Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Departure of Chief Executive Officer
On August 20, 2024, the Board of Directors (the “Board”) of Achieve Life Sciences, Inc. (the “Company”) determined that John Bencich will no longer serve as the Company’s Chief Executive Officer, “principal executive officer” or “principal financial officer,” effective as of August 21, 2024 (the “Separation Date”). Mr. Bencich resigned as a director of the Company, also effective as of the Separation Date.
In connection with his separation, the Company and Mr. Bencich entered into a Separation Agreement (the “Separation Agreement”). Subject to Mr. Bencich’s execution of the Separation Agreement, Mr. Bencich will continue to serve as an advisor to the Company until December 31, 2024, during which time his existing equity awards will continue to vest and he will receive compensation for his services at outlined in the Advisor Agreement between the Company and Mr. Bencich (the “Advisor Agreement”). If the Separation Agreement becomes effective pursuant to its terms, Mr. Bencich will receive (i) a lump-sum cash severance payment equivalent to 18 months of his base salary on the Separation Date, (ii) premium payments for continued healthcare coverage for 18 months following the Separation Date, grossed up for applicable taxes, (iii) in lieu of notice of termination, a cash payment equal to 30 days of his base salary, (iv) accelerated vesting of the unvested portion of each time-based option grant awarded to Mr. Bencich that is equal to the number of shares that would have vested over 18 months following the Separation Date and (v) ability to retain his outstanding performance-based restricted stock units until the earlier of their expiration by their existing terms or the achievement of the milestones. In the event that the Company is subject to a Change in Control (as defined in Mr. Bencich’s Amended and Restated Employment Agreement, dated as of September 28, 2020) within three months following the Separation Date, Mr. Bencich will also receive (a) payments for continued healthcare coverage for an additional six months, (b) an additional cash payment equivalent to six months of his base salary on the Separation Date, and (c) a cash payment equal to the sum of 24 months of his average monthly bonus calculated over the 24 months immediately preceding the Separation Date.
The foregoing summary of the Separation Agreement and the Advisor Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the Separation Agreement and the Advisor Agreement, which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending September 30, 2024.
Appointment of Chief Executive Officer
Effective as of August 21, 2024 (the “Appointment Date”), the Company also announced that the Board of Directors of the Company (the “Board”) appointed Richard Stewart as the Company’s Chief Executive Officer, “principal executive officer” and “principal financial officer.”
Mr. Stewart has served as Executive Chairman of the Board since September 2020, and as Chairman of the Board and a director since the consummation of the merger between OncoGenex Pharmaceuticals, Inc. and the Company in August 2017 (the “Merger”). Previously, Mr. Stewart served as Chief Executive Officer from the Merger to September 2020, and was Chairman and a director from the Company’s founding in May 2015 through the Merger. Mr. Stewart is also a founder and has served as a director of Ricanto Limited, a pharmaceutical asset optimization company, since 2009. Mr. Stewart has been Chairman and Chief Executive Officer of Renown Pharma Limited, a central nervous system company focused on Parkinson’s disease, since 2016. Prior to joining the Company, Mr. Stewart was Chairman and Chief Executive Officer of Huxley Pharmaceuticals, Inc., a single purpose central nervous system company, during 2009, prior to Huxley Pharmaceuticals, Inc.’s acquisition by BioMarin Pharmaceutical Inc. Mr. Stewart was Chief Executive Officer of Brabant Pharma Limited, a single purpose central nervous system company, from 2013 to 2014 prior to its acquisition by Zogenix Inc. He was a co-founder and Chief Executive Officer of Amarin Corporation plc, a central nervous system company focused on Parkinson’s disease and Huntington’s disease, from 2000 to 2007. Mr. Stewart was a co-founder and Chief Financial Officer, and later Chief Business Officer, of SkyePharma plc, a drug delivery company specializing in controlled release formulations, and held such positions from 1995 to 1998. Mr. Stewart holds a B.S. in Business Administration from the University of Bath.
In connection with the appointment of Mr. Stewart as Chief Executive Officer, Mr. Stewart will receive (i) an initial annual base salary of $615,000 per year (the “Stewart Base Salary”), (ii) an annual discretionary bonus of up to 50% of the Stewart Base Salary, (iii) a grant of 157,500 performance-based restricted stock units and an option to purchase 67,500 shares of the Company’s common stock and (iv) reimbursement for certain travel and other business expenses incurred in the course of his duties.