Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
(c)
On January 24, 2019, Akorn, Inc. (the “
Company
”
or “
Akorn
”) appointed Christopher C. Young to the position of Executive Vice President, Global Operations,
reporting to Douglas Boothe, President & Chief Executive Officer (“
CEO
”). Mr. Young, age 47, brings
twenty-five years of pharmaceutical experience to Akorn having most recently been the Executive Vice President of Global Operations
for Alvogen, Inc. from 2013 to 2018. Prior to Alvogen, Mr. Young was Vice President of Operations in the United States and India
for Actavis. Mr. Young received his undergraduate degree from Gettysburg College and his MBA from Rutgers University.
In connection with the above, the Company and Mr. Young
entered into an offer letter agreement (the “
Offer Letter
”), effective January 24, 2019.
The Offer Letter provides that Mr. Young’s annual base
pay will be $375,000 and he will be eligible for a target annual bonus equal to 50% of base salary and an incremental bonus equal
to 25% of base salary if the Company exceeds applicable financial and quality compliance targets for the year.
Mr. Young will also be eligible to participate in the Company’s
long-term incentive program reserved for key executives and senior level management pursuant to which he may be granted long-term
incentive awards on an annual basis. The total award value for Mr. Young’s initial long-term incentive grant will be equal
to 100% of Mr. Young’s base salary. Any long-term incentive awards for which Mr. Young would be eligible are subject to the
terms of the applicable Company plan and annual Board approval.
On his start date, Mr. Young was granted nonqualified
stock options with a grant-date value of $375,000 and restricted stock units with a grant-date value of $375,000, in each
case vesting in equal installments on the first four anniversaries of the grant date. Because these nonqualified stock options
and restricted stock units were made under the Company’s 2017 Omnibus Incentive Compensation Plan, the terms of such
awards will be consistent with the terms of such plan and the Company’s previous filed forms of award agreement.
The Offer Letter entitles Mr. Young to relocation benefits in
connection with his relocation to Illinois.
In addition, Mr. Young will be covered under the Company’s
executive programs for severance, including in connection with a change in control. Under the current programs, if Mr. Young’s
employment is terminated by the Company without “cause”, Mr. Young would be entitled to a lump-sum payment equal to
a prorated portion of his total eligible annual bonus, a lump-sum cash payment equal to one year of base annual compensation and
total eligible annual bonus, and one year of continued benefits, including life insurance and welfare benefits. Also under the
current programs, if Mr. Young’s employment is terminated either by Mr. Young for “good reason” or by the Company
without “cause”, within the ninety day period prior to the Company entering into a definitive agreement that would
result in a “change of control”, or within twelve months following a “change in control”, he would be entitled
to a prorated portion of his total eligible annual bonus, a lump-sum cash payment equal to one times his annual base salary and
total eligible annual bonus, one year of continued benefits, life insurance and welfare benefits. The Company may condition the payment
of severance benefits upon Mr. Young’s delivery of a release of employment-related claims in favor of the Company.
The foregoing description of the Offer Letter is qualified
in its entirety by the text of the Offer Letter, the form of which is attached hereto as Exhibit 10.1 and incorporated herein
by reference.
There are no family relationships between Mr. Young and any
of the Company’s current executive officers or directors. Except for his Offer Letter, Mr. Young is not a party to any transaction
with the Company that might require disclosure under Item 404(a) of Regulation S-K.
(d)
On January 24, 2019, the Company appointed Thomas G. Moore and
Douglas S. Boothe to the Board of Directors of the Company (the “
Board
”), filling two new seats on the Board.
Mr. Moore, age 67, brings 35 years of strategic and operational
pharmaceutical experience as a former executive at the global company Abbott Laboratories, later known as Hospira, and its affiliates.
Mr. Moore served as President of Hospira USA from 2009 until his retirement in 2014. He was President of Global Pharmaceuticals
for Hospira Worldwide, Inc. from 2007 to 2009, and served as VP and General Manager of Specialty Pharmaceuticals for Hospira, Inc.
from 2003 to 2007. Mr. Moore sits on the Board of Trustees for Rosalind Franklin University of Medicine and Science. Previously,
Mr. Moore was a member of the boards of the Generic Pharmaceutical Association, the Society for Vascular Surgery (f/k/a American
Vascular Association), and XHOPL, Ltd., a joint venture corporation for the manufacturing of injectable oncology pharmaceuticals.
Mr. Moore received his undergraduate degree from Loyola Marymount University Los Angeles, and his Doctor of Pharmacy from the University
of Southern California.
In connection with his appointment to the Board, Mr. Moore was
also appointed to serve on the Compensation Committee of the Board. Upon his appointment to the Board, Mr. Moore was awarded a
grant of 20,000 stock options which vest on the one year anniversary of their grant date. Mr. Moore will receive compensation for his service on the Board and its committees consistent with other Board members and
as described in the Company's 2018 Proxy Statement.
There are no family relationships between Mr. Moore and any
of the Company’s current executive officers or directors and Mr. Moore is not a party to any transaction with the Company
that might require disclosure under Item 404(a) of Regulation S-K.
Mr. Boothe, age 55, is the recently appointed President and
CEO of the Company. There are no family relationships between Mr. Boothe and any of the Company’s current executive officers
or directors. Except for his employment agreement, Mr. Boothe is not a party to any transaction with the Company that might require
disclosure under Item 404(a) of Regulation S-K.
(e)
Also on January 24, 2019, the Company awarded Duane A. Portwood,
Executive Vice President & Chief Financial Officer, a Retention Premium Award (“
RPA
”) of $400,000 in connection
with the Company’s ongoing retention efforts. The Company identified Mr. Portwood as a select employee whose contributions
are considered particularly critical to the success of the Company. The RPA will be paid in two equal installments: (1) upon Mr.
Portwood’s signing of the award agreement, and (2) on the next regularly scheduled payroll date after the anniversary of
the signed agreement (in each case, an “
Installment Date
”). Mr. Portwood’s receipt of the RPA installments
is conditioned upon his remaining employed at the Company through the relevant Installment Date and his performance meeting expectations
and is subject to other terms and conditions as set forth in the RPA.
The foregoing description of the RPA is qualified in its entirety
by the text of the Form of RPA, a copy of which is attached as Exhibit 10.2 to Akorn’s Report on Form 8-K filed with the
SEC on December 17, 2018, and is incorporated herein by reference.