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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 October 1, 2020, Cara Therapeutics, Inc. (the “Company”)
announced the appointment of Thomas Reilly to serve as Chief Financial Officer of the Company, effective October 1, 2020.
In this capacity, Mr. Reilly will serve as the Company’s principal financial and accounting officer.
Mr. Reilly, age 48, has over 20 years of experience in
biopharmaceutical financial operations, including management experience in accounting and commercial finance. Mr. Reilly joins
the Company from Allergan plc, now part of AbbVie, Inc., where he served as Head of Finance for U.S. Pharma General Medicines
since October 2017. Prior to Allergan, from 2004 through 2017, he held numerous financial management positions of increasing
responsibility within Novartis AG, most notably Head of Finance of Global Oncology Development. Previously, from 2000 through 2003,
he served as the Finance Manager, U.S. Consumer Healthcare Division of Pharmacia Corporation, now Pfizer Inc. Mr. Reilly holds
an M.B.A. in accounting from Seton Hall University and a B.S. in finance from Manhattan College.
Mr. Reilly’s employment agreement provides that he
will receive an initial annual base salary of $400,000 and a one-time signing bonus of $30,000, which must be repaid if Mr. Reilly
resigns or is terminated (other than a termination without cause, as that term is defined in the employment agreement) prior to
the first anniversary of his employment. In addition, Mr. Reilly will be eligible to earn an annual discretionary bonus with
a target amount equal to 40% of his then-current annual base salary. Mr. Reilly also received an option to purchase 175,000
shares of the Company’s common stock on October 1, 2020, which option has an exercise price equal to the closing price
of the Company’s common shares on the Nasdaq Global Market on the date of grant. The shares underlying the option vest over
a four-year period, with 25% of the shares vesting on October 1, 2021 and the remainder vesting in 36 equal monthly installments
at the end of each calendar month thereafter, subject to Mr. Reilly’s continuous service with the Company as of each
such vesting date.
Mr. Reilly’s employment with the Company is “at
will.” Pursuant to the terms of the employment agreement, if he is terminated without cause on or after the first anniversary
of his employment and he executes a general release in favor of the Company, the Company will provide Mr. Reilly with the
following benefits: (1) an amount equal to nine months of continued base salary, payable on the Company’s regular payroll
dates; (2) a lump-sum payment equal to 50% of his then-current annual target bonus opportunity, pro rated for any partial
year of employment; and (3) payment of applicable COBRA premiums for up to nine months following such separation from the
Company. To the extent he is terminated without cause prior to the first anniversary of his employment and he executes a general
release in favor of the Company, he will be entitled to the foregoing benefits, provided that the period for continuation of base
salary and payment of applicable COBRA premiums shall be reduced to three months. In addition, if a change in control of the Company
occurs during Mr. Reilly’s employment and he is terminated without cause within three months prior or 12 months after
such change in control, any unvested equity awards then held by Mr. Reilly will vest in full.
The Company expects to enter into its standard indemnification
agreement for executive officers with Mr. Reilly, the form of which was previously filed by the Company as Exhibit 10.1
to the Company’s Registration Statement on Form S-1 (File No. 333-192230), filed with the Securities and Exchange
Commission on January 17, 2014.
There is no family relationship between Mr. Reilly and
any director or executive officer of the Company and he has no direct or indirect material interest required to be disclosed pursuant
to Item 404(a) of Regulation S-K.
The foregoing summary of compensatory arrangements is not intended
to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference
to the full text of Mr. Reilly’s employment agreement that is filed as Exhibit 10.1 to this Current Report on Form 8-K
and incorporated herein by reference.