ACHN 2018 Proxy Statement

stock units (if any are outstanding). In the event such termination occurs during the period 60 days prior to or within twelve months following a change in control of the company, then he will receive (i) his salary in effect on the date of termination until the date that is eighteen months following the termination date, (ii) if he is eligible for and elects to receive COBRA continuation, payment of the premiums for his medical or dental insurance benefits for eighteen months or, if earlier, the expiration of his COBRA continuation coverage, (iii) a payment equal to 150% of his target bonus for the fiscal year in which the termination occurred, and (iv) his equity will vest as described under “ Acceleration of Vesting of Equity-Based Awards ” below. Additionally, if we terminate Dr. Deshpande’s employment by notice of non-renewal, provided that he would otherwise have been willing and able to continue his employment under the terms of his agreement, he will receive the same payments he would receive in the event of a termination during the period 60 days prior to or within twelve months following a change in control of the company. In the event Dr. Deshpande’s employment terminates due to his death, his estate is entitled to receive a payment equal to 12 months of his base salary as of the date of his death. In the event we terminate Ms. Fenton, Ms. Manning or Mr. Truitt’s employment for reasons other than cause, death or disability, or if such executive terminates his or her employment for good reason (as defined in their respective employment agreements), such executive is entitled to receive (i) his or her salary in effect on the date of termination until the date that is twelve months following the termination date; (ii) if he or she is eligible for and elects to receive COBRA continuation, payment of the premiums for his or her medical or dental insurance benefits for twelve months or, if earlier, the expiration of his or her COBRA continuation coverage; (iii) a payment equal to a pro-rated portion of his or her target bonus for the fiscal year in which termination occurred; and (iv) immediate vesting and exercisability of 25% of the original number of shares subject to unvested option grants and unvested grants of restricted stock and restricted stock units (if any are outstanding). In the event such termination occurs during the period 60 days prior to or within twelve months following a change in control of the company, then such executive will receive (i) his or her salary in effect on the date of termination until the date that is twelve months following the termination date, (ii) if he or she is eligible for and elects to receive COBRA continuation, payment of the premiums for his or her medical or dental insurance benefits for twelve months or, if earlier, the expiration of his or her COBRA continuation coverage; (iii) a payment equal to his or her target bonus for the fiscal year in which termination occurred; and (iv) his or her equity will vest as described under “ Acceleration of Vesting of Equity-Based Awards ” below. Acceleration of Vesting of Equity-Based Awards . In addition to the benefits described above, upon a change in control, each of Dr. Deshpande, Mr. Truitt, Ms. Fenton and Ms. Manning is entitled to immediate vesting and exercisability of 50% of the original number of shares subject to unvested option grants and unvested grants of restricted stock and restricted stock units (if any are outstanding). We refer to this as “single trigger” acceleration. In the event we terminate such executive’s employment for reasons other than cause, death or disability, or if such executive terminates his or her employment for good reason, during the period 60 days prior to or within twelve months following a change in control of the company, then each executive officer is entitled to immediate vesting and exercisability of all outstanding unvested option grants and unvested grants of restricted stock and restricted stock units. We refer to this as “double trigger” acceleration. We believe that “double trigger” acceleration prevents an unintended windfall in the event of a friendly (non-hostile) change in control and provides an incentive for executive officers to remain with Achillion despite the uncertainties raised by a possible change in control. The agreements with our named executive officers also provide that the amount of severance benefits payable to such executive in connection with a change in control may be reduced by an amount such that the excise tax and non-deductibility provisions of sections 280G and 4999 of the Internal Revenue Code, as amended, (the “Code”) would not apply to such payments. The severance benefits payable will only be so reduced if the net after-tax amount that would be received by the executive is greater than the net after-tax amount that would have been received without such reduction. 43