Item 5.02 Departure of Directors or Principal Officers; Election
of Directors; Appointment of Principal Officers.
Appointment of Dr. Dispersyn as CEO
On February 13, 2019, Geert Cauwenbergh,
Dr. Med. Sc., informed the Board of Directors (the “Board”) that he intends to retire as principal executive and financial
officer (the “CEO”) of Phio Pharmaceuticals Corp. (the “Company”) effective March 1, 2019. Dr. Cauwenbergh’s
announced retirement was not due to any disagreements with the Company. Indeed, Dr. Cauwenbergh will remain on the Board and support
the transition to the new CEO. On February 13, 2019, the Company’s Board appointed Gerrit Dispersyn, Dr. Med. Sc., currently
President and Chief Operating Officer (“COO”) of the Company, as the Company’s CEO (including its principal financial
officer) effective March 1, 2019 for a term to expire at such time as his successor is appointed and qualified. Dr. Dispersyn will
remain President, but will resign as COO as of March 1, 2019. The Board does not intend appoint a successor COO at this time.
Dr. Dispersyn, age 44, joined the Company
on April 24, 2017, as its Chief Development Officer, before becoming the Company’s President and COO on November 14, 2018.
Over the past two years, Dr. Dispersyn has provided exemplary leadership to the research and development team at the Company. He
has been a catalyst in its transformation into an immuno-oncology therapeutics company and has been instrumental in finalizing
the clinical work in its dermatology and ophthalmology programs, with the closure and report-out of various successful clinical
studies. From 2014 to April 2017, Dr. Dispersyn was the Vice President, Global Head of Clinical Affairs at Integra Lifesciences
Corporation, a medical technology company. Prior to assuming this role, Dr. Dispersyn held the position of Vice President, Program
Management & Clinical Affairs from 2008 to 2014. In these positions, Dr. Dispersyn was responsible for the global strategy
and execution of clinical and product development, clinical operations and medical affairs projects.
As President and CEO, Dr. Dispersyn will
be entitled to receive an initial base salary of $380,000 per annum, as well as a performance bonus of up to 50% of his base salary,
subject to the achievement of performance goals to be established annually. Otherwise, Dr. Dispersyn’s April 24, 2017 employment
agreement with the Company (the “Employment Agreement”) will remain in full force and effect. The Employment Agreement,
as described in and filed with the Company’s November 19, 2018, Current Report on Form 8-K, is incorporated in here by reference.
On February 13, 2019, the Board granted
Dr. Dispersyn restricted stock units entitling him to receive 55,000 shares of the Company’s common stock pursuant to the
Company’s 2012 Long Term Incentive Plan. The foregoing restricted stock units vest in equal annual installments over four
years such that they will become fully vested and exercisable on February 13, 2023. Dr. Dispersyn is also entitled to a grant by
the Company of restricted stock units entitling him to receive shares of common stock equal to 2% of the outstanding shares of
the Company’s common stock, subject to the Company’s stockholders’ approving a sufficient increase of shares
of common stock that may be offered pursuant to the Company’s 2012 Long Term Incentive Plan at the Company’s next Annual
Meeting. Such restricted stock units will vest in equal annual installments over four years beginning with the effective date of
Dr. Dispersyn’s appointment as CEO and will become fully vested and exercisable on March 1, 2023.
There are no arrangements or understandings
between Dr. Dispersyn and any other persons, pursuant to which he was appointed as the CEO. There are no current or proposed transactions
between us and Dr. Dispersyn or his immediate family members that would require disclosure under Item 404(a) of Regulation S-K
promulgated by the SEC.
A copy of the Company’s press release
announcing Dr. Dispersyn’s replacement of Dr. Cauwenbergh as CEO is furnished hereto as Exhibit 99.1 and shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section.
Amendment to Dr. Cauwenbergh’s Non-Plan Stock Compensation
Election
On February 14, 2019, the Company and Dr.
Cauwenbergh entered into a Second Amendment to the Non-Plan Stock Compensation Election and Terms and Conditions (as amended on
December 19, 2018, the “Terms and Conditions”) pursuant to which Dr. Cauwenbergh irrevocably elected to receive 50%
of his base salary and cash bonuses, if any, owed to him over the September 15, 2018 through February 28, 2019 period in the form
of unvested, restricted shares of the Company’s common stock (the “Election”). The Second Amendment extends the
vesting period for the restricted shares granted pursuant to the Election from March 1 to June 1, 2019. Other than the aforementioned
changes, the Terms and Conditions will continue to apply.
The description of the Terms and Conditions
in Item 5.02 to the Company’s December 21, 2018, Current Report on Form 8-K, is incorporated herein by reference. Additionally,
the preceding description of the Second Amendment is qualified in its entirety by reference to the full text of the Second Amendment,
a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.