Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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On May 15, 2018, Aileron Therapeutics, Inc. (the Company) announced that Joseph A. Yanchik III had resigned as President and Chief Executive
Officer of the Company and as a member of the Board of Directors of the Company (the Board), effective as of May 15, 2018.
The Company
also announced that John Longenecker, Ph.D., had been appointed as interim President and Chief Executive Officer of the Company, effective as of May 15, 2018, to serve while the Company conducts its search for a new chief executive officer.
Dr. Longenecker, age 70, has provided independent consulting services to biopharmaceutical companies since April 2008. He also served as president
and chief executive officer and as a director of HemaQuest Pharmaceuticals, Inc., a biopharmaceutical company focused on the development of therapeutics for blood diseases, from September 2010 until March 2014. From February 2002 to January
2009, Dr. Longenecker was president and chief executive officer and a member of the board of directors of Favrille, Inc., a publicly traded biopharmaceutical company. He has served as a director of Pacira Pharmaceuticals, Inc., a specialty
pharmaceutical company, since July 2007. Dr. Longenecker holds a B.S. in chemistry/education from Purdue University and a Ph.D. in biochemistry from The Australian National University. He was a post-doctoral fellow at Stanford University from
1980 to 1982.
Employment Agreement with Dr. Longenecker
In connection with his appointment, Dr. Longenecker entered into an employment agreement with the Company on May 15, 2018 (the Employment
Agreement) under which Dr. Longenecker agreed to serve as the Companys President and Chief Executive Officer on an interim basis. Pursuant to the Employment Agreement, Dr. Longenecker will be paid a base salary at a rate of
$43,558.33 per month, which is based on an annualized base salary of $522,700. Following the end of each calendar year that Dr. Longenecker is employed by the Company or following the termination of his employment following the hiring of a new
chief executive officer, he is eligible to receive a discretionary performance bonus of up to 50% of his annual base salary based on the achievement of performance milestones set by the Board or the Compensation Committee of the Board. The amount of
such bonus and the achievement of such milestones will be determined by the Board in its sole discretion. Dr. Longenecker will also be entitled to receive reimbursement for reasonable expenses incurred in connection with travel to and working
in Massachusetts.
Pursuant to the Employment Agreement, the Company has granted Dr. Longenecker options to purchase 30,000 shares of common stock of
the Company under the Companys 2017 Stock Incentive Plan. The options will have an exercise price equal to the closing price of the common stock on May 15, 2018. The options will vest in full on the earlier of September 15, 2018 or
the date on which Dr. Longeneckers employment is terminated in connection with the Companys hiring of a new chief executive officer.
Dr. Longenecker was not selected as interim President and Chief Executive Officer pursuant to any arrangement or understanding between him and any other
person. There are no related party transactions between the Company and Dr. Longenecker and no family relationships between Dr. Longenecker and any of the directors or officers of the Company.
Separation Agreement with Mr. Yanchik
In connection
with his resignation on May 15, 2018, Mr. Yanchik entered into a separation and release of claims agreement with the Company (the Separation Agreement) providing for the terms of Mr. Yanchiks separation from
employment with the Company, including his resignation from his positions as President and Chief Executive Officer and as a member of the Board.
Under
the Separation Agreement, the Company has agreed to provide Mr. Yanchik with the following separation payments and benefits consistent with his employment agreement: (i) salary continuation payments, in equal installments in accordance
with the Companys regular payroll practices, in an aggregate amount equal to one year of Mr. Yanchiks base salary ($522,700), for 12 months following the effective date of the Separation Agreement; (ii) payment on
Mr. Yanchiks behalf of the monthly premiums for group health and/or dental insurance coverage under COBRA until the earlier of the date that is 12 months after the effective date of the Separation Agreement or the date on which
Mr. Yanchik becomes eligible to receive group health insurance coverage through another employer; (iii) accelerated vesting by six months of all stock options held by Mr. Yanchik; (iv) an extension of the
exercise period of all of Mr. Yanchiks outstanding options for 24 months following Mr. Yanchiks resignation from the Company and (v) eligibility for a performance-based
bonus of up to $87,166 based on the Companys achievement of previously-agreed performance milestones for 2018, as determined by the Board in its sole discretion.
The Separation Agreement contains mutual releases, subject to customary exceptions, and covenants not to solicit or disparage and to cooperate with the
Company. The Separation Agreement will become effective on the date that is seven days after the date Mr. Yanchik executes the agreement.