UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
25, 2022
Eastern Time.
Innoviva, Inc.2000 Sierra Point Parkway,1350 Old Bayshore Highway, Suite 500400Brisbane,Burlingame, California 94005
94010
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Proposal 1: | | | To elect | | |
| Proposal 2: | | | To approve a non-binding advisory resolution regarding executive compensation. | |
| Proposal 3: | | | To ratify the selection by the Audit Committee of the Board of Directors of | |
Pavel Raifeld Chief Executive Officer Burlingame, California |
Brisbane, California
March 23, 2018
25, 2022
Innoviva, Inc.2000 Sierra Point Parkway,1350 Old Bayshore Highway, Suite 500400Brisbane,Burlingame, California 94005
94010
Eastern Time.
Stock, par value $0.01 per share (the "Common Stock"“Common Stock”), outstanding. The holders of Common Stock have the right to one vote for each share they held as of the Record Date.
What am I voting on?
Proposal | |||||||||||||||||||
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| | Board Recommendation | | | Vote Required | | | Broker Discretionary Voting Allowed | | ||||||||||
Proposal 1: Elect | | | FOR | ||||||||||||||||
| | Majority Votes Cast | | | | ||||||||||||||
Proposal 2: Approval of a non-binding advisory resolution regarding executive compensation. | | | FOR | ||||||||||||||||
| | Majority Votes Cast | | | No | | |||||||||||||
Proposal 3: Ratify the appointment of | |||||||||||||||||||
| | | | Majority Votes Cast | | | |
authority to vote for any nominee you specify. You may not vote your proxy "“For"” the election of any persons in addition to the fivesix named nominees. For Proposals 2 and 3, you may vote "“For"” or "“Against"” or abstain from voting. We do not have cumulative voting rights for the election of directors. The procedures for voting are explained below.
| | We provide Internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers. | | |
to vote your shares with respect to the election of directors (Proposal 1) or on the non-binding advisory resolution regarding executive compensation (Proposal 2).
Your shares will be counted toward the quorum only if you submit a valid proxy vote or vote in person at the Annual Meeting. Abstentions and any broker non-votes will be counted toward the quorum requirement.
What does it mean if multiple members of my household are stockholders but we only received one set of proxy materials in the mail?
meeting.
Name | | | Age | | | ||
Positions and Offices | Held With the Company | | |||||
George W. Bickerstaff, III | | | | | Director | | |
| | | | | Director | | |
| | | | | Director | | |
Jules Haimovitz | | | 71 | | | Director | |
Odysseas D. Kostas, M.D. | | | | | Director | | |
Sarah J. Schlesinger, M.D. | | | | | Director | |
field, and his understanding of our industry and his senior management experience contributed to our conclusion that he should serve as a director.
Viral and The Hastings Center, the pre-eminent center for the study of bioethics. Dr. Schlesinger served as an independent corporate director of Ariad Pharmaceuticals from 2013 until its sale to Takeda Pharmaceutical Company Limited in 2017. Dr. Schlesinger has a B.A. from Wellesley College and a M.D. from Rush Medical College in Chicago, Illinois. Dr. Schlesinger has demonstrated leadership in her field and her substantial knowledge of our industry contributed to our conclusion that she should serve as a director.
Incumbent Directors Not Standing For Election
In February 2018, each of William H. Waltrip, Patrick G. LePore, Barbara Duncan, Catherine J. Friedman and Paul A. Pepe (collectively, the "Incumbent Directors") notified the Board of Directors that they did not intend to stand for re-election at the Annual Meeting, so that they may devote their respective efforts to other commitments. None of the Incumbent Directors decision to not stand for reelection was the result of any disagreement with the Company relating to the Company's operations, policies or practices.
Agreement with Sarissa
On February 12, 2018, we entered into an agreement (the "Sarissa Agreement") with Sarissa Capital Management LP, and certain of its affiliates (collectively, the "Sarissa Group"). Concurrently with the execution of the Sarissa Agreement, pursuant to resolutions approved by the Board of Directors, the total number of directors constituting the Board of Directors was increased from eight (8) to ten (10) directors in accordance with our Amended and Restated Bylaws, and each of Jules Haimovitz, Sarah Schlesinger, M.D. and Mark DiPaolo, Esq. were appointed as directors to fill an existing and the resulting vacancies on the Board of Directors with a term expiring at the Annual Meeting or until their respective successors have been duly elected and qualified.
Pursuant to the Sarissa Agreement, we also agreed, among other things, to (a) convene the Annual Meeting no later than May 1, 2018, and to not postpone or adjourn (once convened) the Annual Meeting without the prior written consent of the Sarissa Group, and (b) nominate a five-person slate for election as directors at the Annual Meeting consisting solely of Odysseas Kostas, M.D., George Bickerstaff, III, Jules Haimovitz, Sarah Schlesinger, M.D. and Mark DiPaolo, Esq. If prior to the Annual Meeting, any of the foregoing nominees is unable to serve or informs us that he or she does not wish to serve or ceases to serve (or indicates to us his or her desire to cease to serve) as a director for any reason, the Sarissa Group will have the ability to identify a replacement, subject to the provisions of the Sarissa Agreement. We also agreed to reimburse the Sarissa Group for its reasonable out-of-pocket fees and expenses (including legal expenses) in an aggregate amount of up to $2.7 million. In addition, we agreed that prior to the completion of the Annual Meeting, we will not, without the prior written consent of the Sarissa Group, (i) increase the size of (or support any person who is seeking to increase the size of) the Board of Directors or fill any vacancy on the Board of Directors, or (ii) amend our certificate of incorporation or bylaws.
The Sarissa Agreement further provides that, so long as we have not materially breached the Sarissa Agreement, the Sarissa Group will, and will cause its affiliates to, vote all of the shares of Common Stock that are beneficially owned by them as of the record date for the 2018 Annual Meeting for the election of each of Odysseas Kostas, M.D., George Bickerstaff, III, Jules Haimovitz, Sarah Schlesinger, M.D. and Mark DiPaolo, Esq. at the Annual Meeting.
" “FOR"” the election of Messrs. Bickerstaff, DiPaolo and Haimovitz and DiPaolo and Drs. Birx, Kostas and Schlesinger to the Board of Directors at the Annual Meeting, unless otherwise marked on the card. Pursuant to our Amended and Restated Bylaws, a majority of votes cast means that the number of votes cast "“FOR"” a director'sdirector’s election must exceed fifty percent (50%) of the number of votes cast with respect to that director'sdirector’s election. For this purpose, votes cast shall exclude abstentions and broker non-votes. A broker non-vote with respect to the election of a director will not be voted with respect to such director, although it will be counted for purposes of determining whether there is a quorum.
See “Election of Directors — Majority Voting Bylaw” below for more information.
resignation as well as the Board of Directors'Directors’ deliberations and its decision regarding such resignation. The Nominating/Corporate Governance Committee may consider any factors it deems relevant in deciding whether to recommend that the Board of Directors accept a director'sdirector’s resignation. In deciding whether to accept a director'sdirector’s resignation, the Board of Directors shall consider the recommendation of the Nominating/Corporate Governance Committee, the factors considered by the Nominating/Corporate Governance Committee and any additional information and factors that the Board of Directors believes to be relevant. If the incumbent director'sdirector’s resignation is not accepted by the
Director | Audit | Compensation | Nominating/ Corporate Governance | Stock Option | |||||||||
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Michael W. Aguiar | X | ||||||||||||
Barbara Duncan | X | X | |||||||||||
Catherine J. Friedman | X | X | (1) | X | (2) | ||||||||
Patrick G. LePore | X | X | (3) | ||||||||||
Paul A. Pepe | X | X | (4) | X | (5) | ||||||||
James L. Tyree(6) | X | X | |||||||||||
William H. Waltrip | X | ||||||||||||
Total meetings in fiscal year 2017 | 10 | 8 | 7 | (7) |
The following table provides membership and meeting information for each of the Board of Directors' committees as of the Record Date:
Director | | | Audit | | | Compensation | | | Nominating/ Corporate Governance | | |||||||||
George W. Bickerstaff, III | | | | | X* | | | | | | X | | | | | | | | |
Deborah L. Birx, M.D. | | | | | X | | | | | | | | | | | | X | | |
Mark A. DiPaolo, Esq. | | | | | | | | | | | | | | | | | | | |
Jules Haimovitz | | | | | X | | | | | | X* | | | | | | X | | |
Odysseas D. Kostas, M.D. | | | | | | | | | | | | | | | | | | | |
Sarah J. Schlesinger, M.D. | | | | | | | | | | | X | | | | | | X* | | |
Total meetings in fiscal year 2021 | | | | | 7 | | | | | | 5 | | | | | | 6 | | |
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As of the Record Date, there were no members of the Stock Option Committee.
the Annual Meeting, we expect the Board of Directors to appoint directors to the Audit Committee following the expiration of the current Audit Committee members'members’ terms.
The Compensation Committee has retained Frederic W. Cook & Co. ("FW Cook") as its independent compensation consultant. FW Cook serves at the pleasure of the Compensation Committee rather than our management and its fees are approved by the Compensation Committee. FW Cook provides the Compensation Committee with data about the compensation paid by our peer group and other employers who compete with us for executives, updates the Compensation Committee on new developments in areas that fall within the Compensation Committee's jurisdiction and is available to advise the Compensation Committee regarding all of its responsibilities. FW Cook also provides data and recommendations concerning the compensation of directors. The Compensation Committee has assessed the independence of FW Cook pursuant to SEC rules and concluded that no conflict of interest exists that would prevent FW Cook from independently representing the Compensation Committee.
The Compensation Committee, in consultation with FW Cook, reviews and approves the overall strategy for compensating members of the Board of Directors. Specifically, the Compensation Committee reviews the compensation of the directors and recommends to the Board of Directors any changes to the compensation of the directors.
Nominating/Corporate Governance Committee
The Nominating/Corporate Governance Committee will consider director candidates recommended by stockholders and evaluate them using the same criteria as candidates identified by the Board of Directors or the Nominating/Corporate Governance Committee for consideration. If a stockholder of the Company wishes to recommend a director candidate for consideration by the Nominating/Corporate Governance Committee, the stockholder recommendation should be delivered to the Corporate Secretary of the Company at the principal executive offices of the Company, and must include information regarding the candidate and the stockholder making the recommendation as required by the Stockholder—Stockholder — Director Communications Policy. Our Stockholder—Stockholder — Director Communications Policy can be found on the corporate governance section of our website atwww.inva.com.
Stock Option Committee
The Stock Option Committee, of which our former chief executive officer and director was the sole member in 2017, may grant equity awards under the 2012 Equity Incentive Plan (the "2012 Incentive Plan") to employees who are not executive officers. During 2017, the Stock Option Committee did not meet. The Stock Option Committee does not currently have any members.
RISK OVERSIGHT MANAGEMENT
Cash Compensation. Prior to the October 2017 amendment of our non-employee director compensation program, eachprograms. The Compensation Committee considered Compensia’s recommendations in setting 2021 director compensation and discussed the final director compensation arrangements with Compensia to ensure that the package was in-line with market norms and consistent with our overall compensation philosophy. For additional information regarding the Compensation Committee’s engagement of Compensia, please see the section titled “Compensation Discussion and Analysis — Compensation Committee” beginning on page 25.
In October 2017, the lead independent director retainer was eliminated and the retainer paid to the chairman of our board was reduced to $25,000 per year.
In October 2017, the value of the annual equity awards was reduced to $225,000 and the value of the initial equity awards was reduced to $125,000.
credited with an amount equal to all cash dividends paid on the underlying shares of our Common Stock while unvested, which are paid in cash upon vesting.
In addition to the automatic RSUs described above, directors are also eligible to receive other equity awards under our 2012 Equity Incentive Plan.
The value of the initial equity awards described above was reduced to $125,000.
20172021 Director Compensation Table
Name | | | Fees Earned or Paid in Cash ($)(1) | | | Stock Awards ($)(2) | | | Total ($) | | |||||||||
George W. Bickerstaff, III | | | | | 110,944 | | | | | | 224,993 | | | | | | 335,938 | | |
Deborah L. Birx, M.D. | | | | | 52,903 | | | | | | 377,285 | | | | | | 430,187 | | |
Odysseas D. Kostas, M.D.(3) | | | | | 50,000 | | | | | | 224,993 | | | | | | 274,993 | | |
Mark A. DiPaolo(3) | | | | | 50,000 | | | | | | 224,993 | | | | | | 274,993 | | |
Jules Haimovitz | | | | | 87,500 | | | | | | 224,993 | | | | | | 312,493 | | |
Sarah J. Schlesinger | | | | | 74,389 | | | | | | 224,993 | | | | | | 299,382 | | |
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3)(4) | Total ($) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
(a) | (b) | (c) | (h) | |||||||
George Bickerstaff, III(5) | 1,766 | 199,989 | 201,755 | |||||||
Barbara Duncan | 60,000 | 250,000 | 310,000 | |||||||
Catherine J. Friedman | 77,846 | 250,000 | 327,846 | |||||||
Odysseas Kostas, M.D.(5) | 1,766 | (6) | 199,989 | 201,755 | ||||||
Patrick G. LePore | 70,382 | 250,000 | 320,382 | |||||||
Paul A. Pepe | 81,602 | 250,000 | 331,601 | |||||||
James L. Tyree(7) | 32,788 | 250,000 | 282,788 | |||||||
William H. Waltrip | 105,000 | 250,000 | 355,000 |
In July of 2010, the
All As none of our non-employee directors with at least one yearhave served on the Board of service onDirectors for five years, they are not required to meet the share ownership thresholds under the guideline.
Board Diversity Matrix as of March 25, 2022 | | ||||||||||||
Total Number of Directors | | | 6 | | |||||||||
Part I: Gender Identity | | | Female | | | Male | | | Non-Binary | | | Did Not Disclose Gender | |
Directors | | | 2 | | | 3 | | | — | | | 1 | |
Part II: Demographic Background | | | | | | | | | | | | | |
African American or Black | | | — | | | — | | | — | | | — | |
Alaskan Native or American Indian | | | — | | | — | | | — | | | — | |
Asian | | | — | | | — | | | — | | | — | |
Hispanic or Latinx | | | — | | | — | | | — | | | — | |
Native Hawaiian or Pacific Islander | | | — | | | — | | | — | | | — | |
White | | | 2 | | | 2 | | | — | | | — | |
Two or More Races or Ethnicities | | | — | | | — | | | — | | | — | |
LGBTQ+ | | | — | | |||||||||
Did Not Disclose Demographic Background | | | 2 | | |||||||||
Directors who are Military Veterans | | | 1 | |
2017
Following the 2017 Say-On-Pay vote, where approval by our stockholders was lower than in prior years, our Compensation Committee implemented a number of changes in connection with 2018 compensation decisions, and which are further highlighted in the "Compensation Discussion and Analysis." It is also anticipated that following the Annual Meeting our Compensation Committee will be comprised of three members, none of whom served as directors or members of our Compensation Committee at the time that 2017 compensation decisions were made.
company for sustainable value creation.
| Fiscal Year Ended December 31, | ||||||
---|---|---|---|---|---|---|---|
| 2017 | 2016 | |||||
| (in thousands) | ||||||
Audit Fees(1) | $ | 730 | $ | 568 | |||
Audit Related Fees(2) | — | 87 | |||||
Tax Fees(3) | 264 | 300 | |||||
All Other Fees | — | — | |||||
| | | | | | | |
Total Fees | $ | 994 | $ | 955 | |||
| | | | | | | |
| | | Fiscal Year Ended December 31, | | |||||||||
| | | 2021 | | | 2020 | | ||||||
| | | (in thousands) | | |||||||||
Audit Fees(1) | | | | $ | 502 | | | | | $ | 446 | | |
Audit-Related Fees | | | | | — | | | | | | — | | |
Tax Fees(2) | | | | | — | | | | | | — | | |
All Other Fees(3) | | | | | 68 | | | | | | — | | |
Total Fees | | | | $ | 570 | | | | | $ | 446 | | |
PRE-APPROVAL POLICIES AND PROCEDURES
1
Name | | | Age | | | Positions Held | |
Pavel Raifeld | | | 38 | | | Chief Executive Officer | |
Marianne Zhen | | | 53 | | | Chief Accounting Officer | |
Name and Address of Beneficial Owner(1) | | | Number of Shares | | | Percent of Total Outstanding Common Stock | | ||||||
5% Stockholders | | | | | | | | | | | | | |
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10022 | | | | | 9,008,758 | | | | | | 13.0% | | |
Renaissance Technologies LLC(3) 800 Third Avenue New York, NY 10022 | | | | | 5,295,133 | | | | | | 7.6% | | |
The Vanguard Group(4) 100 Vanguard Blvd. Malvern, PA 19355 | | | | | 6,800,195 | | | | | | 9.8% | | |
Sarissa Capital Management LP(5) 660 Steamboat Road Greenwich, CT 06830 | | | | | 6,414,000 | | | | | | 9.2% | | |
Westfield Capital Management Company, LP(6) 1 Financial Center Boston, Massachusetts 02111 | | | | | 3,683,485 | | | | | | 5.3% | | |
Directors and Officers | | | | | | | | | | | | | |
George W. Bickerstaff, III, Director(7) | | | | | 124,560 | | | | | | * | | |
Deborah L. Birx, M.D., Director(8) | | | | | 24,468 | | | | | | * | | |
Mark A. DiPaolo, Esq., Director(9) | | | | | 75,564 | | | | | | * | | |
Jules Haimovitz, Director(10) | | | | | 87,764 | | | | | | * | | |
Odysseas D. Kostas, M.D., Director(11) | | | | | 79,560 | | | | | | * | | |
Sarah J. Schlesinger, M.D., Director(12) | | | | | 75,564 | | | | | | * | | |
Pavel Raifeld, Chief Executive Officer(13) | | | | | 113,908 | | | | | | * | | |
| Beneficial Ownership | ||||||
---|---|---|---|---|---|---|---|
Name and Address of Beneficial Owner(1) | Number of Shares | Percent of Total Outstanding Common Stock | |||||
5% Stockholders | |||||||
GlaxoSmithKline plc(2) | 32,005,260 | 31.64 | % | ||||
FMR LLC(3) | 13,794,465 | 13.64 | % | ||||
The Vanguard Group(4) | 7,161,282 | 7.08 | % | ||||
BlackRock, Inc.(5) | 11,291,145 | 11.16 | % |
| Beneficial Ownership | ||||||
---|---|---|---|---|---|---|---|
Name and Address of Beneficial Owner(1) | Number of Shares | Percent of Total Outstanding Common Stock | |||||
Named Executive Officers and Directors | * | ||||||
Michael W. Aguiar(6) | 987,740 | * | |||||
George W. Bickerstaff, III(7) | 5,442 | * | |||||
Mark DiPaolo, Esq(8) | 2,427 | * | |||||
Barbara Duncan(9) | 40,861 | * | |||||
Catherine J. Friedman(10) | 88,975 | * | |||||
Jules Haimovitz(11) | 14,627 | * | |||||
Odysseas D. Kostas, M.D(12) | 5,442 | * | |||||
Patrick G. LePore(13) | 45,471 | * | |||||
Paul A. Pepe(14) | 88,975 | * | |||||
Sarah J. Schlesinger, M.D(15) | 2,427 | * | |||||
William H. Waltrip(16) | 207,299 | * | |||||
George Abercrombie, RPh, MBA(17) | 405,750 | * | |||||
Eric d'Esparbes(18) | 384,866 | * | |||||
Michael Faerm(19) | 121,637 | * | |||||
Theodore Witek, Jr., Dr.P.H.(20) | 172,805 | * | |||||
All current executive officers and directors as a group (13 persons)(21) | 1,465,367 | 1.44 | % |
Name and Address of Beneficial Owner(1) | | | Number of Shares | | | Percent of Total Outstanding Common Stock | | |||
Marianne Zhen, Chief Accounting Officer(14) | | | | | 40,122 | | | | * | |
All current executive officers and directors as a group (8 persons)(15) | | | | | 621,510 | | | | * | |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We
For 2017,its clients vote “For” the Say-on-Pay Proposal. Based on a review of the overwhelming support of the 2021 Say-on-Pay Resolutions by our "namedother stockholders, our Compensation Committee determined that no major changes to our compensation policies or practices were required during 2021 on account of our stockholders vote on the 2021 Say-on-Pay Resolutions.
On February 6, 2018, Mr. d'Esparbes was appointed interim Principal Executive Officer. Mr. d'Esparbes succeeded Mr. Aguiar following his resignation as President andcompetitive considerations. In 2021, the Compensation Committee approved cost of living adjustments ranging from 3% to 5% to the base salaries of all employees other than the Chief Executive Officer. With respect to Mr. d'Esparbes hasRaifeld, the Compensation Committee approved an increase in his annual base salary from $360,000 to $410,000 effective as of May 14, 2021. In considering this increase, the Compensation Committee considered Mr. Raifeld’s expanded operational responsibilities in connection with the Company’s activities and conducted an analysis of compensation trends for executives in the industry with comparable duties and responsibilities, and concluded that setting Mr. Raifeld’s annual base salary at $410,000 would be more aligned with market practices and would enhance the motivational and retentive value of the CEO pay program.
the remainder scheduled to vest in equal quarterly installments over the next three years thereafter), subject to her continued service through each vesting date.
2017 was a successful year for Innoviva, as
all employees.
she will be expected to hold 50% of the after-tax Innoviva shares acquired thereafter, whether by option exercise, vesting or settlement of equity awards, or an open-market purchase.
Mr. Raifeld’s and Ms. Zhen’s service as an executive officer of the Company commenced on May 20, 2020 and July 27, 2018, respectively, and therefore they are not yet required to meet the share ownership thresholds under the guideline.
Compensation Philosophy and Objectives
The primary goal of our executive compensation program is to maintain a compensation program that fairly compensates employees, allows us to attract and retain highly qualified employees, motivates the performance of employees towards clearly defined corporate goals, rewards goal achievement and aligns employees' long-term interests with those of our stockholders.
In June 2014, we successfully separated our drug discovery and development business into a separate publicly traded company, following which we transformed our business from a drug discovery company to a company focused on royalty management. In connection with such transformation, our philosophy has been to transition from a pay model that emphasized the drug pipeline-driven business of a research and development company to a compensation program that is better suited to a company that manages the royalties of its biopharmaceutical portfolio.
We believe the skills and experience required to be successful managing the drug portfolio include not only those of a biopharmaceutical executive, including both commercial and development functions, but also experience in maximizing the value of long-lived financial assets. Our Compensation Committee continues to evaluate our executive compensation practices in light of our new business model and the needs of our business. Our Compensation Committee has reviewed peer group data for context when making compensation decisions, but the Company does not target a particular level of relative compensation. Instead our Compensation Committee applies its discretion and business judgment to make individual compensation decisions.
Compensation Committee
Following the Annual Meeting, the Compensation Committee is expected to be comprised of three members, none of whom served as directors or members of the Compensation Committee at the time that 2017 compensation decisions were made. During 2017, the Compensation Committee was comprised of three independent members of the Board of Directors. The Compensation Committee's primary responsibilities are to review the performance of our management in achieving corporate objectives and to assure that the named executive officers as well as other members of senior management are compensated effectively in a manner consistent with our compensation philosophy and competitive practice. Historically and in connection with 2017 compensation decisions, our CEO has assessed the contributions of senior management relative to the corporate goals and made a recommendation to the Compensation Committee with respect to any merit increase in salary, cash bonus (based on the fiscal year's cash bonus pool for all employees determined by the Compensation Committee) and annual equity award for each member of the executive team, other than himself. In addition, the Compensation Committee met with the CEO to evaluate, discuss and modify or approve these recommendations. The Compensation Committee also conducted a similar evaluation of the CEO's contributions when the CEO was not present, and determined any increase in salary, cash bonus and annual equity award for the CEO.
2017 Vote on Executive Compensation
At our 2017 annual meeting of stockholders, approximately 53% of our stockholders voted "For" a non-binding advisory resolution approving the compensation of our named executive officers, as
disclosed in the proxy statement for that meeting. However, this followed a 2016 vote in which 91% of our stockholders voted "For" our executive compensation program. The Compensation Committee makes the majority of its executive officer pay decisions in the first quarter of each year, so most 2017 compensation decisions were made prior to the 2017 stockholder vote. After the 2017 vote and following discussions with stockholders and the Compensation Committee's independent executive compensation consultant, the Compensation Committee implemented a number of changes in connection with its 2018 compensation decisions. These changes are not reflected in our named executive officer's 2017 compensation as our 2017 compensation programs were already in place at the time of the advisory vote. The changes that the Compensation Committee made for 2018 included:
In connection with such compensation changes for 2018, our Compensation Committee also determined that funding for our 2017 annual bonuses would not exceed actual EBITDA achievement versus the pre-established 2017 EBITDA goal. As further discussed below, actual 2017 annual bonuses were only paid at target despite overachievement of the 2017 EBITDA goal.
Compensation Consultant
The Compensation Committee has the authority under its charter to engage the services of outside advisors, experts and others to assist the Compensation Committee. In accordance with this authority and as described in the "Compensation Committee" section beginning on page 15, the Compensation Committee confers from time to time with its independent executive compensation consultant, FW Cook. FW Cook is retained by and reports directly to the Compensation Committee and its role is to assist and advise the Compensation Committee on matters related to compensation for executive officers, other key employees and non-employee directors. FW Cook does not work on projects for management except as an agent of the Compensation Committee and with the advance knowledge and approval of the Chairman of the Compensation Committee. The Compensation Committee has the sole authority to retain and dismiss its outside compensation consultants.
Peer Group
In making compensation decisions, our Compensation Committee refers to comparative compensation data from a group of peer companies. The peer group utilized for compensation decisions in 2017 was established in July 2015. The peer group was focused on other biopharmaceutical companies that were of similar size, were primarily focused on commercial activities (as opposed to drug discovery activities), and relied on other organizations for direct product promotion and sales. The criteria utilized in selecting the peer group was focused on companies with a commercial drug, market capitalizations between 0.5 - 2.5 times our market capitalization at the time the peers were chosen (range of about $600 million to $5 billion in light of our $2.1 billion market capitalization at the time), limited or no internal sales force and an emphasis on companies without compounds in phase 3 of research and development. In selecting peer companies, market capitalization was emphasized since it directly affects equity compensation values and is the relevant metric in terms of stockholder value managed by the executive team on behalf of stockholders. Our market capitalization at the time the
peer group was selected was $2.1 billion compared to a peer group median of $2 billion. Our peer group established in July 2015 consists of the following companies:
When making compensation decisions, the Compensation Committee does not target a particular percentile of the peer group data. The actual 2017 compensation of our named executive officers varied, in some cases it was above the median of our peer group, and in other cases it was below the median. For Mr. Aguiar, our former CEO, his total compensation for 2017 as reported in the 2017 Summary Compensation Table was below the median of other CEOs in the Company's peer group.
Principal Elements of Compensation
Base Salaries
Base salaries are set to reflect compensation commensurate with the individual's current position and work experience. Our goal in this regard is to attract and retain high caliber talent for the position and to provide a base wage that is not subject to performance risk. Salary for our named executive officers is established based on the underlying scope of their respective responsibilities, taking into account competitive market compensation. In making base salary decisions our Compensation Committee reviews market data, however that data provides only a reference point for the Compensation Committee.
Our Compensation Committee reviews base salaries for our named executive officers annually, generally in the first quarter of each year. Historically, the CEO had proposed salary adjustments (in target percentages) to the Compensation Committee (other than for himself) based on any changes in
market salaries, individual performance and/or changes in job duties and responsibilities. The Compensation Committee would then determine any salary adjustment applicable to each of the named executive officers. For 2017, our former CEO recommended a merit increase of 3.5% for Messrs. d'Esparbes, Faerm, Abercrombie and Witek, which following discussion by the Compensation Committee were approved. Our Compensation Committee also approved a 3.5% merit increase in Mr. Aguiar's base salary from $749,858 to $776,103.
Annual Cash Incentive Compensation
Our named executive officers are eligible for annual cash incentives under a Company-wide bonus program. Annual cash incentives for our named executive officers are designed to reward the achievement of key corporate goals for the year, which we believe in turn should increase stockholder value over time. The annual cash incentive awards for our named executive officers are based on our achievement of specific performance goals over which we have direct control or significant influence and that are established at the beginning of the fiscal year.
At the end of the year, our Compensation Committee reviews the Company's performance against the goals and determines the overall level of achievement, which determines the size of the Company's bonus pool for all employees. Shortly thereafter, the Compensation Committee determines individual bonus amounts for the named executive officers. In making both of these determinations, the Compensation Committee typically considers a briefing from the Company's former CEO on Company-wide performance against goals and the individual contributions of the named executive officers (other than himself) toward achievement of the goals.
Each of our named executive officers has a target bonus stated in terms of a percentage of the officer's base salary. No changes were made to the target bonus percentages of our named executive officers in 2017 and they remained at 75% for our former CEO and at 50% for each of our other named executive officers. In 2017, similar to recent years, each of our named executive officers was eligible to earn up to two times their target bonus percentage.
2017 Bonus Goals
In the first quarter of 2017, our Compensation Committee established the goals applicable to our Company-wide bonus program for 2017. The table below sets forth our 2017 goals that applied to our bonus program for all employees, including our named executive officers, the determination of our Compensation Committee on whether or not each goal was achieved and, to the extent a goal was achieved, whether it was determined to be overachieved. These goals (other than with respect to one supplemental goal) did not include any sales targets for BREO® and ANORO®, our partnered respiratory programs, since we do not have direct control over sales and marketing activities. Specific weightings are not assigned to the goals, in order to provide our Compensation Committee with flexibility to determine each goal's relative weight and importance on the basis of actual results. The Compensation Committee focused on EBITDA from our partnered programs as the most important measure since it requires both revenue and management of controllable costs to create EBITDA. Additionally, in connection with the compensation changes discussed above for 2018, our Compensation Committee also determined that funding for our 2017 annual bonuses would not exceed actual EBITDA achievement versus the pre-established 2017 EBITDA goal.
In addition to the Company-wide goals set forth below, our Compensation Committee also established an individual goal for our former CEO, focused on successful investor relations.
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The majority of the goals listed above were achieved and in certain cases overachieved, which the Compensation Committee viewed as a significant accomplishment. Despite overachievement of the EBITDA goal and achievement of a majority of our goals for 2017, our Compensation Committee determined that the 2017 bonus pool would be set at 100% of target for all employees, including the Company's named executive officers other than Messrs. Aguiar and Faerm.
The bonuses for 2017 performance are shown in the table below and reflected in the Non-Equity Incentive Compensation column of the "Summary Compensation Table" on page 42:
Name | Title | Cash Bonus ($) | Percentage of Target (%) | ||||||
---|---|---|---|---|---|---|---|---|---|
Michael W. Aguiar | President and Chief Executive Officer | $ | 250,000 | (1) | N/A | ||||
Eric d'Esparbes | Senior Vice President and Chief Financial Officer | $ | 220,773 | 100 | % | ||||
George B. Abercrombie | Senior Vice President and Chief Commercial Officer | $ | 218,342 | 100 | % | ||||
Theodore J. Witek, Jr. | Senior Vice President and Chief Scientific Officer Clinical and Medical Affairs | $ | 217,670 | 100 | % | ||||
Michael E. Faerm | Senior Vice President and Chief Business Officer | $ | 100,000 | (2) | N/A |
Equity Incentive Compensation
The types of equity compensation that may comprise the mix of officer compensation consist of: (i) stock options with time-based vesting, which require the market value of our Common Stock to increase before they are valuable; (ii) performance-contingent restricted stock units ("RSUs") and restricted stock awards ("RSAs"), the right to which is dependent upon successful completion of corporate performance goals; and (iii) RSUs or RSAs with time-based vesting. In 2017, we granted RSUs and RSAs to our named executive officers (with both time-based and performance-based vesting), which we believed were more appropriate than stock options for our 2017 business model as RSUs and RSAs can provide reduced dilution compared to stock options, RSUs and RSAs are designed to capture dividends paid to stockholders, and reward growth as well as value maintenance. We do not use a targeted cash/equity split to set officer compensation.
In order to align the officer's interests with those of our stockholders, a significant equity award is made to a named executive officer at the first regularly scheduled meeting of the Compensation Committee after the officer commences employment. These initial new hire awards are generally within a guideline range recommended by FW Cook, normally around 1.5 to 2.5 times the annual equity awards described below, and adjusted to reflect considerations individual to a specific candidate as well as arms-length negotiations as part of the hiring process.
Annual equity awards are generally considered during the first quarter of each year, following annual performance reviews and based on recommendations to the Compensation Committee from the
CEO (other than with respect to himself). One-third of our named executive officers' 2017 target annual equity awards was subject to performance-based vesting and the remaining two-thirds was subject to time-based vesting, as further described below. Additional equity awards may be made in connection with an officer earning a promotion or taking on additional duties or for retention purposes in certain circumstances. Annual equity awards generally vest over a four-year period for time-based awards, while the performance period (and any accompanying time-based vesting component) varies for performance-based awards. The Company believes that the resulting overlapping vesting schedule from awards made in prior years, together with the number of shares subject to each award, helps ensure a meaningful incentive to remain in the Company's employ and to enhance stockholder value over time.
Our annual equity grant guidelines are stated as a dollar amount, which we believe matches the approximate cost incurred by the Company and is most relevant for a company with our business model, market capitalization, and type of equity award being granted.
2017 Annual Equity Awards
Annual equity awards were made in the first quarter of 2017 and were set at 110% of guideline, as a result of the Company's overachievement of its 2016 performance goals. The 2017 equity awards were made in the first quarter of 2017, prior to the 2017 vote of our stockholders on the compensation of our named executive officers. As with the 2016 annual equity awards, the 2017 awards were designed with one-third of the target award subject to performance-based vesting and the remaining two-thirds of the award with standard time-based vesting. All of our named executive officers received their 2017 annual equity award (both the time-based and performance-based portions) in the form of RSAs other than Mr. Witek, who received RSUs due to Canadian tax considerations.
The following table shows for each of our named executive officers the annual equity award guideline, the total annual equity award at 110% of the guideline based on the 15-day average trading price ending three full trading days prior to the date the awards were granted (which was $10.9947), the portion of the 2017 annual equity award subject to time-based vesting and the portion of the 2017
annual equity award subject to performance-based vesting (at target). The guideline grant values were generally near the median of our peer group, with our CEO set below the median.
Name | Title | Guideline Dollar Value | Total 2017 Annual Equity Award at 110% of Guideline(1) | Time-Based Portion of 2017 Annual Equity Award | Performance-Based Portion of 2017 Annual Equity Award ("2017 Performance Awards")(2) | ||||||||||
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Michael W. Aguiar | President and Chief Executive Officer | $ | 2,500,000 | 250,121 | 166,747 | 83,374 | (3) | ||||||||
Eric d'Esparbes | Senior Vice President and Chief Financial Officer | $ | 1,000,000 | 100,048 | 66,698 | 33,350 | |||||||||
George B. Abercrombie | Senior Vice President and Chief Commercial Officer | $ | 800,000 | 80,038 | 53,358 | 26,680 | |||||||||
Theodore J. Witek, Jr. | Senior Vice President and Chief Scientific Officer Clinical and Medical Affairs | $ | 800,000 | 80,038 | 53,358 | 26,680 | |||||||||
Michael E. Faerm | Senior Vice President and Chief Business Officer | $ | 1,000,000 | 100,048 | 66,698 | 33,350 | (3) |
For all of our named executive officers other than Mr. Witek, the time-based portion of the 2017 annual equity award as originally granted was scheduled to vest over a period of four years (with the first 25% scheduled to vest on February 20, 2018 and the remainder in equal quarterly installments over the next three years thereafter), subject to the named executive officer's continued service through each vesting date. Pursuant to the terms of the separation agreements entered into with Messrs. Aguiar and Faerm in connection with their termination of employment with us, we accelerated the vesting of 41,687 shares and 16,675 shares, respectively, that were subject to the time-based portion of their 2017 annual equity awards and were scheduled to vest on February 20, 2018. The remainder of such awards were forfeited upon their termination of employment with us.
Due to Canadian tax considerations, the time-based portion of Mr. Witek's 2017 annual equity award vests over a three-year period as follows: 25% on February 20, 2018, 6.25% on each of May 20, 2018, August 20, 2018, November 20, 2018, February 20, 2019, May 20, 2019 and August 20, 2019, and the remaining 37.5% vests on November 20, 2019, provided Mr. Witek remains in continuous service through each vesting date.
The 2017 Performance Awards are eligible to vest based on the relative performance of our common stock compared to the NASDAQ Biotechnology Index during the following two performance periods: January 1, 2017 through December 31, 2018; and January 1, 2017 through December 31, 2019 (or, in the case of Mr. Witek, through September 30, 2019). After the end of each performance period, the number of shares for which the performance-based vesting conditions have been satisfied will be calculated by multiplying the "payout percentage" by the target number of shares granted, rounded down to the nearest whole share.
For the 2017 Performance Awards, the payout percentage is calculated as follows:
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| Total Relative Share Performance ("TRSP")(1) | | Payout Percentage(2)(3) | | |||||
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Greater than 0 | 100% plus 5% for each positive percentage point of TRSP, up to a 200% maximum | ||||||||
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0 | 100% | ||||||||
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Less than 0 | 100% minus 5% for each negative percentage point of TRSP | ||||||||
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To the extent the performance-based vesting conditions applicable to the 2017 Performance Awards are satisfied during the first performance period, two-thirds of the related shares will vest on February 20, 2019 and the remaining one-third of such shares will vest on February 20, 2020, subject to the named executive officer's continued service through the applicable vesting date. If the performance-based vesting conditions are satisfied during the second performance period, all of the related shares will vest on February 20, 2020, subject to the named executive officer's continued service through such date. Due to Canadian tax considerations, any RSUs granted to Mr. Witek for which the performance-based vesting conditions have been satisfied will vest no later than November 20, 2019, subject to Mr. Witek's continued service through such date.
In the event we are acquired prior to the end of the second performance period, the performance period then in progress will terminate and the performance-based vesting conditions will be deemed vested as to the greater of (i) the target number of shares and (ii) the number of shares that would vest based on the TRSP as calculated on the closing date of such acquisition. The service-based conditions applicable to the 2017 Performance Awards will be deemed satisfied if the named executive officer remains in continuous service through the date of the acquisition. Any 2017 Performance Awards for which the performance metric is not satisfied as of the closing of the acquisition will be forfeited. See the section entitled "Potential Payments Upon Termination or Change in Control" below for further details on the treatment of the 2017 Performance Awards in the event we are acquired.
The 2017 Performance Awards also provide that in the event of the named executive officer's death or disability prior to the end of the second performance period that the awards will vest at target, less any amounts previously vested, if applicable.
Post-Termination Protection
We believe that the possibility of a change in control creates uncertainty for our officers regarding their continued employment by the Company because such transactions frequently result in senior management changes. We provide change in control protections to our officers to alleviate concerns regarding the possible occurrence of such a transaction, allowing them to focus their attention on the business of the Company. In addition, these protections encourage executives to remain with the Company during the threat or negotiation of a change in control transaction, which preserves the value of the Company and the potential benefit to be received by our stockholders in the transaction.
The change in control severance benefits are structured under a Company plan, which was initially adopted in 2004, instead of using individual employment agreements. With this change in control severance plan, we sought uniformity of results among the officers based on their positions at the Company. For officers who were eligible to participate in the plan prior to December 16, 2009, Innoviva provides gross-ups for excise taxes potentially due in connection with a change in control. Mr. Aguiar was our only named executive officer who was eligible for this benefit.
Prior to his termination, Mr. Aguiar was also eligible for severance benefits outside of the change in control context pursuant to the letter agreement we entered into with him at the time he became our Chief Executive Officer in 2014. Pursuant to such letter agreement, if Mr. Aguiar's service was terminated without cause and he was not eligible for severance benefits under our original change in control severance plan, he would receive a lump-sum severance payment of 24 months of his then-current salary plus two times his then-current target bonus. As our interim Principal Executive Officer, Mr. d'Esparbes is now eligible for similar severance benefits pursuant to a letter agreement entered into with him in February 2018. In the event his employment is terminated without cause, provided he executes a general release of claims, he will receive a lump-sum severance payment of 24 months of his then-current base salary plus his current target bonus, a pro-rata bonus for the year in which his termination occurs, and continuation of his health and welfare benefits for the shorter of 12 months, the expiration of his coverage under COBRA or the date when he obtains new employment offering comparable health insurance coverage.
In 2009, our Board of Directors adopted a new change in control severance plan which applies to any officers hired, or non-officers promoted to officer level, after December 16, 2009 (the "2009 plan") that was essentially identical to the original change in control severance plan except that it does not provide for excise tax gross-ups. All of our named executive officers other than our former CEO participate in the 2009 plan. Since 2015, the 2009 plan also provides our named executive officers who are senior vice presidents with cash severance benefits in the event of a termination without cause. We believe this is consistent with practices within our peer groups and should help reduce the likelihood of employee disputes in the event of a termination of employment.
Our severance and change-in-control arrangements generally do not affect the Compensation Committee's decisions regarding other elements of compensation. Those arrangements serve specific purposes that we believe are not related to the determination of an officer's current compensation. The specific terms of our severance and change in control arrangements are described in detail in "Potential Payments Upon Termination or Change in Control" on page 48.
Perquisites
The Company does not provide a non-qualified deferred compensation program or a supplemental executive retirement plan. Generally the Company does not provide perquisites or other personal benefits to named executive officers, and during 2017 we did not provide any perquisites to executive officers that were not provided to all employees other than the reimbursement of expenses incurred by Mr. Witek in the preparation of his personal income taxes (due to his residency outside of the United States).
Former CEO Compensation
As CEO, Mr. Aguiar's level of responsibility was much greater than those of our other named executive officers and therefore his compensation was higher than that of our other named executive officers. Notwithstanding this fact, Mr. Aguiar's total compensation for 2017, as reported in the 2017 Summary Compensation Table, was below the median of other CEOs in our peer group.
Mr. Aguiar's compensation generally consisted of the same elements provided to our other named executive officers. For 2017, Mr. Aguiar's merit salary increase was 3.5%, consistent with our other named executive officers. As with our other named executive officers, Mr. Aguiar's 2017 annual equity award consisted of both time-based RSAs and performance-based RSAs and was set at 110% of guideline due to the Company's overachievement of its 2016 goals.
On February 6, 2018, Mr. Aguiar resigned as our CEO and member of our Board at the request of the Board. Mr. Aguiar's resignation was treated as a termination "without cause" under the letter agreement we entered into with him at the time he became our CEO in 2014. As a result, pursuant to the separation agreement that was entered into between the company and Mr. Aguiar on February 6, 2018, in exchange for a mutual release of claims we paid Mr. Aguiar a lump sum equal to 24 months of his former base salary plus two times his target bonus (at the time of his termination). In addition, we agreed to (i) pay Mr. Aguiar $250,000 in lieu of his 2017 performance bonus and (ii) accelerate the vesting of an aggregate of 164,045 shares of our common stock underlying restricted stock awards previously awarded to him, and which would have vested on February 20, 2018, if he had remained with the company through such date.
Tax Deductibility of Pay
Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that Innoviva may deduct in any one year with respect to each of its CEO and certain other executive officers. Prior to changes in tax law taking effect in 2018, there was an exception to the $1,000,000 limitation for performance-based compensation meeting certain requirements. Historically some of our named executive officer compensation arrangements were intended to qualify for this exception. However, to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee has not adopted a policy requiring all compensation to be deductible. Although deduction of some amounts paid as compensation by Innoviva to certain executives may be limited by Section 162(m), that limitation has not resulted in the current payment of increased federal income taxes by Innoviva due to its significant net operating loss carry forwards. The Compensation Committee may approve compensation or changes to plans, programs or awards that may cause the compensation or awards not to comply with Section 162(m) if it determines that such action is appropriate and in our best interests. The exemption from Section 162(m)'s deduction limitation for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our CEO and certain other executive officers in excess of $1,000,000 will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
COMPENSATION COMMITTEE REPORT(1)
REPORT
2
Name and Principal Position | | | Year | | | Salary ($)(1) | | | Bonus ($)(2) | | | Stock Awards ($)(3) | | | Option Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($) | | | All Other Compensation ($)(4) | | | Total ($) | | ||||||||||||||||||||||||
(a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (i) | | | (j) | | ||||||||||||||||||||||||
Pavel Raifeld | | | | | 2021 | | | | | | 391,458(5) | | | | | | 234,952 | | | | | | — | | | | | | 580,330 | | | | | | — | | | | | | 64,398 | | | | | | 1,271,138 | | |
Chief Executive Officer | | | | | 2020 | | | | | | 222,000 | | | | | | 132,968 | | | | | | — | | | | | | 1,570,000 | | | | | | — | | | | | | 19,000 | | | | | | 1,943,968 | | |
Marianne Zhen | | | | | 2021 | | | | | | 296,156(6) | | | | | | 144,520 | | | | | | 125,000 | | | | | | 27,086 | | | | | | — | | | | | | 21,500 | | | | | | 614,262 | | |
Chief Accounting Officer | | | | | 2020 | | | | | | 284,625 | | | | | | 128,081 | | | | | | 124,996 | | | | | | — | | | | | | — | | | | | | 21,167 | | | | | | 558,869 | | |
| | | | | 2019 | | | | | | 275,000 | | | | | | 123,750 | | | | | | 125,001 | | | | | | — | | | | | | 7,500 | | | | | | 20,667 | | | | | | 551,918 | | |
Summary Compensation Table
The following table sets forth all of the compensation awarded to, earned by, or paid to our "principal executive officer," our "principal financial officer," and our three other executive officers (our "named executive officers") for fiscal years 2017, 2016 and 2015.
Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||
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(a) | (b) | (c) | (d) | (e) | (g) | (i) | (j) | |||||||||||||||
Michael W. Aguiar(5) | 2017 | 772,822 | 250,000 | (6) | 3,134,018 | — | 20,000 | 4,176,840 | ||||||||||||||
President and Chief | 2016 | 746,688 | — | 2,159,152 | 672,019 | 19,667 | 3,597,526 | |||||||||||||||
Executive Officer | 2015 | 721,438 | — | 2,314,256 | 516,206 | 9,000 | 3,560,900 | |||||||||||||||
Eric d'Esparbes(7) | 2017 | 441,546 | — | 1,253,605 | 220,773 | 12,000 | 1,927,923 | |||||||||||||||
Senior Vice President and | 2016 | 422,920 | — | 863,662 | 253,752 | 9,605 | 1,549,940 | |||||||||||||||
Chief Financial Officer | 2015 | 383,840 | — | 485,997 | 182,585 | 8,958 | 1,061,380 | |||||||||||||||
George B. Abercrombie | 2017 | 436,684 | — | 1,002,879 | 218,342 | 20,000 | 1,677,906 | |||||||||||||||
Senior Vice President | 2016 | 421,917 | 21,096 | 690,929 | 253,150 | 12,000 | 1,399,092 | |||||||||||||||
and Chief Commercial Officer | 2015 | 408,208 | — | 938,934 | 194,456 | 12,000 | 1,553,598 | |||||||||||||||
Theodore J. Witek, Jr. | 2017 | 435,340 | — | 999,678 | 217,670 | 31,983 | 1,684,671 | |||||||||||||||
Senior Vice President | 2016 | 420,619 | — | 681,902 | 252,371 | 23,712 | 1,378,604 | |||||||||||||||
and Chief Scientific Officer | 2015 | 407,105 | — | 938,934 | 193,857 | 12,000 | 1,551,896 | |||||||||||||||
Clinical and Medical Affairs | ||||||||||||||||||||||
Michael E. Faerm(8) | 2017 | 436,392 | 100,000 | (6) | 1,253,605 | — | 20,000 | 1,809,997 | ||||||||||||||
Senior Vice President | 2016 | 422,372 | — | 500,925 | 253,423 | 193,214 | 1,369,934 | |||||||||||||||
and Chief Business Officer | 2015 | 199,640 | 75,000 | 1,644,599 | 114,333 | 33,003 | 2,066,575 |
Salary, Bonus and Non-Equity Incentive Plan Compensation in Proportion to Total Compensation
The amount of salary, bonus and non-equity incentive plan compensation awarded to, earned by, or paid to our named executive officers for fiscal year 2017 in proportion to the total compensation reported for each of our named executive officers is set forth below.
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| | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares or Units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock Awards ($) | | |||||||||||||||||||||||||||
Name | | | Grant Date | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | ||||||||||||||||||||||||||||||||||||
Pavel Raifeld | | | | | 5/21/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 100,000(1) | | | | | | 13.17 | | | | | | 580,330 | | |
Marianne Zhen | | | | | 3/29/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,000(2) | | | | | | 12.13 | | | | | | 27,086 | | |
| | | | | 3/29/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 10,305(3) | | | | | | — | | | | | | — | | | | | | 125,000 | | |
| | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards ($)(1) | Estimated Possible Payouts Under Equity Incentive Plan Awards ($)(2)(3) | | | |||||||||||||||||
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| | All Other Stock Awards: Number of Shares or Units (#)(4)(5) | | |||||||||||||||||||
| | Grant Date Fair Value of Stock Awards ($) | ||||||||||||||||||||
Name | Grant Date | Target ($) | Maximum ($) | Target (#) | Maximum (#) | |||||||||||||||||
(a) | (b) | (d) | (e) | (g) | (h) | (i) | (l) | |||||||||||||||
Michael W. Aguiar | N/A | 579,617 | 1,159,234 | — | — | — | — | |||||||||||||||
1/17/2017 | — | — | — | — | 166,747 | 1,814,207 | ||||||||||||||||
1/17/2017 | — | — | 83,374 | 166,748 | — | 1,319,810 | ||||||||||||||||
Eric d'Esparbes | N/A | 220,773 | 441,546 | — | — | — | — | |||||||||||||||
1/17/2017 | — | — | — | — | 66,698 | 725,674 | ||||||||||||||||
1/17/2017 | — | — | 33,350 | 66,700 | — | 527,931 | ||||||||||||||||
George B. Abercrombie | N/A | 218,342 | 436,684 | — | — | — | — | |||||||||||||||
1/17/2017 | — | — | — | — | 53,358 | 580,535 | ||||||||||||||||
1/17/2017 | — | — | 26,680 | 53,360 | — | 422,344 | ||||||||||||||||
Theodore J. Witek, Jr. | N/A | 217,670 | 435,340 | — | — | — | — | |||||||||||||||
1/17/2017 | — | — | — | — | 53,358 | 580,535 | ||||||||||||||||
1/17/2017 | — | — | 26,680 | 53,360 | — | 419,143 | ||||||||||||||||
Michael E. Faerm | N/A | 218,196 | 436,392 | — | — | — | — | |||||||||||||||
1/17/2017 | — | — | — | — | 66,698 | 725,674 | ||||||||||||||||
1/17/2017 | — | — | 33,350 | 66,700 | — | 527,931 |
achieved during the first performance period will vest for all of our named executive officers other than Mr. Witek as to two-thirds of such shares on FebruaryMay 20, 20192022, and the remaining one-third75% of such shares on February 20, 2020, subject to the holder's continued service through each such date. Stock awards for which the performance metric is achieved during the second performance period will vest for all of our named executive officers other than Mr. Witek in full on February 20, 2020, subject to the holder's continued service through such date. For Mr. Witek, RSUs for which the performance metric is achieved during the first performance period will vest as to two-thirds of such RSUs on February 20, 2019 and the remaining one-third of such RSUs on November 20, 2019, subject to Mr. Witek's continued service through each such date; RSUs for which the performance metric is achieved during the second performance period willoptions vest in full on November 20, 2019, subject toequal quarterly installments over three years thereafter, provided Mr. Witek's continued service through such date. The amounts included as the "target" and "maximum" in the table above assume the holder will remain in continued service through the applicable quarterly vesting date. In connection with their termination of employment with us in February 2018, these awards were forfeited in their entirety by Messrs. Aguiar and Faerm.
Unless otherwise indicated below, all of our equity2021. All such awards were granted under our 2012 Incentive PlanPlan.
| | | | | | | | | Option Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||
Name(1) | | | | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | ||||||||||||||||||
(a) | | | | | | | | | (b) | | | (c) | | | (e) | | | (f) | | | (g) | | | (h) | | ||||||||||||||||||
Pavel Raifeld | | | | | (3) | | | | | | 93,750 | | | | | | 156,250 | | | | | | 14.10 | | | | | | 5/19/2030 | | | | | | — | | | | | | — | | |
| | | | | (4) | | | | | | — | | | | | | 100,000 | | | | | | 13.17 | | | | | | 5/20/2031 | | | | | | — | | | | | | — | | |
Marianne Zhen | | | | | (5) | | | | | | — | | | | | | 5,000 | | | | | | 12.13 | | | | | | 3/28/2031 | | | | | | — | | | | | | — | | |
| | | | | | | | | Option Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||
Name(1) | | | | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | ||||||||||||||||||
(a) | | | | | | | | | (b) | | | (c) | | | (e) | | | (f) | | | (g) | | | (h) | | ||||||||||||||||||
| | | | | (6) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 388 | | | | | | 6,693 | | |
| | | | | (7) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,548 | | | | | | 43,953 | | |
| | | | | (8) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 111 | | | | | | 1,915 | | |
| | | | | (9) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 10,305 | | | | | | 177,761 | | |
| | | | | (10) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,916 | | | | | | 84,801 | | |
| Option Awards | Stock Awards | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | |||||||||||||||||
(a) | (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||
Michael W. Aguiar | — | — | — | — | 3,125 | (3) | 44,344 | — | — | ||||||||||||||||
— | — | — | — | 8,232 | (4) | 116,812 | — | — | |||||||||||||||||
— | — | — | — | 55,017 | (5) | 780,691 | — | — | |||||||||||||||||
— | — | — | — | 81,374 | (6) | 1,154,697 | 18,083 | (7) | 256,597 | ||||||||||||||||
— | — | — | — | 166,747 | (8) | 2,366,140 | 83,374 | (9) | 1,183,077 | ||||||||||||||||
Eric d'Esparbes | — | — | — | — | 25,618 | (10) | 363,519 | — | — | ||||||||||||||||
— | — | — | — | 11,554 | (5) | 163,951 | — | — | |||||||||||||||||
— | — | — | — | 32,549 | (6) | 461,870 | 7,233 | (7) | 102,636 | ||||||||||||||||
— | — | — | — | 66,698 | (8) | 946,445 | 33,350 | (9) | 473,237 | ||||||||||||||||
George B. Abercrombie | 87,500 | 12,500 | (11) | 29.32 | 6/18/2024 | — | — | — | — | ||||||||||||||||
— | — | — | — | 5,000 | (12) | 70,950 | — | — | |||||||||||||||||
— | — | — | — | 22,321 | (5) | 316,735 | — | — | |||||||||||||||||
— | — | — | — | 26,039 | (6) | 369,493 | 5,786 | (7) | 82,103 | �� | |||||||||||||||
— | — | — | — | 53,358 | (8) | 757,150 | 26,680 | (9) | 378,589 | ||||||||||||||||
Theodore J. Witek, Jr. | 106,771 | 18,229 | (13) | 23.88 | 7/23/2024 | — | — | — | — | ||||||||||||||||
— | — | — | — | 26,039 | (14) | 369,493 | 5,786 | (15) | 82,103 | ||||||||||||||||
— | — | — | — | 53,358 | (16) | 757,150 | 26,680 | (17) | 378,589 | ||||||||||||||||
Michael E. Faerm | — | — | — | — | 46,063 | (18) | 653,634 | — | — | ||||||||||||||||
— | — | — | — | 18,878 | (6) | 267,879 | 4,195 | (7) | 59,527 | ||||||||||||||||
— | — | — | — | 66,698 | (8) | 946,445 | 33,350 | (9) | 473,237 |
thereafter, provided the holder remains in continuous service through each vesting date. Pursuant to the terms of the separation agreement entered into with Mr. Aguiar in February 2018 in connection with his termination of employment with us, the vesting of the 11,003 RSAs that were scheduled to vest on February 20, 2018 was accelerated. The remainder of the RSAs were forfeited by Mr. Aguiar.
| | | | | | | | | Stock Awards | | |||||||||
Name | | | Security | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(1) | | |||||||||
Marianne Zhen | | | | | INVA | | | | | | 8,483 | | | | | | 116,831 | | |
| | Option Awards | Stock Awards | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Security | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||
(a) | | (b) | (c) | (d) | (e) | ||||||||||
Michael W. Aguiar(3) | INVA | — | — | 194,541 | 2,444,455 | ||||||||||
TBPH | — | — | 18,216 | 521,539 | |||||||||||
Eric d'Esparbes | INVA | — | — | 60,177 | 739,205 | ||||||||||
George B. Abercrombie | INVA | — | — | 40,611 | 498,312 | ||||||||||
Theodore J. Witek, Jr. | INVA | — | — | 60,432 | 761,579 | ||||||||||
Michael E. Faerm | INVA | — | — | 41,006 | 504,040 |
Change in Control Severance Benefits
Pursuant to our severance plans, if a named executive officerMr. Raifeld is subject to an involuntary termination within 3 months prior to or 24 months after a change in control of Innoviva, he is entitled to full vesting of all unvested stock options.
Non-Change in Control Severance Benefits
Former Chief Executive Officer. In addition to the severance benefits Mr. Aguiar was entitled to pursuant to our Change in Control Severance Plan, Mr. Aguiar's offer letter provided that if his employment was terminated by Innoviva without cause, he would receive a lump-sum severance payment of 24 months' salary plus two times his current target bonus provided he signs a general release of claims. "Cause" was defined as Mr. Aguiar's (i) unauthorized use or disclosure of the confidential information or trade secrets, which use causes material harm to the Company, (ii) conviction of a felony under the laws of the United States or any state thereof, (iii) gross negligence, or (iv) repeated failure to perform lawful assigned duties for thirty days after receiving written notification from the Board of Directors. In the event that Mr. Aguiar was eligible for cash severance benefits under our Change in Control Severance Plan, then the severance benefits under his offer letter would not apply.
Interim Principal Executive Officer. Pursuant to the letter agreement entered into with Mr. d'Esparbes in February 2018 in connection with his appointment as our interim Principal Executive Officer, if his employment is terminated by Innoviva without cause, provided he executes a general release of claims, he will receive a lump-sum severance payment of 24 months of his then-current base salary plus his current target bonus, a pro-rata bonustermination) for the year in which his termination occurs, and continuation of his health and welfare benefitstermination.
All Other Named Executive Officers. Pursuant to our 2009 Severance Plan, in whichour named executive officers other than Mr. Aguiar participate,her unvested restricted stock and stock option awards.a Senior Vice PresidentMs. Zhen’s employment is terminated by the Company for reasons other than for misconduct or by her with good reason and the termination does not otherwise entitle her to the officer tochange in control severance benefits under such plan (i.e., the termination is not within 3 months prior to or 24 months after a change in control of Innoviva), heshe is entitled to the following benefits provided heshe signs a release of claims:•the officer'sher annual base salary.•The officer•Continuationthe officer's health and welfare benefitsher monthly premium under COBRA for the shorter of 12 months, the expiration of the officer'sher continuation coverage under COBRA or the date when the officershe obtains new employment offering comparable health insurance coverage.Conditions to Receive Severance Payments Under our Severance Plans In order to receive severance benefits under our severance plans, an officer must sign a general release of claims. In addition, severance benefits may be conditioned upon the officer's compliance with any confidentiality agreement between the officer and the Company.Definitionsdefinitions are usedtable shows the amounts and benefits that would have been payable to Mr. Raifeld and Ms. Zhen had a qualifying termination occurred on December 31, 2021 in our severance plans: A "changevarious scenarios, including in control" includes:•The consummation of a merger or consolidation if persons who were not our stockholders prior to the merger or consolidation own 50% or more of the voting securities of the surviving company and its parent.•A sale, transfer or other disposition of all or substantially all of our assets.•A change in the composition of our Board of Directors as a result of which fewer than 50% of the incumbent directors either were directors on the date 24 months prior to the change in control (the "original directors") or were appointed or nominated for election to the Board of Directors by a majority of the original directors or directors whose appointment or nomination was approved by at least 50% of the original directors.•A transaction as a result of which any person becomes the beneficial owner of 50% or more of our outstanding voting securities. A transaction shall not constituteconnection with a change in control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in substantiallyon the same proportions by the persons who held the Company's securities immediately before such transaction. An "involuntary termination" means a termination of an officer'sdate.Name
Year of
Termination
($)
Severance
($)
Payout
($)
Stock or
Options
that Vest
($)
and
Welfare
($)
($) Pavel Raifeld 234,952(1) 205,000 38,180 — — 478,132
Control 234,952 205,000 38,180 900,188(2) — 1,378,320 Marianne Zhen 144,520(3) 300,000(4) 50,481 — 31,458(5) 526,459
Control 144,520(3) 444,520(6) 50,481 340,723(7) 31,458(5) 1,011,702 for reasons other than misconduct, or an officer's resignation following (1)without cause, he will remain eligible to receive a material diminutionpro-rata target bonus (based on the number of full months of employment completed in the officer's authority, duties or responsibilities, (2) a material reduction inyear of termination) for the officer's base compensation, (3) a material change inyear of termination, subject to the officer's work location or (4) a material breachterms and conditions of the officer's employment agreement by the Company. In order to qualify as an involuntary termination, the officer must give written notice to the Company within 90 days after the initial existence of one of the conditions described above and the Company must not have cured such condition within 30 days thereafter. "Misconduct" means an officer's (1) commissionbonus program, including achievement of any material actperformance conditions.fraud, embezzlement or dishonesty, (2) material unauthorized use or disclosurefull vesting of our confidential information or trade secrets or (3) other material intentional misconduct adversely affecting the business or affairs of the Company.280G Tax Gross-Up Pursuant to our original Change in Control Severance Plan, inall unvested stock options held by Mr. Raifeld, which Mr. Aguiar participated prior to his termination, if an officer meets the conditions for severance payments under such plan, and if an independent accounting firm selected by the Company determines that the officer would be subject to excise taxes under Section 4999 of the Code as a result of payments under the plan or otherwise, then the Company will pay the officer an additional amountis equal to the excise taxes and any income and excise taxes due as a resultvalue of the Company's payment256,250 unvested shares of Common Stock of the excise taxes, along with any interest or penalties stemming from these taxes. Officers hired afterCompany underlying Mr. Raifeld’s
The table below reflects31, 2021, based on the potential payments and benefits to which our named executive officers would be entitled under the arrangements described above (other than the letter agreement entered into with Mr. d'Esparbes in February 2018 in connection with his appointment as interim Principal Executive Officer). The amounts shown in the table below assume that both the change in control (if applicable) and termination of employment occurred on December 29, 2017 (the last business day of the 2017 fiscal year) and that all eligibility requirements under the severance plans (or in the case of Mr. Aguiar, pursuant to his offer letter) were met.
The following assumptions were used in calculating the values described in the table below:
amounts will be discounted as attributable to reasonable compensation and no value will be attributed to Mr. Aguiar for executing a non-competition agreement.
Name | Bonus for Year of Termination ($)(1) | Cash Severance ($) | Vacation Payout ($) | Options that Vest ($) | Restricted Stock or RSUs that Vest ($) | Health and Welfare ($)(2) | Excise Tax Gross-Up ($) | Total($) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | |||||||||||||||||
Michael W. Aguiar(3) | |||||||||||||||||||||||||
Termination Without Cause | — | 2,716,361 | (4) | 74,697 | — | — | — | — | 2,791,058 | ||||||||||||||||
Involuntary Termination in Connection with a Change in Control | 582,077 | 2,716,361 | (4) | 74,697 | — | 8,100,620 | (5) | 66,347 | 6,766,428 | 18,306,530 | |||||||||||||||
Eric d'Esparbes | |||||||||||||||||||||||||
Termination Other than for Misconduct | 221,710 | 443,420 | (6) | 7,519 | — | — | 23,082 | — | 695,731 | ||||||||||||||||
Involuntary Termination in Connection with a Change in Control | 221,710 | 997,695 | (4) | 7,519 | — | 3,390,979 | (5) | 34,632 | — | 4,652,526 | |||||||||||||||
George B. Abercrombie | |||||||||||||||||||||||||
Termination Other than for Misconduct | 219,269 | 438,538 | (6) | 40,058 | — | — | 23,082 | — | 720,947 | ||||||||||||||||
Involuntary Termination in Connection with a Change in Control | 219,269 | 986,710 | (4) | 40,058 | — | 2,678,478 | (5) | 34,623 | — | 3,959,137 | |||||||||||||||
Theodore J. Witek, Jr. | |||||||||||||||||||||||||
Termination Other than for Misconduct | 218,594 | 437,188 | (6) | 59,902 | — | — | 6,011 | — | 721,695 | ||||||||||||||||
Involuntary Termination in Connection with a Change in Control | 218,594 | 983,673 | (4) | 59,902 | — | 2,290,793 | (5) | 9,016 | — | 3,561,977 | |||||||||||||||
Michael E. Faerm(7) | |||||||||||||||||||||||||
Termination Other than for Misconduct | 219,122 | 438,245 | (6) | 30,704 | — | — | 33,173 | — | 721,245 | ||||||||||||||||
Involuntary Termination in Connection with a Change in Control | 219,122 | 986,051 | (4) | 30,704 | — | 2,978,277 | (5) | 49,760 | — | 4,263,915 |
2021:
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
| (a) | (b) | (c) | |||||||
Equity compensation plans approved by security holders | 1,956,470 | (1) | $ | 24.34 | (3) | 3,597,491 | (4) | |||
Equity compensation plans not approved by security holders | 53,493 | (2) | $ | 10.79 | (3) | — | ||||
| | | | | | | | | | |
Total | 2,009,963 | (1)(2) | $ | 23.90 | (3) | 3,597,491 | (4) | |||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | |||||||||
| | | (a) | | | (b) | | | (c) | | |||||||||
Equity compensation plans approved by security holders | | | | | 881,228(1) | | | | | $ | 20.79(2) | | | | | | 5,150,348(3) | | |
| | | | | 881,228 | | | | | | | | | | | | 5,150,348 | | |
The Innoviva, Inc. 2008 New Employee Equity Incentive Plan is a non-stockholder approved plan, which was adopted by the Board of Directors on January 29, 2008 and amended on July 21, 2009 and was intended to satisfy the requirements of Nasdaq Marketplace Rule 5635(c)(4). Non-statutory options, RSUs and RSAs were granted under the New Employee Equity Incentive Plan to new employees of the Company. The Board of Directors authorized 700,000 shares of Common Stock for issuance under the New Employee Equity Incentive Plan. All option grants had an exercise price per share of no less than 100% of the fair market value per share of Common Stock on the grant date. Each option, RSU and restricted stock award vests in installments over the holder's period of service with the Company. Additional features of the New Employee Equity Incentive Plan are outlined in Note 6 to our consolidated financial statements in our Annual Report on Form 10-K filed on February 23, 2018. Following the approval by stockholders of the amendment and restatement of the Innoviva, Inc. 2004 Incentive Plan at our Annual Meeting on April 27, 2010, no additional awards have been made or will be made in the future under the 2008 New Employee Equity Incentive Plan.
We have previously entered into significant agreements with GSK, which resulted in transactions with GSK during the fiscal year ended December 31, 2017 and transactions that have and may occur during the current fiscal year.
LABA
certain of our discovery programs on pre-determined terms and on an exclusive, worldwide basis. In 2005, GSK licensed our MABA program for the treatment of COPD, and in October 2011, we and GSK expanded the MABA program by adding six additional Innoviva-discovered preclinical MABA compounds (the "Additional MABAs").compounds. The development program has beenwas funded in full by GSK. In June of 2020, GSK terminated the program and agreed to pay a $10.0 million termination fee to TRC. This fee was recognized as revenue from collaborative arrangements with a related party on our consolidated statements of income for the year ended December 31, 20172020.
Agreement with Sarissa
On February 12, 2018, we entered into an agreement (the "Sarissa Agreement") with Sarissa Capital Management LP, and certain ofor its affiliates (collectively,pursuing substantially the "Sarissa Group"). Concurrently with thesame investment strategy.
Pursuantis exclusively responsible for any decisions related to the strategic advisory agreement or the investment with Sarissa Agreement,Capital.
The Sarissa Agreement further provides that, so long as we have not materially breached the Sarissa Agreement, the Sarissa Group will, and will cause its affiliates to, vote all of the shares of Common Stock that are beneficially owneddistribution by them as of the record date for the 2018 Annual Meeting for the election of each of Odysseas Kostas, M.D., George Bickerstaff, III, Jules Haimovitz, Sarah Schlesinger, M.D. and Mark DiPaolo, Esq. at the Annual Meeting.
March 31, 2022.
corporation or other entity in which any of the foregoing persons is employed, is a general partner or in which such person has a 5% or greater beneficial ownership interest. As set forth in our policies and procedures, it is our general policy to approve or ratify related person transactions only when our Board of Directors or a committee of our Board of Directors determines that the transaction is in, or is not inconsistent with, our and our stockholders'stockholders’ best interests, including situations where we may obtain products or services of a nature, quantity or quality, or on other
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March 23, 2018