Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers
On October 2, 2017, the Board of Directors (the “
Board
”) of
CRISPR Therapeutics AG (the “
Company
”) accepted Rodger Novak, M.D.’s resignation from his position as Chief Executive Officer (“
CEO
”), effective December 1, 2017 (the “
Transition Date
”).
Effective on the Transition Date, Samarth Kulkarni, Ph.D., who has served as the President and Chief Business Officer of the Company since May 2017, and the Chief Business Officer since 2015, will become Chief Executive Officer. Effective on the
Transition Date, Dr. Novak will become President of the Company and will continue serving as a member of the Board.
Prior to joining
the Company, Dr. Kulkarni was at McKinsey & Company from 2006 to 2015, with various titles, his most recent being Partner within the Pharmaceuticals and Biotechnology practice. Dr. Kulkarni received a Ph.D. in Bioengineering and
Nanotechnology from the University of Washington and a B. Tech. from the Indian Institute of Technology.
In connection with
Dr. Kulkarni’s appointment to the position of Chief Executive Officer, the Company’s wholly owned subsidiary, CRISPR Therapeutics, Inc., entered into a Second Amended and Restated Employment Agreement (the “
Employment
Agreement
”) with Dr. Kulkarni dated October 2, 2017, that amended and restated his previous agreement dated May 3, 2017.
Pursuant to the terms of the Employment Agreement, Dr. Kulkarni is entitled to receive his current annual base salary of $415,000 up to
the Transition Date and, effective on the Transition Date, his annual base salary will be increased to $500,000, subject to yearly adjustments as determined by the Board. Dr. Kulkarni is also eligible for an annual performance bonus of not less
than 45% of his annual salary prior to the Transition Date and not less than 50% of his annual salary from and after the Transition Date, subject to the achievement of performance targets determined by the Board.
In connection with entering into the Employment Agreement and conditioned upon his continued employment as of the Transition Date,
Dr. Kulkarni will receive on the Transition Date (a) an option to purchase 260,000 of the Company’s common shares, nominal value of $0.03 per share (the “
Common Shares
”), which shall vest in 48 equal monthly
installments commencing upon the
one-month
anniversary of the grant date and (b) 26,667 restricted stock units which shall vest in 16 quarterly installments commencing upon the three-month anniversary of the
grant date, in each case, subject to Dr. Kulkarni’s continued employment with the Company or any subsidiary as of each vesting date. The options shall be issued with a
per-share
option exercise price
equal to the closing market price of a Common Share on the NASDAQ Global Market as of the date of the grant, which the Board determines to be the per share fair market value of the common shares as of such date.
In addition, on the Transition Date, Dr. Kulkarni will receive a performance based stock option grant for 150,000 Common Shares (the
“
Performance Based Option Grant
”). Dr. Kulkarni will earn, but not vest in, 50% of the Performance Based Option Grant (the “
Earned Options
”) in the event the Company’s Average Stock Price (as defined in
the Employment Agreement) exceeds $40.00 per share at any time prior to the third anniversary of the grant date of the Performance Based Grant (the “
Vesting Date
”). The remaining 50% of the Performance Based Option Grant will become
Earned Options, but not vest, if the Company’s Average Stock Price exceeds $50.00 per share at any time prior to the Vesting Date. Any portion of the Performance Based Option Grant have not become
Earned Options by the Vesting Date will be cancelled and forfeited by Dr. Kulkarni. Seventy-five percent of any Earned Options will vest on the Vesting Date, subject to
Dr. Kulkarni’s continued employment with the Company, and the remaining 25% of any Earned Options will vest on the second anniversary of the Vesting Date, subject to Dr. Kulkarni’s continued employment with the Company. If
Dr. Kulkarni’s employment with the Company is terminated due to an Involuntary Departure (as defined in the Employment Agreement), any Earned Options that are unvested will vest in full. In the event the Sale Event (as defined in the
Company’s 2016 Stock Option and Incentive Plan) that occurs after the Vesting Date, any Earned Options that are unvested will become fully vested. If the Sale Event that occurs before the Vesting Date, any portion of the Performance Based
Option Grant that has not become Earned Options will be eligible to be earned if the Average Stock Price as of the consummation of the Sale Event exceeds the $40.00 or $50.00 per share, as applicable. The options in the Performance Based Option
Grant shall be issued with a
per-share
option exercise price equal to the closing market price of a Common Share on the NASDAQ Global Market as of the date of the grant, which the Board determines to be the
per share fair market value of the common shares as of such date
The other material terms of Dr. Kulkarni’s employment
agreement were not amended.
There are no family relationships between Dr. Kulkarni and any director or executive officer of the
Company.
The foregoing summary of the Employment Agreement is qualified in its entirety by reference to the complete text of the
Employment Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form
8-K
and is incorporated herein by reference.
A copy of the Company’s press release announcing the transition is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.