AKAO 2018 Proxy Statement

34 Severance and Change in Control Arrangements We are party to change in control severance agreements with each of our NEOs, which provide for severance benefits and payments upon certain terminations without cause or resignations for good reason. Our Compensation Committee believes that these types of arrangements are necessary to attract and retain executive talent and are a customary component of executive compensation. In particular, such arrangements can serve to mitigate a potential disincentive for them when they are evaluating a potential acquisition of the Company and can encourage retention through the conclusion of the transaction. The payments and benefits provided under our severance and change in control arrangements are designed to provide our NEOs with treatment that is competitive with market practices. A description of these arrangements, as well as information on the estimated payments and benefits that our NEOs would have been eligible to receive as of December 31, 2017, are set forth in “ Potential Payments Upon Termination or Change in Control ” below. In connection with his resignation as our Chief Medical Officer in March 2017, we entered into a transition and severance agreement with Dr. Friedland, which provided for certain severance benefits and payments. A description of this agreement and amounts Dr. Friedland was eligible to receive under the agreement are set forth in “ Potential Payments Upon Termination or Change in Control ” below. 2018 Leadership Transition Effective January 1, 2018, Mr. Wise was promoted to Chief Executive Officer, replacing Dr. Hillan, who became our President, R&D. The Board also appointed Mr. Wise as a member of the Board, effective January 1, 2018. Dr. Hillan remains a member of the Board. In connection with Mr. Wise’s promotion, the Board approved (i) an increase in Mr. Wise’s annual base salary to $548,600, effective January 1, 2018 and (ii) an increase in Mr. Wise’s discretionary annual bonus target to 55% of his base salary for the 2018 fiscal year, with the payment amount based upon performance as determined by the Board. In addition, Mr. Wise was granted an option to purchase 106,000 shares of the Company’s common stock effective January 1, 2018, which vests as to 1/48 th of the shares subject to the option on each monthly anniversary of January 1, 2018, subject to Mr. Wise continuing to provide services to the Company through each such vesting date. In addition, effective January 1, 2018, the Board approved a change in control severance agreement to replace Mr. Wise’s existing change in control severance agreement, which provides that, in the event his employment is terminated by the Company other than for cause or he experiences a constructive termination, he will receive as severance 12 months of his base salary paid in a single cash lump sum, 12 months of COBRA reimbursement and accelerated vesting of equity awards with respect to the number of shares that would have vested during the 12 months following his termination date had his employment continued. Further, in the event his employment is terminated other than for cause or he experiences a constructive termination, in each case, within the period commencing three months prior to a change in control and ending 12 months after a change in control, his severance will consist of 18 months of his base salary paid in a single cash lump sum, 100% of his target bonus paid in a single cash lump sum, assuming achievement of performance goals at 100% of target, 18 months of COBRA reimbursement and full vesting acceleration for equity awards he holds. Effective January 1, 2018, the Board also approved a change in control severance agreement to replace Dr. Hillan’s existing change in control severance agreement, which provides that, in the event his employment is terminated by the Company other than for cause or he experiences a constructive termination, he will receive as severance 12 months of his base salary paid in a single cash lump sum, 12 months of COBRA reimbursement and accelerated vesting of equity awards with respect to the number of shares that would have vested during the 12 months following his termination date had his employment continued. Further, in the event his employment is terminated other than for cause or he experiences a constructive termination, within the period commencing three months prior to a change in control and ending 12 months after a change in control, his severance will consist of 15 months of his base salary paid in a single cash lump sum, 100% of his target bonus paid in a single cash lump sum, assuming achievement of performance goals at 100% of target, 15 months of COBRA reimbursement and full vesting acceleration for equity awards he holds.