Eterna Therapeutics Inc. appointed Sanjeev Luther as new CEO

Item 5.02

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


Departure of Chief Executive Officer


On December 19, 2023, Dr. Matthew Angel notified Eterna Therapeutics Inc. (the "Company") that he was resigning from his position as the Company's President and Chief Executive Officer, effective on December 31, 2023. Dr. Angel's resignation was not the result of any disagreement between Dr. Angel and the Company.


Appointment of Chief Executive Officer


On December 19, 2023, the board of directors (the "Board") of the Company appointed Sanjeev Luther as the Company's President and Chief Executive Officer (and principal executive officer), which appointment will become effective on January 1, 2024, to serve until his successor is duly elected and qualified, or until his earlier resignation or removal.


Mr. Luther, 62 years old, served as President and Chief Executive Officer of Cornerstone Pharmaceuticals, Inc. ("Cornerstone") from November 2017 until December 2023, prior to which he served as Chief Operations Officer of Cornerstone from January 2017 to November 2017 and as Chief Business Officer from December 2014 to December 2016. Mr. Luther also served as Executive Chairman of Lipomedix Pharmaceuticals Ltd. ("Lipomedix") from 2018 to 2021. Mr. Luther serves on the board of directors of Lipomedix as well as the South Asian Pharmaceutical Council. Mr. Luther received his bachelor's degree from the University of Buffalo and his masters of business administration in marketing from the University of Buffalo.


There are no family relationships between Mr. Luther and any of the Company's existing directors or executive officers. Since the beginning of the Company's last fiscal year, the Company has not engaged in any transactions, and there are no proposed transactions, or series of similar transactions, in which Mr. Luther was or is to be a participant and in which Mr. Luther had a direct or indirect material interest in which the amount involved exceeds or exceeded $120,000.


In connection with his appointment as President and Chief Executive Officer, the Company entered into an employment agreement with Mr. Luther, dated as of December 19, 2023 (the "Luther Employment Agreement"). The Luther Employment Agreement provides for Mr. Luther's at-will employment as the Chief Executive Officer for a term commencing on January 1, 2024 and continuing until terminated by either the Company or Mr. Luther. Under the terms of the Luther Employment Agreement, the Company will pay Mr. Luther an annual base salary of $550,000, which amount is subject to periodic review by the compensation committee of the Board (the "Compensation Committee"). Mr. Luther will also receive a signing bonus equal to $75,000, and he is eligible to receive an annual cash bonus award in an amount up to a target of 50% of his base salary upon achievement of agreed upon performance targets. The bonus will be determined by the Board or the Compensation Committee and paid annually by March 15 in the year following the performance year on which such bonus is based.


In accordance with the terms of the Luther Employment Agreement, Mr. Luther will receive a non-qualified stock option to purchase 1,685,218 shares of common stock, 25% of which will vest on the first anniversary of Mr. Luther's actual start date, and the remainder will vest ratably on a monthly basis over the three-year period thereafter (the "Luther Option Grant"). Vesting generally requires Mr. Luther's continued employment through the relevant vesting date.


If Mr. Luther's employment is terminated by the Company without Cause or by Mr. Luther for Good Reason (each such capitalized term as defined in the Luther Employment Agreement), then the Company will pay Mr. Luther all amounts accrued but unpaid as of the effective date of such termination, continuation of his base salary for the nine months following termination, COBRA benefits for the nine months following termination and a prorated performance bonus. Notwithstanding the foregoing, if a termination without Cause or for Good Reason occurs within the twelve months following a Change in Control (as defined in the Luther Employment Agreement), Mr. Luther will receive a lump-sum payment comprised of all amounts accrued but unpaid as of the effective date of such termination, twelve months of his then-current base salary, his full expected performance bonus, and twelve months of COBRA benefits. Any such severance benefits under the Luther Employment Agreement are contingent on Mr. Luther entering into and not revoking a general release of claims in favor of the Company.


The Luther Employment Agreement provides for reimbursement of reasonable business expenses and participation in the Company's benefit plans. The Luther Employment Agreement contains customary covenants related to confidentiality and non-disparagement.


The foregoing description of the Luther Employment Agreement is not complete and is subject to and qualified in its entirety by reference to the full text of the Luther Employment Agreement, which is attached as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.


The Company also expects to enter into its standard director and officer indemnification agreement with Mr. Luther, a form of which was filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 15, 2022.


Chairman of the Board


On December 19, 2023, the Board appointed James Bristol as chairman of the Board, effective immediately, to serve until his successor is duly elected and qualified, or until his earlier resignation or removal. As previously disclosed, Mr. Bristol has served on the Board since October 30, 2023.


Compensation of Senior Vice President of Finance


On December 19, 2023, the Board approved (i) an increase in base salary for Sandra Gurrola, the Company's Senior Vice President of Finance, to $275,000, effective as of December 16, 2023, and (ii) the payment to Ms. Gurrola of a cash lump sum equal to $33,541.67, representing the additional amount of salary Ms. Gurrola would have received had the salary increase referred to in (i) taken effect as of May 5, 2023.