UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Employment Agreement with Daniel Paterson, Chief Executive Officer
As previously disclosed, Daniel Paterson was appointed to the position of President and Chief Executive Officer of Verastem, Inc. (the “Company”) effective as of August 1, 2023 (the “Effective Date”). On August 2, 2023, the Company entered into an employment agreement (the “Agreement”) between the Company and Mr. Paterson, governing the terms of Mr. Paterson’s employment for an indefinite term. The Agreement, effective as of August 1, 2023, replaces and supersedes any prior existing employment agreement between Mr. Paterson and the Company.
Under the Agreement, Mr. Paterson will receive an initial annual base salary of $600,000 and is eligible for an annual bonus target of 55% of his base salary, which will be pro-rated for the remainder of the year ended December 31, 2023, with Mr. Paterson’s 2023 annual bonus for the period prior to the Effective Date determined on the terms as in effect prior to the Effective Date and pro-rated for that portion of the year.
Pursuant to the terms of the Agreement, on August 2, 2023 (the “Grant Date”), the Company granted Mr. Paterson an option to purchase 100,000 shares of its common stock at an exercise price equal to $10.44 per share, the closing price of the Company’s common stock as reported by the Nasdaq Capital Market on the Grant Date. The Company also granted Mr. Paterson 50,000 restricted stock units on the Grant Date. The stock option and the restricted stock units each vest as to 25% of the shares on the one-year anniversary of the Grant Date, and as to an additional 6.25% of the shares at the end of each successive three-month period following the first anniversary of the Grant Date until the fourth anniversary of the Grant Date, subject to Mr. Paterson’s continuing service with the Company on the applicable vesting date. The Company also granted Mr. Paterson 50,000 restricted stock units, which vest as to 50% of the shares upon the acceptance by the U.S. Food and Drug Administration of a New Drug Application for a product which contains avutometinib in combination with defactinib, and as to 50% of the shares upon the approval of such New Drug Application, in each case subject to Mr. Paterson’s continuing service with the Company on the applicable vesting date.
Under the Agreement and subject to Mr. Paterson’s execution and non-revocation of an effective release of claims, if Mr. Paterson’s employment is terminated by the Company without Cause (as defined in the Agreement) or by Mr. Paterson for Good Reason (as defined in the Agreement), he will be entitled to receive the following severance benefits: (i) twelve months of base salary continuation, (ii) if Mr. Paterson exercises his right to continue participation in our health and dental plans under the federal law known as COBRA, a monthly cash amount equal to the full premium cost of that participation for 12 months (or, if earlier, until the time when Mr. Paterson becomes eligible to enroll in the health or dental plan of a new employer), (iii) a pro-rata portion of his target annual bonus amount for the year in which the termination occurs, calculated based on the number of days Mr. Paterson was employed by us in such year, (iv) accelerated vesting of the portion of any outstanding stock options, restricted stock, and restricted stock units held by Mr. Paterson that, by their terms, vest only based on the passage of time and that would have vested during the 12-month period following the termination of his employment and (v) any bonus which has been awarded, but not yet paid on the date of termination.
If Mr. Paterson’s employment is terminated by the Company without Cause or by Mr. Paterson for Good Reason, in either case within 90 days prior to or within 18 months following, a Change of Control (as defined in the Agreement), subject to Mr. Paterson’s execution and non-revocation of an effective release of claims, he will instead be entitled to receive the following severance benefits: (i) a lump sum amount equal to 18 months of his base salary, (ii) if Mr. Paterson exercises his right to continue participation in our health and dental plans under the federal law known as COBRA, a monthly cash amount equal to the full premium cost of that participation for 18 months (or, if earlier, until the time when Mr. Paterson becomes eligible to enroll in the health or dental plan of a new employer), (iii) a pro-rata portion of his target annual bonus amount for the year in which the termination occurs, calculated based on the number of days Mr. Paterson was employed by us in such year, (iv) accelerated vesting of all outstanding stock options, restricted stock and restricted stock units held by Mr. Paterson that, by their terms, vest only based on the passage of time and (v) any bonus which has been awarded, but not yet paid on the date of termination. In addition, upon a Change of Control, any then-unvested stock options, restricted stock and restricted stock units which are outstanding as of the Effective Date and which, by their terms, vest based on the achievement of specified performance criteria will vest to the extent they are not assumed or continued by the acquirer in such Change of Control.
The foregoing summary of the Agreement is qualified in its entirety by the copy of the Agreement filed as Exhibit 10.1 hereto and incorporated herein by this reference.
Item 9.01 Financial Statements and Exhibits.
| Exhibit No. | Description | |
| 10.1 | Employment Agreement, dated August 2, 2023, by and between Verastem, Inc. and Daniel W. Paterson | |
| 104 |
Cover Page Interactive Data File (formatted in Inline XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VERASTEM, INC. | ||
| Dated: August 4, 2023 | By: | /s/ Daniel W. Paterson |
| Daniel W. Paterson | ||
| Chief Executive Officer | ||