Akili, Inc. appointed Matthew Franklin as new CEO

Item 5.02 
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. 


Board Chair and CEO Leadership Transition; Director Resignation 

Effective October 5, 2023 (the "Transition Date"), the Board of Directors (the "Board") of Akili, Inc. (the "Company") approved a leadership transition of W. Edward Martucci II, Ph.D., one of the Company's co-founders, from Chief Executive Officer of the Company to Chair of the Board and an advisor to the Company, and the appointment of Matthew Franklin, the Company's President and Chief Operating Officer, to President and Chief Executive Officer and principal executive officer of the Company, effective as of the Transition Date. 

On the Transition Date, the Board also elected Mr. Franklin as a member of the Board, effective as of the Transition Date, filling the director vacancy resulting from Chamath Palihapitiya's resignation from the Board (and from his role as Chair of the Board). Mr. Palihapitiya informed the Board of his resignation, effective immediately, on October 4, 2023 and his resignation was not due to any disagreement with the Company. 

Mr. Franklin will serve as a Class III director on the Board, and his initial term as a director will expire at the Company's 2025 annual meeting of stockholders. As an executive officer of the Company, Mr. Franklin is not independent under the Nasdaq Marketplace Rules and the Company's criteria for determining director independence. 

Mr. Franklin, 50, served as our President and Chief Operating Officer from August 2022 to the Transition Date. Mr. Franklin served in the same capacity at legacy Akili from June 2022 until August 2022. Prior to joining us, from January 2021 to June 2022, Mr. Franklin served as General Manager of the Precision Oncology business unit at Exact Sciences Corp., a publicly traded molecular diagnostics company. From March 2020 to January 2021, Mr. Franklin served as Chief Commercial Officer of Thrive Earlier Detection Corp., a healthcare company, where he led the go-to-market strategy development for their multi-cancer early detection assay. From August 2018 to January 2020, Mr. Franklin served as Chief Business Officer of ArcherDX Inc., a growth-stage molecular diagnostics company, where he was responsible for establishing and scaling the global sales, customer support, marketing, market access, business development and corporate development teams. From March 2015 to July 2018, Mr. Franklin served as Senior Vice President of Global Marketing and Clinical Product Strategy of Foundation Medicine Inc., a molecular insights company which was acquired by Roche Holdings, Inc. in 2018. Mr. Franklin holds a B.A. in English Literature from Northwestern University and an MBA from the University of Michigan, Ann Arbor. 

There are no arrangements or understandings between Mr. Franklin and any other person pursuant to which he was selected as a director of the Company. Mr. Franklin previously entered into an indemnification agreement on the Company's standard form, a copy of which was filed with the Securities and Exchange Commission (the "SEC") as Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-40558) on August 23, 2022. Other than Mr. Franklin's employment arrangement with the Company, there have been no related party transactions between the Company and Mr. Franklin that would be reportable under Item 404(a) of Regulation S-K. Mr. Franklin has no family relationship with any of the executive officers or directors of the Company. As an executive of the Company, Mr. Franklin will not be eligible for any additional compensation as part of his service as a director. 

Franklin Employment Arrangement 

In connection with Mr. Franklin's appointment as the Company's President and Chief Executive Officer, Mr. Franklin will receive an annual base salary of $550,000 and will be eligible for an annual target bonus opportunity equal to 60% of his annual base salary, each effective as of the Transition Date. 

In addition, the Board approved a grant to Mr. Franklin, effective as of October 12, 2023 (the "Option Grant Date"), of a stock option to purchase up to 1,057,180 shares (the "Option") of common stock of the Company ("Common Stock") at an exercise price equal to the closing price of the Common Stock on the Nasdaq Capital Market on the Option Grant Date. The shares of Common Stock underlying the Option will vest in eight (8) equal semiannual installments over a four (4)-year period following the Option Grant Date, subject to Mr. Franklin's continued service on each such vesting date. 


Mr. Franklin is also eligible for severance benefits under the Company's Amended and Restated Executive Severance Plan (the "Severance Plan"). Under the Severance Plan, if the Company terminates Mr. Franklin's employment without "cause" or if Mr. Franklin resigns from his employment with the Company for "good reason" (each as defined in the Severance Plan) prior to or more than 12 months following a change in control (as detailed in the Severance Plan), he will be entitled to receive (i) an amount equal to his monthly base salary multiplied by 12 plus (ii) an amount equal to the monthly employer COBRA premium for the same level group health coverage in effect on the date of termination for 12 months following the date of such termination (subject to his continued eligibility for such COBRA coverage as detailed in the Severance Plan). If the Company terminates Mr. Franklin's employment without "cause" or he resigns from his employment with the Company for "good reason" within the "change in control period (as defined in the Severance Plan), he will be entitled to receive (a) his monthly base salary multiplied by 18 plus (b) 1.5 times his target bonus opportunity plus (c) an amount equal to the monthly employer COBRA premium for the same level group health coverage as in effect for Mr. Franklin on the date of termination for 18 months following the date of such termination (subject to his continued eligibility for such COBRA coverage as detailed in the Severance Plan) plus (d) for all outstanding and unvested equity awards of the Company that are subject to time-based vesting held by Mr. Franklin, full accelerated vesting of such awards. 

Martucci Advisor Arrangement

In addition to assuming the role of Chair of the Board, Dr. Martucci has agreed to assist the Company in an advisory capacity for one (1) year from the Transition Date under the terms of an advisor agreement entered into with the Company on October 5, 2023 (the "Advisor Agreement") that became effective as of the Transition Date. Pursuant to the Advisor Agreement, Dr. Martucci will receive (i) a monthly fee of $46,785 per month in exchange for approximately 40 hours of mutually agreed services per week through December 31, 2023 and (ii) $500 per hour for mutually agreed services beginning January 1, 2024 through October 5, 2024. As part of the Advisor Agreement, and notwithstanding his continued service to the Company, Dr. Martucci has agreed to forfeit seventy-five percent (75%) of his November 2, 2022 grant of performance-based restricted stock units. Dr. Martucci's outstanding equity awards following the aforementioned forfeiture shall continue to vest in accordance with their terms. The Advisor Agreement is subject to Dr. Martucci's execution and non-revocation of a standard release of claims. 

Amendment to Non-Employee Director Compensation Policy 

On August 2, 2023, the Board approved an amendment to the Company's Non-Employee Director Compensation Policy (the "Director Compensation Policy") to (i) provide that equity awards granted to directors annually as of the date of the Company's annual meeting of stockholders, starting with the Company's 2024 annual meeting of stockholders, shall be prorated based on the number of days of services on the Board as of the grant date of such first annual equity award to any directors who are not employees or officers of the Company or its subsidiaries ("Outside Directors") and (ii) provide that, effective as of May 3, 2023, Outside Directors are eligible to receive cash and equity compensation under the Director Compensation Policy. 

Martucci Director Compensation 

From and after October 6, 2023 (i.e. the day after the Transition Date), and for so long as Dr. Martucci remains a non-employee member of the Board, Dr. Martucci will be eligible for cash and equity compensation for his service as an Outside Director on the Board and as non-executive Chair of the Board (as applicable), pursuant to the terms of the Director Compensation Policy. 

The foregoing descriptions of the Severance Plan, Dr. Martucci's Advisor Agreement and the Director Compensation Policy do not purport to be complete and are qualified in their entirety by reference to the Advisor Agreement and Director Compensation Policy, copies of which will be filed with the SEC in the Company's Quarterly Report on Form 10-Q for the three months ended September 30, 2023, and the Severance Plan, a copy of which was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on October 27, 2022 (File No. 001-40558).