Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
Appointment of Chief Executive Officer and Class II Director; Employment
Agreement with Chief Executive Officer
On November 8, 2022, the Board of Directors (the "Board") of Seagen Inc. (the
"Company") appointed David R. Epstein as the Chief Executive Officer of the
Company and as a member of the Board, in each case effective as of November 9,
2022 (the "Start Date"). Mr. Epstein will serve as a Class II director for a
term expiring at the 2024 annual meeting of the Company's stockholders and until
his successor has been duly elected and qualified, or until his earlier death,
resignation or removal. On the Start Date, Mr. Epstein assumed the duties and
responsibilities of the Company's principal executive officer from Roger D.
Dansey, M.D., who was serving as the Interim Chief Executive Officer of the
Company since May 5, 2022 until the Start Date. There is no arrangement or
understanding with any person pursuant to which Mr. Epstein was appointed as the
Chief Executive Officer of the Company and/or as a member of the Board.
Mr. Epstein, age 61, most recently served as an executive partner at Flagship
Pioneering from January 2017 to October 2022. From January 2010 to July 2016, he
served as Chief Executive Officer of Novartis Pharmaceuticals, a division of
Novartis AG. Previously, Mr. Epstein started and led Novartis' Oncology and
Molecular Diagnostic units. Mr. Epstein has extensive public and private company
board experience, and currently serves on the board of directors of Evelo
Biosciences, Inc. (Nasdaq: EVLO), OPY Acquisition Corp. I (Nasdaq: OHAA) and
Senti Biosciences, Inc. (Nasdaq: SNTI). Mr. Epstein previously served as
Chairman of the board of directors of Evelo Biosciences, Inc. from September
2019 to June 2022. He also previously served as Chairman and as a member of the
board of directors of Axcella Health Inc. (Nasdaq: AXLA) from December 2017 to
October 2022 and of Rubius Therapeutics, Inc. (Nasdaq: RUBY) from January 2017
to October 2022. Mr. Epstein also served on the board of International Flavors
and Fragrances (NYSE: IFF) from January 2016 to January 2021. Mr. Epstein holds
a B.S. Degree in Pharmacy from Rutgers University College of Pharmacy and an
M.B.A. in Finance and Marketing from the Columbia University Graduate School of
Business.
On November 8, 2022, the Company entered into an employment agreement (the
"Epstein Employment Agreement") with Mr. Epstein in connection with his
employment as the Chief Executive Officer of the Company commencing on the Start
Date. Pursuant to the Epstein Employment Agreement, while employed as Chief
Executive Officer, Mr. Epstein will be eligible for the following compensation
and benefits: (i) an initial annual base salary of $1,500,000, (ii) a target
annual incentive opportunity under the Company's executive bonus plan (the
"Bonus Plan") equal to 150% of his annual base salary, (iii) a one-time sign-on
award of time-based vesting restricted stock units (the "Epstein RSU Award")
granted pursuant to the terms of the Company's Amended and Restated 2007 Equity
Incentive Plan (the "Plan") with a target value of $14,000,000, (iv) a one-time
sign-on award of time-based vesting options to purchase shares of common stock
of the Company ("Common Stock") with a target value of $14,000,000 (the "Epstein
Option Award") granted pursuant to the Plan, (v) a one-time sign-on award of
performance-based options in respect of 400,000 shares of Common Stock (the
"Epstein Performance Option Award") granted pursuant to the Plan, (vi) a
one-time relocation payment in the amount of $6,000,000 (payable upon the time
Mr. Epstein and his family establish primary residence in the Seattle,
Washington area, provided such relocation occurs prior to September 1, 2023, and
subject to pro-rated repayment upon certain events prior to the sixth
anniversary of the relocation payment), and (vii) certain relocation and
temporary living cost benefits. For more information on the Bonus Plan, see
"Compensation Discussion and Analysis-Compensation-Setting Process-Cash
Incentive Awards" in the Company's definitive proxy statement filed with the
U.S. Securities and Exchange Commission on March 30, 2022. The actual number of
shares underlying the Epstein RSU Award (107,389) was calculated by dividing the
target value of the Epstein RSU Award by the average closing stock price during
the 30 calendar days preceding the Start Date. The actual number of shares
underlying the Epstein Option Award (243,347) was calculated based on the
average closing stock price during the 30 calendar days preceding the Start Date
and using a Black Scholes methodology for stock option valuation. The Epstein
RSU Award will vest annually over four years beginning on the first anniversary
of the Start Date, subject to Mr. Epstein's continued employment with the
Company. Twenty-five percent of the Epstein Option Award will vest on the first
anniversary of Start Date and 1/48th of the Epstein Option Award will vest in
equal monthly installments thereafter until fully vested on the fourth
anniversary of Start Date, subject to Mr. Epstein's continued employment with
the Company. The Epstein Performance Option Award will be subject to performance
vesting in tranches tied to Common Stock price targets and each such tranche
will time-vest 1/3 on the date of performance vesting, 1/3 on the nine month
anniversary of performance-vesting and 1/3 on the 18 month anniversary of
performance vesting, in each case, subject to continued employment by the
Company. Any unearned portion of the Epstein Performance Option Award will
generally be forfeited if the performance vesting conditions are not met on the
earlier of (1) December 31, 2028 and (2) a change of control (as defined in the
Epstein Employment Agreement).
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Under the terms of the Epstein Employment Agreement, in the event of a
termination of Mr. Epstein's employment by the Company without "cause" or due to
a "constructive termination" and not in the three months prior to or 18 months
following a change of control of the Company, Mr. Epstein will be entitled to
receive: (i) payment of severance benefits equal to his annual base salary for
18 months and 1.5 times his target bonus, to be increased to up to 24 months of
annual base salary and 2 times target bonus, based on years of service;
(ii) payment of 18 months of COBRA premiums, (iii) accelerated time-vesting of
18 months (to be increased to up to 24 months based on length of service) of any
unvested equity awards held by Mr. Epstein (including options, RSUs and any
earned performance options), and (iv) a minimum of 18 months (to be increased to
up to 24 months based on length of service) extended option exercisability for
vested outstanding options. In the event of a termination of Mr. Epstein's
employment by the Company without "cause" or due to a "constructive termination"
and in the three months prior to or 18 months following a change of control of
the Company, Mr. Epstein will be entitled to receive: (i) payment of severance
benefits equal to his annual base salary for 36 months and 3 times his target
bonus; (ii) payment of 18 months of COBRA premiums, (iii) double-trigger
acceleration of equity awards, provided that the Epstein Performance Option
Award shall be earned based on the stock price achieved in the change of control
and (v) any clawback provisions on the relocation payment will be voided.
The foregoing description of the Epstein Employment Agreement is only a summary
and is qualified in its entirety by the terms of the Epstein Employment
Agreement, a copy of which will be filed as an exhibit to the Company's annual
report on Form 10-K for the fiscal year ending December 31, 2022.
The Company also entered into it standard form of indemnification agreement (the
"Indemnification Agreement") with Mr. Epstein, which will require the Company,
under the circumstances and to the extent provided for therein, to indemnify
Mr. Epstein to the fullest extent permitted by law against certain expenses and
other amounts incurred by Mr. Epstein as a result of being made a party or
threatened to be made a party to certain actions, suits or proceedings by reason
of his position as a director, officer, employee or other agent of the Company.
The foregoing is only a brief description of the Indemnification Agreement, does
not purport to be complete, and is qualified in its entirety by reference to the
form of Indemnification Agreement previously filed by the Company as Exhibit
10.29 to the Company's Registration Statement on Form S-1/A (File
No. 333-50266), filed with the Securities and Exchange Commission on January 4,
2001.
There is no family relationship between Mr. Epstein and any director, executive
officer, or person nominated or chosen by the Company to become a director or
executive officer of the Company.
Amended Employment Agreement with President, Research and Development and Chief
Medical Officer
Dr. Dansey has served as Interim Chief Executive Officer of the Company since
May 5, 2022 and as the Company's Chief Medical Officer since May 2018. On
November 8, 2022, the Company entered into an amended and restated employment
agreement (the "Dansey Employment Agreement") with Dr. Dansey in connection with
his employment as President, Research and Development of the Company, commencing
November 9, 2022. Dr. Dansey will also continue to serve as Chief Medical
Officer of the Company.
Pursuant to the Dansey Employment Agreement, while employed as President,
Research and Development, Dr. Dansey will be eligible for the following
compensation and benefits: (i) an initial annual base salary of $1,100,000, (ii)
a target annual incentive opportunity under the Bonus Plan equal to 110% of his
annual base salary and (iii) a one-time award of performance-based options in
respect of 275,000 shares of Common Stock granted pursuant to the Plan (the
"Dansey Performance Option Award"). The Dansey Performance Option Award will be
subject to performance vesting in tranches tied to Common Stock price targets
and each such tranche will time-vest 1/3 on the date of performance vesting, 1/3
on the nine month anniversary of performance-vesting and 1/3 on the 18 month
anniversary of performance vesting, in each case, subject to continued
employment by the Company. Any unearned portion of the Dansey Performance Option
Award will generally be forfeited if the performance vesting conditions are not
met on the earlier of (1) December 31, 2028 and (2) a change of control (as
defined in the Dansey Employment Agreement).
Under the terms of the Dansey Employment Agreement, in the event of a
termination of Dr. Dansey's employment by the Company without "cause" or due to
a "constructive termination" and not in the three months prior to or 18 months
following a change of control of the Company, Dr. Dansey will be entitled to
receive: (i) payment of
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severance benefits equal to his annual base salary for 18 months and 1.5 times
his target bonus; (ii) payment of 18 months of COBRA premiums, (iii) accelerated
time-vesting of 18 months of any unvested equity awards held by Dr. Dansey, and
(iv) 18 months extended option exercisability for vested outstanding options. In
the event of a termination of Dr. Dansey's employment by the Company without
"cause" or due to a "constructive termination" and within the three months prior
to or 18 months following a change of control of the Company, Dr. Dansey will be
entitled to receive: (i) payment of severance benefits equal to his annual base
salary for 24 months and 2 times his target bonus; (ii) payment of 18 months of
COBRA premiums, (iii) double-trigger acceleration of equity awards, provided
that the Dansey Performance Option Award shall be earned based on the stock
price achieved in the change of control.
The foregoing description of the Dansey Employment Agreement is only a summary
and is qualified in its entirety by the terms of the Dansey Employment
Agreement, a copy of which will be filed as an exhibit to the Company's annual
report on Form 10-K for the fiscal year ending December 31, 2022.
Appointment of Sandra M. Swain, M.D. as Class III Director
On November 8, 2022, the Board appointed Sandra M. Swain, M.D. to the Board,
effective November 9, 2022. Dr. Swain will serve as a Class III director for a
term expiring at the 2025 annual meeting of the Company's stockholders and until
her successor has been duly elected and qualified, or until her earlier death,
resignation or removal. There is no arrangement or understanding with any person
pursuant to which Dr. Swain was appointed as a member of the Board.
In accordance with the Company's compensation policy with respect to annual cash
fees for non-employee directors, Dr. Swain will receive an annual cash retainer
of $60,000 for her service on the Board, which will be prorated during 2022.
In addition, effective as of November 9, 2022 (the "Grant Date"), in accordance
with the Company's policy with respect to initial equity grants to new
non-employee directors, the Board granted Dr. Swain a nonstatutory stock option
to purchase shares of Common Stock with a target value of $101,370 (the pro rata
portion of the Company's annual non-employee director option grant) (the "Swain
Option") and a restricted stock unit award covering shares of Common Stock with
a target value of $101,370 (the pro rata portion of the Company's annual
non-employee director restricted stock unit grant) (the "Swain RSU Award")
pursuant to the terms of the Plan. The actual number of shares underlying the
Swain Option (1,763) was calculated based on an approximation of the target
award value based on the average closing stock price during the 30 calendar days
preceding the Grant Date and using a Black Scholes methodology for stock option
valuation. The actual number of shares underlying the Swain RSU Award (778) was
calculated by dividing the target value of the Swain RSU Award by the average
closing stock price during the 30 calendar days preceding the Grant Date. The
Swain Option and the Swain RSU Award will vest in full on the first anniversary
of the Grant Date.
The Company also intends to enter into its standard form of Indemnification
Agreement with Dr. Swain, which will require the Company, under the
circumstances and to the extent provided for therein, to indemnify Dr. Swain to
the fullest extent permitted by law against certain expenses and other amounts
incurred by Dr. Swain as a result of being made a party or threatened to be made
a party to certain actions, suits or proceedings by reason of her position as a
director of the Company. The foregoing is only a brief description of the
Indemnification Agreement, does not purport to be complete, and is qualified in
its entirety by reference to the form of Indemnification Agreement previously
filed by the Company as Exhibit 10.29 to the Company's Registration Statement on
Form S-1/A (File No. 333-50266), filed with the Securities and Exchange
Commission on January 4, 2001.
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