Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Appointment of Owen Hughes as Interim Chief Executive Officer, Director and
Executive Chairman
On December 30, 2022, the board of directors (the "Board") of XOMA Corporation
appointed Owen Hughes as our Interim Chief Executive Officer and principal
executive officer and as a member of our Board and Executive Chairman of our
Board, effective as of January 1, 2023.
Mr. Hughes, age 48, has served as the Chief Executive Officer of Sail Bio, Inc.,
a private biotechnology company focused on addressing toxic proteinopathies,
since February 2022 and served as the Chief Executive Officer and co-founder of
Cullinan Oncology, Inc., a publicly-traded oncology company, from September 2017
to October 2021. Previously, Mr. Hughes served as the Chief Business Officer and
Head of Corporate Development at Intarcia Therapeutics, Inc., a biotechnology
company focused on type II diabetes, from February 2013 to August 2017. Prior to
his operating roles, Mr. Hughes spent 16 years on Wall Street in various
capacities, including roles at Brookside Capital, an operating division of Bain
Capital and Pyramis Global Advisors, a Fidelity Investments Company. Mr. Hughes
has served on the board of directors of Ikena Oncology, Inc., a publicly-traded
oncology company, since December 2022. Mr. Hughes served on the board of
directors of Radius Health, Inc., a publicly-traded biopharmaceutical company,
from April 2013 to August 2022 until its sale to Gurnet Point Capital and
Patient Square Capital; Translate Bio, Inc., a messenger RNA therapeutics
company, from July 2016 until its acquisition by Sanofi in September 2021; and
FS Development Corp. II, a special purpose acquisition company sponsored by
Foresite Capital, from February 2021 to December 2021. Mr. Hughes received a
B.A. in History from Dartmouth College.
Pursuant to Mr. Hughes' employment agreement with us, he will receive an annual
base salary of $125,000. He will also be eligible to receive an annual
discretionary cash bonus, with a target amount equal to 55% of his then-current
annual base salary, upon the achievement of annual performance milestones to be
established by the Board.
Pursuant to the terms of his employment agreement, on January 3, 2023 we granted
Mr. Hughes two separate non-qualified stock options to purchase: (i) 100,000
shares of the Company's common stock at an exercise price of $18.66 per share
(the "First Hughes Inducement Award") and (ii) 75,000 shares of the Company's
common stock at an exercise price of $30.00 per share (the "Second Hughes
Inducement Award" and together with the First Hughes Inducement Award, the
"Hughes Inducement Awards"). The First Hughes Inducement Award will vest in a
series of four equal installments on March 31, 2023, June 30, 2023,
September 30, 2023 and December 31, 2023. The Second Hughes Inducement Award
will vest in a series of 36 successive equal monthly installments measured from
January 1, 2023. The Hughes Inducement Awards are subject to the terms and
conditions of the Company's Amended and Restated 2010 Long Term Incentive and
Stock Award Plan (the "Plan"), but were granted outside the Plan as an
inducement material to Mr. Hughes entering into employment with us in accordance
with Nasdaq Listing Rule 5635(c)(4).
Pursuant to the terms of his employment agreement, Mr. Hughes is subject to
certain confidentiality obligations and is obligated to sign and comply with an
agreement relating to proprietary information and inventions. Mr. Hughes'
employment is "at will" and may be terminated at any time, with or without cause
or advanced notice. Pursuant to the terms of his employment agreement, if
Mr. Hughes' employment automatically terminates due to a new chief executive
officer commencing employment within one year after the effective date of his
employment agreement, then we will pay Mr. Hughes severance in the form of base
salary continuation at the rate then in effect through the one-year anniversary
of the effective date of his employment agreement.
We have entered into our standard indemnity agreement with Mr. Hughes, the form
of which was previously filed as Exhibit 10.56 to our Annual Report on Form 10-K
for the year ended December 31, 2020, which was filed with the Securities and
Exchange Commission on March 10, 2021.
There is no arrangement or understanding between Mr. Hughes and any other person
pursuant to which he was appointed as an officer or director of our company,
there is no family relationship between Mr. Hughes and any of our directors or
other executive officers, and Mr. Hughes is not a party to any transactions of
the type listed in Item 404(a) of Regulation S-K.
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The foregoing summary of the terms and conditions of employment of Mr. Hughes
does not purport to be complete and is qualified in its entirety by reference to
the employment agreement for Mr. Hughes, which will be filed as an exhibit to
our Annual Report on Form 10-K for the year ended December 31, 2022.
Appointment of Bradley Sitko as Chief Investment Officer
On December 30, 2022, the Board of XOMA Corporation appointed Bradley Sitko as
our Chief Investment Officer, effective as of January 3, 2023.
Mr. Sitko, age 42, served as the Managing Director, Strategic Finance, at RTW
Investments, LP from November 2019 to January 2023 and also served as a member
of the board of directors of such firm's Irish collective asset-management
vehicle (ICAV), RTW Investments ICAV, and was Chief Financial Officer of Ji Xing
Pharmaceuticals Limited, a Shanghai-based biopharmaceutical company, incubated
by RTW Investments, LP. From March 2015 to November 2019, Mr. Sitko served as
Vice President, Finance, Operations and Corporate Development of DNAnexus, Inc.,
a genetic data management company. Mr. Sitko received a B.A. in History and
Sociology of Science from the University of Pennsylvania and an M.B.A. from
Columbia Business School.
Pursuant to Mr. Sitko's employment agreement with us, he will receive an annual
base salary of $500,000 and a signing bonus of $110,000. Mr. Sitko's signing
bonus will be paid within 30 days after the effective date of his employment
agreement and will be subject to standard deductions and withholdings. If
Mr. Sitko resigns without good reason or is terminated for cause (each as
defined in his employment agreement), in either case, within one year after the
effective date of his employment agreement, then Mr. Sitko will be required to
repay the signing bonus, based on the gross amount, but prorated on a daily
basis for the time employed, to be paid within 60 days after his termination
date. Mr. Sitko will also be eligible to receive an annual discretionary cash
bonus, with a target amount equal to 50% of his then-current annual base salary,
upon the achievement of annual performance milestones to be established by the
Board.
Pursuant to the terms of his employment agreement, on January 3, 2023 we granted
Mr. Sitko two separate non-qualified stock options to purchase: (i) 300,000
shares of the Company's common stock at an exercise price of $18.66 per share
(the "First Sitko Inducement Award") and (ii) 250,000 shares of the Company's
common stock at an exercise price of $30.00 per share (together with the First
Sitko Inducement Award, the "Sitko Inducement Awards"). Twenty-five percent of
the shares subject to each of the Sitko Inducement Awards will vest and become
exercisable on January 3, 2024 (the "Initial Vesting Date"), and the balance of
the shares subject to each of the Sitko Inducement Awards will vest and become
exercisable in a series of 36 successive equal monthly installments thereafter
on the same day of the month as the Initial Vesting Date, or if there is no such
date, the last day of the month. The Sitko Inducement Awards are subject to the
terms and conditions of the Plan, but were granted outside the Plan as an
inducement material to Mr. Sitko entering into employment with us in accordance
with Nasdaq Listing Rule 5635(c)(4).
Pursuant to the terms of his employment agreement, Mr. Sitko is subject to
certain confidentiality obligations and is obligated to sign and comply with an
agreement relating to proprietary information and inventions. Mr. Sitko's
employment is "at will" and may be terminated at any time, with or without cause
or advanced notice. Pursuant to the terms of his employment agreement, upon
termination of his employment without cause or his resignation for good reason
(each as defined in his employment agreement), Mr. Sitko will receive:
• 12 months of base salary;
• any earned but unpaid bonus with respect to the prior year;
• a pro-rated amount of Mr. Sitko's annual bonus with respect to the year
of termination; and
• reimbursement for continued medical coverage for 12 months.
If Mr. Sitko is subjected to excise tax pursuant to Sections 280G and 4999 of
the Internal Revenue Code, he will either have his payments cut back so that the
excise tax does not apply, or he will receive the full payments and benefits and
be subject to the excise tax, whichever puts him in a better after-tax position.
If the termination occurs within two months prior to or 12 months after a change
of control, Mr. Sitko will receive:
• 18 months of base salary;
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• any earned but unpaid bonus with respect to the prior year;
• 1.5 times his annual bonus for the year of termination;
• 100% acceleration of any time-based equity awards;
• a post-termination exercise period extension to the earlier of 60 months
after the date of termination and the remainder of the maximum term of
any time-based equity awards;
• upon a good faith assessment of our Board, pro rata acceleration of a
portion of any performance-based equity awards; and
• reimbursement for continued medical coverage for 18 months.
We have entered into our standard indemnity agreement with Mr. Sitko, the form
of which was previously filed as Exhibit 10.56 to our Annual Report on Form 10-K
for the year ended December 31, 2020, which was filed with the Securities and
Exchange Commission on March 10, 2021.
There is no arrangement or understanding between Mr. Sitko and any other person
pursuant to which he was appointed as an officer of our company, there is no
family relationship between Mr. Sitko and any of our directors or other
executive officers, and Mr. Sitko is not a party to any transactions of the type
listed in Item 404(a) of Regulation S-K.
The foregoing summary of the terms and conditions of employment of Mr. Sitko
does not purport to be complete and is qualified in its entirety by reference to
the employment agreement for Mr. Sitko, which will be filed as an exhibit to our
Annual Report on Form 10-K for the year ended December 31, 2022.
Departure of James R. Neal as Chief Executive Officer, Director and Chairman of
the Board
In connection with Mr. Hughes' appointment, James R. Neal has retired as our
Chief Executive Officer effective as of December 31, 2022 (the "Departure Date")
and resigned as a member of our Board and Chairman of the Board, effective as of
January 1, 2023. Mr. Neal's retirement as our Chief Executive Officer and
resignation as a member of our Board and Chairman of the Board were not the
result of any disagreement with us on any matter relating to our operations,
policies or practices. Pursuant to that certain Amended and Restated Employment
Agreement, dated as of December 15, 2021, by and between us and Mr. Neal, which
was previously filed as Exhibit 10.26 to our Annual Report on Form 10-K for the
year ended December 31, 2021, which was filed with the Securities and Exchange
Commission on March 8, 2022, following the Departure Date, Mr. Neal will be
entitled to a cash payment of $1,160,000. This payment will be made in equal
monthly installments starting in January 2023 through December 2023, less
deductions and withholdings.
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