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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
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On November 6, 2019, Aerpio Pharmaceuticals, Inc. (the “Company”) entered
into an employment agreement with Regina Marek, Vice President of Finance and the Company’s principal financial officer and principal accounting officer. Ms. Marek’s employment agreement provides for “at will” employment.
Pursuant to the terms of her employment agreement, and as further approved by the Board of Directors of the Company (the “Board”), Ms. Marek is entitled to receive an annual base salary of $270,000 and a target annual performance
bonus of 35% of her annual base salary. Ms. Marek is eligible to participate in the employee benefit plans generally available to full-time employees, subject to the terms of those plans. Pursuant to the terms of her employment agreement, if
Ms. Marek’s employment is terminated by us without cause (as defined in her employment agreement) or by Ms. Marek for good reason (as defined in her employment agreement), Ms. Marek will receive any base salary through the date
of termination, unpaid expense reimbursements, unused vacation accrued through the date of termination, any vested benefits under any employee benefit plan through the date of termination, and any incentive compensation for the year preceding the
year in which the date of termination occurred if Ms. Marek had been employed at the end of a calendar year. Additionally, subject to Ms. Marek’s execution of a release of potential claims against us, Ms. Marek will be entitled
to receive: (i) a lump sum in cash in an amount equal to 12 months of base salary, (ii) a monthly cash payment for 12 months for medical and dental benefits or Ms. Marek’s COBRA health continuation period, whichever ends earlier,
and (iii) acceleration of vesting on any stock options and other stock-based awards that are subject to time-based vesting in which Ms. Marek would have vested if she had remained employed for an additional 12 months. However, in the event
that Ms. Marek’s employment is terminated by us without cause, or Ms. Marek terminates her employment with us for good reason, in either case within 15 months following the occurrence of a change in control (as defined in her
employment agreement), in lieu of the severance payments and benefits described in the preceding sentence and subject to Ms. Marek’s execution of a release of potential claims against us, Ms. Marek will be entitled to receive:
(i) a lump sum in cash in an amount equal to 1.5 times the sum of both Ms. Marek’s base salary (as defined in her employment agreement) then in effect plus her target annual performance bonus for the year in which the termination
occurs (or her target annual performance bonus in effect immediately prior to the change in control, if larger), (ii) a monthly cash payment for 18 months for medical and dental benefits or Ms. Marek’s COBRA health continuation
period, whichever ends earlier, and (iii) acceleration of vesting on any stock options and other stock-based awards that are subject to time-based vesting. The employment agreement also reaffirms the previously disclosed cash retention payment
to Ms. Marek, which is expected to be paid at the end of the second quarter in fiscal year 2020, in the amount of $120,000 (the “Retention Bonus”). Ms. Marek shall not be eligible to receive the Retention Bonus if
Ms. Marek’s employment is terminated for any reason prior to the end of the second quarter in fiscal year 2020.
Additionally, as approved by
the Board on November 4, 2019 (the “Grant Date”), Ms. Marek also received a stock option to purchase 44,300 shares of the Company’s common stock. To the extent permitted by applicable tax law, such options were granted in
the form of an incentive stock option pursuant to the Company’s 2017 Stock Option and Incentive Plan (the “2017 Plan”). The options will have a ten-year term and will vest as to one quarter of the shares subject to the option on
February 15, 2020 and as to the remaining shares subject to the option in 36 equal monthly installments thereafter, subject to Ms. Marek’s continued service. The options have an exercise price per share equal to the closing price of
the Company’s common stock on the Nasdaq Stock Market on the Grant Date.
The Board previously approved, on May 14, 2019, a retention stock
option award pursuant to the 2017 Plan to Ms. Marek to purchase 153,300 shares of the Company’s common stock, which stock options vest 50% on June 30, 2020 and the remaining 50% vest on June 30, 2021, provided that Ms. Marek
remains an employee of the Company or its subsidiaries on each vesting date. If Ms. Marek is terminated for a reason other than death, disability, or Cause (as defined in the 2017 Plan and the award agreements issued thereunder), such options
(to the extent vested and exercisable as of the termination date), will remain exercisable for a period of two years following Ms. Marek’s termination date. Such options shall be considered subject to time-based vesting and therefore
subject to acceleration of vesting as noted above.
The foregoing description of the employment agreement with Ms. Marek is qualified in its entirety
by reference to the complete text of such agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K.