Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
President and Chief Executive Officer Appointment
On October 6, 2022, Hyperfine, Inc. (the “Company”) announced that Maria Sainz, one of the Company’s current directors, was appointed by the Board of Directors of the Company (the “Board”) as President and Chief Executive Officer of the Company, effective as of October 24, 2022 (the “Appointment Date”). Ms. Sainz will also continue to serve as a director on the Board. In connection with Ms. Sainz’s appointment, R. Scott Huennekens, who has been serving as Interim President and Chief Executive Officer of the Company, will step down from that role effective as of the Appointment Date. Mr. Huennekens will continue to serve as Executive Chairperson of the Board.
Ms. Sainz, age 56, has served on the Board since the closing of the Company’s business combination in December 2021. Ms. Sainz also serves as member of the board of directors of ShockWave Medical, Inc., Avanos Medical, Inc. and Atrion Corporation, and was previously on the board of Orthofix Medical Inc., Iridex Corporation and MRI Interventions, Inc. Ms. Sainz served as the President and Chief Executive Officer of AEGEA Medical, a medical device company in the women’s health space focused on the development of technology for endometrial ablation, from May 2018 through February 2021. Prior to that, she served as the President and Chief Executive Officer of Cardiokinetix, a medical device company, from 2012 until 2017. Ms. Sainz received a Bachelor of Arts in Linguistics from the University Complutense in Madrid, Spain and a Masters in International Business from the American Graduate School of International Management. Ms. Sainz’s qualifications to serve on the Board include her leadership experience in the healthcare industry.
The selection of Ms. Sainz to perform the functions of President and Chief Executive Officer was not pursuant to any arrangement or understanding between Ms. Sainz and any other person. There are no family relationships between Ms. Sainz and any director or executive officer of the Company, and there are no transactions between Ms. Sainz and the Company that would be required to be reported under Item 404(a) of Regulation S-K.
On October 4, 2022, the Company entered into an offer letter of employment with Ms. Sainz, effective as of the Appointment Date (the “Offer Letter”). Pursuant to the terms of the Offer Letter, Ms. Sainz’s annual base salary is $550,000. Ms. Sainz is eligible to receive an annual discretionary bonus with a target of 90% of her base salary. Ms. Sainz will receive a one-time sign-on bonus in the amount of $125,000, which is recoverable in full by the Company in the event that Ms. Sainz voluntarily terminates her employment with the Company or is terminated for “cause” (as defined in the Hyperfine, Inc. Executive Severance Plan, as amended (the “Severance Plan”)) prior to the 12 month anniversary of the Appointment Date. The Offer Letter further provides that Ms. Sainz will receive an award of stock options to purchase 3,175,000 shares of Class A common stock of the Company as of the effective date of the stock option repricing previously approved by the Board on August 24, 2022, which is expected to be on or about October 31, 2022, with 25% of the stock options to vest on the last day of the calendar month that includes the one year anniversary of the Appointment Date, and 2.08% at the end of each month thereafter, subject to Ms. Sainz’s continued service to the Company through the applicable vesting dates. Commencing on the Appointment Date, Ms. Sainz will become a participant in the Company’s Severance Plan. The foregoing description of the Offer Letter is not complete and is qualified in its entirety by reference to the full text of the Offer Letter, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K.
Further, in connection with Ms. Sainz’s membership on the Board, Ms. Sainz and the Company previously entered into an indemnification agreement in the form the Company has entered into with its other executive officers and directors, which form is filed as Exhibit 10.24 to the Company’s Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission on December 28, 2021.
Amended Executive Severance Plan
On October 3, 2022, the Board amended the Severance Plan to include the Chief Executive Officer as a participant in the Severance Plan effective October 1, 2022, but the terms of the Severance Plan did not otherwise change. Participants in the Severance Plan include the Chief Executive Officer and all employees with the title of Vice President, including Executive Vice President, Senior Vice President and Vice President.
Under the Severance Plan, if the Company terminates a participant’s employment without cause (as defined in the Severance Plan) at any time other than during the twelve (12) month period following a change in control (as such term is defined in the Severance Plan) (the “Change in Control Period”), then the participant is eligible to receive the following benefits:
|
|
|
|
|
• |
|
Severance payable in the form of salary continuation or a lump sum payment. The severance amount is equal to participant’s then-current base salary times a multiplier determined based on the participant’s title or role with us. |
|
|
|
|
|
• |
|
The Company will pay for company contribution for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) during the severance period. |
Under the Severance Plan, if the Company terminates a participant’s employment without cause or a participant resigns for good reason, during the Change in Control Period, then the participant is eligible to receive the following benefits:
|
|
|
|
|
• |
|
Severance payable in a single lump sum. The severance amount is equal to participant’s then-current base salary and then-current target annual bonus opportunity, times a change in control multiplier determined based on the participant’s title or role with us. |
|
|
|
|
|
• |
|
The Company will pay for company contribution for continuation coverage under COBRA during the severance period. |
|
|
|
|
|
• |
|
Any outstanding unvested equity awards held by the participant under any then-current outstanding equity incentive plan(s) will become fully vested as of the date the termination of such participant’s employment becomes effective. |
A participant’s rights to any severance benefits under the Severance Plan are conditioned upon the participant executing and not revoking a valid separation and general release of claims agreement in a form provided by the Company.
The foregoing description of the Severance Plan is not complete and is qualified in its entirety by reference to the full text of the Severance Plan, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K.
Executive Chairperson Compensation
On October 4, 2022, the Board approved the terms of compensation to be granted to Mr. Huennekens for his service as Executive Chairperson of the Board. Mr. Huennekens will be compensated in the amount of $10,000 per month, effective as of the Appointment Date, and continuing until his successor has been appointed or until his earlier death, resignation or removal. In addition, Mr. Huennekens will continue to be entitled to an annual cash retainer fee of $50,000, an annual equity grant and the reimbursement of expenses for his service as a non-employee director in accordance with the Company’s Nonemployee Director Compensation Policy.