Item 5.02.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
August 18, 2022, the board of directors of Adial Pharmaceuticals, Inc. (the “Company”) appointed Cary J. Claiborne, age 61,
as President and Chief Executive Officer. On August 18, 2022, the Company’s board of directors also appointed Kevin Schuyler as
non-executive Chairman of the board of directors.
Cary
J. Claiborne has served as the Company’s Chief Operating Officer since December 2021 and a director since November 2021. In December
2021, Mr. Claiborne was appointed to the board of directors of NeuroSense Therapeutics, a clinical-stage drug development company that
is advancing a treatment for people living with amyotrophic lateral sclerosis, where he also serves as Chairman of the audit committee.
In July 2022, Mr. Claiborne was appointed to the board of directors of CytRx Corporation, a biopharmaceutical company focused on discovering
and developing new cancer therapeutics, where he also serves as Chairman of the compensation committee.
Prior
to joining Adial, Mr. Claiborne served as CEO of Prosperity Capital Management, LLC, a Private Investment and Advisory firm that he founded
in 2018. Prosperity Capital is focused on private Investment Management and providing Advisory Services to clients in multiple industries
with an emphasis in the Pharma/Biotech and Finance sectors. From November 2014 until February 2017, he served as the Chief Financial
Officer and member of the Board of Directors at Indivior PLC (INDV, FTSE 500), a specialty pharmaceutical company. Mr. Claiborne led
the company’s spin off from its then parent company, Reckitt Benckiser, to become an independent, listed company. While at Indivior,
he established and oversaw corporate reporting, internal audit, tax, treasury, external audit and information technology. Prior to joining
Indivior, Mr. Claiborne served as the CFO of Sucampo Pharmaceuticals, Inc. , a global biopharmaceutical company, which was later sold
to Mallinckrodt. Before joining Sucampo, Mr. Claiborne served as CFO and Corporate Secretary of Osiris Therapeutics, Inc. , and oversaw
corporate finance during the company’s initial public offering.
Mr.
Claiborne graduated from Rutgers University with a B.A. in Business Administration and from Villanova University with an M.B.A., and
was a National Association of Corporate Directors (NACD) Governance Fellow.
In
connection with his appointment, the Company entered into an amendment to its December 2021 employment agreement with Mr. Claiborne (the
“Claiborne Employment Agreement Amendment”) to employ Mr. Claiborne on a full-time basis as the Company’s Chief Executive
Officer for the remaining term of the three-year employment agreement at an annual base salary of $450,000, with a discretionary bonus
of up to 40% of his base salary upon achievement of objectives as may be determined by the Company’s board of directors. Mr. Claiborne
also received a grant of restricted stock units for 1,000,000 shares of the Company’s common stock pursuant to the Company’s
2017 Equity Incentive Plan, vesting monthly on a pro rata basis over 36 months. In his previous capacity as the Company’s Chief
Operating Officer Mr. Claiborne devoted eighty percent (80%) of his business time to the affairs of the Company for which he received
an annual base salary of $304,000.
There
are no family relationships between Mr. Claiborne and any of the Company’s directors or executive officers. In addition, except
as set forth above, Mr. Claiborne is not a party to any transaction, or series of transactions, required to be disclosed pursuant to
Item 404(a) of Regulation S-K.
Kevin
Schuyler, age 53, has served as the Company’s director since April 2016 and is Lead Independent Director. From April 2016 to August
2022, he served as the Company’s Vice Chairman of the board of directors. He currently serves as a director of Twin Vee PowerCats
Co., a Nasdaq-listed designer, manufacturer, distributor, and marketer of power sport catamaran boats based in Fort Pierce, Florida for
over 27 years, where he also serves as Chairman of the audit committee, and a director of ForzaX1, Inc., a Nasdaq-listed developer of
electric sport boats with a mission to inspire the adoption of sustainable recreational boating, where he also serves as Chairman of
the audit committee. Mr. Schuyler is also senior managing director at CornerStone Partners, a full-service institutional CIO and investment
office located in Charlottesville, Virginia, with approximately $10 billion under management. Prior to joining CornerStone Partners in
2006, he held various positions with McKinsey & Company, Louis Dreyfus Corporation and The Nature Conservancy. Mr. Schuyler serves
on various boards and committees of Sentara Martha Jefferson Hospital, the US Endowment for Forestry and Communities, and Stone Barns
Center. He is a member of the investment committee of the Margaret A. Cargill Philanthropies. Mr. Schuyler graduated with honors from
Harvard College and received his MBA from The Darden Graduate School of Business at the University of Virginia. He is a member of the
Chartered Financial Analyst Society of Washington, DC.
On
August 18, 2022, William B. Stilley was appointed Chief Executive Officer of Purnovate, Inc. In connection with Mr. Stilley’s appointment
as Chief Executive Officer of Purnovate, Inc., the Company and Mr. Stilley entered into an amendment to its July 2018 employment agreement
with Mr. Stilley, as amended (the “Stilley Employment Agreement Amendment”), to employ Mr. Stilley as the Chief Executive
Officer of Purnovate, Inc. for the remaining term of the five-year employment agreement at an annual base salary of $260,000, with opportunity
for bonuses and a salary increase upon certain achievements. Mr. Stilley also received a grant of options to purchase 100,000 shares
of the Company’s common stock pursuant to the Company’s 2017 Equity Incentive Plan, vesting upon the achievement of certain
milestones.
The
foregoing descriptions of the Claiborne Employment Agreement Amendment and Stilley Employment Agreement Amendment are a summary and are
qualified in its entirety by reference to the Claiborne Employment Agreement Amendment and Stilley Employment Agreement Amendment, which
are attached hereto as Exhibit 10.1 and Exhibit 10.2 and are incorporated by reference herein.