{"url_path":"/sec/tern/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 Executive Compensation.","topic":"sec","document":{"doc_type":"10-K/A","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/1831363/0001193125-26-182140-index.html","accession_number":"0001193125-26-182140","cik":"0001831363","ticker":"TERN","issuer_name":"Terns Pharmaceuticals, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1831363/0001193125-26-182140-index.html","primary_entity_key":"0001831363","primary_entity_name":"Terns Pharmaceuticals, Inc."},"word_count":6228,"has_tables":true,"body_markdown":"Item 11. Executive Compensation.\n\n \n\nExecutive Compensation\n\n \n\nThis section discusses the material components of the executive compensation program for our 2025 named executive officers. Our named executive officers for fiscal year 2025 were:\n\n•\nAmy Burroughs, M.B.A., our Chief Executive Officer;\n\n•\nAndrew Gengos, M.B.A., our Chief Financial Officer; and\n\n•\nEmil Kuriakose, M.D., our Chief Medical Officer.\n\n \n\nThis discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from the currently planned programs summarized in this discussion. As an “emerging growth company” as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.\n\n \n\n7\n\n \n\n2025 Summary Compensation Table\n\n \n\nThe following table sets forth information concerning the compensation of our named executive officers for the years ended December 31, 2025 and December 31, 2024.\n\n \n\nName and Principal Position\n\n \n\nYear\n\n \n\nSalary\n($)\n\n \n\n \n\nBonus\n($)\n\n \n\n \n\nStock\nAwards\n($)(1)\n\n \n\n \n\nOption\nAwards\n($)(2)\n\n \n\n \n\nNon-Equity\nIncentive Plan\nCompensation\n($)\n\n \n\n \n\nAll Other Compensation\n($)(3)\n\n \n\n \n\nTotal\n($)\n\n \n\nAmy Burroughs, M.B.A.\n\n \n\n2025\n\n \n\n \n\n645,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,416,541\n\n \n\n \n\n514,388(4)\n\n \n\n \n\n \n\n14,000\n\n \n\n \n\n \n\n4,589,929\n\n \n\nChief Executive Officer and Director\n\n \n\n2024\n\n \n\n \n\n563,701\n\n \n\n \n\n \n\n—\n\n \n\n \n\n807,750(5)\n\n \n\n \n\n \n\n6,476,968\n\n \n\n \n\n375,000(6)\n\n \n\n \n\n28,800(7)\n\n \n\n \n\n \n\n8,252,219\n\n \n\nAndrew Gengos, M.B.A.\n\n \n\n2025\n\n \n\n \n\n434,807\n\n \n\n \n\n8,691(4)\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,912,202\n\n \n\n \n\n252,038(4)\n\n \n\n \n\n \n\n14,000\n\n \n\n \n\n \n\n2,621,738\n\n \n\nChief Financial Officer and Treasurer\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nEmil Kuriakose, M.D.\n\n \n\n2025\n\n \n\n \n\n510,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,541,416\n\n \n\n \n\n295,800(4)\n\n \n\n \n\n \n\n14,000\n\n \n\n \n\n \n\n2,361,216\n\n \n\nChief Medical Officer\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n(1)\nExcept as otherwise indicated, amounts reflect the full grant date fair value of restricted stock units (RSUs) awarded to each named executive officer, computed in accordance with ASC Topic 718. These amounts do not represent the actual amounts paid to or realized by the named executive officers. The value as of the grant date for the RSU awards is calculated based on the number of shares granted and the grant date market price. See Note 5 of the consolidated financial statements included in the Original Filing for the assumptions used in calculating these amounts.\n\n(2)\nAmounts reflect the full grant date fair value of option awards granted for the respective fiscal year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. See Note 5 of the consolidated financial statements included in the Original Filing for the assumptions used in calculating these amounts.\n\n(3)\nExcept as otherwise indicated, the amounts reported in this column represent 401(k) matching contributions of up to $14,000 and $13,800 for the years ended December 31, 2025 and December 31, 2024, respectively. In addition, the amounts include other de minimis perquisites.\n\n(4)\nThe non-equity incentive plan compensation for 2025 was determined based on a 145% corporate achievement level. The amounts denoted in the bonus column represent bonus payments made to the respective named executive officer above the 145% corporate achievement level.\n\n(5)\nAmount reflects the full grant date fair value of RSUs with market conditions awarded to Ms. Burroughs. This amount does not represent the actual amount paid to or realized by Ms. Burroughs. The value as of the grant date for these RSUs with market conditions is calculated based on the number of shares granted and the grant date market price, in accordance with ASC Topic 718. For RSUs with market conditions, amounts reflect the target number of shares subject to the RSU award, assuming all market conditions are met. The shares subject to this RSU award vest in equal installments upon the achievement of escalating stock price thresholds of $15.00 and $20.00, respectively, calculated based on the average price per share of the Company’s common stock for a period of 30 consecutive trading days equaling or exceeding the applicable price threshold, with vesting occurring as of the last day of the 30 consecutive trading day period. The escalating stock price thresholds can be met any time after the first anniversary of employment but prior to the fourth anniversary of the date of grant. See Note 5 of the consolidated financial statements included in the Original Filing for the assumptions used in calculating these amounts.\n\n(6)\nThe non-equity incentive plan compensation for 2024 for Ms. Burroughs was determined based on a 120% achievement level.\n\n(7)\nIncludes reimbursement for legal fees incurred with negotiating Ms. Burroughs employment agreement of $15,000.\n\n \n\n8\n\n \n\nNarrative to the Summary Compensation Table\n\n \n\n2025 Annual Base Salaries\n\n \n\nOur named executive officers each receive a base salary to compensate them for services rendered to us. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. During fiscal year 2025, our named executive officers’ annual base salaries were as follows:\n\n•\nMs. Burroughs: $645,000;\n\n•\nMr. Gengos: $510,000; and\n\n•\nDr. Kuriakose: $510,000.\n\n \n\nEffective as of January 1, 2026, the annual base salaries for Ms. Burroughs, Mr. Gengos and Dr. Kuriakose are $680,000, $530,000 and $530,000, respectively.\n\n \n\n2025 Annual Performance Bonuses\n\n \n\nWe maintain an annual performance-based cash bonus program in which each of our named executive officers participated in 2025. Each named executive officer’s target bonus is expressed as a percentage of base salary, and bonus payments are determined based on achievement of certain performance goals approved by our board of directors. The 2025 annual bonus for Ms. Burroughs was targeted at 55% of her annual base salary, the 2025 annual bonus for Mr. Gengos was targeted at 40% of his annual base salary, and the 2025 annual bonus for Dr. Kuriakose was targeted at 40% of his annual base salary. In January 2026, our board of directors determined annual performance-based cash bonus amounts for 2025, and the 2025 annual bonuses earned by our named executive officers are set forth in the Summary Compensation Table above in the column entitled “Non-Equity Incentive Plan Compensation”. For fiscal 2026, the target bonuses for our named executive officers are as follows: Ms. Burroughs: 60%, Mr. Gengos: 40%, and Dr. Kuriakose: 40%.\n\n \n\nEquity Compensation\n\n \n\nWe have granted stock options to our employees, including our named executive officers, in order to attract and retain them, as well as to align their interests with the interests of our stockholders. In order to provide a long-term incentive, these stock options generally vest over four years subject to continued service to us.\n\nOur 2021 Incentive Award Plan (the 2021 Plan) allows us to make grants of cash and equity incentives to our directors, employees (including our named executive officers) and consultants and certain of our affiliates in order to enable us to obtain and retain services of these individuals, which is essential to our long-term success.\n\n \n\nOur 2022 Inducement Award Plan, as amended (the 2022 Inducement Plan) allows us to grant nonqualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards to newly hired employees, including officers.\n\n \n\nOn January 30, 2025, Ms. Burroughs and Dr. Kuriakose were granted options to purchase 1,075,000 and 485,000 shares of our common stock, respectively, under the 2021 Plan. The options granted on January 30, 2025 vest as to 25% of the shares on January 1, 2026, and in monthly installments over 36 months thereafter, generally subject to the named executive officer’s continued service through the applicable vesting date.\n\n \n\nOn February 24, 2025, Mr. Gengos was granted an option to purchase 750,000 shares of our common stock under the 2022 Inducement Plan. The option granted on February 24, 2025 vests as to 25% of the shares on February 24, 2026, and in monthly installments over 36 months thereafter, generally subject to the named executive officer’s continued service through the applicable vesting date.\n\n \n\n9\n\n \n\nOn January 14, 2026, Ms. Burroughs, Mr. Gengos and Dr. Kuriakose were granted options to purchase 300,000, 137,500, and 112,500 shares of our common stock, respectively, under the 2021 Plan. The options granted on January 14, 2026 vest as to 25% of the shares on January 1, 2027, and in monthly installments over 36 months thereafter, generally subject to the named executive officer’s continued service through the applicable vesting date.\n\n \n\nOn January 14, 2026, Ms. Burroughs, Mr. Gengos and Dr. Kuriakose were awarded RSUs of 150,000, 68,750, and 56,250 for shares of our common stock, respectively, under the 2021 Plan. The RSUs awarded on January 14, 2026 vest as to 25% of the shares on January 1, 2027, and in quarterly installments over 36 months thereafter, generally subject to the named executive officer’s continued service through the applicable vesting date.\n\n \n\nOther Elements of Compensation\n\n \n\nRetirement Savings and Health and Welfare Benefits\n\n \n\nOur employees, including our named executive officers, who satisfy certain eligibility requirements are eligible to participate in our 401(k) plan. Our named executive officers are eligible to participate in the 401(k) plan on the same terms as other full-time employees. In 2025, for each participant, we made matching contributions to the 401(k) plan equal to 100% of the first 4% of eligible contribution, up to $14,000. In 2024, for each participant, we made matching contributions to the 401(k) plan equal to 100% of the first 4% of eligible contribution, up to $13,800. We believe that providing a vehicle for tax-deferred retirement savings through our 401(k) plan adds to the overall desirability of our compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.\n\n \n\nAll of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans. These health and welfare plans include medical, dental and vision benefits; short-term and long-term disability insurance; and supplemental life and accidental death and dismemberment insurance.\n\n \n\nPerquisites and Other Personal Benefits\n\n \n\nWe determine perquisites on a case-by-case basis and will provide a perquisite to a named executive officer when we believe it is necessary to attract or retain the named executive officer. However, in 2025 and 2024, we did not provide any perquisites or personal benefits to our named executive officers not otherwise made available to our other employees.\n\n \n\n10\n\n \n\nOutstanding Equity Awards at Fiscal Year-End\n\n \n\nThe following table summarizes the number of shares of common stock underlying outstanding equity awards for each named executive officer as of December 31, 2025.\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOption Awards\n\n \n\nStock Awards\n\n \n\nName\n\n \n\nGrant Date\n\n \n\nVesting\nCommencement\nDate(1)(2)\n\n \n\nNumber of\nSecurities\nUnderlying\nUnexercised\nOptions (#)\nExercisable\n\n \n\n \n\nNumber of\nSecurities\nUnderlying\nUnexercised\nOptions\n(#)\nUnexercisable\n\n \n\n \n\nOption\nExercise\nPrice\n($)\n\n \n\nOption\nExpiration\nDate\n\n \n\nNumber of shares or units of stock that have not vested (#)(3)\n\n \n\n \n\nMarket value of shares of units of stock that have not vested ($)(4)\n\n \n\nAmy Burroughs, M.B.A.\n\n \n\n3/1/2024\n\n \n\n3/1/2024\n\n \n\n \n\n546,875\n\n \n\n \n\n \n\n703,125\n\n \n\n \n\n7.31\n\n \n\n2/28/2034\n\n \n\n150,000(5)\n\n \n\n \n\n \n\n6,060,000\n\n \n\n \n\n \n\n1/30/2025\n\n \n\n1/1/2025\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,075,000\n\n \n\n \n\n4.64\n\n \n\n1/29/2035\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nAndrew Gengos, M.B.A.\n\n \n\n2/24/2025\n\n \n\n2/24/2025\n\n \n\n \n\n—\n\n \n\n \n\n \n\n750,000\n\n \n\n \n\n3.73\n\n \n\n2/23/2035\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nEmil Kuriakose, M.D.\n\n \n\n5/1/2023\n\n \n\n5/1/2023\n\n \n\n \n\n180,833\n\n \n\n \n\n \n\n99,167\n\n \n\n \n\n12.93\n\n \n\n4/30/2033\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1/23/2024\n\n \n\n1/1/2024\n\n \n\n \n\n56,302\n\n \n\n \n\n \n\n61,198\n\n \n\n \n\n5.46\n\n \n\n1/22/2034\n\n \n\n \n\n33,047\n\n \n\n \n\n \n\n1,335,099\n\n \n\n \n\n \n\n12/12/2024\n\n \n\n12/12/2024\n\n \n\n \n\n30,000\n\n \n\n \n\n \n\n90,000\n\n \n\n \n\n6.59\n\n \n\n12/11/2034\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1/30/2025\n\n \n\n1/1/2025\n\n \n\n \n\n—\n\n \n\n \n\n \n\n485,000\n\n \n\n \n\n4.64\n\n \n\n1/29/2035\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n(1)\nExcept as otherwise indicated, 1/4th of the shares subject to each option vest on the 12-month anniversary of the vesting commencement date and 1/48th of the shares subject to the option vest on each monthly anniversary of the vesting commencement date for three years thereafter, subject to continued service with us through each vesting date.\n\n(2)\nPursuant to the terms of the named executive officer’s amended employment letter agreement, the shares subject to the option will vest in full in the event of a termination of the executive’s employment by us without “cause” or the executive’s resignation for “good reason” (each such term as defined in the named executive officer’s employment letter agreement), in each case, that occurs after entering into a definitive agreement providing for a change in control and within three months prior to or 12 months following a change in control of our company.\n\n(3)\nExcept as otherwise indicated, 1/4th of the shares subject to each RSU award vest on the 12-month anniversary of the vesting commencement date and 1/16th of the shares subject to the option vest on each quarterly anniversary of the vesting commencement date for three years thereafter, subject to continued service with us through each vesting date.\n\n(4)\nAmounts in this column are calculated by multiplying the number of shares shown as unvested in the prior column by $40.40, the closing price of our common stock on December 31, 2025, as reported on the Nasdaq Global Select Market.\n\n(5)\nThe shares subject to this RSU award with market conditions vest in equal installments upon the achievement of escalating stock price thresholds of $15.00 and $20.00, respectively, calculated based on the average price per share of our common stock for a period of 30 consecutive trading days equaling or exceeding the applicable price threshold, with vesting occurring as of the last day of the 30 consecutive trading day period. The escalating stock price thresholds can be met any time after the first anniversary of employment but prior to the fourth anniversary of the date of grant. As of December 31, 2025, the performance criteria for the specified milestones were determined to have been achieved by the Company's compensation committee as to 100% of the underlying shares. The 150,000 RSUs with market conditions have vested, and the delivery and release of the underlying shares occurred in January 2026.\n\n \n\nPolicies and Practices Related to the Grant of Certain Equity Awards\n\nWe grant equity awards, including stock options and restricted stock units, to our employees and directors on an annual basis. We may also grant equity awards to individuals upon hire or promotion or for retention purposes. During the last fiscal year, neither the board nor the compensation committee took material nonpublic information into account when determining the timing or terms of equity awards, nor did the Company time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.\n\n \n\n11\n\n \n\nExecutive Compensation Arrangements\n\n \n\nEmployment Letter Agreements\n\n \n\nMs. Burroughs Employment Letter Agreement\n\nOn February 6, 2024, we entered into an employment agreement with Amy Burroughs (the Burroughs Agreement) pursuant to which Ms. Burroughs serves as our Chief Executive Officer.\n\nPursuant to the Burroughs Agreement, Ms. Burroughs is entitled to receive an initial annualized base salary of $625,000, and is eligible to receive an annual cash bonus targeted at 50% of her annual base salary then in effect, with the actual amount of such bonus, if any, to be based upon the achievement of performance objectives established by the board. For 2025 and 2026, the base salary and target bonus percentage for Ms. Burroughs were increased as described above. For calendar year 2024, any annual bonus paid to Ms. Burroughs was to be determined based on achievement of performance goals to be determined by the compensation committee of the board, after consultation with Ms. Burroughs, within the first three months of her employment and was not prorated for the partial year of service. Ms. Burroughs is also eligible to participate in our employee benefit plans, subject to the terms and conditions of such plans. In addition, we agreed to pay legal fees for Ms. Burroughs incurred in connection with negotiation of the Burroughs Agreement up to an amount of $15,000.\n\n \n\nIn accordance with the Burroughs Agreement, the board also approved the grant to Ms. Burroughs, effective as of March 1, 2024 (the Burroughs Grant Date), of a stock option to purchase 1,250,000 shares of our common stock at an exercise price per share equal to the closing price per share of the common stock on The Nasdaq Global Select Market on the Burroughs Grant Date and of a restricted stock unit award representing the right to receive 150,000 shares of our common stock. The option award has a ten-year term and vests over a four-year period, with 25% of the shares underlying the award vesting on the first anniversary of the Burroughs Grant Date and the remaining 75% of the shares underlying the award vesting monthly over the subsequent three-year period, subject to Ms. Burroughs’ continued employment by us. The restricted stock unit award vests as to 50% of the shares underlying the award if the average closing price of our common stock over 30 consecutive trading days equals or exceeds $15.00 per share and as to the remaining 50% of the shares underlying the award if the average closing price of our common stock over 30 consecutive trading days equals or exceeds $20.00 per share, subject to Ms. Burroughs’ continued employment by us; provided that vesting shall not be deemed to occur earlier than the first anniversary of her employment start date, except in the case of an Involuntary Termination (as defined below) or a Change in Control of our company (as defined in the Burroughs Agreement), and that vesting must be achieved on or before the fourth anniversary of her employment start date. The Compensation Committee certified the achievement in full of the performance criteria for the restricted stock unit award in December 2025, and all of the shares subject to such award were delivered and released in January 2026. Each of the option award and the restricted stock unit award is subject to the terms and conditions of the applicable award agreement and was granted pursuant to the Terns 2022 Employment Inducement Award Plan.\n\n \n\nIn the event of an Involuntary Termination, Ms. Burroughs is entitled to receive the following benefits, in addition to any accrued obligations and subject to her timely execution and non-revocation of a general release of claims in our favor: (i) continuation of her then-current annual base salary for a period of 12 months, (ii) a pro-rated portion of her annual performance bonus at 100% of target, payable in a lump sum and (iii) continuation of her then-effective group medical, vision and dental coverage at Terns’ cost (or equivalent taxable installment payments from Terns) for a period of up to 12 months.\n\nAdditionally, in the event of an Involuntary Termination within three months prior to or 12 months following a Change in Control (as defined in the Burroughs Agreement), she is entitled to receive the following benefits, in addition to any accrued obligations and subject to her timely execution and non-revocation of a general release of claims in our favor: (i) a lump sum cash payment equal to 18 months of her then-current annual base salary, (ii) one and one half times her annual performance bonus at 100% of target, payable in a lump sum, (iii) full vesting acceleration of all her then-outstanding equity awards and (iv) continuation of her then-effective group medical, vision and dental coverage at Terns’ cost (or equivalent taxable installment payments from Terns) for a period of up to 18 months.\n\n \n\nThe Burroughs Agreement defines an “Involuntary Termination” as a separation resulting from a termination without “cause” or a voluntary resignation by Ms. Burroughs for “good reason”.\n\n12\n\n \n\nThe Burroughs Agreement generally defines “cause” to mean the occurrence of any one or more of the following, subject to certain notice and cure rights: (i) the commission of any crime involving fraud, dishonesty or moral turpitude, (ii) the attempted commission of or participation in a fraud or act of dishonesty against us that results in (or might have reasonably resulted in) material harm to our business; (iii) the intentional, material violation of any contract or agreement between her and us or any statutory duty owed to us, or (iv) conduct that constitutes gross insubordination, or habitual neglect of duties and that results in (or might have reasonably resulted in) material harm to our business.\n\nThe Burroughs Agreement generally defines “good reason” to mean the occurrence of any one or more of the following, without her consent and subject to certain notice and cure rights: (i) a material diminution in her duties, authorities or responsibilities; (ii) a reduction of greater than 10% in her annual base salary (as in effect on the effective date of the Change in Control transaction, if applicable); provided, however, that good reason shall not be deemed to have occurred in the event of a reduction in her annual base salary that is pursuant to a salary reduction program affecting all of our C-level officers and that does not adversely affect her to a greater extent than our other C-level officers; or (iii) a relocation of her primary business office to a location more than 30 miles from the location of her then-primary business office.\n\n \n\nMr. Gengos Employment Letter Agreement\n\nOn February 21, 2025, we entered into an employment agreement with Andrew Gengos (the Gengos Agreement) pursuant to which Mr. Gengos serves as our Chief Financial Officer. Mr. Gengos is entitled to receive a starting annualized base salary of $510,000, and is eligible to receive an annual cash bonus targeted at 40% of his annual base salary then in effect, with the actual amount of such bonus, if any, to be based upon the achievement of performance objectives established by the board. For 2026, the base salary for Mr. Gengos was increased as described above. Mr. Gengos is also eligible to participate in our employee benefit plans, subject to the terms and conditions of such plans.\n\nIn accordance with the Gengos Agreement, the board also approved the grant to Mr. Gengos, effective as of February 24, 2025 (the Gengos Grant Date), of a stock option to purchase 750,000 shares of our common stock at an exercise price per share equal to the closing price per share of the common stock on The Nasdaq Global Select Market on the Gengos Grant Date. The option award has a ten-year term and vests over a four-year period, with 25% of the shares underlying the award vesting on the first anniversary of the Gengos Grant Date and the remaining 75% of the shares underlying the award vesting monthly over the subsequent three-year period, subject to Mr. Gengos’ continued employment by us. Each of the stock options awarded is subject to the terms and conditions of the applicable award agreement and was granted pursuant to the Terns 2022 Employment Inducement Award Plan.\n\n \n\nIn the event of an Involuntary Termination (as defined below), Mr. Gengos is entitled to receive the following benefits, in addition to any accrued obligations and subject to his timely execution and non-revocation of a general release of claims in our favor: (i) continuation of his then-current annual base salary for a period of 12 months, (ii) a pro-rated portion of his annual performance bonus at 100% of target, payable in a lump sum and (iii) continuation of his then-effective group medical, vision and dental coverage at Terns’ cost (or equivalent taxable installment payments from Terns) for a period of up to 12 months.\n\nAdditionally, in the event of an Involuntary Termination within three months prior to or 12 months following a Change in Control (as defined in the Gengos Agreement), he is entitled to receive the following benefits, in addition to any accrued obligations and subject to his timely execution and non-revocation of a general release of claims in our favor: (i) a lump sum cash payment equal to 12 months of his then-current annual base salary, (ii) his annual performance bonus at 100% of target, payable in a lump sum, (iii) full vesting acceleration of all his then-outstanding equity awards and (iv) continuation of his then-effective group medical, vision and dental coverage at Terns’ cost (or equivalent taxable installment payments from Terns) for a period of up to 12 months.\n\n \n\nThe Gengos Agreement defines an “Involuntary Termination” as a separation resulting from a termination without “cause” or a voluntary resignation by Mr. Gengos for “good reason”.\n\n13\n\n \n\nThe Gengos Agreement generally defines “cause” to mean the occurrence of any one or more of the following, subject to certain notice and cure rights: (i) the commission of any crime involving fraud, dishonesty or moral turpitude, (ii) the attempted commission of or participation in a fraud or act of dishonesty against us that results in (or might have reasonably resulted in) material harm to our business; (iii) the intentional, material violation of any contract or agreement between him and us or any statutory duty owed to us, or (iv) conduct that constitutes gross insubordination, or habitual neglect of duties and that results in (or might have reasonably resulted in) material harm to our business.\n\nThe Gengos Agreement generally defines “good reason” to mean the occurrence of any one or more of the following, without his consent and subject to certain notice and cure rights: (i) a material diminution in his duties, authorities or responsibilities; (ii) a reduction of greater than 10% in his annual base salary (as in effect on the effective date of the Change in Control transaction, if applicable); provided, however, that good reason shall not be deemed to have occurred in the event of a reduction in his annual base salary that is pursuant to a salary reduction program affecting all of our C-level officers and that does not adversely affect him to a greater extent than our other C-level officers; or (iii) a relocation of his primary business office to a location more than 30 miles from the location of his then-primary business office.\n\n \n\nDr. Kuriakose Employment Letter Agreement\n\n \n\nOn March 14, 2023, we entered into an employment agreement with Emil Kuriakose (the Kuriakose Agreement) pursuant to which Dr. Kuriakose serves as our Chief Medical Officer. Pursuant to the Kuriakose Agreement, Dr. Kuriakose is entitled to receive an initial annualized base salary of $440,000, and is eligible to receive an annual cash bonus targeted at 40% of his annual base salary then in effect, with the actual amount of such bonus, if any, to be based upon the achievement of performance objectives established by the board. For 2025 and 2026, the base salary for Dr. Kuriakose was increased as described above. Dr. Kuriakose is also eligible to participate in our employee benefit plans, subject to the terms and conditions of such plans.\n\nIn accordance with the Kuriakose Agreement, the board also approved the grant to Dr. Kuriakose, effective as of May 1, 2023 (the Kuriakose Grant Date), of a stock option to purchase 280,000 shares of our common stock at an exercise price per share equal to the closing price per share of the common stock on The Nasdaq Global Select Market on the Kuriakose Grant Date. The option award has a ten-year term and vests over a four-year period, with 25% of the shares underlying the award vesting on the first anniversary of the Kuriakose Grant Date and the remaining 75% of the shares underlying the award vesting monthly over the subsequent three-year period, subject to Dr. Kuriakose’s continued employment by us. Each of the stock options awarded is subject to the terms and conditions of the applicable award agreement and was granted pursuant to the Terns 2022 Employment Inducement Award Plan.\n\n \n\nIn the event of an Involuntary Termination (as defined below), Dr. Kuriakose is entitled to receive the following benefits, in addition to any accrued obligations and subject to his timely execution and non-revocation of a general release of claims in our favor: (i) continuation of his then-current annual base salary for a period of 12 months, (ii) a pro-rated portion of his annual performance bonus at 100% of target, payable in a lump sum and (iii) continuation of his then-effective group medical, vision and dental coverage at Terns’ cost (or equivalent taxable installment payments from Terns) for a period of up to 12 months.\n\nAdditionally, in the event of an Involuntary Termination within three months prior to or 12 months following a Change in Control (as defined in the Kuriakose Agreement), he is entitled to receive the following benefits, in addition to any accrued obligations and subject to his timely execution and non-revocation of a general release of claims in our favor: (i) a lump sum cash payment equal to 12 months of his then-current annual base salary, (ii) his annual performance bonus at 100% of target, payable in a lump sum, (iii) full vesting acceleration of all his then-outstanding equity awards and (iv) continuation of his then-effective group medical, vision and dental coverage at Terns’ cost (or equivalent taxable installment payments from Terns) for a period of up to 12 months.\n\n \n\nThe Kuriakose Agreement defines an “Involuntary Termination” as a separation resulting from a termination without “cause” or a voluntary resignation by Dr. Kuriakose for “good reason”.\n\n \n\n14\n\n \n\nThe Kuriakose Agreement generally defines “cause” to mean the occurrence of any one or more of the following, subject to certain notice and cure rights: (i) the commission of any crime involving fraud, dishonesty or moral turpitude, (ii) the attempted commission of or participation in a fraud or act of dishonesty against us that results in (or might have reasonably resulted in) material harm to our business; (iii) the intentional, material violation of any contract or agreement between him and us or any statutory duty owed to us, or (iv) conduct that constitutes gross insubordination, or habitual neglect of duties and that results in (or might have reasonably resulted in) material harm to our business.\n\nThe Kuriakose Agreement generally defines “good reason” to mean the occurrence of any one or more of the following, without his consent and subject to certain notice and cure rights: (i) a material diminution in his duties, authorities or responsibilities; (ii) a reduction of greater than 10% in his annual base salary (as in effect on the effective date of the Change in Control transaction, if applicable); provided, however, that good reason shall not be deemed to have occurred in the event of a reduction in his annual base salary that is pursuant to a salary reduction program affecting all of our C-level officers and that does not adversely affect him to a greater extent than our other C-level officers; or (iii) a relocation of his primary business office to a location more than 30 miles from the location of his then-primary business office.\n\n \n\nDirector Compensation\n\n \n\nWe compensate our non-employee directors under a non-employee director compensation policy adopted by our board of directors upon the recommendation of our compensation committee and independent compensation consultants. The following summarizes our non-employee director compensation policy that was in effect during 2025 and a subsequent amendment implemented in January 2026. Ms. Burroughs receives no additional compensation for her service as a director.\n\n \n\nUnder our non-employee director compensation policy, as in effect during 2025, each non-employee director received an annual cash retainer for service to our board of directors (Base Fee) and an additional annual cash retainer for service as a member or the chair of any committee of our board of directors, in each case, prorated for partial years of service, as follows:\n\n \n\nNon-Employee Director (non-Chair) Base Fee:\n\n$\n\n40,000\n\n \n\nNon-Employee Board Chair Base Fee:\n\n$\n\n70,000\n\n \n\nAudit Committee Chair:\n\n$\n\n15,000\n\n \n\nCompensation Committee Chair:\n\n$\n\n12,000\n\n \n\nNominating and Corporate Governance Committee Chair:\n\n$\n\n10,000\n\n \n\nResearch and Development Committee Chair:\n\n$\n\n12,000\n\n \n\nAudit Committee Member (non-Chair):\n\n$\n\n7,500\n\n \n\nCompensation Committee Member (non-Chair):\n\n$\n\n6,000\n\n \n\nNominating and Corporate Governance Committee Member (non-Chair):\n\n$\n\n5,000\n\n \n\nResearch and Development Committee Member (non-Chair):\n\n$\n\n6,000\n\n \n\n \n\nIn 2025, our non-employee director compensation program provided that each non-employee director was automatically granted an option to purchase 90,000 shares of our common stock upon the director’s initial appointment or election to our board of directors, referred to as the Initial Grant, and an option to purchase 45,000 shares of our common stock automatically on the date of each annual stockholder’s meeting thereafter, referred to as the Annual Grant.\n\n \n\nThe Initial Grant vests as to 1/3rd of the total shares subject thereto on the first anniversary of the applicable date of grant and as to 1/36th of the total shares subject thereto on each monthly anniversary of the applicable date of grant over the next 24 months thereafter, subject to continued service through each applicable vesting date. Each Annual Grant vests on the earlier of (i) the first anniversary of the date of grant and (ii) immediately prior to the annual meeting of stockholders following the date of grant, in each case, subject to continued service through the applicable vesting date. Each Initial Grant and Annual Grant will vest in full in the event of a change in control.\n\n \n\n15\n\n \n\nIn January 2026, our board of directors approved an amendment to our non-employee director compensation program providing for increases to the annual cash retainers for non-employee board chair and directors, as well as increases for annual cash retainers for chairs and members of our audit committee, compensation committee, and research and development committee. The increased annual cash retainers for non-employee board chair and directors, as well as chairs and members of our audit committee, compensation committee, and research and development committee as of January 2026, in each case, prorated for partial years of service, are as follows:\n\n \n\nNon-Employee Director (non-Chair) Base Fee:\n\n$\n\n45,000\n\n \n\nNon-Employee Board Chair Base Fee:\n\n$\n\n75,000\n\n \n\nAudit Committee Chair:\n\n$\n\n20,000\n\n \n\nCompensation Committee Chair:\n\n$\n\n15,000\n\n \n\nResearch and Development Committee Chair:\n\n$\n\n15,000\n\n \n\nAudit Committee Member (non-Chair):\n\n$\n\n10,000\n\n \n\nCompensation Committee Member (non-Chair):\n\n$\n\n7,500\n\n \n\nResearch and Development Committee Member (non-Chair):\n\n$\n\n7,500\n\n \n\nNon-employee directors may elect on an annual basis to receive an option award in lieu of a cash payment for their applicable Base Fee. We refer to these options in lieu of cash Base Fees as Base Fee Grants. The Base Fee Grants will have a Black-Scholes value approximately equal to the amount of the applicable Base Fee based on the average closing price of our common stock over a 30-day period prior to the grant. Notwithstanding any election by the non-employee director, if the applicable 30-day average closing price is not equal to or greater than $3.00 per share, all Base Fees will be paid to the non-employee directors in cash.\n\n \n\nAny election to receive a Base Fee Grant must have been made by a non-employee director prior to the start of such calendar year and will apply to the Base Fee payable to such director for the full calendar year. The Base Fee Grants will vest on a pro rata monthly basis for the service period to which the Base Fees relate, subject to continued service through the applicable vesting date. Each Base Fee Grant will vest in full in the event of a change in control.\n\n \n\nAdditionally, we provide reimbursement to our non-employee directors for their reasonable expenses incurred in attending meetings of our board of directors and its committees.\n\n2025 Director Compensation Table\n\n \n\nName\n\n \n\nFees Earned or Paid in Cash ($)\n\n \n\n \n\nOption Awards\n($)(1)\n\n \n\n \n\nAll Other Compensation ($)\n\n \n\n \n\nTotal\n($)\n\n \n\nDavid Fellows\n\n \n\n \n\n15,717\n\n \n\n \n\n \n\n180,014\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n195,731\n\n \n\nCarl Gordon, Ph.D., C.F.A.(2)\n\n \n\n \n\n6,156\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n6,156\n\n \n\nJeffrey Kindler, J.D.\n\n \n\n \n\n11,811\n\n \n\n \n\n \n\n156,363\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n168,174\n\n \n\nHongbo Lu, Ph.D.(3)\n\n \n\n \n\n6,496\n\n \n\n \n\n \n\n156,363\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n162,859\n\n \n\nJill Quigley, J.D.\n\n \n\n \n\n19,906\n\n \n\n \n\n \n\n156,363\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n176,269\n\n \n\nRadhika Tripuraneni, M.D., M.P.H.\n\n \n\n \n\n19,311\n\n \n\n \n\n \n\n156,363\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n175,674\n\n \n\nHeather Turner, J.D.\n\n \n\n \n\n47,500\n\n \n\n \n\n \n\n124,829\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n172,329\n\n \n\nRobert Azelby\n\n \n\n \n\n39,611\n\n \n\n \n\n \n\n251,890\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n291,501\n\n \n\n(1)\nAmounts reflect the full grant date fair value of option awards granted during 2025 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. See Note 5 of the consolidated financial statements included in the Original Filing for the assumptions used in calculating these amounts. Any amounts elected to be received as options in lieu of cash are reflected in the Option Awards column. In February 2025, Mr. Fellows was awarded an option to purchase 18,650 shares of our common stock as a Base Fee Grant in lieu of cash for his annual cash retainer earned in fiscal 2025. In February 2025, Mr. Kindler, Drs. Lu and Tripuraneni, and Ms. Quigley were each awarded an option to purchase 10,657 shares of our common stock as a Base Fee Grant in lieu of cash for their annual cash retainer earned in fiscal 2025.\n\n(2)\nEffective February 20, 2025, Carl Gordon resigned as a member of our board.\n\n(3)\nEffective August 5, 2025, Hongbo Lu resigned as a member of our board.\n\n16\n\n \n\nThe table below shows the aggregate numbers of stock options and restricted stock units held as of December 31, 2025 by each nonemployee director.\n\n \n\nName\n\n \n\nOptions\nOutstanding as\nof December 31,\n2025 (#)\n\n \n\nDavid Fellows\n\n \n\n \n\n218,308\n\n \n\nJeffrey Kindler, J.D.\n\n \n\n \n\n206,808\n\n \n\nJill Quigley, J.D.\n\n \n\n \n\n145,612\n\n \n\nRadhika Tripuraneni, M.D., M.P.H.\n\n \n\n \n\n188,333\n\n \n\nHeather Turner, J.D.\n\n \n\n \n\n109,000\n\n \n\nRobert Azelby\n\n \n\n \n\n90,000\n\n \n\n \n\nIn February 2025, Mr. Fellows was awarded an option to purchase 18,650 shares of our common stock as a Base Fee Grant. In February 2025, Messrs. Kindler, Lu, Quigley and Tripuraneni were each awarded an option to purchase 10,657 shares of our common stock as a Base Fee Grant. In February 2025, Mr. Azelby was awarded an option to purchase 90,000 shares of the Company's common stock as an Initial Grant in accordance with the non-employee director compensation program.\n\n \n\nIn June 2025, Messrs. Fellows and Kindler, Drs. Lu and Tripuraneni, and Mses. Quigley and Turner were each awarded an option to purchase 45,000 shares of our common stock as an Annual Grant.\n\n \n\nIn February 2026, Mr. Fellows was awarded an option to purchase 2,828 shares of our common stock as a Base Fee Grant. In February 2026, Messrs. Azelby and Kindler, Mses. Quigley and Turner and Dr. Tripuraneni were each awarded an option to purchase 1,697 shares of our common stock as a Base Fee Grant.\n\n \n\n \n\n17"}