Form 4: Terns Pharmaceuticals Director Carl Gordon Receives Stock Option in Lieu of Cash Retainer

Director Carl Gordon of Terns Pharmaceuticals receives a stock option for 4,676 shares in lieu of a $20,000 cash retainer.

Summary

• Carl Gordon, a director at Terns Pharmaceuticals, received a stock option for 4,676 shares on July 1, 2024.
• The option was granted in lieu of a $20,000 cash retainer fee for the third and fourth quarters of 2024.
• The exercise price of the option is $6.85 per share.
• The option vests monthly, with full vesting by January 1, 2025.
• Gordon is obligated to transfer any securities or economic benefits from the option to OrbiMed Asia Partners III, L.P. and OrbiMed Private Investments VII, LP, according to an agreement with OrbiMed Advisors LLC and related entities.

Sentiment

Score: 7

Explanation: The document reflects a standard compensation practice, indicating stability and alignment of interests. The sentiment is neutral to positive.

Positives

• The grant of stock options aligns the director's interests with those of the shareholders.
• The vesting schedule encourages continued service and contribution to the company.

Risks

• The obligation to transfer securities or economic benefits to OrbiMed may reduce the director's direct financial incentive.

Future Outlook

NA

Industry Context

Stock options are a common form of compensation for directors, particularly in the pharmaceutical industry, to align their interests with the long-term success of the company.

Comparison to Industry Standards

• Director compensation packages vary widely across the pharmaceutical industry depending on company size, stage of development, and performance.
• Stock options are frequently used by companies like Terns Pharmaceuticals to attract and retain qualified board members, similar to practices at comparable companies such as Madrigal Pharmaceuticals and Viking Therapeutics.

Related Party Transactions

• The Reporting Person is obligated to transfer any securities issued under any such stock options or other awards, or the economic benefit thereof, to OrbiMed Advisors LLC, OrbiMed Asia GP III, L.P., OrbiMed Advisors III Limited, and OrbiMed Capital GP VII LLC, which will in turn ensure that such securities or economic benefits are provided to OrbiMed Asia Partners III, L.P. and OrbiMed Private Investments VII, LP.

Stakeholder Impact

• Shareholders may view the stock option grant as a positive sign, aligning the director's interests with the company's performance.
• The director benefits from potential equity appreciation.

Key Dates