of Non-Statutory Stock Option Agreement under the Novavax, Inc.
2023 Inducement Plan.
10.3 Form of Restricted Stock Unit Award Agreement under the Novavax, Inc.
2023 Inducement Plan.
10.4 Form of Indemnification Agreement entered into between the Company
and its directors and officers (Incorporated by reference to
Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year
ended December 31, 2009 (File No. 000-26770), filed on March 16,
2010).
99.1 Press release of the Company, dated January 9, 2023.
104 Cover Page Interactive Data File (formatted as Inline XBRL).
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