| ITEM 5.02 |
Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers
|
On November 21, 2022, Teva Pharmaceutical Industries Ltd. (the
“Company”) announced that its Board of Directors had appointed
Richard Francis to become the Company’s President and Chief
Executive Officer, effective January 1, 2023. In order to
facilitate an orderly transition, Kåre Schultz and the Company’s
Board of Directors have mutually agreed that Mr. Schultz will
retire from his current positions as President and Chief Executive
Officer, and a member of the Board of Directors, effective
December 31, 2022.
Mr. Francis, age 54, is a seasoned pharmaceutical executive
bringing over two decades of experience to the Company, including
five years as Chief Executive Officer of Sandoz and a member of the
Novartis Executive Team from 2014 to 2019. Prior to his role at
Sandoz, Mr. Francis was a senior executive at Biogen for 13
years where he held a number of senior roles, including leading the
U.S. business. He also oversaw the successful launch of
Tecfidera® in
2013. Mr. Francis has served as the CEO of Purespring
Therapeutics, a pioneering gene therapy company focused on
transforming the treatment of kidney diseases, since 2021, and as
CEO of Forcefield Therapeutics, a pioneer of best-in-class therapeutics to
protect heart function, since 2021. He has also served as an
operating partner for Syncona Investment Management Limited since
2021. Mr. Francis also serves as a member of the board of
directors of Mettler-Toledo International Inc.
Mr. Francis and the Company have entered into an employment
agreement (the “Employment Agreement”), which provides for an
initial employment term of three years, subject to automatic
renewal for successive one-year periods unless either party
gives at least six months advance notice of non-renewal or termination. Under the
Employment Agreement, Mr. Francis will receive an annual base
salary of USD $1.6 million, a target annual bonus opportunity
equal to 150% of his annual base salary (and a maximum opportunity
of 200% of his annual base salary), annual equity incentives with a
total target grant date fair value of USD $9 million, 70% of
which will be in the form of performance stock units (“PSUs”) and
30% in the form of restricted stock units (“RSUs”), and the same
employee benefits as are provided to similarly situated senior
executives of the Company. Upon commencing employment, in light of
forfeited compensation opportunities at his prior employer and to
incentivize him to join the Company, Mr. Francis will also
receive (a) the following sign-on equity awards: (i) an RSU
award with a grant date fair value of USD $5 million, which
will vest in equal installments on the first, second and third
anniversaries of the grant date, subject to his continued
employment through the applicable vesting dates; and (ii) a
PSU award with a target grant date fair value of USD
$5 million, which will be earned based on the achievement of
stretch performance goals to be established by the Human
Resources & Compensation Committee of the Board prior to
the 2023 annual meeting of shareholders, and (b) a
sign-on cash award of USD
$5 million, which will vest and be paid in three installments,
with the first installment, equal to $1,500,000, to be paid on the
first business day following the date that Mr. Francis
commences employment with the Company (the “Effective Date”), the
second installment, equal to $1,500,000, to be paid on the first
business day following the first anniversary of the Effective Date,
and the third installment, equal to $2,000,000, to be paid on the
first business day following the third anniversary of the Effective
Date, in each case subject to his continued employment through the
applicable vesting date. In connection with rendering services from
the Company’s principal offices in Israel, Mr. Francis will
also receive certain housing and travel reimbursements, annual
allowance for financial and tax advisory fees, and certain other
relocation benefits in accordance with the Company’s policies. The
Employment Agreement also provides for a one-time legal fee reimbursement.
If Mr. Francis’s employment were terminated by the Company
without “cause” or by him for “good reason” (each term as defined
in the Employment Agreement), he would be entitled to, as of the
date of termination: (a) cash severance equal to two times his
annual base salary; (b) vesting (on the later of the date of
termination and the first anniversary of the grant date) of any
portion of the sign-on RSU
award that is unvested; (c) vesting of the portion of the
sign-on PSU award that is
earned based on actual performance at the end of the applicable
performance period; (d) vesting of any portion of the
sign-on cash award that is
unvested; (e) if Mr. Francis has been employed by the
Company for at least 12 months, a prorated annual bonus for the
year of termination, determined based on actual performance; and
(f) if the date of termination occurs within the first year
following a change in control of the Company, an additional cash
severance payment equal to his annual base salary. In addition, in
consideration for Mr. Francis’s compliance with certain
restrictive covenants including noncompetition covenants,
Mr. Francis shall be entitled to payment of 12 months of his
base salary, payable in 12 equal monthly installments following the
date of termination for any reason other than due to his death or
termination for cause by the Company. All severance benefits (other
than any portion required under applicable law) and the noncompete
payment are subject to
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