Item 5.02 - Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b)
Resignations
On July 12, 2020, the Board of Directors (the “Board”)
of Scholar Rock Holding Corporation (along with its subsidiary Scholar Rock, Inc., collectively, the “Company”) accepted
the planned resignation of Nagesh K. Mahanthappa, Ph.D. as the Company’s President and CEO and from the Board effective as
of August 1, 2020. Dr. Mahanthappa’s decision to resign was not the result of any disagreement with the Company on any matters
relating to the Company’s operations, policies or practices. Following Dr. Mahanthappa’s resignation, he will remain
a consultant to the Company through August 2021 as further described in Item 5.02(e) below.
Edward H. Myles resigned from the Board, including from his committee positions on the Compensation Committee and as chair of the Audit Committee, effective July 16, 2020
in connection with his employment as Chief Financial Officer and Head of Business Operations (“CFO”) of the Company.
Mr. Myles’s decision to resign was not the result of any disagreement with the Company on any matters relating to the Company’s
operations, policies or practices. As of July 16, 2020 the Audit Committee will be comprised of Michael Gilman, as Audit Committee chair, Kristina Burow, and
Amir Nashat. As of July 16, 2020 the Compensation Committee will be comprised of Kristina Burow, as Compensation Committee
chair, David Hallal, and Akshay Vaishnaw.
(c)
President & CEO Transition
On July 12, 2020, the Board approved the appointment of Tony
Kingsley as President and CEO, effective August 1, 2020. From July 14, 2020 to July 31, 2020, Mr. Kingsley will serve as the CEO
Elect of the Company in connection with the leadership transition. Mr. Kingsley will also remain a member of the Board.
Mr. Kingsley was most recently President and Chief Executive
Officer of Taris Bio, prior to its acquisition by Janssen Pharmaceuticals at the end of 2019. Prior to Taris, he served as President
and Chief Operating Officer of The Medicines Company. From 2010 to 2015, Mr. Kingsley led global commercial operations at Biogen,
Inc. as Executive Vice President. Prior to Biogen, he held leadership roles in the medical device industry, including senior vice
president and general manager of the gynecological surgical products business at Hologic, Inc. and division president, diagnostic
products at Cytyc Corporation (now part of Hologic, Inc.), and was also a partner at McKinsey & Company. He received a BA in
government from Dartmouth College and an MBA from Harvard Business School.
In connection with his employment with the Company as CEO Elect
effective July 14, 2020, and as President and Chief Executive Officer effective August 1, 2020, and pursuant to the terms of his
employment agreement (the “Kingsley Agreement”), Mr. Kingsley will receive an initial annual base salary of $520,000.
Mr. Kingsley will also be eligible for an annual cash bonus with an annual incentive target of 50% of his annual base salary based
upon achievement of certain individual performance goals and/or company performance goals established by the Company. Achievement
of the goals will be determined in the discretion of the Board.
Mr. Kingsley is also eligible to participate in the employee
benefit plans available to the Company’s employees, subject to the terms of those plans. The new employment agreement provides
that, in the event that his employment is terminated by the Company without “cause” or by him for “good reason,”
subject to the execution and effectiveness of a separation agreement and release, he will be entitled to receive (i) an amount
equal to (x) 12 months of base salary and prorated incentive compensation, payable on the Company’s normal payroll cycle
if such termination is not in connection with a “change in control,” provided, that Mr. Kingsley does not breach
certain restrictive covenants set forth in his employment agreement, or (y) 18 months if such termination is in connection with
a “change in control” within 18 months of such “change in control” (a “CIC Termination”), plus
1.5 times his annual target bonus he would have been entitled to receive in the fiscal year of such termination and (ii) reimbursement
of COBRA premiums for health benefit coverage for him and his immediate family in an amount equal to the monthly employer contribution
that the Company would have made to provide health insurance to Mr. Kingsley had he remained employed with the Company for up to
(x) 12 months following termination if such termination is not in connection with a “change in control” or (y) 18 months
if such termination is a CIC Termination. In addition, upon a CIC Termination by the Company without “cause” or he
resigns for “good reason,” all time-based stock options and other time-based stock-based awards held by Mr. Kingsley
will accelerate and vest immediately.
On July 16, 2020 (the “Grant Date”) the Board granted
to Mr. Kingsley an option to purchase up to 429,684 shares of the Company’s common stock (the “Kingsley Equity Grant”)
pursuant to the Company’s 2018 Stock Option and Incentive Plan (the “Plan”). The exercise price per share of
the Kingsley Equity Grant is equal to the closing price per share of the Company’s common stock on the NASDAQ Global Market
on the Grant Date. The Kingsley Equity Grant will vest over four years, with 25% vesting on the first anniversary of July 14, 2020
and the remainder vesting in twelve quarterly installments over the remaining three years.
Mr. Kingsley will enter into an indemnification agreement with
the Company consistent with the form of the existing indemnification agreement entered into between the Company and its executive
officers. This agreement will supersede his existing indemnification agreement with the Company, which he entered into in connection
with being a director.
CFO Appointment
On July 16, 2020, the Board announced the appointment of Edward
H. Myles as the CFO of the Company. In connection with his employment with the Company as CFO effective July 16, 2020, and pursuant
to the terms of his employment agreement (the “Myles Agreement”), Mr. Myles will receive an initial annual base salary
of $430,000. Mr. Myles will also be eligible for an annual cash bonus with an annual incentive target of 40% of his annual base
salary based upon achievement of certain individual performance goals and/or company performance goals established by the Company.
Achievement of the goals will be determined in the discretion of the Compensation Committee of the Board.
Mr. Myles is also eligible to participate in the employee benefit
plans available to the Company’s employees, subject to the terms of those plans. The Myles Agreement provides that, in the
event that his employment is terminated by the Company without “cause” or by him for “good reason,” subject
to the execution and effectiveness of a separation agreement and release, he will be entitled to receive (i) an amount equal to
(x) 9 months of base salary and prorated incentive compensation, payable on the Company’s normal payroll cycle if such termination
is not in connection with a “change in control,” provided, that Mr. Myles does not breach certain restrictive covenants
set forth in his employment agreement, or (y) if such termination is in connection with a “change in control” within
18 months of such “change in control,” 1 times the sum of his annual base salary plus his annual target bonus he would
have been entitled to receive in the fiscal year of such termination and (ii) reimbursement of COBRA premiums for health benefit
coverage for him and his immediate family in an amount equal to the monthly employer contribution that the Company would have made
to provide health insurance to Mr. Myles had he remained employed with the Company for up to (x) 9 months following termination
if such termination is not in connection with a “change in control” or (y) 12 months if such termination is a CIC Termination.
In addition, upon a CIC Termination by the Company without “cause” or he resigns for “good reason,” all
time-based stock options and other time-based stock-based awards held by Mr. Myles will accelerate and vest immediately.
On the Grant Date, the Board granted to Mr. Myles an option
to purchase up to 250,000 shares of the Company’s common stock (the “Myles Equity Grant”) pursuant to the Plan.
The exercise price per share of the Myles Equity Grant is equal to the closing price per share of the Company’s common stock
on the NASDAQ Global Market on the Grant Date. The Myles Equity Grant will vest over four years, with 25% vesting on the first
anniversary of the Grant Date and the remainder vesting in twelve quarterly installments over the remaining three years.
Mr. Myles has served as
a director of the Company since November 2018. Mr. Myles most recently served as Chief Financial Officer and Chief Operating Officer
of AMAG Pharmaceuticals, Inc. (“AMAG”) from January 2020 to July 2020. He served as Executive Vice President and Chief
Financial Officer of AMAG from April 2016 to January 2020. Prior to joining AMAG, from June 2013 to April 2016, he served as Chief
Financial Officer at Ocata Therapeutics, Inc. (“Ocata”) before it was acquired by Astellas Pharma, Inc. While at Ocata,
Mr. Myles also served as Executive Vice President of Corporate Development from June 2013 to July 2014, interim President from
January 2014 to July 2014, and Chief Operating Officer from July 2014 to April 2016. His prior leadership positions include Chief
Financial Officer and Vice President of Operations at PrimeraDx, Inc. from November 2008 to June 2013, Senior Vice President and
Chief Financial Officer of Pressure BioSciences, Inc. from April 2006 to November 2008 and Controller of EMD Pharmaceuticals (now
EMD Serono, a part of Merck KGaA) from 2003 to 2006. Earlier in his career, Mr. Myles was an associate in the healthcare investment
banking group at SG Cowen Securities Corporation, and was a senior associate in the audit practice of Coopers & Lybrand LLP
from 1993 to 1997. Mr. Myles holds a Master of Business Administration from John M. Olin School of Business at Washington University
and Bachelor of Science in Business Administration from the University of Hartford.
Mr. Myles will enter into an indemnification agreement with
the Company consistent with the form of the existing indemnification agreement entered into between the Company and its executive
officers. This agreement will supersede his existing indemnification agreement with the Company, which he entered into in connection
with being a director.
(e)
On July 16, 2020, the Company entered
into a Consulting Agreement (the “Mahanthappa Agreement”) with Nagesh K. Mahanthappa, Ph.D., the Company’s President
and CEO, which sets forth the terms of Dr. Mahanthappa’s continued services as the Company’s scientific advisor starting
August 1, 2020.
Pursuant to the Mahanthappa Agreement,
Dr. Mahanthappa will provide consulting services to the Company as a scientific advisor for twelve months commencing
August 1, 2020. Dr. Mahanthappa will receive a monthly retainer fee of $42,916.67, payable monthly in arrears and pro-rated for
any partial month of services. Provided that Dr. Mahanthappa remains engaged as an independent contractor to the Company as of
December 31, 2020, he will receive a performance bonus for calendar year 2020, to be paid no later than March 15, 2021, the amount
of which shall be based on Dr. Mahanthappa’s current bonus target amount of $257,500 as adjusted based on the Company’s
2020 corporate objectives, as determined by the Board. Dr. Mahanthappa will also be able to elect COBRA continuation coverage to
the extent that he is eligible. Dr. Mahanthappa’s existing equity awards will continue to vest throughout his term as a scientific
advisor, subject to the terms of the applicable equity award agreements and the Plan. The Mahanthappa Agreement also contains standard
confidentiality, general release, and non-competition provisions, including Dr. Mahanthappa’s existing obligations to the
Company.
The compensation disclosures for Mr.
Kingsley and Mr. Myles are included in Item 5.02(c) hereto and are incorporated by reference herein.
The above summaries are not complete
and are qualified in their entirety by the Kingsley Agreement, the Myles Agreement and the Mahanthappa Agreement, copies of which
are attached hereto as Exhibits 10.1, 10.2 and 10.3 respectively, and are incorporated herein by reference.