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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 |
INSMED INCORPORATED | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies: | |||
(2) | Aggregate number of securities to which transaction applies: | |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
(4) | Proposed maximum aggregate value of transaction: | |||
(5) | Total fee paid: | |||
o | Fee paid previously with preliminary materials. | |||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid: | |||
(2) | Form, Schedule or Registration Statement No.: | |||
(3) | Filing Party: | |||
(4) | Date Filed: |
NOTICE
and
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 201812, 2020
10 Finderne Avenue, Building 10700 US Highway 202/206
Bridgewater, New Jersey 08807
Insmed Incorporated10 Finderne Avenue, Building 10700 US Highway 202/206
Bridgewater, New Jersey 08807
(908) 977-9900
April 5, 2018March 31, 2020
To Our Shareholders:
We cordially invite you to attend the 20182020 Annual Meeting of Shareholders of Insmed Incorporated (Insmed) to, which, in light of the COVID-19 pandemic and related public health concerns, will be held virtually via the Internet at the Bridgewater Marriott, 700 Commons Way, Bridgewater, New Jersey 08807,www.virtualshareholdermeeting.com/INSM2020 on May 15, 2018,12, 2020, at 9:00 a.m. localEastern time (the Annual Meeting). A formal notice of the Annual Meeting accompanies this letter. At the Annual Meeting, the following items will be submitted to a shareholder vote:
Your vote is important, and the company encourages you to vote. Please read the notice and proxy materials carefully, and vote promptly in advance of the meeting by telephone, electronically through the Internet, or by returning a completed proxy card by mail. You may also vote in person atattend the Annual Meeting.Meeting and vote and submit questions during the Annual Meeting via the Internet at www.virtualshareholdermeeting.com/INSM2020. Whether or not you plan to attend the Annual Meeting in person and regardless of the number of shares of Insmed common stock you own, please vote by proxy prior to the Annual Meeting.
You may inspect a list of shareholders of record as of the record date at Insmed's headquarters during regular business hours starting on April 7, 2018 through the date of the Annual Meeting, and the list of shareholders will be available at the Annual Meeting for inspection.
Sincerely yours, | ||
/s/ | ||
Chairman of the Board |
This Proxy Statement is first being mailed to shareholders on or about April 5, 2018.March 31, 2020.
INSMED INCORPORATED10 Finderne Avenue, Building 10700 US Highway 202/206
Bridgewater, New Jersey 08807
(908) 977-9900
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 201812, 2020
NOTICE IS HEREBY GIVEN that the 20182020 Annual Meeting of Shareholders of Insmed Incorporated (Insmed) will be held virtually via the Internet at the Bridgewater Marriott, 700 Commons Way, Bridgewater, New Jersey 08807,www.virtualshareholdermeeting.com/INSM2020, on May 15, 2018,12, 2020, at 9:00 a.m. localEastern time (the Annual Meeting), and at any adjournment or postponement thereof, for the following purposes:
Due to the COVID-19 pandemic and public health concerns, the Annual Meeting will be a completely virtual meeting of shareholders. Holders of record of shares of Insmed common stock at the close of business on March 23, 201818, 2020 will be entitled to vote at the Annual Meeting.
You are requested to vote promptly in advance of the Annual Meeting by telephone, electronically through the Internet, or by returning a completed proxy card by mail regardless of whether you expect to attend the Annual Meeting. If you are present atattend the Annual Meeting, you may vote in person even if you already have sent in your proxy. If you are a beneficial owner, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.
By Order of the Board | ||
/s/ CHRISTINE PELLIZZARI | ||
Christine Pellizzari Corporate Secretary |
April 5, 2018March 31, 2020
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE INSMED INCORPORATED ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 15, 2018:12, 2020: The Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 20172019 are available atwww.proxyvote.com.
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
of
INSMED INCORPORATED
To be held May 15, 201812, 2020
| Page | |
---|---|---|
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING | 1 | |
PROPOSAL NO. 1 ELECTION OF CLASS | ||
CORPORATE GOVERNANCE | ||
AUDIT COMMITTEE REPORT AND INDEPENDENT AUDITOR FEES | ||
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | ||
DELINQUENT SECTION 16(a) | ||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT | ||
PROPOSAL NO. 2 ADVISORY VOTE ON THE | ||
| ||
COMPENSATION COMMITTEE REPORT | ||
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | ||
DODD-FRANK MANDATED PAY RATIO DISCLOSURE | ||
DIRECTOR COMPENSATION | ||
PROPOSAL NO. 3 RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||
PROPOSAL NO. 4 | ||
PROPOSALS FOR | ||
ANNUAL REPORT ON FORM 10-K | ||
SEPARATE COPIES FOR BENEFICIAL HOLDERS | ||
APPENDIX A: | A-1 |
In this Proxy Statement, we use the words "Insmed Incorporated" to refer to Insmed Incorporated, a Virginia corporation, and we use the words "Company," "Insmed," "we," "us" and "our" to refer to Insmed Incorporated and its consolidated subsidiaries. Insmed, CONVERT and CONVERTARIKAYCE are trademarks of Insmed Incorporated. This Proxy Statement also contains trademarks of third parties. Each trademark of another company appearing in this Proxy Statement is the property of its owner.
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
of
INSMED INCORPORATED
To be held May 15, 201812, 2020
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Distribution of Proxy Solicitation and Other Required Annual Meeting Materials
The Board of Directors (the Board) of Insmed Incorporated is soliciting your proxy for the Annual Meeting of Shareholders to be held at the Bridgewater Marriott, 700 Commons Way, Bridgewater, New Jersey 08807, on May 15, 2018,12, 2020, at 9:00 a.m. localEastern time (the Annual Meeting), and any adjournment or postponement thereof. Due to the COVID-19 pandemic and related public health concerns, the Annual Meeting will be held virtually via the Internet at www.virtualshareholdermeeting.com/INSM2020. We intend to make the Proxy Statement and related proxy materials available to our shareholders on or about April 5, 2018.March 31, 2020.
Information about the Annual Meeting and Voting at or Prior to the Annual Meeting
Why Did I Receive a One-page Notice in the Mail Regarding the Internet Availability of Proxy Materials this Year Instead of a Full Set of Proxy Materials?
Pursuant to rules adopted by the Securities and Exchange Commission (SEC),SEC, we have elected to mail to many of our shareholders a Notice of Internet Availability of the Proxy Materials (the Notice) instead of a paper copy of the proxy materials. All shareholders receiving the Notice will have the ability to access the proxy materials over the Internet and receive a paper copy of the proxy materials by mail on request. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. In addition, the Notice contains instructions on how you may request proxy materials in printed form by mail or electronically on an ongoing basis. This process has allowed us to expedite our shareholders' receipt of proxy materials, lower the costs of distribution and reduce the environmental impact of our Annual Meeting.
Who May Vote Shares in Connection with the Annual Meeting?
Shareholders of record at the close of business on March 23, 201818, 2020 (the Record Date), will be entitled to notice of and to vote at the Annual Meeting. As of the Record Date, we had 76,623,13689,859,549 outstanding shares of our common stock, $0.01 par value per share (the Common Stock). Each share of our Common Stock entitles the holder to one vote with respect to all matters submitted to shareholders at the Annual Meeting. Beneficial owners of shares of our Common Stock may direct the record holder of the shares on how to vote the shares held on their behalf.
Who may participate in the Annual Meeting?
This year's Annual Meeting will take place virtually through the Internet, in light of the COVID-19 pandemic and related public health concerns. We have designed the format of this year's Annual Meeting to ensure that our shareholders who attend the Annual Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. You are entitled to attend and participate in the Annual Meeting only if you were a shareholder of record as of the close of business on the Record Date, or if you hold a valid proxy for the meeting, as described below. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/INSM2020, you must enter the
16-digit control number found on your proxy card or other proxy materials. If you do not have a control number, please contact the brokerage firm, bank, dealer, or other similar organization that holds your account as soon as possible so that you can be provided with a control number.
What is a Shareholder of Record and How Can I Vote if I am a Shareholder of Record?
If, as of the close of business on the Record Date, shares of our Common Stock were registered directly in your name with our transfer agent, then you are a shareholder of record. As a shareholder of record, you may vote by proxy or in personadvance or at the Annual Meeting.
If you are a shareholder of record, you may vote or submit a proxy as follows:
Before the Annual Meeting—You may authorize the voting of your shares by following the "Vote by Internet" instructions set forth on the Notice or proxy card through 11:59 p.m. Eastern Time on
Monday, May 14, 2018.11, 2020. You must specify how you want your shares voted or your vote will not be completed and you will receive an error message.
During the Annual Meeting—You may vote online during the Annual Meeting. You may cast your vote electronically during the Annual Meeting using the 16-digit control number found on your proxy card or other proxy materials and following the instructions at www.virtualshareholdermeeting.com/INSM2020.
In all cases, your shares will be voted according to your instructions.
What is a Beneficial Owner of Shares and How Can I Vote if I am a Beneficial Owner?
If, on the Record Date, your shares of our Common Stock were not held in your name with our transfer agent, but ratherinstead were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in "street name," and these proxy materials have been forwarded to you by that organization. The organization holding your account is considered to be the shareholder of record of shares of our Common Stock for purposes of voting at the Annual Meeting and is required to vote those shares in accordance with your instructions. If you do not give instructions to the organization holding your account, then the organization will have discretion to vote the shares with respect to "routine" matters but will not be permitted to vote the shares with respect to "non-routine" matters. See "What Matters at the Annual Meeting are 'Routine' and 'Non-Routine'?" below. As a beneficial owner, you are invited to attend the Annual Meeting.Meeting via the Internet at www.virtualshareholdermeeting.com/INSM2020. If you are a beneficial owner and not the shareholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.
What if I Need Technical Assistance During the Annual Meeting?
We encourage you to access the Annual Meeting before it begins. Online check-in will start shortly before the meeting on May 12, 2020. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual Annual Meeting log-in page.
What is the Quorum Requirement?
A quorum of shareholders is necessary to hold the Annual Meeting. Shares of our Common Stock representing a majority of the votes entitled to be cast on a matter at the Annual Meeting (or 38,311,56944,929,775 shares as of the Record Date) will constitute a quorum for the transaction of business with respect to such matter, unless otherwise provided by law or in our Articles of Incorporation, as amended (Articles of Incorporation). Votes withheld, abstentions and broker non-votes count as present for establishing a quorum.
What Matters at the Annual Meeting are "Routine" and "Non-Routine"?
Proposal 1, the election of Class IIIII directors, Proposal 2, the advisory vote on the 2019 compensation of our named executive officers, and Proposal 4, the approval of an amendment to the Insmed Incorporated 2018 Employee Stock Purchase2019 Incentive Plan (the 2018 Employee Stock Purchase2019 Incentive Plan), are non-routine matters. Proposal 3, the ratification of the appointment of anour independent registered public accounting firm, is a routine matter. If you are a beneficial owner of shares of our Common Stock and do not instruct your broker or other agent how to vote, your shares with respect to thewill not be voted on "non-routine" matters and your shares will be "broker non-votes" with respect to that proposal, which means your shares will not be voted.
Table of Contentsthose proposals.
What are the Voting Requirements to Approve Each Proposal to be Submitted to Shareholders?
The vote required to elect directors and approve each of the matters scheduled for a vote at the Annual Meeting is set forth below:
Proposal | Vote Required | Board Recommendation | ||
---|---|---|---|---|
1. Election of | Plurality of votes cast | FOR | ||
2. Advisory vote to approve the 2019 compensation of our named executive officers | Majority of votes cast | FOR | ||
3. Ratification of appointment of Ernst & Young LLP (Ernst & Young) as our independent registered public accounting firm for the year ending December 31, | Majority of votes cast | FOR | ||
4. Approval of an amendment to the | Majority of votes cast | FOR |
Proposal 1, the election of Class IIIII directors, requires the affirmative vote of the holders of a plurality of the votes cast. This means that the three nominees who receive the highest number of affirmative votes cast will be elected irrespective of how small the number of affirmative votes is in comparison to the total number of shares voted. Our Board, however, has adopted a director resignation policy, under which a director nominee in an uncontested election must submit his or her resignation for consideration by our Nominations and Governance Committee and our Board if the number of votes withheld with respect to such director's election exceeds the number of votes "for" such director's election. See "Corporate Governance—Corporate Governance Matters—Director Resignation Policy" for additional information.
Proposal 2, the advisory vote on the 20172019 compensation of our named executive officers, is not binding on, nor does it overrule, any decisions of the Company, the Board or the Compensation Committee. We value the input of our shareholders, and in the event that Proposal 2 is not approved by a majority of votes cast, the Board and the Compensation Committee will consider our shareholders' concerns and evaluate what actions, if any, may be appropriate to address those concerns.
Proposal 3, the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2018,2020, does not require shareholder ratification under Virginia law, our Articles of Incorporation, or our Amended and Restated Bylaws (Bylaws). However, the Board is submitting the appointment of Ernst & Young to the shareholders for ratification as a matter of good corporate governance. In the event that Proposal 3 is not approved by a majority of votes cast, the Audit Committee will consider the vote in future independent auditor selection decisions.
Proposal 4, the approval of an amendment to the 2018 Employee Stock Purchase2019 Incentive Plan, requires the affirmative vote of a majority of the votes cast in person or by proxy, at the Annual Meeting.
What Is the Effect of Votes Withheld, Abstentions and Broker Non-Votes On Each of the Proposals?
Votes that are withheld or any abstentions from voting will not be counted in determining the number of votes cast with respect to any of the proposals. As explained above, because Proposals 1, 2 and 4 are considered "non-routine," if a beneficial owner does not instruct the broker or other agent how to vote the shares, broker non-votes will result. Broker non-votes will not be counted in determining the number of votes cast with respect to these proposals. Because Proposal 3 is considered "routine," the broker or other agent will have discretion to vote any shares with respect to which a
beneficial owner does not provide instructions, and no broker non-votes will occur with respect to this proposal.
What if I Submit a Proxy But Do Not Specify How I Would Like to Vote?
If we receive a signed and dated proxy card or receive your instructions by Internet or by telephone and your instructions do not specify how your shares are to be voted, your shares will be voted as follows:
Unsigned proxy cards will not be voted.
What If Other Matters Not on the Proxy Card Are Brought Before the Annual Meeting for Action by the Shareholders?
As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is not aware of any matters to be presented by other parties. If other matters are properly brought before the Annual Meeting, or any adjournment or
postponement thereof, for action by the shareholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holders.
How Can I Revoke a Proxy Once I Have Voted?
Anyone giving a proxy may revoke it at any time before it is votedexercised by voting in person at the Annual Meeting or by delivering, including by phone or Internet, a later dated proxy or written notice of revocation to our Corporate Secretary. Attendance at the Annual Meeting will not itself revoke a proxy. A proxy, if executed, properly delivered and not revoked, will be voted at the Annual Meeting.
What is the Expected Cost of Soliciting Proxies and Who Will Pay for this Cost?
We will pay the cost of soliciting proxies. In addition to the use of mail and email,e-mail, proxies may be solicited in person or by telephone by our employees, with no additional remuneration. We have engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support, for a service fee, plus customary disbursements, which are not expected to exceed $15,000 in total.
Principal Executive Offices of Insmed
The address of our principal executive offices is 10 Finderne Avenue, Building 10,700 US Highway 202/206, Bridgewater, New Jersey 08807.
PROPOSAL NO. 1
ELECTION OF CLASS IIIII DIRECTORS
Our organizational documentsBylaws currently provide that our Board will consist of not less than six or more than ten10 directors. Our Board has adopted resolutions providing for up to nine directors. The directors are divided into three classes—Class I, Class II, and Class III. Each class of directors serves for three years on a staggered term basis, and the term of our Class IIIII directors will expire at the Annual Meeting. Accordingly, the Board has nominated Clarissa Desjardins, Ph.D., David R. BrennanW.J. McGirr and Melvin Sharoky, M.D.Elizabeth McKee Anderson for election as Class IIIII directors. Each of the nominees was recommended for election by the Nominations and Governance Committee, and such recommendation was approved by the Board. If re-elected,elected, the term of office for these nominees will expire at our 20212023 Annual Meeting of Shareholders. If one of these bona fide nominees set forth in this Proxy Statement is unable to serve or for good cause will not serve, proxy holders may vote for another nominee proposed by the Board or, as an alternative, the Board may reduce the number of directors to be elected at the Annual Meeting. The information below describes the primary experience, qualifications and skills of Dr. Desjardins, Mr. McGirr and Ms. Anderson.
Clarissa Desjardins, Ph.D., age 53 • Director since November 2019 Career Highlights: • Clementia Pharmaceuticals Inc. (2011 - 2019), acquired by Ipsen S.A. in 2019 o Founder o President and Chief Executive Officer • Centre of Excellence in Personalized Medicine (CEPMED) (2009 - 2011) o President and Chief Executive Officer o Director • Caprion Pharmaceuticals Inc. (1998 - 2007) o Co-Founder o Senior Vice President, Corporate Development o Director • Advanced Bioconcept Inc. (1992 - 1998) o Co-Founder o Vice President, Business Development | Current Public Board Service: • Director, BELLUS Health Inc. (Nasdaq: BLU; TSX: BLU) • Director, Xenon Pharmaceuticals Inc. (Nasdaq: XENE) Education: • McGill University - B.Sc., anatomical sciences and history and philosophy of science • McGill University - Ph.D., neurology and neurosurgery • McGill University - Medical Research Council postdoctoral fellow, Douglas Hospital Research Centre | |||||
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Qualifications: Dr. Desjardins has more than 20 years of leadership experience in biotechnology, pharmaceuticals and research. The Board believes that Dr. Desjardins' skills, including her unique experience in the founding of several pharmaceutical and biotechnology companies, leadership roles, corporate development expertise, public company experience and medical education, make her a valuable asset to the Board. |
David W.J. McGirr, age 65 • Director since October 2013 • Chair of the Audit Committee Career Highlights: • Menlo Therapeutics Inc. (2017 - 2020) o Director until merger with Foamix Pharmaceuticals Ltd. • Roka Bioscience, Inc. (2013 - 2018) o Director until sale of assets to the Institute for Environmental Health, Inc. • Relypsa, Inc. (2013 - 2016) o Director until acquisition by Galencia AG • Cubist Pharmaceuticals, Inc. (2002 - 2014), acquired by Merck & Co., Inc. (NYSE: MRK) in 2015 o Senior Advisor to the CEO o Senior Vice President o Chief Financial Officer o Treasurer • hippo inc. (1999 - 2002) o Chief Operating Officer o President o Director • GAB Robins North America, Inc. (1996 - 1999) o CEO o President • Private Equity Investor (1995 - 1996) • S.G. Warburg Group (1978 - 1995) o Chief Financial Officer (U.S.) o Chief Administrative Officer o Managing Director of S.G. Warburg & Co., Inc. | Current Public Board Service: • Director, Rhythm Pharmaceuticals, Inc. (Nasdaq: RYTM) • Director, X4 Pharmaceuticals, Inc. (Nasdaq: XFOR), formerly known as Arsanis, Inc. Education: • University of Glasgow - B.S., civil engineering • University of Pennsylvania - M.B.A. | |||||
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Qualifications: Mr. McGirr has more than 30 years of experience as a senior financial executive, including nearly 12 years at Cubist, during which the company secured a number of product approvals and launched these products across multiple markets. The Board believes that Mr. McGirr brings a unique combination of skills to the Board, including public company executive and board experience, capital markets insight, operational and corporate development experience, and significant expertise in the healthcare sector, specifically with infectious diseases. Mr. McGirr's background as a senior financial executive provides significant value to the Board in the areas of accounting, financing and business development. |
Elizabeth McKee Anderson, age 62 • Director since November 2018 • Chair of the Nominations and Governance Committee Career Highlights: • Janssen Pharmaceuticals, Inc., a Johnson & Johnson company (2003 - 2014) o Worldwide Vice President, Global Strategic Marketing and Market Access, Infectious Diseases and Vaccines o Worldwide Vice President, Global Strategic Marketing and Market Access, Vaccines o Worldwide Vice President, Immunology, Global Strategic Marketing o Worldwide Vice President, BIO Strategic Marketing o Vice President, Global Biologics Strategic Marketing, Centocor o Vice President, Strategic Planning & Market Research, Centocor • Wyeth (1997 - 2002) o Vice President & General Manager, Wyeth Lederle Vaccines • Rhone-Poulenc Rorer Pharmaceuticals Inc. (1993 - 1997) o Senior Vice President and General Manager, North America, Centeon LLC o Vice President and General Manager, North America, Armour Pharmaceutical Company o Vice President, Worldwide Business Operations, Armour Pharmaceutical • American National Red Cross (1983 - 1993) • Mobay Chemical Company (1979 - 1983) | Current Public Board Service: • Director, Bavarian Nordic A/S (CHP: BAVA) • Director, BioMarin Pharmaceutical Inc. (Nasdaq: BMRN) • Director, Revolution Medicines, Inc. (Nasdaq: RVMD) Current Private Board and Other Service: • Director, Aro Biotherapeutics Inc. • Director, Context Therapeutics, Inc. Education: • Loyola University Maryland - M.B.A., finance • Rutgers University - B.S., engineering | |||||
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Qualifications: Ms. Anderson has over 30 years of leadership in biotechnology, pharmaceuticals and vaccines. The Board believes that Ms. Anderson's experience, including extensive global marketing and infectious disease experience, makes her well-suited to guide the Board in commercial and market access matters. |
Vote Required for Election of Director Nominees
Our Class II directors will be elected by a plurality of the votes properly cast at the Annual Meeting. Votes withheld and broker non-votes will not have any effect on the outcome of this vote.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE CLASS II DIRECTOR NOMINEES.
The information below describes the primary experience, qualifications and skills of each of our Class III directors, David R. Brennan, Melvin Sharoky, M.D., and Dr. Sharoky.Leo Lee, and Class I directors, Alfred F. Altomari, Steinar J. Engelsen, M.D., and William H. Lewis. The term of the Class III directors will expire at the 2021 Annual Meeting of Shareholders, and the term of the Class I directors will expire at the 2022 Annual Meeting of Shareholders.
Incumbent Directors Whose Term Expires at the 2021 Annual Meeting of Shareholders (Class III Directors)
David R. Brennan, age • Director since May 2014 • Lead Independent Director since November 2018 • Member of the Compensation Committee Career Highlights: • Alexion Pharmaceuticals (Nasdaq: ALXN) (2016 - 2017) o Interim CEO • AstraZeneca PLC (NYSE: AZN) (1999 - 2012) o CEO o Executive Vice President of North America o Senior Vice President of Commercialization and Portfolio Management o Director • Astra Merck, Inc. (1995 - 1999) • Merck & Co., Inc. (1975 - 1994) | Current Public Board Service: • Chairman, Alexion Pharmaceuticals Education: • Gettysburg College - B.A., business administration | |||||
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Qualifications: Mr. Brennan has nearly 40 years of experience in the pharmaceutical industry. The Board believes that Mr. Brennan's experience at public |
Melvin Sharoky, M.D., age • Director since May 2001 • Chairman from June 2009 - December 2010 • Member of the Nominations and Governance Committee • Member of Career Highlights: • Par Pharmaceutical Companies, Inc. (2007 - 2012) o Director until acquisition by Endo International plc (Nasdaq: ENDP) • Somerset Pharmaceuticals, Inc. (1995 - 2001; 2002 - 2007) o President o CEO o Consultant • Watson Pharmaceuticals, Inc. (now o President • Circa Pharmaceuticals, Inc., a wholly-owned subsidiary of Watson Pharmaceuticals, Inc. (1988 - 1998) o President o CEO • Pharmakinetics Laboratories, Inc. (1986 - 1988) o Vice President o Chief Medical Officer | Education: • University of Maryland in Baltimore County - B.A., biology • University of Maryland School of Medicine - M.D. | |||||
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Qualifications: Dr. Sharoky has more than 30 years of experience in the pharmaceutical industry. The Board believes that, in addition to his medical experience as a physician, Dr. Sharoky's background as an executive of pharmaceutical companies, as well as his public company board service, brings valuable senior management, leadership, financial and strategic planning experience to our Board. |
Table of Contents THE BOARD RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE CLASS III DIRECTOR NOMINEES.
Vote Required for Election of Director Nominees
Our Class III directors will be elected by a plurality of the votes properly cast, in person or by proxy, at the Annual Meeting. Votes withheld and broker non-votes will not have any effect on the outcome of this vote.
The information below describes the primary experience, qualifications and skills of each of our Class I directors, Alfred F. Altomari, Steinar J. Engelsen, M.D., and William H. Lewis, and Class II directors, Donald Hayden, Jr., David W.J. McGirr, and Myrtle Potter. The term of the Class I directors will expire at the 2019 Annual Meeting of Shareholders, and the term of the Class II directors will expire at the 2020 Annual Meeting of Shareholders.
Leo Lee, age 50 • Director since May 2018 • Member of the Compensation Committee • Member of the Science and Technology Committee Career Highlights: • Regeneus Ltd. (ASX: RGS) (Regeneus) (2017 - present) o Chief Executive Officer o Executive Director • Merck KGaA (2015 - 2017) o President, Japan • Allergan plc (2011 - 2015) o President, Japan • Merck & Co. (2008 - 2011) o Vice President of Sales • IQVIA (Cegedim Dendrite) (2003 - 2008) o General Manager o Vice President of Sales and Marketing, Asia Pacific o Director of Global Accounts Operation, Asia • Accelrys, Inc. (1997 - 2003) o Senior Director of Western Regional Sales o President and Representative Director o General Manager of Asia Pacific o Sales Manager for Asia Pacific | Current Public Board Service: • Executive Director, Regeneus Education: • University of California, Los Angeles - B.S., molecular genetics and microbiology | |||||
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Qualifications: Mr. Lee has more than 21 years of experience in the pharmaceutical industry in Japan. The Board believes that Mr. Lee's experience in commercial leadership roles in Japan and the Asia Pacific region brings value to the Board as the Company seeks to expand in this geography. |
Incumbent Directors Whose Term Expires at the 20192022 Annual Meeting of Shareholders (Class I Directors)
Alfred F. Altomari, age • Director since August 2012 •
• Member of the Audit Committee Career Highlights: • Agile Therapeutics, Inc. (Nasdaq: AGRX) (Agile) (2004 - present) o Chairman of the Board o President o CEO o Director o Executive Chairman o Consultant • Barrier Therapeutics, Inc. (2003 - 2008) o Director o CEO o Chief Operating Officer o Chief Commercial Officer • Johnson & Johnson (NYSE: JNJ) (1982 - 2003) o Numerous executive roles in general management, commercial operations, business development, product launch preparation, and finance | Current Public Board Service: • Executive Chairman, Agile •
Education: • Drexel University - B.S., finance • Drexel University - B.S., accounting • Rider University - M.B.A. | |||||
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Qualifications: Mr. Altomari is a pharmaceutical industry veteran with more than 30 years of experience. The Board believes that Mr. Altomari's executive experience in pharmaceutical companies with commercialized products, product launches, and more than 20 years of focus on the development and marketing of specialty pharmaceutical products, along with his public company board service, makes him uniquely suited to guide the Board in strategic planning, as well as operational and commercial matters. |
Steinar J. Engelsen, M.D., age • Director since November 1999 • Director of Insmed Pharmaceuticals Inc. from 1998 - 2000 •
• Member of the Audit Committee Career Highlights: • Teknoinvest AS (1996 - present) o Partner • Soleno Therapeutics, Inc. (Nasdaq: SLNO) (2003 - 2017) , formerly known as Capnia, Inc. o Director • Centaur Pharmaceuticals, Inc. (2000) o
o Senior Vice President |
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o
o Treasurer • hippo inc. (1999 - 2002) o Chief Operating Officer o President o
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Incumbent Directors Whose Term Expires at the 2020 Annual Meeting of Shareholders (Class II Directors)
o
o President • Private Equity Investor (1995 - 1996) • S.G. Warburg Group (1978 - 1995) o
o
o
| Current Public Board Service: •
• Director,
Education: •
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Qualifications: Mr. |
• Director since • Chair of the Nominations and Governance Committee Career Highlights: • Janssen Pharmaceuticals, Inc., a Johnson & Johnson company (2003 - 2014) o Worldwide Vice President, Global Strategic Marketing and Market Access, Infectious Diseases and Vaccines o Worldwide Vice President, Global Strategic Marketing and Market Access, Vaccines o Worldwide Vice President, Immunology, Global Strategic Marketing o Worldwide Vice President, BIO Strategic Marketing o Vice President, Global Biologics Strategic Marketing, Centocor o Vice President, Strategic Planning & Market Research, Centocor • Wyeth (1997 - 2002) o Vice President & General Manager, Wyeth Lederle Vaccines • Rhone-Poulenc Rorer Pharmaceuticals Inc. (1993 - 1997) o Senior Vice President and General Manager, North America, Centeon LLC o Vice President and General Manager, North America, Armour Pharmaceutical Company o Vice President, Worldwide Business Operations, Armour Pharmaceutical • American National Red Cross (1983 - 1993) • Mobay Chemical Company (1979 - 1983) | Current Public Board Service: • Director, Bavarian Nordic A/S (CHP: BAVA) • Director, BioMarin Pharmaceutical Inc. (Nasdaq: BMRN) • Director, Revolution Medicines, Inc. (Nasdaq: RVMD) Current Private Board and Other Service: • Director, Aro Biotherapeutics Inc. • Director, Context Therapeutics, Inc. Education: • Loyola University Maryland - M.B.A., finance • Rutgers University - B.S., engineering | |||||
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Qualifications: Ms. Anderson has over 30 years of leadership in biotechnology, pharmaceuticals and vaccines. The Board believes that Ms. Anderson's experience, including extensive global marketing and infectious disease experience, makes her well-suited to guide the Board in commercial and market access matters. |
Vote Required for Election of Director Nominees
Our Class II directors will be elected by a plurality of the votes properly cast at the Annual Meeting. Votes withheld and broker non-votes will not have any effect on the outcome of this vote.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE CLASS II DIRECTOR NOMINEES.
The information below describes the primary experience, qualifications and skills of each of our Class III directors, David R. Brennan, Melvin Sharoky, M.D., and Leo Lee, and Class I directors, Alfred F. Altomari, Steinar J. Engelsen, M.D., and William H. Lewis. The term of the Class III directors will expire at the 2021 Annual Meeting of Shareholders, and the term of the Class I directors will expire at the 2022 Annual Meeting of Shareholders.
Incumbent Directors Whose Term Expires at the 2021 Annual Meeting of Shareholders (Class III Directors)
David R. Brennan, age 66 • Director since May 2014 • Lead Independent Director since November 2018 • Member of the Compensation Committee Career Highlights: • Alexion Pharmaceuticals (Nasdaq: ALXN) (2016 - 2017) o Interim CEO • AstraZeneca PLC (NYSE: AZN) (1999 - 2012) o CEO o Executive Vice President of North America o Senior Vice President of Commercialization and Portfolio Management o Director • Astra Merck, Inc. (1995 - 1999) • Merck & Co., Inc. (1975 - 1994) | Current Public Board Service: • Chairman, Alexion Pharmaceuticals Education: • Gettysburg College - B.A., business administration | |||||
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Qualifications: Mr. Brennan has nearly 40 years of experience in the pharmaceutical industry. The Board believes that Mr. Brennan's experience at public pharmaceutical companies, including board experience and roles in executive management, commercialization and product management, makes him a valuable asset to the Board. |
Melvin Sharoky, M.D., age 69 • Director since May 2001 • Chairman from June 2009 - December 2010 • Member of the Nominations and Governance Committee • Member of the Science and Technology Committee Career Highlights: • Par Pharmaceutical Companies, Inc. (2007 - 2012) o Director until acquisition by Endo International plc (Nasdaq: ENDP) • Somerset Pharmaceuticals, Inc. (1995 - 2001; 2002 - 2007) o President o CEO o Consultant • Watson Pharmaceuticals, Inc. (now Allergan PLC) (1995 - 1998) o President • Circa Pharmaceuticals, Inc., a wholly-owned subsidiary of Watson Pharmaceuticals, Inc. (1988 - 1998) o President o CEO • Pharmakinetics Laboratories, Inc. (1986 - 1988) o Vice President o Chief Medical Officer | Education: • University of Maryland in Baltimore County - B.A., biology • University of Maryland School of Medicine - M.D. | |||||
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Qualifications: Dr. Sharoky has more than 30 years of experience in the pharmaceutical industry. The Board believes that, in addition to his medical experience as a physician, Dr. Sharoky's background as an executive of pharmaceutical companies, as well as his public company board service, brings valuable senior management, leadership, financial and strategic planning experience to our Board. |
Leo Lee, age 50 • Director since May 2018 • Member of the Compensation Committee • Member of the Science and Technology Committee Career Highlights: • Regeneus Ltd. (ASX: RGS) (Regeneus) (2017 - present) o Chief Executive Officer o Executive Director • Merck KGaA (2015 - 2017) o President, Japan • Allergan plc (2011 - 2015) o President, Japan • Merck & Co. (2008 - 2011) o Vice President of Sales • IQVIA (Cegedim Dendrite) (2003 - 2008) o General Manager o Vice President of Sales and Marketing, Asia Pacific o Director of Global Accounts Operation, Asia • Accelrys, Inc. (1997 - 2003) o Senior Director of Western Regional Sales o President and Representative Director o General Manager of Asia Pacific o Sales Manager for Asia Pacific | Current Public Board Service: • Executive Director, Regeneus Education: • University of California, Los Angeles - B.S., molecular genetics and microbiology | |||||
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Qualifications: Mr. Lee has more than 21 years of experience in the pharmaceutical industry in Japan. The Board believes that Mr. Lee's experience in commercial leadership roles in Japan and the Asia Pacific region brings value to the Board as the Company seeks to expand in this geography. |
Incumbent Directors Whose Term Expires at the 2022 Annual Meeting of Shareholders (Class I Directors)
Alfred F. Altomari, age 61 • Director since August 2012 • Chair of the Compensation Committee • Member of the Audit Committee Career Highlights: •
o Chairman of the Board o President o CEO o Director o Executive Chairman o Consultant •
o Director o CEO o Chief Operating Officer o Chief Commercial Officer • Johnson & Johnson (NYSE: JNJ) (1982 - 2003) o Numerous executive roles in general management, commercial operations, business development, product launch preparation, and finance | Current Public Board Service: • Executive Chairman, Agile • Chairman, Baudax Bio (Nasdaq: BXRX) Education: • Drexel University - B.S., finance • Drexel University - B.S., accounting • Rider University - M.B.A. | |||||
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Qualifications: Mr. Altomari is a pharmaceutical industry veteran with more than 30 years of experience. The Board believes that Mr. Altomari's executive experience in pharmaceutical companies with commercialized products, product launches, and more than 20 years of focus on the development and marketing of specialty pharmaceutical products, along with his public company board service, makes him uniquely suited to guide the Board in strategic planning, as well as operational and commercial matters. |
Steinar J. Engelsen, M.D., age 69 • Director since November 1999 • Director of Insmed Pharmaceuticals Inc. from 1998 - 2000 • Chair of the Science and Technology Committee • Member of the Audit Committee Career Highlights: • Teknoinvest AS (1996 - present) o Partner • Soleno Therapeutics, Inc. (Nasdaq: SLNO) (2003 - 2017) , formerly known as Capnia, Inc. o Director • Centaur Pharmaceuticals, Inc. (2000) o Senior Advisor to the CEO o Senior Vice President o Chief Financial Officer o Treasurer • hippo inc. (1999 - 2002) o Chief Operating Officer o President o Director • GAB Robins North America, Inc. (1996 - 1999) o CEO o President
Private Equity Investor (1995 - 1996) • S.G. Warburg Group (1978 - 1995) o Chief Financial Officer (U.S.) o Chief Administrative Officer o Managing Director of S.G. Warburg & Co., Inc. | Current Public Board Service: • Director, Rhythm Pharmaceuticals, Inc. (Nasdaq: RYTM) • Director,
Education: • University of Glasgow - B.S., civil engineering • University of Pennsylvania - M.B.A. | |||||
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Qualifications: Mr. McGirr has more than 30 years of experience as a senior financial executive, including |
• Director since •
Career Highlights: •
o
o
o
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Worldwide Vice President,
o Vice President, o Vice President, Strategic Planning & Market Research, Centocor •
o Vice President & • Rhone-Poulenc Rorer Pharmaceuticals Inc. (1993 - 1997) o Senior Vice President and General Manager, North America, Centeon LLC o Vice President and General Manager, North America, Armour Pharmaceutical Company o Vice President, Worldwide Business Operations, Armour Pharmaceutical • American National Red Cross (1983 - • Mobay Chemical Company (1979 - 1983) | Current Public Board Service: • Director, • Director, • Director, Revolution Medicines, Inc. (Nasdaq: RVMD) Current Private Board and Other Service: • Director, • Director,
Education: • Loyola University • Rutgers University - B.S., engineering | |||||
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Qualifications: Ms. |
Vote Required for Election of Director Nominees
Our Class II directors will be elected by a plurality of the votes properly cast at the Annual Meeting. Votes withheld and broker non-votes will not have any effect on the outcome of this vote.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE CLASS II DIRECTOR NOMINEES.
The information below describes the primary experience, qualifications and skills of each of our Class III directors, David R. Brennan, Melvin Sharoky, M.D., and Leo Lee, and Class I directors, Alfred F. Altomari, Steinar J. Engelsen, M.D., and William H. Lewis. The term of the Class III directors will expire at the 2021 Annual Meeting of Shareholders, and the term of the Class I directors will expire at the 2022 Annual Meeting of Shareholders.
Incumbent Directors Whose Term Expires at the 2021 Annual Meeting of Shareholders (Class III Directors)
David R. Brennan, age 66 • Director since May 2014 • Lead Independent Director since November 2018 • Member of the Compensation Committee Career Highlights: • Alexion Pharmaceuticals (Nasdaq: ALXN) (2016 - 2017) o Interim CEO • AstraZeneca PLC (NYSE: AZN) (1999 - 2012) o CEO o Executive Vice President of North America o Senior Vice President of Commercialization and Portfolio Management o Director • Astra Merck, Inc. (1995 - 1999) • Merck & Co., Inc. (1975 - 1994) | Current Public Board Service: • Chairman, Alexion Pharmaceuticals Education: • Gettysburg College - B.A., business administration | |||||
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Qualifications: Mr. Brennan has nearly 40 years of experience in the pharmaceutical industry. The Board believes that |
Melvin Sharoky, M.D., age 69 • Director since May 2001 • Chairman from June 2009 - December 2010 • Member of the Nominations and Governance Committee • Member of the Science and Technology Committee Career Highlights: • Par Pharmaceutical Companies, Inc. (2007 - 2012) o Director until acquisition by Endo International plc (Nasdaq: ENDP) • Somerset Pharmaceuticals, Inc. (1995 - 2001; 2002 - 2007) o President o CEO o Consultant • Watson Pharmaceuticals, Inc. (now Allergan PLC) (1995 - 1998) o President • Circa Pharmaceuticals, Inc., a wholly-owned subsidiary of Watson Pharmaceuticals, Inc. (1988 - 1998) o President o CEO • Pharmakinetics Laboratories, Inc. (1986 - 1988) o Vice President o Chief Medical Officer | Education: • University of Maryland in Baltimore County - B.A., biology • University of Maryland School of Medicine - M.D. | |||||
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Qualifications: Dr. Sharoky has more than 30 years of experience in the pharmaceutical industry. The Board believes that, in addition to his medical experience as a physician, Dr. Sharoky's background as an executive of pharmaceutical companies, as well as his public company board service, brings valuable senior management, leadership, financial and strategic planning experience to our Board. |
Leo Lee, age 50 • Director since May 2018 • Member of the Compensation Committee • Member of the Science and Technology Committee Career Highlights: • Regeneus Ltd. (ASX: RGS) (Regeneus) (2017 - present) o Chief Executive Officer o Executive Director • Merck KGaA (2015 - 2017) o President, Japan • Allergan plc (2011 - 2015) o President, Japan • Merck & Co. (2008 - 2011) o Vice President of Sales • IQVIA (Cegedim Dendrite) (2003 - 2008) o General Manager o Vice President of Sales and Marketing, Asia Pacific o Director of Global Accounts Operation, Asia • Accelrys, Inc. (1997 - 2003) o Senior Director of Western Regional Sales o President and Representative Director o General Manager of Asia Pacific o Sales Manager for Asia Pacific | Current Public Board Service: • Executive Director, Regeneus Education: • University of California, Los Angeles - B.S., molecular genetics and microbiology | |||||
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Qualifications: Mr. Lee has more than 21 years of experience in the pharmaceutical industry in Japan. The Board believes that Mr. Lee's experience in commercial leadership roles in Japan and the Asia Pacific region brings value to the Board as the Company seeks to expand in this geography. |
Incumbent Directors Whose Term Expires at the 2022 Annual Meeting of Shareholders (Class I Directors)
Alfred F. Altomari, age 61 • Director since August 2012 • Chair of the Compensation Committee • Member of the Audit Committee Career Highlights: • Agile Therapeutics, Inc. (Nasdaq: AGRX) (Agile) (2004 - present) o Chairman of the Board o President o CEO o Director o Executive Chairman o Consultant • Barrier Therapeutics, Inc. (2003 - 2008) o Director o CEO o Chief Operating Officer o Chief Commercial Officer • Johnson & Johnson (NYSE: JNJ) (1982 - 2003) o Numerous executive roles in general management, commercial operations, business development, product launch preparation, and finance | Current Public Board Service: • Executive Chairman, Agile • Chairman, Baudax Bio (Nasdaq: BXRX) Education: • Drexel University - B.S., finance • Drexel University - B.S., accounting • Rider University - M.B.A. | |||||
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Qualifications: Mr. Altomari is a pharmaceutical industry veteran with more than 30 years of experience. The Board believes that Mr. Altomari's executive experience in pharmaceutical companies with commercialized products, product launches, and more than 20 years of focus on the development and marketing of specialty pharmaceutical products, along with his public company board service, makes |
Steinar J. Engelsen, M.D., age 69 • Director since November 1999 • Director of Insmed Pharmaceuticals Inc. from 1998 - 2000 • Chair of the Science and Technology Committee • Member of the Audit Committee Career Highlights: • Teknoinvest AS (1996 - present) o Partner • Soleno Therapeutics, Inc. (Nasdaq: SLNO) (2003 - 2017) , formerly known as Capnia, Inc. o Director • Centaur Pharmaceuticals, Inc. (2000) o Acting CEO • Hafslund Nycomed AS (1989 - 1996) o Senior Vice President, Research and Development among other management positions | Education and Certifications: • University of Oslo - M.S., nuclear chemistry • University of Oslo - M.D. • Norwegian School of Economics - Certified European Financial Analyst | |||||
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Qualifications: Dr. Engelsen has more than 25 years of experience in the pharmaceutical industry, including his experience as a financial analyst and as an investor in biopharmaceutical companies. The Board believes that Dr. Engelsen's finance and management experience as well as his public company board experience in biopharmaceutical companies enables him to provide operating insights. |
William H. Lewis, age 51 • Chairman of the Board since November 2018 • Director since September 2012 • President and CEO since September 2012 • Consultant to Board from June - September 2012 Career Highlights: • Aegerion Pharmaceuticals, Inc. (Nasdaq: AEGR) (Aegerion) (2005 - 2011) o Co-founder o President o Chief Financial Officer • Wells Fargo & Co. (2002 - 2004) • Robertson Stephens Capital (2000 - 2002) • JP Morgan Chase & Co. (1995 - 2000) • Foreign Service for the U.S. Government (1989 - 1992) | Education: • Oberlin College - B.A. • Case Western Reserve University - M.B.A. • Case Western Reserve University - J.D. | |||||
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Qualifications: Mr. Lewis has nearly 15 years of executive experience in the life sciences industry and a track record of success for over 20 years in the pharmaceutical and finance industries both in the United States and internationally. During his tenure at Aegerion, Mr. Lewis played a pivotal role in re-orienting the company's strategy to focus on rare disease indications, enabling Aegerion to conduct a successful initial public offering in 2010. The Board believes that Mr. Lewis brings significant qualifications to his role as Chairman due to his experience as our CEO since 2012 and his experience as an executive at Aegerion. His professional experience offers the Board significant insights and experience with financing, orphan drug development and commercialization, and international business development. |
The following table sets forth our current executive officers, their ages, the positions currently held by each such person as of the date of this Proxy Statement and the period holding such positions.
Name | Age | Position(s) | Period During Which Officer Served in Such Position(s) | ||||
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William H. Lewis | President and CEO | September 2012—Present | |||||
Chief Financial Officer | |||||||
Roger Adsett | Chief | September 2016—Present | |||||
Chief Medical Officer | |||||||
Christine Pellizzari | Chief Legal Officer | July 2013—Present | |||||
S. Nicole Schaeffer | 51 | Chief People Strategy Officer | January 2013—Present | ||||
John Soriano | 58 | Chief Compliance Officer | January 2018—Present |
William H. Lewis. Mr. Lewis's biographical information is summarized above under "Incumbent Directors Whose Term Expires at the 20192022 Annual Meeting of Shareholders (Class I Directors)."
Paolo Tombesi.Sara Bonstein. Mr. TombesiMs. Bonstein joined Insmed as Chief Financial Officer in June 2017. Mr. TombesiJanuary 2020. Ms. Bonstein brings over 20more than 15 years of experienceoperational and financial leadership in the biotechnology and pharmaceutical sector.life sciences
industry. Prior to joining the Company, Mr. TombesiMs. Bonstein was Vice President and Chief Financial and Administrative Officer of Novartis Pharmaceuticals Corporation, a position he held since November 2014. Mr. Tombesi was Managing Director and Chief Financial Officer & Chief Operating Officer of Novartis JapanOncoSec Medical Incorporated, a position she held since May 2018. From February 2014 to April 2018, Ms. Bonstein served as the Chief Financial Officer, Secretary, Treasurer and Executive Vice President at Advaxis, Inc. Prior to Advaxis, Ms. Bonstein was a Six Sigma Champion & Black Belt at Eli Lilly and Company (Lilly) from April 2009January 2012 to October 2014 and heldFebruary 2014. From August 2004 to December 2011, Ms. Bonstein served in various finance roles at Novartis from September 2006ImClone Systems (acquired by Lilly in 2008), including Director of Development Finance. From May 2001 to March 2009. Mr. Tombesi held several finance director positionsAugust 2004, Ms. Bonstein was a financial analyst at Bristol-Myers Squibb from August 1996 to September 2006. From January 1988 to July 1996, Mr. Tombesi held various positions in consumer goods at Unilever NV and Johnson & Johnson. Mr. TombesiJohnson in both the Ortho McNeil Pharmaceuticals and Ortho Biotech divisions. Ms. Bonstein holds a B.Ed. inMasters of Business and Managerial EconomicsAdministration from Sapienza Università di RomaRider University and a B.A.Bachelor of Science in AccountingFinance from Duca degli Abruzzi Roma.The College of New Jersey.
Roger Adsett. Mr. Adsett joined Insmed as Chief Commercial Officer in September 2016.2016 and was promoted to Chief Operating Officer in November 2019. Mr. Adsett has over 20 years of experience in the global biotechnology and pharmaceutical industry. From January 2015 to September 2016, Mr. Adsett was Senior Vice President, Head of Gastrointestinal and Internal Medicine Business Unit at Shire Plc (Nasdaq: SHPG) (Shire), a global specialty biopharmaceutical company. From August 2008 to January 2015, Mr. Adsett was Senior Vice President, Gastrointestinal Business Unit Leader at Shire. From October 2005 to August 2008, Mr. Adsett was General Manager, Oral IBD Products of the Gastroenterology Business Unit of Shire. From November 1994 to October 2005, Mr. Adsett held various marketing and commercial roles at AstraZeneca plc, (NYSE: AZN), a multinational pharmaceutical and biopharmaceutical company. Mr. Adsett was a senior analyst at Accenture PLC, (NYSE: ACN), a global professional services company, from September 1991 to November 1994. Mr. Adsett holds a Masters of Business Administration from The Wharton School at the University of Pennsylvania and a Bachelor of Arts in English and Economics from Bucknell University.
Paul Streck.Martina Flammer, M.D. Dr. StreckFlammer joined Insmed as Chief Medical Officer in June 2017.December 2019. Dr. StreckFlammer has over 2517 years of clinical development, managementexperience in both medical and leadership expertise. He most recently served ascommercial roles in the global biotechnology and pharmaceutical industry. From February 2018 to October 2019, Dr. Flammer was Head of Corporate Division Customer Value, Senior Vice President Global Medical Specialty Franchise, Immuno-inflammation at GlaxoSmithKline, a position he held since November 2015, where he was responsible for portfolio strategy, including drug launch, life cycle management, post-registration clinical strategy and health economics.Boehringer Ingelheim International. From November 20072012 to November 2015,2018, Dr. StreckFlammer held various positions at Shire Pharmaceuticals. Dr. Streck served as GroupBoehringer Ingelheim, including Vice President, Clinical Development/TA Lead (Hematology, Gastrointestinal, Internal Medicine) at Shire Pharmaceuticals from November 2013 to November 2015. Prior to that, Dr. Streck
served as Global Head ofDevelopment and Medical Affairs Internal(2016 - 2018), Vice President of Medicine, (November 2012 to December 2013), Product General Manager, Emerging Business Unit (November 2011 to November 2012)Regulatory Affairs & Pharmacovigilance (2014 - 2016), and Senior Global Medical Director, Global Clinical Development (November 2007& Medical Affairs Virology (2012 - 2014). Prior to December 2012). From February 2006her time at Boehringer Ingelheim, Dr. Flammer served in various roles at Pfizer, Inc. from 2000 to October 2007,2011. Dr. Streck was Director of Marketing at AMGEN USA Inc. Dr. StreckFlammer holds aan M.B.A. from the DukeNew York University FuquaStern School of Business aand an M.D. from JeffersonUniversity of Vienna Medical College, a D.M.D. from the Temple University School of Dentistry and a B.A. in chemistry from Rutgers University.School.
Christine Pellizzari. Ms. Pellizzari joined Insmed as General Counsel and Corporate Secretary in July 2013 and was promoted to Chief Legal Officer in January 2018. Ms. Pellizzari has over 20 years of experience in the global biotechnology and pharmaceutical industry, including senior-level leadership roles. From August 2007 to December 2011, Ms. Pellizzari served as Executive Vice President, General Counsel and Secretary for Aegerion and served as a legal consultant for Aegerion from January 2012 to June 2012. From 1998 to 2007, Ms. Pellizzari served as Senior Vice President, General Counsel and Secretary of Dendrite International, Inc., a publicly traded company that provided the global pharmaceutical industry with sales effectiveness, promotional and compliance solutions until it was acquired by Cegedim S.A. (Euronext: CGM) in 2007. Prior to her tenure at Dendrite, Ms. Pellizzari practiced law at the firm of Wilentz, Goldman & Spitzer where she specialized in health care transactions and related regulatory matters. Before joining Wilentz, Ms. Pellizzari served as a law clerk to the Honorable Reginald Stanton, Assignment Judge for the Superior Court of New Jersey. Ms. Pellizzari received her Bachelor of Arts degree, cum laude, from the University of Massachusetts, Amherst and her Juris Doctor degree from the University of Colorado, Boulder.
S. Nicole Schaeffer. Ms. Schaeffer joined Insmed as Senior Vice President, Human Resources and Corporate Services in January 2013 and was promoted to Chief People Strategy Officer in January 2018. From October through December 2012, Ms. Schaeffer was a consultant to Insmed. Ms. Schaeffer has more than 25 years of experience in human resources, organizational development, corporate operations, and building life science organizations. From March 2005 to June 2012, Ms. Schaeffer served as Senior Vice President, Administration and Human Resources, for Amicus Therapeutics where she was responsible for the human resources, facilities, and information technology functions. Prior to Amicus, she served as Senior Director, Human Resources, for three portfolio companies of Flagship Ventures (now Flagship Pioneering), a venture capital firm, and in that capacity she managed human resources for three life sciences companies. Ms. Schaeffer also held HR leadership positions with Oak Industries, from 1997 to 2000, and EMC Corporation, from 1994 to 1996. Ms. Schaeffer received her Bachelor of Arts degree from the University of Rochester and her Masters of Business Administration degree from Boston University.
John Soriano. Mr. Soriano joined Insmed as Chief Compliance Officer in January 2018, bringing over 30 years of experience in legal and compliance leadership roles. From August 2010 to November 2017, Mr. Soriano served as Senior Vice President and Chief Compliance Officer at Celgene Corporation where he oversaw the Global Compliance Program. From November 2000 to February 2010, Mr. Soriano served as Vice President-Compliance and Deputy General Counsel at Ingersoll-Rand Company. Prior to that, Mr. Soriano worked as a litigation attorney at Becton Dickinson and Co. (December 1998—November 2000), Johnson & Johnson (February 1998—December 1998), and Simpson Thacher & Bartlett (September 1987—February 1998). Mr. Soriano received his Bachelor of Arts degree from Princeton University's Woodrow Wilson School of Public and International Affairs and his Juris Doctor degree from Harvard Law School.
Corporate Governance Materials and Practices. Our written corporate governance materials, including our Bylaws, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter, Nominations and Governance Committee Charter, Science and Technology Committee Charter, and Director Resignation Policy are posted on our website at www.insmed.com under the heading "Investor Relations—"Investors—Corporate Governance." None of the information in or that can be accessed through our website is incorporated by reference in this Proxy Statement. Our corporate governance practices include the following:
Code of Business Conduct and Ethics. We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers (including our CEO, chief financial officer, controller and any person performing similar functions) and employees. Our Code of Business Conduct and Ethics contains written standards designed to communicate our expectations of our directors, officers, and employees when making decisions and conducting themselves in corporate activities, including the ethical handling and use of confidential information; actual or apparent conflicts of interest; compliance with applicable governmental laws, rules and regulations; protection of our assets and proprietary information; the ethical handling of payments and gifts received in the normal course of business and of payments made to government personnel; prompt internal reporting of violations of our Code of Business Conduct and Ethics; and accountability for adherence to our Code of Business Conduct and Ethics. We have established a means for individuals to report a violation or suspected violation of the Code of Business Conduct and Ethics anonymously, including those violations relating to accounting, internal controls or auditing matters, and federal securities laws. We intend to satisfy the disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Business
Conduct and Ethics by making disclosures concerning such matters available on our website at www.insmed.com under the heading "Investor Relations—"Investors—Corporate Governance."
Corporate Governance Guidelines. We have adopted Corporate Governance Guidelines to assist and guide the Board in the exercise of its responsibilities and establish a framework for our corporate governance practices. The Corporate Governance Guidelines contain written standards pertaining to director qualifications, director responsibilities, structure of our Board, director access to management and independent advisors, director compensation, and performance evaluation of our Board and committees, among other things. The Corporate Governance Guidelines help to ensure that the Board is independent from management, the Board adequately performs its oversight functions, and the interests of the Board and management align with the interests of our shareholders. Our Corporate Governance Guidelines are interpreted in accordance with all applicable laws and regulations, the Nasdaq listing standards, and our Articles of Incorporation and our Bylaws.
Meetings of the Board. The Board held eleven10 meetings during 2017.2019. Each director attended at least 75% of the aggregate number of Board meetings that occurred in 2017. Each director attended at least 75% of theand committee meetings that occurred in 20172019 during his or her tenure on such committees.the Board.
Director Resignation Policy. Any nominee for director in an uncontested election who has a greater number of votes "withheld" from his or her election than votes cast "for" his or her election must submit his or her resignation to the Board promptly following certification of the election results. Within 90 days after the date of the certification of the election results, the Nominations and Governance Committee will make a recommendation to the Board as to whether to accept or reject the submitted resignation. Within 45 days after receiving this recommendation, the Board must accept or reject the resignation or pursue another action unless doing so would cause us to fail to comply with federal or state law or Nasdaq listing standards. If more than a majority of the members of the Nominations and Governance Committee do not receive a greater number of votes cast "for" their election than votes "withheld," the independent directors whose classes were not nominated for election will appoint a special committee to consider the resignations and make a recommendation to the Board. Any director whose resignation is under consideration will not participate in any deliberation or vote regarding his or her resignation. If the Board accepts a director's resignation pursuant to this policy, the Board may decrease the size of the Board or fill the resulting vacancy in accordance with the Virginia Stock Corporation Act and our Articles of Incorporation and Bylaws.
Independence of the Directors and Director Nominees.Directors. The Board makes an affirmative determination regarding the independence of each director annually, based on the recommendation of the Nominations and Governance Committee. The Board has determined that the following members of the Board are independent, as that term is defined under the general independence standards of the Nasdaq listing standards: Mr. Altomari, Mr. Brennan, Dr. Desjardins, Dr. Engelsen, Mr. Hayden, Mr. McGirr, Ms. Potter,Anderson, Dr. Sharoky and Dr. Sharoky.Mr. Lee. Mr. Lewis is not considered independent because he is currently employed by the Company. The Board makesalso determined that Mr. Hayden, who resigned as a director in May 2019, was an affirmative determination regarding the independence of each director annually, based on the recommendation of the Nominations and Governance Committee.independent director.
Board's Role in Strategy. The Board actively participates in Company strategy decisions and oversight throughout the year. The Board annually reviews the company's strategic plan, including key risks and decisions facing the company.Company.
Our Nominations and Governance Committee, which is described more fully below under "Corporate Governance—Committees of the Board—Nominations and Governance Committee," serves as an independent and objective party to identify, assess, recruit and recommend to the Board qualified candidates for directorship, consistent with criteria approved by the Board, and establishes and annually
reviews such criteria based on factors it considers appropriate. The Board evaluates each nominee in the context of the Board as a whole, with the objective of recommending a group of directors that can best oversee the business and affairs of the Company and use its diversity of experience to represent shareholder interests through the exercise of sound judgment. The Board seeks director nominees with experience in the pharmaceutical and biotechnology industries, as well as business, management, accounting and financial experience, among other areas. Among the factors that the Board and the Nominations and Governance Committee consider are strength of character, sound business
judgment, career specialization, relevant technical skills, diversity, independence, the ability to commit sufficient time to the Board, and the extent to which the candidate would fill a present need ofon the Board.Board, along with geographic, gender, age, racial and ethnic diversity.
Nominations and Governance Committee Process for Identifying and Evaluating Director Candidates. The Nominations and Governance Committee evaluates all director candidates in accordance with the director qualification standards described in the Corporate Governance Guidelines and seeks candidates with experience in the pharmaceutical and biotechnology industries, as well as business, management, accounting and financial experience.above. The Nominations and Governance Committee evaluates a candidate's qualifications to serve as a member of the Board based on the skills and characteristics of such individual Board members,member, as well as the composition of the Board as a whole. In addition, the Nominations and Governance Committee will evaluate a candidate's independence, diversity, skills and experience in the context of the Board's needs.
Director Candidate Recommendations and Nominations by Shareholders. The Nominations and Governance Committee's charter provides that the committee will consider director candidate recommendations by shareholders. Shareholders should submit any such recommendations for the Nominations and Governance Committee through the method described below under "Corporate Governance—Communications with the Board." In accordance with our Bylaws, any person who is a shareholder of record on the record date for the shareholder meeting, on the date of the shareholder meeting, and on the date such person provides required notice to the Company may nominate persons for election to the Board if such shareholder complies with the notice procedures set forth in the Bylaws and summarized in this Proxy Statement under the heading "Proposals for 20192021 Annual Meeting."
The Board has approved a process for shareholders to send communications to the Board. Shareholders can send communications to the Board and, if applicable, to the Nominations and Governance Committee or to specified individual directors in writing c/o Ms. Christine Pellizzari, Corporate Secretary, Insmed Incorporated, 10 Finderne Avenue, Building 10,700 US Highway 202/206, Bridgewater, New Jersey, 08807. All communications sent to Ms. Pellizzari will be forwarded, as appropriate, to the Board, the Nominations and Governance Committee or any specified individual directors.
Director Attendance at Annual Meeting
Our policy is that directors are expected to make reasonable efforts to attend the annual meeting of shareholders absent unusual circumstances. All directors then on the Board, including Mr. Hayden, attended the 20172019 Annual Meeting of Shareholders.
The Board believes that it is in the best interests of the Company to maintain the flexibility to make determinations about the separation of the positions of Board Chair and CEO. The Nominations and Governance Committee considers this structure as part of its annual review of the size, organization, structure, composition and operations of the Board and its committees. In November
2018, Mr. Hayden stepped down as Chairman of the Board and was succeeded by Mr. Lewis. Mr. Lewis continued as President and CEO of the Company and Mr. Brennan was elected as Lead Independent Director. The Board believes that its current leadership structure, with Mr. Lewis serving as CEO and Chairman and Mr. HaydenBrennan serving as our independent non-executive Chairman,Lead Independent Director, is appropriate for the Company at this time. Both Mr. Lewis and Mr. HaydenBrennan are actively engaged on significant matters affecting us, such as long-term strategy. The CEO has overall responsibility for all aspects of our operation, while the ChairmanLead Independent Director has a greater focus on governance of the Company, including oversight of the Board. We believe this balancethe combined role of CEO and Chairman balanced with the shared leadership betweenwith the two positionsLead Independent Director is a strength for the Company. As our independent non-executive Chairman,Lead Independent Director, Mr. HaydenBrennan calls and chairs regular and special meetings of the Board and all
executive sessions of the independent directors, chairs and presides at annual or special meetings of shareholders, provides meaningful input into the agenda of Board meetings, oversees the retention of outside advisors, consultants and legal counsel who report directly to the Board, consults frequently with committee chairs and management and has the right to and often does attend Board committee meetings.
Our Bylaws provide that the Board may create one or more committees of the Board. Currently, the Board has threefour standing committees: the Audit Committee, the Compensation Committee, and the Nominations and Governance Committee and the Science and Technology Committee.
Audit Committee
Composition and Attendance. Our Audit Committee consists of Mr. McGirr (Chairman), Dr. Engelsen, and Mr. Altomari, each of whom is an independent Board member. During 2017,2019, the Audit Committee held sixseven meetings. Each of Mr. McGirr, Dr. Engelsen and Mr. Altomari attended all meetings of the Audit Committee held in 2017.
Responsibilities and Duties. The Audit Committee assists our Board in fulfilling its oversight responsibilities relating to the accounting, reporting and financial practices of the Company and seeking to ensureas well as overseeing our compliance with applicable legal and regulatory requirements. The Committee reviews and oversees:
The Audit Committee reviews and reassesses the adequacy of its charter at least annually.
Committee Independence. Our Board has determined that all three of the current Audit Committee members, Mr. McGirr, Dr. Engelsen, and Mr. Altomari, satisfy the heightened independence requirements of the Nasdaq listing standards and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act).
Financial Literacy and Expertise. Our Board determined that each of the members of the Audit Committee is able to read and understand fundamental financial statements, including our consolidated balance sheet, statement of comprehensive income/loss, statement of cash flows, and statement of shareholders' equity. Our Board also has determined that Mr. McGirr is an "audit committee financial expert," as that term is defined in the rules promulgated by the SEC and has accounting or related financial management expertise as required under the Nasdaq listing standards.
Compensation Committee
Composition and Attendance. Our Compensation Committee consists of Mr. Altomari (Chairman)(Chair), Mr. Brennan, Ms. Potter, and Dr. Sharoky,Mr. Lee, each of whom is an independent Board member. During 2017,2019, the Compensation Committee held seven meetings. Each of Mr. Altomari, Mr. Brennan, and Dr. Sharoky attended all Compensation Committee meetings held in 2017 and Ms. Potter attended six of the Compensation Committee meetings held in 2017.
Responsibilities and Duties. The Compensation Committee develops and oversees the implementation of our compensation philosophy for our executive officers and is responsible for our executive and other compensation plans. The Compensation Committee's primary objectives are to develop and maintain an executive compensation program that:
The Compensation Committee reviews and reassesses the adequacy of its charter at least annually.
Committee Independence and Related Requirements. Our Board has determined that all fourthree of the current Compensation Committee members, Mr. Altomari, Mr. Brennan, Ms. Potter and Dr. Sharoky,Mr. Lee satisfy the heightened independence requirements of the Nasdaq listing standards. In addition, all of the members of our Compensation Committee are "non-employee directors" within the meaning of the rules under Section 16 of the Exchange Act and "outside directors" for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code and Section 162(m)). The Board has determined that Mr. Sharoky also satisfied these independence and related requirements during his tenure on the Compensation Committee.
Nominations and Governance Committee
Composition and Attendance. Our Nominations and Governance Committee consists of Dr. Engelsen (Chairman), Mr. Hayden,Ms. Anderson (Chair) and Dr. Sharoky, each of whom is an independent Board member. During 2017,2019, the Nominations and Governance Committee held sixfour meetings. Each of Dr. Engelsen, Mr. Hayden, and Dr. Sharoky attended all meetings of the Nominations and Governance Committee held in 2017 during their tenure on the Nominations and Governance Committee.
Responsibilities and Duties. The Nominations and Governance Committee identifies and nominates qualified candidates for directorship and serves in a leadership role in shaping our corporate
governance and overseeing the evaluation of the Board and its committees. The Nominations and Governance Committee:
The Nominations and Governance Committee reviews and reassesses the adequacy of its charter at least annually.
Science and Technology Committee
Composition and Attendance. Our Science and Technology Committee consists of Dr. Engelsen (Chair), Dr. Sharoky, and Mr. Lee, each of whom is an independent Board member. The Science and Technology Committee was formed in May 2019 and held four meetings.
Responsibilities and Duties. The Science and Technology Committee assists our Board in its oversight of the Company's preclinical research and development (R&D) activities and its clinical development activities and decisions. The Science and Technology Committee:
The Science and Technology Committee reviews and reassesses the adequacy of its charter at least annually.
The Role of the Board in Risk Oversight
The Board has primary responsibility for overseeing the Company's risk management. The Board administers its oversight responsibility for risk management directly and through its committees.
Each committee chairman reports to the Board regarding the committee's considerations of management's processes for identifying, evaluating, and controlling significant risks. In addition, the officers responsible for oversight of particular risks within the Company provide updates and information to our Board. The Board considers specific risk topics, including risks associated with our strategic plan, our capital structure, our research and development activities, our manufacturing and supply chain, and our operations. Our Board believes that full and open communication between management and the Board is essential for effective risk management and oversight. The Board and each of its committees have full access to our senior management, as well as the ability to engage outside advisors and other experts. Management routinely informs the Board of developments that could affect our risk profile or other aspects of our business and development.
The Audit Committee is responsible for overseeing the Company's program for identifying, evaluating and controlling significant risks. The Audit Committee periodically discusses with management and the independent auditor our policiesthe Company's major risk exposures, including financial, legal, regulatory and guidelines regarding risk assessment and risk management as well as our major financial and operationalcybersecurity risk exposures, and the steps that management has taken to monitor, control and controlminimize such exposures. The Audit Committee also reviews and evaluates our processes and policies for identifying and assessing key risk areas and for formulating and implementing steps to address such risk areas. The Audit Committee oversees disclosure controls and procedures, including applicable internal control over financial reporting and meets with the Chief Financial Officer, the Chief Legal Officer, the Chief Compliance Officer, the Vice President of Quality Assurance, the Vice President, Corporate Controller,Chief Accounting Officer, external audit personnel, and other senior managers as appropriate to review issues regarding compliance with the applicable legal and regulatory requirements.
The Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk taking. Our Compensation Committee engages an independent consultant to advise it on topics related to Board and executive compensation. DuringIn July 2019, the last year,Company selected Willis Towers Watson as its new independent compensation consultant. In February 2019, the Compensation Committee, with the assistance of Frederic W. Cook & Co., Inc. (FW Cook), itsthe Company's former independent compensation consultant, reviewed the executive compensation program and determined that the design of the compensation policies, including the components, weightings and focus of the elements of executive compensation, do not encourage management to assume excessive or inappropriate risks.
The Nominations and Governance Committee oversees the risks associated with our corporate governance and operating practices, including those relating to the composition of the Board, the structure and function of Board committees and meeting logistics and policies. The Nominations and Governance Committee regularly reviews the Board's performance, oversees the self-evaluation of each of the Board's committees, oversees our corporate governance and formulates and recommends corporate governance standards to our Board.
The Science and Technology Committee oversees the Company's efforts related to clinical activities, R&D, business development and intellectual property. The Science and Technology Committee reviews the competitive landscape related to the Company's preclinical R&D and research activities and advises the Board on the scientific aspects of business development transactions.
AUDIT COMMITTEE REPORT*REPORT AND INDEPENDENT AUDITOR FEES
The Audit Committee approves the selection of the Company's independent registered public accounting firm and regularly meets with and holds discussions with management and the Company's independent registered public accounting firm.
The Audit Committee oversees the Company's financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 20172019 (the Annual Report) with management, including a discussion of the quality, the accounting principles, the reasonableness of significant judgments, and the quality and clarity of disclosures in the financial statements.
The Audit Committee reviewed with Ernst & Young, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgments as to the overall quality of financial reporting, the Company's accounting principles, and such other matters as are required to be discussed with the Audit Committee by Public Company Accounting Oversight Board (PCAOB) standards.
In addition, the Audit Committee has discussed with Ernst & Young its independence from management and the Company, including the matters described in the written disclosures and letter required by PCAOB standards from Ernst & Young to the Audit Committee regarding the independent accountant's communications with the Audit Committee concerning independence, and has considered the compatibility of non-audit services with the independence of the independent registered public accounting firm.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in the Company's Annual Report for filing with the SEC.
THE AUDIT COMMITTEE
David W.J. McGirr, Chairman
Alfred F. Altomari
Steinar J. Engelsen, M.D., C.E.F.A.
Audit Committee Pre-Approval Policy
The Audit Committee has adopted an Audit Committee Pre-Approval Policy for the pre-approval of audit services and permitted non-audit services by the Company's independent registered public accounting firm in orderan effort to assureensure that the provision of such services does not impair the independence of the independent registered public accounting firm from the Company and is consistent with the rules of the SEC. The policy requires pre-approval by the Audit Committee of the terms and fees of all audit, review and attestation engagements and related services. The policy also requires the Audit Committee to determine thatpre-approve the provision of any audit-related services or non-audit services and determine they would not impair the independence of our independent registered public accounting firm. The policy also prohibits the Audit Committee from retaining our independent registered public accounting firm in connection with a transaction initially recommended by such firm, the purpose of which may be tax deferral or reduction. The policy delegates pre-approval authority to the Chair of the Audit Committee or, if the Chair is not available, to any of the Audit Committee's members, but any pre-approval decision must be reported to the Audit Committee at its next scheduled meeting. All of the services performed by Ernst & Young in the year ended December 31, 20172019 were pre-approved in accordance with the applicable pre-approval policy.
Independent Registered Public Accounting Firm Fee Disclosure
The Audit Committee reviewed the aggregate fees billed by Ernst & Young for professional services rendered for the years ended December 31, 20172019 and 2016,2018, which were as follows:
| 2017 | 2016 | 2019 | 2018 | ||||
---|---|---|---|---|---|---|---|---|
Audit Fees | $782,550 | $652,017 | $1,196,177 | $975,910 | ||||
Audit Related Fees | — | — | ||||||
Audit-Related Fees | — | — | ||||||
Tax Fees | — | — | — | — | ||||
All Other Fees | 1,995 | 1,995 | 1,995 | 1,995 | ||||
| | | | | | | | |
Total Fees | $784,545 | $654,012 | $1,198,172 | $977,905 | ||||
| | | | | | | | | |
| | | | | | | | |
Audit fees in 20172019 and 20162018 include fees for services performed to comply with generally accepted auditing standards. These services include the quarterly reviews, the integrated year-end audit of our consolidated financial statements, attestation services with respect to our internal control over financial reporting, review of documents filed with the SEC,quarterly reviews, accounting consultations on matters addressed during the audit or quarterly reviews, review of documents filed with the SEC, and $125,000, with respect to 2017, $100,0002019, and $115,000, with respect to 2018, paid to Ernst & Young for consent and comfort letter procedures for registration statements filed in 2017.2019 and 2018, respectively.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Review and Approval of Related Party Transactions
Pursuant to our written related party policy, our Audit Committee must review and consider whether to approve or ratify all related party transactions, as defined in Item 404 of Regulation S-K. In determining whether to approve or ratify a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, the purpose and potential benefits to us of the transaction, the related party's interest in the transaction, the approximate dollar value involved in the transaction, whether the transaction was undertaken in the ordinary course of business, whether the related party transaction is on terms no less favorable to us than terms generally available to us from an unaffiliated third-party under the same or similar circumstances, and whether, under all the
circumstances, the transaction is not inconsistent with our best interests. Any transaction which is
deemed to be a related party transaction requires the approval of a majority of the disinterested Audit Committee members.
Since January 1, 2017,2019, there were no related party transactions, nor are there currently any proposed related party transactions, which in accordance with SEC rules, would require disclosure in this Proxy Statement.
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Exchange Act requires that our directors, executive officers and holders of more than 10% of our Common Stock report to the SEC their ownership of our Common Stock and changes in that ownership. Directors, executive officers and beneficial owners of more than 10% of our Common Stock are required by applicable regulations to furnish us with copies of all Section 16(a) forms they file. As a matter of practice, members of our staff assist our executive officers and directors in preparing initial ownership reports and reporting ownership changes and typically file these reports on their behalf. Based solely upon a review of the reports filed pursuant to Section 16(a) of the Exchange Act, we believe that during the year ended December 31, 2017,2019, our executive officers, directors and beneficial owners of more than 10% of our Common Stock complied with applicabletimely filed all reports required under Section 16(a) requirements.16, except for the following instances: (1) on May 16, 2019, Mr. Lee filed a Form 3 that inadvertently omitted 10,000 shares of our Common Stock that Mr. Lee held at the time of his appointment as a director, which shares were subsequently reported on an amended Form 3 filed on March 27, 2020, (2) on February 27, 2019, Mr. Hayden filed a late Form 4 reporting the exercise of options to purchase shares of our Common Stock, and the subsequent sale of such shares, on February 15, 2019, due to a broker error in notifying the Company and Mr. Hayden of the transaction, and (3) on June 12, 2019, Mr. Goll filed a Form 3 that inadvertently omitted options to purchase shares of our Common Stock, which options were subsequently reported on an amended Form 3 filed on November 20, 2019.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following tables set forth information about the beneficial ownership of our Common Stock as of the Record Date (except as otherwise noted), by:
Beneficial ownership and percentage ownership are determined in accordance with Section 13 of the Exchange Act and related rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within 60 days of the
Record Date and restricted stock units that may vest within 60 days of the Record Date are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following tables or pursuant to applicable community property laws, to our knowledge each shareholder named in the tables has sole voting and investment power with respect to the shares set forth opposite such
shareholder's name. As of the Record Date, there were 76,623,13689,859,549 shares of Common Stock outstanding.
| Shares Beneficially Owned(1) | |||
---|---|---|---|---|
Name and Address | Number | Percentage | ||
Greater Than Five Percent (5%) Shareholders | ||||
FMR LLC(2) | 13,401,528 | 14.9% | ||
245 Summer Street | ||||
Boston, Massachusetts 02210 | ||||
Janus Henderson Group plc(3) | 11,667,278 | 13.0% | ||
201 Bishopsgate EC2M 3AE | ||||
United Kingdom | ||||
The Vanguard Group(4) | 8,176,076 | 9.1% | ||
100 Vanguard Blvd. | ||||
Malvern, PA 19355 | ||||
BlackRock, Inc.(5) | 7,456,517 | 8.3% | ||
55 East 52nd Street | ||||
New York, NY 10055 | ||||
The Palo Alto Investors(6) | 6,848,760 | 7.6% | ||
470 University Avenue | ||||
Palo Alto, CA 94301 | ||||
T. Rowe Price Associates, Inc.(7) | 6,530,775 | 7.3% | ||
100 E. Pratt Street | ||||
Baltimore, Maryland 21202 |
| Shares Beneficially Owned(1) | |||
---|---|---|---|---|
Name and Address | Number | Percentage | ||
Greater Than Five Percent (5%) Shareholders | ||||
T. Rowe Price Associates, Inc.(2) | 13,028,622 | 17.00% | ||
100 E. Pratt Street | ||||
Baltimore, Maryland 21202 | ||||
FMR LLC(3) | 11,488,651 | 14.99% | ||
245 Summer Street | ||||
Boston, Massachusetts 02210 | ||||
BlackRock, Inc.(4) | 7,830,604 | 10.22% | ||
40 East 52nd Street | ||||
New York, NY 10022 | ||||
Palo Alto Investors, LLC(5) | 6,718,495 | 8.77% | ||
470 University Avenue | ||||
Palo Alto, CA 94301 | ||||
The Vanguard Group(6) | 6,305,495 | 8.23% | ||
100 Vanguard Blvd. | ||||
Malvern, PA 19355 | ||||
Janus Henderson Group plc(7) | 5,963,206 | 7.78% | ||
201 Bishopsgate EC2M 3AE | ||||
United Kingdom |
Members of the Johnson family, ofincluding Abigail P. Johnson, Director, Vice Chairman, CEO and President of FMR, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR, representing 49% of the voting power of FMR. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may
be deemed, under the Investment Company Act of 1940 (the Investment(Investment Company Act), to form a controlling group with respect to FMR.
Neither FMR nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment
Company Act advised by Fidelity Management & Research Company, a wholly owned subsidiary of FMR, which power resides with the Fidelity Funds' Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees.
As a result of its role as investment adviser or sub-adviser to the Managed Portfolios, JCM may be deemed to be the beneficial owner of 11,667,278 shares or 13.0% of the shares outstanding of Insmed Common Stock held by such Managed Portfolios. However, JCM does not have the right to receive any dividends from, or the proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights.
Palo Alto Healthcare Master II, and Drs. Lee and Yun disclaims that it or he is a beneficial owner, as defined in Rule 13d-3 underregistered investment adviser and investment adviser of investment limited partnerships, and is the Exchange Act,investment adviser to other investment funds. PAI LLC is the general partner of anyinvestment limited partnerships. Palo Alto's clients have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of, our Common Stock.
| Shares Beneficially Owned | |||
---|---|---|---|---|
Name | Number | Percentage | ||
Directors and Executive Officers | ||||
Donald Hayden, Jr.(1) | 81,131 | * | ||
Alfred F. Altomari(2) | 41,876 | * | ||
David R. Brennan(2) | 42,256 | * | ||
Steinar J. Engelsen, M.D.(2) | 259,152 | * | ||
David W.J. McGirr(2) | 29,296 | * | ||
Myrtle Potter(2) | 19,444 | * | ||
Melvin Sharoky, M.D.(2) | 225,728 | * | ||
William H. Lewis(3) | 1,898,251 | 2.42% | ||
Paolo Tombesi | — | * | ||
Roger Adsett(4) | 72,742 | * | ||
Christine Pellizzari(5) | 375,475 | * | ||
Paul Streck, M.D. | — | * | ||
Andrew T. Drechsler(6) | 20,000 | * | ||
All directors and executive officers as a group (13 persons)(7) | 3,065,351 | 3.88% |
| Shares Beneficially Owned | |||
---|---|---|---|---|
Name | Number | Percentage | ||
Directors and Executive Officers | ||||
Elizabeth M. Anderson(1) | 12,017 | * | ||
Alfred F. Altomari(1) | 32,841 | * | ||
David R. Brennan(1) | 55,221 | * | ||
Clarissa Desjardins, M.D. | – | * | ||
Steinar J. Engelsen, M.D.(1) | 288,202 | * | ||
Leo Lee(1) | 22,965 | * | ||
David W.J. McGirr(1) | 42,261 | * | ||
Melvin Sharoky, M.D.(1) | 258,693 | * | ||
William H. Lewis(2) | 2,246,512 | 2.44% | ||
Roger Adsett(3) | 312,103 | * | ||
John Goll(4) | 114,254 | * | ||
Christine Pellizzari(5) | 591,545 | * | ||
S. Nicole Schaeffer(6) | 392,707 | * | ||
Paolo Tombesi | – | * | ||
All current directors and executive officers as a group (15 persons)(7) | 4,320,845 | 4.63% |
PROPOSAL NO. 2
ADVISORY VOTE ON THE 20172019 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Information Regarding the Advisory Vote on the 20172019 Compensation of our Named Executive Officers
As required pursuantPursuant to Section 14A of the Exchange Act, we are holding a shareholder advisory vote on the compensation of our named executive officers, as described in the "Compensation Discussion and Analysis" section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure set forth in this Proxy Statement. At the 2017 Annual Meeting, shareholders voted to hold advisory votes on an annual basis, and the Board subsequently adopted a resolution providing for such an annual vote. At the Annual Meeting, shareholders will be asked to approve the following resolution:
RESOLVED, that the shareholders of Insmed Incorporated approve, on an advisory basis, the compensation of the Company's named executive officers, disclosed pursuant to Item 402 of Regulation S-K in the Company's Proxy Statement.
The Compensation Committee oversees and administers our executive compensation program, including the evaluation and approval of compensation plans, policies and programs offered to our named executive officers. Our executive compensation program is designed to meet the following objectives:
Please read the "Compensation Discussion and Analysis" section starting on page 2732 of this Proxy Statement for a detailed discussion about our executive compensation programs, including information about the 20172019 compensation of our named executive officers.
Vote Required for Approval of this Proposal
The advisory vote on the compensation of our named executive officers will be approved by the affirmative vote of the majority of votes properly cast in person or by proxy, at the Annual Meeting. Abstentions or broker non-votes will not have an effect on the outcome of this proposal.
While this vote is being conducted on an advisory basis, and is therefore not binding on us, the vote will be carefully considered by the Compensation Committee and our Board. Both our Compensation Committee and our Board value the opinions of our shareholders and, to the extent there is any meaningful vote against the 2019 compensation of our named executive officers, as disclosed in this Proxy Statement, we will consider our shareholders' concerns and evaluate what actions, if any, may be appropriate to address those concerns. The outcome of the vote, however, will not be construed as overruling any prior decision by the Company, the Compensation Committee or the Board.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL, ON AN ADVISORY BASIS, OF THE 20172019 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (the CD&A) explains our compensation philosophy, policies and decisions for 20172019 for the following executives, whom we refer to in this CD&A and in the following tables as our named executive officers:
Executive Summary of Our 20172019 Business and Strategic Achievements
We are a global biopharmaceutical company focused on a mission to transform the unmet needslives of patients with serious and rare diseases. Our leadfirst commercial product, candidate is amikacinARIKAYCE (amikacin liposome inhalation suspension (ALIS) (formerly known as liposomal amikacinsuspension), received accelerated approval in the United States (US) in September 2018 for inhalation), which is in late-stage development for adult patients withthe treatment refractory nontuberculous mycobacteria (NTM) lung disease caused byofMycobacterium avium complex (MAC), lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options in a refractory setting, as defined by patients who do not achieve negative sputum cultures after a minimum of six consecutive months of a multidrug background regimen therapy. Nontuberculous mycobacterial (NTM) lung disease caused by MAC (which we refer to as MAC lung disease) is a rare and often chronic infection that can cause irreversible lung damage and can be fatal. Our earlier clinical-stage pipeline includes INS1007 and INS1009. INS1007 is a novel oral, reversible inhibitor of dipeptidyl peptidase 1 (DPP1), an enzyme responsible for activating neutrophil serine proteases, which are implicated
In 2019, our named executive officers played critical roles in the pathologyfurtherance of chronic inflammatoryour mission. We successfully completed our first year of commercialization and observed strong performance in the US launch of ARIKAYCE. In July 2019, we filed a marketing authorization application (MAA) with the European Medicines Agency (EMA) for ARIKAYCE for the treatment of patients with persistent MAC lung diseases, such as non-cystic fibrosis (non-CF) bronchiectasis. INS1009 is an inhaled nanoparticle formulationinfection, and the filing was subsequently validated. In 2019, we also advanced our Japanese new drug application (JNDA), resulting in the submission of the JNDA to Japan's Ministry of Health, Labour and Welfare (MHLW) in March 2020 for ARIKAYCE for the treatment of patients with MAC lung disease who do not respond sufficiently to prior treatment.
We also have a treprostinil prodrug that may offer a differentiatedrobust pipeline which includes the following product profile for rare pulmonary disorders, including pulmonary arterial hypertension (PAH). Our earlier-stage pipeline includes preclinical compounds that we are evaluating in multiple rare diseases of unmet medical need, including methicillin-resistant staph aureus and NTM.candidates:
Pipeline Stage | Product Candidate | Potential Rare Disease Area(s) | ||
---|---|---|---|---|
Clinical Stage | INS1007 | Therapeutic potential in non cystic fibrosis (non-CF) bronchiectasis and other inflammatory diseases | ||
| | | | |
Pre-Clinical Stage | INS1009 | Formulation that may offer a differentiated product profile for rare pulmonary disorders, including pulmonary arterial hypertension | ||
| | | | |
Early Stage | Various pre-clinical compounds | Opportunities related to multiple rare diseases of unmet medical need, including gram positive pulmonary infections in cystic fibrosis (CF), NTM lung disease and refractory localized infections involving biofilm |
To complement our internal research and development, we actively evaluate in-licensing and acquisition opportunities for a broad range of rare diseases.
In 2017, our named executive officers played critical rolesMay 2019, we completed enrollment of patients in achieving several key strategic steps toward our goalthe WILLOW study, a global randomized, double-blind, placebo-controlled Phase 2 clinical study evaluating the efficacy, safety and pharmacokinetics of building a commercial biopharmaceutical company. WeINS1007 administered once daily for 24 weeks in adults with non-CF bronchiectasis. In February 2020, we announced positive top-line results from the phase 3 CONVERT study of ALISWILLOW study.
More broadly from a strategic and operational standpoint, in patients with NTM lung disease, advanced the WILLOW study of INS1007 in patients with non-CF bronchiectasis, and2019 we expanded our
leadership team with talented executives in key finance,financial, medical, commercial, sales, and clinical and investor relations roles. When determining payouts for the annual cash incentives, the Board, with respect to our President and CEO, and the Compensation Committee, with respect to the other named executive officers, took into account these and other achievements in the evaluation of our performance against our annual corporate objectives.
Compensation Philosophy and Principles
We operate in a competitive, rapidly changing and heavily-regulated industry. The long-term success of our business requires us to be resourceful, adaptable, and innovative. As we transition from a development stage company to a commercial biopharmaceutical company,innovative, and the skills, talent, and dedication of our executive officers are critical components to the success of this transition and the future growth of the company.success. Therefore, our compensation program for our executive officers, including our named executive officers, is designed to attract, retain, and incentivize the best possible talent. The Company's compensation program for named executive officers is structured to implement the following guiding principles:
Alignment with Shareholder Interests. The compensation program is designed to align the compensation realized by our named executive officers with the value realized by our shareholders. For instance, aA significant portion of our named executive officers' compensation is based on stock optionsin the form of equity awards based on our belief that stock optionsequity awards align management's interests with the creation of future shareholder value.
Use of "At-Risk" Compensation to Incentivize Executives. As shown in the charts below, the compensation program is designed such that aA substantial portion of our named executive officers' compensation is based on "at risk," or variable, compensation, such as annual cash incentives and stock options. We believe this mix of compensation best aligns the interests of our named executive officers with those of our shareholders over time and contributes to the achievement of short-term goals and the advancement of our long-term strategy through long-term goals. Accordingly, in 2017, 87%In 2019, approximately 90% of our CEO's compensation was "at risk," and 81%82% of our other named executive officers' (excluding Mr. Drechsler) compensation was "at risk":. The charts below reflecting compensation to our non-CEO named executive officers do not include compensation paid to Mr. Tombesi, who stepped down as Chief Financial Officer during the first half of 2019.
Variable Performance-Based vs. Guaranteed CEO Compensation for | |||
Variable Performance-Based vs. Guaranteed Other | |||
(1) Mr. Dreschler's 2017 compensation is not included in these charts.
Pay for Performance. The compensation program is designed toWe reward the named executive officers for attaining established business and individual goals. The attainment of these goals requires the named executive officer to dedicate his or her time, effort, skills and business experience to the success of the Company and the maximization of shareholder value. A significant portion of the named executive officers' compensation is based on Company and individual performance, and the compensation program is designed to reward both short-term and long-term performance. Short-term performance of our named executive officers is principally rewarded through annual cash incentives that reflect the achievement of corporate goals and, with respect to named executive officers other than our President and CEO, individual goals. Long-term performance of our named executive officers is largely rewarded through stock option and RSU awards that are eligible to vest based on continued service and have a value tied to our share price appreciation.
Pay competitively to attract and retain skilled executive officers. The compensation program is designed to allow the Company to attract and retain individuals whose skills are critical to the current and long-term success of the Company. Because the implementation of our strategic goals requires long-term commitments by our named executive officers, and because competition for top talent is intense in our industry, retention is a key objective of the compensation program. The compensation program is designed to
appropriately compensate our executive officers for the success of the Company
from a competitive standpoint, so that they remain with the Company and continue to contribute to the Company's long-term success. We seek to achieve this objective by granting equity as a combination of stock options and RSU awards.
At our 20172019 Annual Meeting of Shareholders, we held an advisory vote on the compensation of our named executive officers. Over 99%95% of the shares voted were voted in favor of our say-on-pay proposal. The Compensation Committee considered these voting results and believes they affirm the Company's compensation philosophy and the principles discussed above.
Corporate Governance Perspectives on our Executive Compensation Program
We believe that our executive compensation program reflects our commitment to strong corporate governance practices as evidenced by the following aspects of our executive compensation program:
In addition, the Compensation Committee conductsannually reviews a compensation risk assessment annually. Due to adherence to our compensation philosophy and principles and the governance principles described above, theconducted by management. The Compensation Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on the Company.Company based on our compensation philosophy and principles and the governance principles described above.
Executive Compensation Determination Process
Role of the Compensation Committee and the Board in Making Compensation Decisions. Our Compensation Committee has been delegated the authority to make determinations regarding all elements of compensation for our executive officers, except for Mr. Lewis, our President and CEO. Our Compensation Committee recommends to our independent Board members the goals and individual elements of total compensation for Mr. Lewis for final approval. The independent Board members review this recommendation and determine the compensation for Mr. Lewis. As discussed in further detail below, in assessing executive compensation, our Compensation Committee engages an outside independent executive compensation consultant to assess the competitiveness of our programs and periodically conducts a peer group review.
Role of Management. The Compensation Committee, in making executive compensation decisions, may solicit input from management as appropriate with respect to individual and Company performance and results. The Compensation Committee receives recommendations and evaluations with respect to the compensation and performance of our named executive officers from the President and CEO (aside from his own compensation and performance) and Company performance. The Compensation Committee considered management's assessment along with the input of its independent executive compensation consultant when making 20172019 compensation decisions.
Role of the Compensation Consultant. The Compensation Committee is authorized to select and retain its own independent compensation consultant and has routinely sought the advice of an independent compensation consultant regarding our executive compensation practices. During 2019, FW Cook advised the Compensation Committee on its compensation risk assessment, and provided data and recommendations on executive officer compensation. In December 2019, Willis Towers Watson provided a comprehensive review of long-term incentive guidelines for all employee levels, an unvested equity analysis to assess the retention power of our compensation program for senior executives, and
data and recommendations on executive officer compensation. The Compensation Committee evaluates the independence of its compensation consultant on an annual basis and has concluded during its 2017 evaluation that each of FW Cook, its former compensation consultant, and Willis Towers Watson, its current compensation consultant, was independent. During 2017, FW Cook advised the Compensation Committee on evolving best pay practices, provided benchmarking data and recommendations on executive officer compensation and provided recommendations about certain changes to our 2017 peer group.independent during their respective tenure in 2019.
Compensation Evaluation Processes and Criteria. Given the high demand for the experienced and well-qualified executives of the type we seek to employ, the Compensation Committee reviews data and information from a variety of sources such as outside surveys of compensation and benefits for executive officers in the biotechnology industry, as well as public information regarding executive compensation at peer biotechnology companies. The Compensation Committee also draws upon the personal knowledge of its members with respect to executive compensation at comparable companies.
In determining the amount and composition of compensation elements (cash and non-cash elements and short- and long-term elements) for our non-CEO named executive officers, our Compensation Committee relies upon its judgment aboutreviews the performance of each individual executive officer and not on rigid formulas or short-term changes in business performance.holistically. In setting compensation levels for our executive officers for 2017,2019, our Compensation Committee considered many factors, including, but not limited to, the following factors:
Consideration of these factors is subjective; nosubjective. No relative weights or rankings are assigned to them (exceptexcept as otherwise discussed in this CD&A).&A.
For the President and CEO's compensation, the Compensation Committee reviews and evaluates the performance of the President and CEO and recommends to the Board the individual elements of his total compensation, considering, among other things, individual performance,
experience, prior compensation levels, and our general performance objectives, as well as the compensation practices of peer companies and the markets wherein which we compete for executive talent. The Board then must approve the President and CEO's compensation; thecompensation. The President and CEO may not be present during voting or deliberations on his compensation.
Selection of Peer Companies/Companies and Benchmarking
In August 2016,November 2018, the Compensation Committee, upon advice received from FW Cook, its former compensation consultant, selected the companies that comprised our 20172019 peer group through a screening process that considered publicly traded biopharmaceutical companies similar to us in number of employees, market capitalization and stage of product development. This review resulted in modifications from our 20162018 peer group as described below.
The number of employees at the companies in our 20172019 peer group ranged from 2859 to 465,520, with a median of 184255 employees, and these companies had average market capitalizations that ranged from approximately $450 million$1.39 billion to $2.12$8.60 billion, with a median of $953 million. We had 125 employees and an average market capitalization of approximately $866 million.$2.89 billion. Employee numbers were as of the most recently reported fiscal year-end prior to August 2016November 2018 and market capitalizations were the average of the market capitalizations as of December 31, 2015 and June 30, 2016. At those respective times, our percentile rank among our peers for numberJuly 25, 2018. The peer group was identified assuming a successful launch of ARIKAYCE in 2019, with an estimated 430 Company employees and averagean estimated market capitalization were 35% and 32%, respectively.for the Company of approximately $3.00 billion. The table below depicts our 20172019 peer group:
Sage Therapeutics | ||||
Halozyme Therapeutics, Inc. | Sangamo BioSciences, Inc. | |||
Heron Therapeutics, Inc. | ||||
Agios Pharmaceuticals, Inc. | Spark Therapeutics, Inc. | |||
Ultragenyx Pharmaceutical Inc. | ||||
Array BioPharma Inc. | Loxo Oncology, Inc.* | |||
Clovis Oncology, Inc. |
The 20172019 peer group reflects the following changes from our 20162018 peer group: (i) the removal of Anacor Pharmaceuticals,Keryx Biopharmaceuticals, Inc., Dyax Corp., Ligand Pharameucitcal Incorporated, Nektar Therapeutics, and PTC Therapeutics,ZIOPHARM Oncology, Inc., and (ii) the addition of Achillion Pharmaceuticals, Inc., Dynavax Technologies Corp. and ZIOPHARM Oncology, Inc.the companies above that are marked by an asterisk. The Compensation Committee concluded that these adjustments to the peer group were appropriate given changes in the number of employees, market capitalization, stage of development and merger-and-acquisition activity of the Company and historical and potential peer companies. The removal of Keryx Biopharmaceuticals, Inc. and ZIOPHARM Oncology, Inc. were due to their significantaly smaller market capitalizations as compared to the assumed market capitalization of the Company.
FW Cook provided comparative data regarding cash compensation, long-term equity incentives, and short-term incentives to executive officers at companies in the 2019 peer group. Using this compensation data from these peer companies,and relevant survey data, the Compensation Committee establishesestablished benchmarks for the purpose of evaluating appropriate compensation ranges for base salary, annual cash incentive targets and long-term equity incentives for each of our named executive officers.
In summary, the compensation paid to our executive officers includesin 2019 included the following components:
Component | Purpose of Component | |
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Base Salary | Provide our executive officers with a level of stability and certainty each year. | |
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Annual Cash Incentives | Motivate and reward executive officers for | |
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Long-term Equity Incentives | Motivate and reward executive officers for long-term corporate performance. | |
Align the interests of management and shareholders, thereby enhancing shareholder value. | ||
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Health, Welfare and Retirement Programs | Provide market competitive benefits to protect employees' and their covered dependents' health and welfare. Provide a program to foster retirement savings. | |
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Severance and Change in Control Benefits | Discourage turnover and |
The components of our compensation program and compensation decisions for 20172019 for each named executive officer are described in more detail below:
Base Salary
The Compensation Committee reviews and sets base salaries for executives, other than the President and CEO, on an annual basis during the first quarter of each year. The Board annually determines the base salary for our President and CEO based on the recommendation of our Compensation Committee.
Our Board and Compensation Committee seek to establish and maintain base salaries for each position and level of responsibility that (i) are competitive with those of executive officers in our peer group.group and (ii) reflect individual performance contributions. Our Compensation Committee reviews variances between the salary levels for each of our executive officers and thosethe executive officers of the companies included in our peer group and determines, in its discretion, individual salary adjustments after considering the factors described above, although no relative weights or rankings are assigned to these factors. In setting the base salary for our named executive officers other than our President and CEO, the Compensation Committee also considers the recommendations of our President and CEO.
The base salaries forAll of our named executive officers were adjusted as followsreceived merit-based increases to their base salaries in 2017:January 2019, which adjustments are reflected in the table below. Ms. Schaeffer's adjustment also reflected a 3.4% adjustment to better align with salaries in our peer group.
| Base Salaries | Base Salaries | ||||||||||
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Name | Annual Rate Approved in 2016 | Annual Rate Approved in 2017 | % Increase | Annual Rate Approved in 2018 | Annual Rate Approved in 2019 | % Increase | ||||||
William H. Lewis | $550,000 | $566,500 | 3% | $610,000 | $640,500 | 5.0% | ||||||
Roger Adsett | $458,280 | $472,030 | 3.0% | |||||||||
John Goll | $306,520 | $316,480 | 3.2% | |||||||||
Christine Pellizzari | $436,110 | $449,200 | 3.0% | |||||||||
S. Nicole Schaeffer | $375,940 | $400,010 | 6.4% | |||||||||
Paolo Tombesi | N/A | $435,000 | N/A | $442,620 | $455,900 | 3.0% | ||||||
Roger Adsett | $430,000 | $436,450 | 1.5% | |||||||||
Christine Pellizzari | $394,613 | $415,340 | 5.25% | |||||||||
Paul Streck | N/A | $425,000 | N/A | |||||||||
Andrew T. Drechsler | $379,106 | $390,480 | 3% |
Mr. Lewis,The base salaries of Mr. Adsett Ms. Pellizzari, and Mr. DrechslerGoll were given merit increases based onfurther adjusted in 2019 to reflect their performance in 2016.respective promotions. Mr. Adsett's meritbase salary increased from $472,030 to $500,000, effective in November 2019, in connection with his promotion from Chief Commercial Officer to Chief Operating Officer. The aggregate increase has been prorated for six months, given that he joined the Company during the second half of 2016.in Mr. Adsett's base salary from 2018 to 2019 was 9.1%. Mr. Goll's base salary increased from $316,480 to $335,000, effective in March 2019, in connection with his promotion from Vice President, Corporate Controller to Senior Vice President, Chief Accounting Officer. The aggregate increase in Mr. Goll's base salary from 2018 to 2019 was 9.3%.
Sign-On Bonuses
Mr. Tombesi received a $40,000 sign-on bonus in 2017 to incent him to join the Company and serve as its Chief Financial Officer. Dr. Streck received a $40,000 sign-on bonus in 2017 to incent him to join the Company and serve as its Chief Medical Officer.
Annual Cash Incentives
We maintain an annual cash incentive program for all of our employees to motivate and reward the attainment of annual corporate goals and individual goals. In establishing targets for the cash incentive awards for our executive officers, the Compensation Committee (and the Board, in the case of our President and CEO) considers target annual cash incentive opportunities extended to executive officers in similar positions at companies included in our peer group.
For 2017,2019, there were no changes to target cash incentive award percentages were set at 60% of our President and CEO's base salary and 40% of base salary for each of Mr. Tombesi, Mr. Adsett, Ms. Pellizzari, and Dr. Streck. The target percentages set for 2017 are the same as the percentages set for the prior year for Mr. Lewis, Mr. Adsett, and Ms. Pellizzari, as reflected in the table below. The 2017 target percentages for Mr. Tombesi and Dr. Streckthat were set in accordance with their respective employment agreements. Mr. Drechsler left the Company in March 2017 and was not eligible for an annual cash incentive in 2017.2018.
| Target Cash Incentive Award Opportunity as a Percentage of Base Salary | Target Cash Incentive Award Opportunity as a Percentage of Base Salary | ||||||
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Name | 2016 | 2017 | 2018 | 2019 | ||||
William H. Lewis | 60% | 60% | 60% | 60% | ||||
Roger Adsett | 40% | 40% | ||||||
John Goll | 35% | 35% | ||||||
Christine Pellizzari | 40% | 40% | ||||||
S. Nicole Schaeffer | 40% | 40% | ||||||
Paolo Tombesi | — | 40% | 40% | 40% | ||||
Roger Adsett | 40% | 40% | ||||||
Christine Pellizzari | 40% | 40% | ||||||
Paul Streck | — | 40% |
For 2017,2019, the Compensation Committee determined that the cash incentive award for our named executive officers other than Mr. Lewis would be determined by reference to both corporate
and individual goals, with 75% tied to corporate goals and 25% tied to individual goals. The Compensation Committee believesbelieved that including the achievement of individual goals as a component of our 20172019 cash incentive award payouts iswas important to incentincentivize our non CEOnon-CEO named executive officers, as we continue to transform the Company from a development stage company into a commercial biopharmaceutical company.and reflect their actual individual performance. Given Mr. Lewis's substantial influence on the
overall performance of the Company, the Compensation Committee believesbelieved it iswas appropriate and in the best interests of our shareholders to continue to have Mr. Lewis's cash incentive award be based solely upon the achievement of corporate objectives, and the Board has concurred in this view.
Payouts for corporate goals were based upon the product of each named executive officer's respective target award timesand an overall corporate multiplier (ranging between 0% and 200%), which was determined based on Company performance during 2017.2019. For our non-CEO named executive officers, payouts for individual objectives were based uponon the product of each named executive officer's respective target award times an individual multiplier (ranging between 25% and 150%), which was determined based on achievement of individual goals for 2017.2019.
Corporate Goals
At the beginning of each year, management recommends annual corporate objectives to the Compensation Committee for approval. These objectives serve as the basis for determining our performance against key strategic and operating parameters for the year.
The Compensation Committee (and the Board, with respect to our President and CEO) approved the following corporate objectives and weightings for 2017:2019:
Corporate Objectives | Weighting (% of Corporate Objectives) | |
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Advance | ||
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Advance | 10% | |
Improve corporate operations | 10% | |
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Total | 100% | |
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Each objective had at least two goals associated with it, such as net revenue, patient start rate or pipeline milestones. At that time, the Compensation Committee believed that the goals associated with these corporate objectives were challenging but attainable, and that attainment was uncertain.
While the specific goals are not disclosed for each objective given their potential commercial sensitivity, the following achievements in 2019 were factors taken into consideration when assessing Company performance:
Corporate Objective | Key Achievements | |
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Advance ARIKAYCE Franchise | Achieved target net revenue goal and goals related to certain patient metrics, including enrollment forms, patient start rate and adherence rate | |
Continued dialogue with the Food and Drug Administration (FDA) on protocol for post-marketing requirement and advanced additional life-cycle management plans | ||
Advanced international filings (filed MAA with EMA and advanced Japanese submission with MHLW) | ||
Ensured adequate supply to cover forecast and built inventory reserve | ||
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Advance Future Pipeline | Completed enrollment in the WILLOW study during 1H 2019 | |
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Improve Corporate Operations | Stayed within timeline and budget for the building of new corporate headquarters | |
Enhanced internal communication, transparency and culture of feedback at all employee levels |
The following table provides a breakdown of how the Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, determined that we performed against each of these corporate objectives during 2019:
Corporate Objectives | Weighting (% of Corporate Objectives) | Actual Performance | Actual % of Corporate Objectives Earned | |||
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Advance ARIKAYCE franchise | 80% | 129% | 103% | |||
Advance future pipeline | 10% | 100% | 10% | |||
Improve corporate operations | 10% | 100% | 10% | |||
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Total | 100% | 123% | ||||
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Individual Goals
In consultation with our named executive officers, Mr. Lewis established individual goals for each of our other named executive officers at the beginning of 20172019 that (i) were specific to each named executive officer's area of responsibility and (ii) supportedwere intended to support our corporate objectives for 2017.2019. These individual goals were then recommended to and approved by our Compensation Committee. At the time these goals were established, the Compensation Committee believed they were challenging but
believed they were challenging but attainable, and attainment was uncertain. Specifically, theThe individual goals for each named executive officer, other than Mr. Lewis, for 2017 were as follows:2019 included the following:
Named Executive Officer | Individual Goals | ||||||||||||
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Roger Adsett | Achieve target net revenue for ARIKAYCE | ||||||||||||
Operationalize life-cycle management plan for ARIKAYCE | |||||||||||||
Ensure adequate supply to cover forecast and build inventory reserve for ARIKAYCE | |||||||||||||
Advance international filings | |||||||||||||
Implement global expansion plans | |||||||||||||
Advance future pipeline | |||||||||||||
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John Goll | Support pre-commercial international growth and global tax structuring | ||||||||||||
Ensure and monitor a cost-disciplined approach to investments consistent with strategic priorities of the organization | |||||||||||||
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Advance company growth through successful identification, diligence and execution of strategic acquisitions | |||||||||||||
Effectively manage Board interactions and be responsive to Board needs | |||||||||||||
Complete successful public financings to provide capital necessary for continued operations | |||||||||||||
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S. Nicole Schaeffer | Continue to drive leadership and collaboration of executive leaders | ||||||||||||
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Increase pipeline and
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Hire key senior executive and
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Ensure timely and accurate financial statement preparation and filings in compliance with the Sarbanes-Oxley Act of 2002 | |||||||||||||
Raise company profile across media, public opinion and employees through corporate communications | |||||||||||||
Advance strategic procurement function |
With input from Mr. Lewis, the Compensation Committee made a qualitative determination following the end of the year as to the level of achievement by each of our named executive officers other than our President and CEO with regard to his or her respective individual performance objectives.
Determining Payouts of Annual Cash Incentives
The Compensation Committee received benchmarking data and recommendations from FW Cook in evaluating the 2017 cash incentive awards for our named executive officers. When determining payouts for the annual cash incentives, the Board, with respect to our President and CEO, and the Compensation Committee, with respect to the other named executive officers, took into account our
performance against our annual corporate objectives. Specifically, we had the following achievements in 2017 relative to our corporate objectives:
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For bonuses related to our 2017 performance, the Compensation Committee determined that we achieved a cash bonus payout percentage of 170% on our overall performance against our corporate objectives. The following table provides a breakdown of how the Board, with respect to our President
and CEO, and the Compensation Committee, with respect to our remaining named executive officers, determined that we performed against each of these corporate objectives during 2017:
Corporate Objectives | Weighting (% of Corporate Objectives) | Actual Performance | Actual % of Corporate Objectives Earned | |||
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Advance ALIS for NTM for commercial sale | 70% | Exceeded | 122.5% | |||
Ensure resourcing of human and financial capital | 20% | Exceeded | 37.5% | |||
Advance successor product candidates | 10% | Achieved | 10% | |||
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Total | 100% | 170% | ||||
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Based upon our performance in 2017, including our achievement of the corporate goals summarized above, as well as the achievement of individual goals set by the Compensation Committee, our named executive officers earned the following cash incentive awards for 2017:2019:
| | | Allocation of Bonus | Actual Bonus Achievement | | |||||||||
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Name | Base Salary | Target Bonus % | Corporate Goals | Individual Goals | Corporate Goals | Individual Goals | 2019 Cash Bonus | |||||||
William H. Lewis | $640,500 | 60% | 100% | N/A | 123% | N/A | $472,700 | |||||||
Roger Adsett(1) | $476,692 | 40% | 75% | 25% | 123% | 130% | $237,900 | |||||||
John Goll(2) | $335,000 | 35% | 75% | 25% | 123% | 110% | $140,500 | |||||||
Christine Pellizzari | $449,200 | 40% | 75% | 25% | 123% | 130% | $224,200 | |||||||
S. Nicole Schaeffer | $400,010 | 40% | 75% | 25% | 123% | 123% | $196,900 | |||||||
Paolo Tombesi(3) | $455,900 | 40% | 75% | 25% | 123% | 100% | $89,627 |
| | | Allocation of Bonus | Actual Bonus Achievement | | |||||||||
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Name | Base Salary | Target Bonus % | Corporate Goals | Individual Goals | Corporate Goals | Individual Goals | 2017 Cash Bonus | |||||||
William H. Lewis | $566,500 | 60% | 100% | N/A | 170% | N/A | $577,830 | |||||||
Paolo Tombesi | $435,000 | 40% | 75% | 25% | 170% | 127.5% | $277,400 | |||||||
Roger Adsett | $436,450 | 40% | 75% | 25% | 170% | 135% | $281,600 | |||||||
Christine Pellizzari | $415,340 | 40% | 75% | 25% | 170% | 140% | $270,000 | |||||||
Paul Streck | $425,000 | 40% | 75% | 25% | 170% | 145% | $208,800 |
Dr. Streck's 2017
Long-term Equity Incentives
One of the guiding principles of our compensation program is pay for performance, and we believe that a significant portion of our executives' compensation should be performance-based to create appropriate incentives and rewards for achieving strategic goals that are critical drivers of shareholder value. We also believe that stock ownership by management aligns our executives' interests with those of our shareholders, and equity incentive compensation rewards our executives for their contributions to the long-term success of the Company. The Compensation Committee believes that equity-based compensation is a vital part of our compensation program as it creates an ownership culture that rewards our executives for maximizing shareholder value over time and aligns the interests of our named executive officers and other key employees with those of our shareholders.
The Compensation Committee believes that the combination of stock option and RSU awards to our named executive officers and other employees encourages retention and aligns the interests of employees and our shareholders.
In determining the equity compensation awards to grant to our named executive officers in 2017,2019, the Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, considered each named executive officer's role, as
described above, along with the advice of FW Cook, our former compensation consultant, including information regarding comparative equity compensation awards received by the executives in our peer group. With regard to Messrs. Lewis, Tombesi, and Adsett and Ms. Pellizzari,Individual performance prior to the grant date was also
Table considered. Generally, 75% of Contents
considered.the award value is made in the form of stock options and 25% of the award value is made in the form of RSUs. The Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, may also grant equity awards from time to time in recognition of a named executive officer's expanded duties and responsibilities or continuing contributions to the Company's performance. Based on these considerations, Messrs. Lewis, Tombesi and Adsett, Ms. Pellizzari and Dr. Streckour named executive officers received the following optionequity incentive awards in 2017:2019.
Name | Date of | Number of Options | Number of Restricted Stock Units Granted(2) | |||
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William H. Lewis | 1/ | — | ||||
5/ | 51,741 | |||||
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Roger | 1/ | — | ||||
5/ | 21,559 | |||||
11/18/2019 | — | 24,863 | ||||
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5/ | ||||||
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Christine Pellizzari(4) | 1/3/2019 | 157,290 | — | |||
5/15/2019 | — | 25,870 | ||||
S. Nicole Schaeffer | 1/3/2019 | 157,290 | — | |||
5/15/2019 | — | 14,660 | ||||
Paolo Tombesi(5) | 1/3/2019 | 120,280 | — |
The Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, may also grant stock options from time to time in recognition
Other Benefits
We maintain several other benefit programs that are offered to all employees including executives on an equivalent basis, which include coverage for health insurance, dental insurance, life and disability insurance, and a 401(k) Plan. In 2017, we increased the Company match withplan. With respect to our 401(k) Plan. In general, for each employee who contributes up to 4% of his or her eligible compensation,plan, the Company will deposit a matching contribution of 100% of deferrals up to 4% of an employee's eligible compensation (subject to any maximum applicable limits under the IRSInternal Revenue Service regulations). We also maintain an Employee Stock Purchase Plan whereby eligible employees, including executives, are given the opportunity to purchase Common Stock at a discounted price through payroll deductions. We do not have any defined benefit plans or non-qualified deferred compensation plans. From time to time, we may also provide employees with certain other limited perquisites. For instance, in 2019, we paid certain legal fees on Mr. Lewis' behalf, including in connection with his sale of shares of our Common Stock in a registered offering.
Severance and Change in Control Benefits
As discussed in further detail below, we have entered into employment agreements with each of our named executive officers that, in addition to other items, provide for certain severance and change in control payments. We believe that the existence of these potential benefits will discourage turnover and cause such executives to be better able to respond tomitigate the possibilityinfluence of a change in control
without being influenced by the potential effect of a change in control on theiran executive officer's decision-making due to concerns regarding job security. The employment agreements with our named executive officers do not provide for single-trigger vesting on a change in control or tax gross-up payments.
Other Compensation Considerations
Section 162(m). The limitation on deductibility imposed by Section 162(m) is one of In connection with the considerations we take into account in designing our executive compensation programs. Under Section 162(m), we cannot deduct, for federal income tax purposes, compensation in excess of $1,000,000 paid to certain executive officers for any one calendar year. Prior to the Tax Cuts and Jobs Act of 2017 (the Tax Act), this limitation on deductibility did not apply to certain "performance-based compensation" within the meaning of Section 162(m) and the regulations promulgated thereunder. However, the Tax Act eliminated the "performance-based compensation" exemption for tax years beginning after December 31, 2017, other than with respect to grandfathered amounts. In light of this change to Section 162(m), compensation that was previously intended to satisfy the "performance-based compensation" exemption may not be fully deductible when paid after December 31, 2017. Additionally, the Tax Act significantly expanded the definition of "covered employees" under Section 162(m), such that after December 31, 2017, all of our named executives officers (including our chief financial officer) will be subject to the limitation on deductibility under Section 162(m), and any executive who is a covered employee will remain a covered employee for subsequent years, even after such executive's termination of employment.
Table of ContentsMr. Tombesi's employment, we entered into a separation agreement providing for certain cash and other benefits. See "Potential Payments Upon Termination" for additional information.
COMPENSATION COMMITTEE REPORT*REPORT
The Compensation Committee has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management and based on the review and discussions with management of the CD&A, the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated by reference in the Company's Annual Report.
Alfred F. Altomari, Chairman
David R. BrennanMyrtle PotterMelvin Sharoky, M.D.
Table of ContentsLeo Lee
The following table sets forth information regarding compensation earned by the named executive officers in 2017, 2016,2019, 2018, and 2015.2017.
To improve readability, the following columns have been removed from the table as there is no reportable information with respect to these items: "Stock Awards," "Change in Pension Value,"Value" and "Nonqualified Deferred Compensation Earnings."
Name and Principal Position | Year | Salary | Bonus(1) | Option Awards(2) | Non-Equity Incentive Plan Compensation(3) | All Other Compensation(4) | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
William H. Lewis | 2017 | $566,500 | — | $3,200,003 | $577,830 | $8,100 | $4,352,433 | |||||||
President and | 2016 | $550,000 | — | $3,595,226 | $330,000 | $7,950 | $4,483,176 | |||||||
CEO | 2015 | $505,000 | — | $2,379,360 | $248,460 | $7,950 | $3,140,770 | |||||||
Paolo Tombesi(5) | 2017 | $253,750 | $40,000 | $1,300,046 | $277,400 | $12,087 | $1,883,283 | |||||||
Chief Financial | 2016 | — | — | — | — | — | — | |||||||
Officer | 2015 | — | — | — | — | — | — | |||||||
Roger Adsett(6) | 2017 | $436,450 | — | $1,612,615 | $281,600 | $8,100 | $2,338,765 | |||||||
Chief Commercial | 2016 | $114,115 | $25,000 | $1,282,154 | $86,000 | $3,583 | $1,510,852 | |||||||
Officer | 2015 | — | — | — | — | — | — | |||||||
Christine Pellizzari | 2017 | $415,340 | — | $1,284,425 | $270,000 | $8,100 | $1,977,865 | |||||||
Chief Legal Officer | 2016 | $394,613 | — | $1,100,674 | $169,700 | $7,950 | $1,672,937 | |||||||
2015 | $365,382 | — | $880,026 | $132,000 | $7,950 | $1,385,358 | ||||||||
Paul Streck(7) | 2017 | $244,920 | $40,000 | $1,099,996 | $208,800 | $684 | $1,594,400 | |||||||
Chief Medical | 2016 | — | — | — | — | — | — | |||||||
Officer | 2015 | — | — | — | — | — | — | |||||||
Andrew T. Drechsler(8) | 2017 | $97,620 | — | — | — | $3,905 | $101,525 | |||||||
Former Chief | 2016 | $379,106 | — | $1,100,674 | $151,700 | $7,950 | $1,639,430 | |||||||
Financial Officer | 2015 | $351,024 | — | $880,026 | $119,700 | $7,950 | $1,358,700 |
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
William H. Lewis | 2019 | $640,500 | — | $1,499,972 | $4,499,965 | $472,700 | $61,957 | $7,175,094 | ||||||||
President and CEO | 2018 | $610,000 | — | $1,174,995 | $3,524,964 | $622,200 | $11,000 | $5,943,159 | ||||||||
2017 | $566,500 | — | — | $3,200,003 | $577,830 | $8,100 | $4,352,433 | |||||||||
Roger Adsett | 2019 | $475,741 | — | $1,124,990 | $1,874,999 | $237,900 | $14,773 | $3,728,403 | ||||||||
Chief Operating Officer | 2018 | $458,280 | — | $474,993 | $1,425,015 | $300,200 | $14,662 | $2,673,150 | ||||||||
2017 | $436,450 | — | — | $1,612,615 | $281,600 | $8,100 | $2,338,765 | |||||||||
John Goll | 2019 | $330,584 | — | $124,976 | $225,023 | $140,500 | $11,200 | $832,283 | ||||||||
Former Principal Financial Officer | 2018 | $306,520 | — | $68,748 | $206,264 | $171,100 | $11,000 | $763,632 | ||||||||
2017 | $297,590 | $100,000 | — | $274,958 | $161,500 | $8,100 | $842,148 | |||||||||
Christine Pellizzari | 2019 | $449,200 | — | $749,971 | $1,274,993 | $224,200 | $11,200 | $2,709,564 | ||||||||
Chief Legal Officer | 2018 | $436,110 | — | $324,978 | $975,001 | $283,500 | $11,000 | $2,030,589 | ||||||||
2017 | $415,340 | — | — | $1,284,425 | $270,000 | $8,100 | $1,977,865 | |||||||||
S. Nicole Schaeffer | 2019 | $400,010 | — | $424,993 | $1,274,993 | $196,900 | $15,701 | $2,312,597 | ||||||||
Chief People Strategy Officer | 2018 | $375,940 | — | $324,978 | $975,001 | $244,400 | $14,529 | $1,934,848 | ||||||||
2017 | $348,090 | — | — | $1,219,612 | $226,300 | $11,400 | $1,805,402 | |||||||||
Paolo Tombesi(6) | 2019 | $189,958 | — | — | $974,990 | — | $362,384 | $1,527,332 | ||||||||
Former Chief Financial Officer | 2018 | $442,620 | — | $324,978 | $975,001 | $270,000 | $11,229 | $2,023,828 | ||||||||
2017 | $253,750 | $40,000 | — | $1,300,046 | $277,400 | $12,087 | $1,883,283 |
20172019 Grants of Plan-Based Awards
The following table sets forth certain information regarding the annual cash incentive awards and stock optionequity grants made to our named executive officers during the year ended December 31, 2017.2019. No other plan-based awards were granted to any of our named executive officers during 2017. Mr. Drechsler was not eligible to receive annual cash incentive awards or stock option grants in 2017.2019.
| | | | | Estimated Future Payouts Under Equity Incentive Plan | All Other Stock Awards: Number of Shares of Restricted Stock Units (RSUs) (#) | | | | | | | | All Other Stock Awards: Number of Shares of Restricted Stock Units (RSUs) (#)(2) | | | | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | All Other Option Awards: Number of Securities Underlying Options (#)(2) | | | | | | | All Other Option Awards: Number of ecurities Underlying Options (#)(3) | | | ||||||||||||||||||||
| | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | ||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Target (#) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | |||||||||||||||||||||||||
William H. Lewis | — | — | $339,900 | $679,800 | — | — | — | — | — | — | — | $384,300 | $768,600 | — | — | — | — | |||||||||||||||||
1/5/2017 | — | — | — | — | — | 175,530 | $13.67 | $1,600,026 | 1/3/2019 | — | — | — | — | 555,140 | $13.91 | $4,499,965 | ||||||||||||||||||
5/17/2017 | — | — | — | — | — | 142,080 | $17.16 | $1,599,977 | 5/15/2019 | — | — | — | 51,741 | — | — | $1,499,972 | ||||||||||||||||||
Paolo Tombesi | — | $10,875 | $174,000 | $326,250 | — | — | — | — | — | |||||||||||||||||||||||||
Roger Adsett | — | $12,500 | $200,000 | $375,000 | — | — | — | |||||||||||||||||||||||||||
6/1/2017 | — | — | — | — | — | 127,160 | $15.60 | $1,300,046 | 1/3/2019 | — | — | — | — | 231,310 | $13.91 | $1,874,999 | ||||||||||||||||||
Roger Adsett | — | $10,911 | $174,580 | $327,338 | — | — | — | — | — | |||||||||||||||||||||||||
5/15/2019 | — | — | — | 21,559 | — | — | $624,995 | |||||||||||||||||||||||||||
11/18/2019 | — | — | — | 24,863 | — | — | $499,995 | |||||||||||||||||||||||||||
John Goll | — | $7,328 | $117,250 | $219,844 | — | — | — | — | ||||||||||||||||||||||||||
1/5/2017 | — | — | — | — | — | 82,280 | $13.67 | $750,015 | 1/3/2019 | — | — | — | — | 27,760 | $13.91 | $225,023 | ||||||||||||||||||
5/17/2017 | — | — | — | — | — | 76,600 | $17.16 | $862,600 | 5/15/2019 | — | — | — | 4,311 | — | — | $124,976 | ||||||||||||||||||
Christine Pellizzari | — | $10,384 | $166,136 | $311,505 | — | — | — | — | — | — | $11,230 | $179,680 | $336,900 | — | — | — | — | |||||||||||||||||
1/5/2017 | — | — | — | — | — | 65,820 | $13.67 | $599,975 | 1/3/2019 | — | — | — | — | 157,290 | $13.91 | $1,274,993 | ||||||||||||||||||
5/17/2017 | — | — | — | — | — | 60,780 | $17.16 | $684,450 | 5/15/2019 | — | — | — | 25,870 | — | — | $749,971 | ||||||||||||||||||
Paul Streck. | — | $10,625 | $170,000 | $318,750 | — | — | — | — | — | |||||||||||||||||||||||||
S. Nicole Schaeffer | — | $10,000 | $160,004 | $300,008 | — | — | — | — | ||||||||||||||||||||||||||
6/5/2017 | — | — | — | — | — | 109,210 | $15.38 | $1,099,996 | 1/3/2019 | — | — | — | — | 157,290 | $13.91 | $1,274,993 | ||||||||||||||||||
Andrew T. Drechsler | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
5/15/2019 | — | — | — | 14,660 | — | — | $424,993 | |||||||||||||||||||||||||||
Paolo Tombesi. | — | $11,398 | $182,360 | $341,925 | — | — | — | — | ||||||||||||||||||||||||||
1/3/2019 | — | — | — | — | 120,280 | $13.91 | $974,990 |
Narrative Disclosure to Summary Compensation Table and 20172019 Grants of Plan-Based Awards Table
Employment Agreements
OurThe employment agreements for our named executive officers and other officers generally provide for no fixed termination or other expiration dates. See "Potential Payments Upon Termination or Change in Control"Termination" for information regarding the terms of these agreements that would be relevant in the event of the executive's termination or upon a change in control.
William H. Lewis. On September 10, 2012, we entered into an employment agreement with Mr. Lewis under which he is entitled to an annual base salary, a target annual bonus opportunity equal to 50% of his base salary and participation in Company benefit plans generally provided to the Company's executive personnel, including participation in any equity incentive plans maintained by the Company. For 2017, Mr. Lewis's base salary was increased to $566,500 and his target bonus percentage remained consistent with the prior year at 60%.
Paolo Tombesi. On June 1, 2017, we entered into an employment agreement with Mr. Tombesi under which he is entitled to an annual base salary, a target annual bonus opportunity equal to 40% of his base salary and participation in Company benefit plans generally provided to the Company's executive personnel, including participation in any equity incentive plans maintained by the Company. For 2017, Mr. Tombesi's initial base salary was at an annual rate of $435,000. He also received a sign-on bonus of $40,000 upon the completion of 30 days of employment
Roger Adsett. On September 27, 2016, we entered into an employment agreement with Mr. Adsett under which he is entitled to an annual base salary, a target annual bonus opportunity equal to 40% of his base salary and participation in Company benefit plans generally provided to the Company's executive personnel, including participation in any equity incentive plans maintained by the Company. For 2017, Mr. Adsett's base salary was increased to $436,450 and his target bonus percentage remained consistent with the prior year at 40%.
Christine Pellizzari. On July 29, 2013, we entered into an employment agreement with Ms. Pellizzari under which she is entitled to an annual base salary, a target annual bonus opportunity equal to 40% of her base salary and participation in Company benefit plans generally provided to the Company's executive personnel, including participation in any equity incentive plans maintained by the Company. On September 26, 2016, we entered into an amended employment agreement with Ms. Pellizzari to revise certain terms of her employment agreement related to severance, as described in more detail below. For 2017, Ms. Pellizzari's base salary was increased to $415,340 and her target bonus remained consistent with the prior year at 40%.
Paul Streck. On June 5, 2017, we entered into an employment agreement with Dr. Streck under which he is entitled to an annual base salary, a target annual bonus opportunity equal to 40% of his base salary and participation in Company benefit plans generally provided to the Company's executive personnel, including participation in any equity incentive plans maintained by the Company. For 2017, Dr. Streck's initial base salary was at an annual rate of $425,000. Dr. Streck also received a sign-on bonus of $40,000 upon the completion of 30 days of employment. We further agreed to reimburse Dr. Streck for certain other fees and expenses incurred by him in connection with entering into the employment agreement and joining the Company, up to a maximum of $50,000.
Andrew T. Drechsler. On November 7, 2012, we entered into an employment agreement with Mr. Drechsler under which he was entitled to an annual base salary, a target annual bonus opportunity equal to 30% of his base salary and participation in Company benefit plans generally provided to the Company's executive personnel, including participation in any equity incentive plans maintained by the Company. For 2017, Mr. Drechsler's base salary was increased to $390,480. Mr. Drechsler announced his resignation in November 2016 and left the Company in March 2017, and was not eligible for an annual bonus.
Outstanding Equity Awards at 2017 Year End2019 Fiscal Year-End
The following table sets forth certain information regarding the stock optionsequity awards held by each of our named executive officers as of December 31, 2017. None of our named executive officers held unvested RSUs as of December 31, 2017.2019.
| Option Awards | Stock Awards | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 (#) | 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 (#) | |||||||||
William H. Lewis | 708,314 | — | — | $3.40 | 09/10/2022(1) | — | — | — | — | |||||||||
186,170 | — | — | $4.55 | 09/28/2022(1) | — | — | — | — | ||||||||||
83,334 | — | — | $12.44 | 05/23/2023(1) | — | — | — | — | ||||||||||
83,333 | 83,333 | — | $12.44 | 05/23/2023(2) | — | — | — | — | ||||||||||
250,000 | — | — | $14.24 | 10/31/2023(1) | — | — | — | — | ||||||||||
43,750 | 6,250 | — | $20.49 | 01/10/2024(1) | — | — | — | — | ||||||||||
43,750 | 6,250 | — | $12.58 | 06/02/2024(1) | — | — | — | — | ||||||||||
93,750 | 56,250 | — | $22.76 | 05/21/2025(1) | — | — | — | — | ||||||||||
61,125 | 101,875 | — | $16.16 | 01/07/2026(1) | — | — | — | — | ||||||||||
92,231 | 153,719 | — | $10.85 | 05/19/2026(1) | — | — | — | — | ||||||||||
— | 175,530 | — | $13.67 | 01/05/2027(1) | — | — | — | — | ||||||||||
— | 142,080 | — | $17.16 | 05/17/2027(1) | — | — | — | — | ||||||||||
Paolo Tombesi | — | 127,160 | — | $15.60 | 06/01/2027(1) | — | — | — | — | |||||||||
Roger Adsett | 22,015 | 66,045 | — | $14.56 | 10/03/2026(1) | — | — | — | — | |||||||||
— | 82,280 | — | $13.67 | 01/05/2027(1) | — | — | — | — | ||||||||||
— | 76,600 | — | $17.16 | 05/17/2027(1) | — | — | — | — | ||||||||||
Christine Pellizzari | 150,000 | — | — | $11.14 | 07/30/2023(1) | — | — | — | — | |||||||||
26,250 | 3,750 | — | $20.49 | 01/10/2024(1) | — | — | — | — | ||||||||||
26,250 | 3,750 | — | $12.58 | 06/02/2024(1) | — | — | — | — | ||||||||||
9,375 | 5,625 | — | $16.07 | 01/07/2025(1) | — | — | — | — | ||||||||||
28,125 | 16,875 | — | $22.76 | 05/21/2025(1) | — | — | — | — | ||||||||||
18,750 | 31,250 | — | $16.16 | 01/07/2026(1) | — | — | — | — | ||||||||||
28,181 | 46,969 | — | $10.85 | 05/19/2026(1) | — | — | — | — | ||||||||||
— | 65,820 | — | $13.67 | 01/05/2027(1) | — | — | — | — | ||||||||||
— | 60,780 | — | $17.16 | 05/17/2027(1) | — | — | — | — | ||||||||||
Paul Streck | — | 109,210 | — | $15.38 | 06/05/2027(1) | — | — | — | — | |||||||||
Andrew T. Drechsler | — | — | — | — | — | — | — | — | — |
| Option Awards | Stock Awards | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 (#) | 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 (#) | |||||||||
William H. Lewis | 430,630 | — | — | $3.40 | 09/10/2022(1) | — | — | — | — | |||||||||
186,170 | — | — | $4.55 | 09/28/2022(1) | — | — | — | — | ||||||||||
83,333 | — | — | $12.44 | 05/23/2023(1) | — | — | — | — | ||||||||||
166,667 | — | — | $12.44 | 05/23/2023(2) | — | — | — | — | ||||||||||
250,000 | — | — | $14.24 | 10/31/2023(1) | — | — | — | — | ||||||||||
50,000 | — | — | $20.49 | 01/10/2024(1) | — | — | — | — | ||||||||||
50,000 | — | — | $12.58 | 06/02/2024(1) | — | — | — | — | ||||||||||
150,000 | — | — | $22.76 | 05/21/2025(1) | — | — | — | — | ||||||||||
142,625 | 20,375 | — | $16.16 | 01/07/2026(1) | — | — | — | — | ||||||||||
215,206 | 30,744 | — | $10.85 | 05/19/2026(1) | — | — | — | — | ||||||||||
109,706 | 65,824 | — | $13.67 | 01/05/2027(1) | — | — | — | — | ||||||||||
88,800 | 53,280 | — | $17.16 | 05/17/2027(1) | — | — | — | — | ||||||||||
75,109 | 125,181 | — | $30.46 | 01/04/2028(1) | — | — | — | — | ||||||||||
— | 555,140 | — | $13.91 | 01/03/2029(1) | ||||||||||||||
— | — | — | — | — | 80,672(3) | $1,926,447(4) | — | — |
| Option Awards | Stock Awards | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 (#) | 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 (#) | |||||||||
Roger Adsett | 65,045 | 22,015 | — | $14.56 | 10/03/2026(1) | — | — | — | — | |||||||||
51,425 | 30,855 | — | $13.67 | 01/05/2027(1) | — | — | — | — | ||||||||||
47,875 | 28,725 | — | $17.16 | 05/17/2027(1) | — | — | — | — | ||||||||||
30,364 | 50,606 | — | $30.46 | 01/04/2028(1) | — | — | — | — | ||||||||||
— | 231,310 | — | $13.91 | 01/03/2029(1) | ||||||||||||||
— | — | — | — | — | 58,117(3) | $1,387,834(4) | — | — | ||||||||||
John Goll | 12,500 | — | — | $16.07 | 01/08/2025(1) | — | — | — | — | |||||||||
37,500 | — | — | $22.76 | 05/21/2025(1) | — | — | — | — | ||||||||||
10,062 | 1,438 | — | $16.16 | 01/07/2026(1) | — | — | — | — | ||||||||||
14,945 | 2,135 | — | $10.85 | 05/19/2026(1) | — | — | — | — | ||||||||||
9,425 | 5,655 | — | $13.67 | 01/05/2027(1) | — | — | — | — | ||||||||||
7,631 | 4,579 | — | $17.16 | 05/17/2027(1) | — | — | — | — | ||||||||||
4,395 | 7,325 | — | $30.46 | 01/04/2028(1) | — | — | — | — | ||||||||||
— | 27,760 | — | $13.91 | 01/03/2029(1) | — | — | — | — | ||||||||||
— | — | — | — | — | 6,003(3) | $143,352(4) | ||||||||||||
Christine Pellizzari | 150,000 | — | — | $11.14 | 07/30/2023(1) | — | — | — | — | |||||||||
30,000 | — | — | $20.49 | 01/10/2024(1) | — | — | — | — | ||||||||||
30,000 | — | — | $12.58 | 06/02/2024(1) | — | — | — | — | ||||||||||
15,000 | — | — | $16.07 | 01/08/2025(1) | — | — | — | — | ||||||||||
45,000 | — | — | $22.76 | 05/21/2025(1) | — | — | — | — | ||||||||||
43,750 | 6,250 | — | $16.16 | 01/07/2026(1) | — | — | — | — | ||||||||||
65,756 | 9,394 | — | $10.85 | 05/19/2026(1) | — | — | — | — | ||||||||||
41,137 | 24,683 | — | $13.67 | 01/05/2027(1) | — | — | — | — | ||||||||||
37,987 | 22,793 | — | $17.16 | 05/17/2027(1) | — | — | — | — | ||||||||||
20,775 | 34,625 | — | $30.46 | 01/04/2028(1) | — | — | — | — | ||||||||||
— | 157,290 | — | $13.91 | 01/03/2029(1) | — | — | — | — | ||||||||||
— | — | — | — | — | 33,871(3) | $808,839(4) | — | — | ||||||||||
S. Nicole Schaeffer | 4,226 | — | — | $6.96 | 01/02/2023(1) | — | — | — | — | |||||||||
40,000 | — | — | $12.44 | 05/23/2023(1) | — | — | — | — | ||||||||||
25,000 | — | — | $12.44 | 05/23/2023(2) | — | — | — | — | ||||||||||
27,500 | — | — | $20.49 | 01/10/2024(1) | — | — | — | — | ||||||||||
27,500 | — | — | $12.58 | 06/02/2024(1) | — | — | — | — | ||||||||||
13,750 | — | — | $16.07 | 01/08/2025(1) | — | — | — | — | ||||||||||
41,250 | — | — | $22.76 | 05/21/2025(1) | — | — | — | — | ||||||||||
43,750 | 6,250 | — | $16.16 | 01/07/2026(1) | — | — | — | — | ||||||||||
28,181 | 9,394 | — | $10.85 | 05/19/2026(1) | — | — | — | — | ||||||||||
25,712 | 15,428 | — | $13.67 | 01/05/2027(1) | — | — | — | — | ||||||||||
23,937 | 14,363 | — | $17.16 | 05/17/2027(1) | — | — | — | — | ||||||||||
20,775 | 34,625 | — | $30.46 | 01/04/2028(1) | — | — | — | — | ||||||||||
— | 157,290 | — | $13.91 | 01/03/2029(1) | — | — | — | — | ||||||||||
— | — | — | — | — | 22,661(3) | $541,145(4) | — | — | ||||||||||
Paolo Tombesi | — | — | — | — | — | — | — | — | — |
Option Exercises and Stock Vested During 20172019
DuringThe following table sets forth information with respect to stock options exercised and stock vested during the fiscal year ended December 31, 2017, none of the named executive officers acquired shares upon exercise of stock options or vesting of stock awards.2019.
| Option Awards | Stock Awards | ||||||
---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||
William H. Lewis | 277,684 | 6,275,658 | 9,644 | 143,213 | ||||
Roger Adsett | — | — | 3,899 | 57,900 | ||||
John Goll | 25,000 | 186,539 | 565 | 8,390 | ||||
Christine Pellizzari | — | — | 2,668 | 39,620 | ||||
S. Nicole Schaeffer | 12,000 | 195,319 | 2,668 | 39,620 | ||||
Paolo Tombesi | 79,475 | 67,241 | 2,668 | 39,620 |
Potential Payments Upon Termination or Change in Control
Our named executive officers are entitled to payments and other benefits under their employment agreements in connection with their termination under certain circumstances. We believe that the existence of these potential benefits will discourage turnover and cause such executives to be better able to respond tomitigate the possibilityinfluence of a change in control without being influenced by the potential effect of a change in control on theiran executive officer's decision-making due to concerns regarding job security. On June 2, 2019, Mr. Tombesi stepped down as our Chief Financial Officer and his employment with the Company ended. Pursuant to a separation agreement, Mr. Tombesi received the following severance benefits: (i) 12 months' salary at his 2019 base salary, paid semi-monthly over a 12-month period; (ii) a pro-rata portion of his annual bonus based on actual Company performance during 2019, payable within two and one-half months following December 31, 2019; (iii) accelerated vesting of any of his options and RSUs that would have otherwise vested within six months of June 2, 2019; and (iv) payment for the cost of COBRA coverage equivalent to his current coverage through no later than May 31, 2020 (minus certain employee contributions), in each case less applicable tax withholding. As of December 31, 2019, Mr. Tombesi had earned $362,237 under this arrangement.
If Mr. Lewis's employment is terminated by us without cause or by Mr. Lewis for good reason within twelve monthstwo years after a change in control of the Company, Mr. Lewis will receive payment of accrued obligations, a lump sum severance payment equal to two times the sum of his then applicable annual base salary andplus two times his annual target bonus plus a pro-rata portion of his annual target bonus based on actual performance(calculated as the target bonus for the year of termination multiplied by the following fraction: (i) the number of days that the Executive was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all time-based vesting equity awards, and continuation for up to eighteen18 months of health benefits provided he elects continued coverage under COBRA. Should Mr. Lewis's employment be terminated by us without cause or by Mr. Lewis for good reason prior to the date of a change in control or more than one yeartwo years after a change in control, he would be entitled to receive all of the foregoing benefits provided that his severance payment would instead be limited to one and one-half times his then applicable annual base salary and one times his target bonus (payable over a twelve monthan 18-month period) and target bonus for the year of termination, his pro-rata bonus would be based on actual performance for the year of
termination, and his accelerated vesting would be limited to full vesting of all time-based equity awards granted at least one year prior to his termination date. Should Mr. Lewis's employment be terminated due to his death or disability, Mr. Lewis or his estate would receive payment of accrued obligations, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he and his beneficiaries were entitled as a result of his death or disability.
If Mr. Tombesi's, Mr. Adsett's Ms. Pellizzari's or Dr. Streck's employment is terminated by us without cause or by Mr. Adsett for good reason within two years after a change in control of the departing executiveCompany, Mr. Adsett will receive payment of accrued obligations, a lump sum severance payment equal to one and one-half times his then applicable annual base salary plus one and one-half times his annual target bonus plus a pro-rata portion of his annual target bonus (calculated as the target bonus for the year of termination multiplied by the following fraction: (i) the number of days that the Executive was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all equity awards, and a continuation of up to 18 months of health benefits provided he elects continued coverage under COBRA. Should Mr. Adsett's employment be terminated by us without cause or by Mr. Adsett for good reason prior to the date of a change in control or more than two years after a change in control, Mr. Adsett would be entitled to receive all of the foregoing benefits provided that his severance payment would be limited to his then applicable annual base salary and instead be payable over a 12-month period, his pro-rata bonus would be based on actual performance for the year of termination, and his equity award vesting would be limited to accelerated vesting of all time-based equity awards that would otherwise have vested within 12 months following his termination date. Should Mr. Adsett's employment be terminated due to his death or disability, Mr. Adsett or his estate would receive payment of accrued obligations, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he and his beneficiaries were entitled as a result of his death or disability.
If Mr. Goll's employment is terminated by us without cause or by Mr. Goll for good reason within one year after a change in control of the Company, the departing executiveMr. Goll will receive payment of accrued obligations, a lump sum severance payment equal to the sum of his or her then applicable annual base salary plus a pro-rata portion of his or her annual target bonus based on actual performance(calculated as the target bonus for the year of termination multiplied by the following fraction: (i) the number of days that the Executive was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all time-based equity awards, and a continuation of up to one year12 months of health benefits provided he or she elects continued coverage under COBRA. Should Mr. Tombesi's, Mr. Adsett's, Ms. Pellizzari's or Dr. Streck'sGoll's employment be terminated by us without cause or by the departing executiveMr. Goll for good reason prior to the date of a change in control or more than one year after a change in control, the departing executiveMr. Goll would be entitled to receive all of the foregoing benefits provided that his severance payment would be limited to one-half of his then applicable annual base salary and instead be payable over a six-month period, his pro-rata bonus would be based on actual performance for the year of termination, his equity award vesting would be limited to accelerated vesting of all time based equity awards that would otherwise have vested within six months following his termination date, and he would be entitled to receive a continuation of up to six months of health benefits provided he elects continued coverage under COBRA. Should Mr. Goll's employment be terminated due to his death or disability, Mr. Goll or his estate would receive payment of accrued obligations, a pro rata portion of his annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he and his beneficiaries were entitled as a result of his death or disability.
If Ms. Pellizzari's employment is terminated by us without cause or by Ms. Pellizzari for good reason within two years after a change in control of the Company, Ms. Pellizzari will receive payment of accrued obligations, a lump sum severance payment equal to one and one-half times her then applicable annual base salary plus one and one-half times her annual target bonus plus a pro-rata portion of her annual target bonus (calculated as the target bonus for the year of termination
multiplied by the following fraction: (i) the number of days that the Executive was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all equity awards, and a continuation of up to 18 months of health benefits provided she elects continued coverage under COBRA. Should Ms. Pellizzari's employment be terminated by us without cause or by Ms. Pellizzari for good reason prior to the date of a change in control or more than two years after a change in control, Ms. Pellizzari would be entitled to receive all of the foregoing benefits provided that her severance payment would be limited to her then applicable annual base salary and instead be payable over a twelve month period, her pro-rata bonus would be based on actual performance for the year of termination, and his or her equity award vesting would be limited to accelerated vesting of stock optionsall time-based equity awards that would otherwise have vested within 12 months following his or her termination date. Should the departing executive'sMs. Pellizzari's employment be terminated due to his or her death or disability, the executive or hisMs. Pellizzari or her estate would receive payment of accrued obligations, a pro-rata portion of his or her annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he or she and his or her beneficiaries were entitled as a result of his or her death or disability.
Table If Ms. Schaeffer's employment is terminated by us without cause or by Ms. Schaeffer for good reason within two years after a change in control of Contentsthe Company, Ms. Schaeffer will receive payment of accrued obligations, a lump sum severance payment equal to one and one-half times her then applicable annual base salary plus one-and-one-half times her annual target bonus plus a pro-rata portion of her annual target bonus (calculated as the target bonus for the year of termination multiplied by the following fraction: (i) the number of days that the Executive was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all equity awards, and a continuation of up to 18 months of health benefits provided she elects continued coverage under COBRA. Should Ms. Schaeffer's employment be terminated by us without cause or by Ms. Schaeffer for good reason prior to the date of a change in control or more than two years after a change in control, Ms. Schaeffer would be entitled to receive all of the foregoing benefits provided that her severance payment would be limited to her then applicable annual base salary and instead be payable over a 12-month period, her pro-rata bonus would be based on actual performance for the year of termination, and her equity award vesting would be limited to accelerated vesting of all time-based equity awards that would otherwise have vested within 12 months following her termination date. Should Ms. Schaeffer's employment be terminated due to her death or disability, Ms. Schaeffer or her estate would receive payment of accrued obligations, a pro-rata portion of her annual target bonus based on actual performance for the year of termination, and any insurance benefits to which she and her beneficiaries were entitled as a result of her death or disability.
For purposes of the employment agreements, the term "cause" generally includes:
For purposes of the employment agreements, the term "good reason" generally includes:
For purposes of the employment agreements, the term "change in control" generally includes:
To protect our business and goodwill, for a period of twelve 12��months after the termination of an executive's employment with us, each executive has agreed that he or she will not:
The severance benefits that executives may be entitled to receive under these agreements and other benefits that the executives are entitled to receive under other plans may constitute parachute payments that are subject to the "golden parachute" rules of Section 280G of the Code and the excise tax of Code Section 4999. If these payments are determined to be parachute payments, as calculated by our independent registered public accounting firm, the parachute payments will be reduced if, and only to the extent that, a reduction will allow the executives to receive a greater net after tax amount than the executives would receive absent a reduction. All severance benefits are also subject to the execution and non-revocation of a general release of claims against the Company.
Mr. Drechsler resigned as our chief financial officer in November 2016, and his employment with the Company ended on March 31, 2017. Mr. Drechsler did not receive any compensation from the Company as a resultTable of his resignation.Contents
The table below summarizes the hypothetical payments that could have been incurred by us with respect to each of our remainingthe named executive officers below, assuming that a qualified termination under the applicable agreement had occurred on December 31, 20172019 as a result of termination without cause or for good reason during the one-yeartwo-year period immediately following a change in control.
| Cash Severance(1) | Pro-Rata Bonus(2) | Benefits | Value of Accelerated Equity(3) | Total | |||||
---|---|---|---|---|---|---|---|---|---|---|
William H. Lewis | $1,812,800 | $339,900 | $38,075 | $10,377,449 | $12,568,224 | |||||
Paolo Tombesi | $435,000 | $174,000 | $30,808 | $1,981,153 | $2,620,961 | |||||
Roger Adsett(4) | $436,450 | $174,580 | $84 | $3,612,323 | $4,223,437 | |||||
Christine Pellizzari | $415,340 | $166,136 | $25,383 | $3,765,817 | $4,372,676 | |||||
Paul Streck | $425,000 | $170,000 | $25,383 | $1,725,518 | $2,345,901 |
| Cash Severance(1) | Pro-Rata Bonus(2) | Benefits | Value of Accelerated Equity(3) | Total | |||||
---|---|---|---|---|---|---|---|---|---|---|
William H. Lewis | $2,049,600 | $384,300 | $39,016 | $9,049,187 | $11,522,103 | |||||
Roger Adsett | $1,050,000 | $200,000 | $22,606 | $4,407,236 | $5,679,842 | |||||
John Goll | $335,000 | $117,250 | $26,011 | $547,548 | $1,025,809 | |||||
Christine Pellizzari | $943,320 | $179,680 | $39,016 | $2,952,857 | $4,114,873 | |||||
S. Nicole Schaeffer | $840,021 | $160,004 | $13,922 | $2,534,019 | $3,547,966 |
Tableoptions, and (ii) RSUs is calculated by multiplying the number of Contents
The following table summarizes the hypothetical payments that could have been incurred by us with respect to each of the named executive officers below assuming that a qualified termination under the applicable agreement had occurred on December 31, 20172019 as a result of termination without cause or for good reason prior to the date of a change in control or following the one-yearone- or two-year period, as applicable, after a change in control.
| Cash Severance(1) | Pro-Rata Bonus(2) | Benefits | Value of Accelerated Equity(3) | Total | |||||
---|---|---|---|---|---|---|---|---|---|---|
William H. Lewis | $906,400 | $339,900 | $38,075 | $5,311,957 | $6,596,332 | |||||
Paolo Tombesi | $435,000 | $174,000 | $30,808 | $742,932 | $1,382,740 | |||||
Roger Adsett(4) | $436,450 | $174,580 | $84 | $1,308,885 | $1,919,999 | |||||
Christine Pellizzari | $415,340 | $166,136 | $25,383 | $1,582,666 | $2,189,525 | |||||
Paul Streck | $425,000 | $170,000 | $25,383 | $647,069 | $1,267,452 |
| Cash Severance(1) | Pro-Rata Bonus(2) | Benefits | Value of Accelerated Equity(3) | Total | |||||
---|---|---|---|---|---|---|---|---|---|---|
William H. Lewis | $1,345,050 | $384,300 | $39,016 | $2,278,866 | $4,047,232 | |||||
Roger Adsett | $500,000 | $200,000 | $15,071 | $1,630,501 | $2,345,572 | |||||
John Goll | $167,500 | $117,250 | $13,006 | $176,822 | $474,578 | |||||
Christine Pellizzari | $449,200 | $179,680 | $26,011 | $1,246,972 | $1,901,863 | |||||
S. Nicole Schaeffer | $400,010 | $160,004 | $9,281 | $1,079,287 | $1,648,582 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised entirely of independent directors, and none of our executive officers served on the Compensation Committee or on the board of any company that employed any member of our Compensation Committee or our Board during the year ended December 31, 2017.2019.
DODD-FRANK MANDATED CEO PAY RATIO
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median annual total compensation of our employees and the annual total
compensation of Mr. Lewis, our President and CEO. Registrants may identify the median employee once every three years unless there has been a change in their employee population or employee compensation arrangements that the registrant reasonably believes would result in a significant change in pay ratio disclosure. The pay ratio included in this section is calculated in a manner consistent with Item 402(u) of Regulation S-K.
For 2017, our last completed fiscal year:
Based on this information, for 2017, the ratio of the median of the annual total compensation of all employees (other than Mr. Lewis) to the annual total compensation of Mr. Lewis was 1 to 18.46.30.17.
To identify the median of the annual total compensation of all of our employees (other than Mr. Lewis), as well as to determine the annual total compensation of our median employee, we took the following steps:
employees who were hired in 20172019 but did not work for us the entire fiscal year. The fair value of option awards granted during 20172019 was calculated using the Black-Scholes valuation model pursuant to the assumptions described in Note 810, "Stock-Based Compensation" of the consolidated financial statements included in our Annual Report.Report on Form 10-K for the fiscal year ended December 31, 2019. We did not make any cost-of-living adjustments in identifying the median employee. Our determination of the median employee yielded two median employees because our employee population consisted of an even number of employees.
The SEC's rules for identifying the median compensated employee and calculating the pay ratio based on that employee's annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratioratios reported by other companies may not be comparable to our pay ratio, reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Our Board determines the compensation of our non-employee directors based in part on recommendations made by the Compensation Committee. The Compensation Committee evaluates the appropriate levelform and formamount of compensation for non-employee directors at least annually and recommends changes to our Board when appropriate. Our Board is currently compensated through a combination of fees, in the form of cash retainers and equity awards in the form of RSUs. Our approach to Board compensation is intended to align our non-employee director compensation practices with the interests of our shareholders. For example, we have share ownership guidelines in place for our non-employee directors, with a target share ownership of three times the amount of each director's annual retainer that should be achieved within five years after the adoption of the guidelines or first appointment to the Board, whichever is later. As of the Record Date, all of our non-employee directors who had been on the Board for at least five years held shares exceedingexceeded the share ownership guidelines. Mr. Lewis is a director and an executive officer of the Company. He receives no additional compensation for serving on the Board. Our share ownership guidelines for Mr. Lewis are described under "Compensation Discussion and Analysis—Corporate Governance Perspectives on our Executive Compensation Program" above. No other director is an employee of the Company.
Our non-employee directors are paid quarterly retainer fees for their service on the Board. Our non-employee directors are not compensated for attending individual meetings of the Board on a per-meeting basis. During 2017,2019, each non-employee director was paid a retainer fees totaling $40,000 annually, except for$50,000 annually. Mr. Hayden who, asBrennan, the Chairman of the Board,Lead Independent Director, was paid an additional retainer fees totaling $80,000 annually.$25,000. The ChairmanChair of the Nominations and Governance Committee was paid an additional annual fee of $10,000. The Chairman$10,000; the Chair of the Compensation Committee was paid an additional annual fee of $15,000. The Chairman$15,000; the Chair of the Audit Committee was paid an additional annual fee of $20,000.$20,000; the Chair of the Science and Technology Committee was paid an additional annual fee of $15,000. Annual retainer fees for non-chair committee members were paid as follows: members of the Nominations and Governance Committee, $5,000; members of the Compensation Committee, $7,000;$7,500; members of the Audit
Committee, $10,000; and members of the AuditScience and Technology Committee, $10,000.$7,500. Retainers are paid on a quarterly basis.
Grant of Restricted Stock Units
During 2017,2019, each non-employee director, other than Mr. Hayden and Dr. Desjardins, received an annual equity-based grant with a grant date value of approximately $115,000$200,000 in the form of RSUs. Mr. Hayden resigned from the Board in May 2019 and did not receive an equity-based grant as a result, while Dr. Desjardins's compensation was prorated to reflect her appointment as of November 12, 2019. The RSUs vest on the first anniversary of the date of the award, provided that the director attends at least 75% of the meetings of the Board during the year in which the award is made.
We reimburse all of our directors for expenses incurred in connection with their attendance at Board or committee meetings. We also provide director and officer insurance for all directors. In 2019, we made a payment to Mr. Hayden in recognition of his service to the Board, as described further below.
The following table sets forth a summary of the compensation we paid to our non-employee directors in 2017.
Table of Contents2019.
To improve readability, only the columns "Fees Earned or Paid in Cash," "Stock Awards," "All Other Compensation" and "Total" have been included in the table, alltable. All other columns have been removed as there is no reportable information with respect to those compensation items.
Name | Fees Earned or Paid in Cash | Stock Awards(1)(2)(3) | Total | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3) | All Other Compensation ($)(4) | Total ($) | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Alfred F. Altomari | $65,000 | $115,000 | $180,000 | $75,000 | $200,000 | — | $275,000 | |||||||
Elizabeth M. Anderson | $55,000 | $200,000 | — | $255,000 | ||||||||||
David R. Brennan | $47,000 | $115,000 | $162,000 | $82,500 | $200,000 | — | $282,500 | |||||||
Steinar J. Engelsen, M.D. | $60,000 | $115,000 | $175,000 | $72,500 | $200,000 | — | $272,500 | |||||||
Donald J. Hayden Jr. | $85,000 | $115,000 | $200,000 | |||||||||||
Clarissa Desjardins, Ph.D.(5) | $6,794 | $100,552 | — | $107,346 | ||||||||||
Donald Hayden | $27,500 | — | $50,000 | $77,500 | ||||||||||
Leo Lee | $57,500 | $200,000 | — | $257,500 | ||||||||||
David W.J. McGirr | $60,000 | $115,000 | $175,000 | $70,000 | $200,000 | — | $270,000 | |||||||
Myrtle Potter | $47,000 | $115,000 | $162,000 | |||||||||||
Melvin Sharoky, M.D. | $52,000 | $115,000 | $167,000 | $62,500 | $200,000 | — | $262,500 |
PROPOSAL NO. 3
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Information Relative to Ratification of the Appointment of Independent Registered Public Accounting Firm
The Audit Committee has appointed Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2018.2020. Shareholder ratification of the appointment of our independent registered public accounting firm is not required under Virginia law, our Articles of Incorporation or our Bylaws. However, the Board is submitting the appointment of Ernst & Young to our shareholders for ratification as a matter of good corporate governance. A representative of Ernst & Young is expected to be present atattend the Annual Meeting and will have an opportunity to make a statement and respond to appropriate questions.
The principal function of Ernst & Young is to audit our consolidated financial statements and attest on the effectiveness of our internal control over financial reporting and, in connection with these audits, to review certain related filings submitted to the SEC and to conduct limited reviews of the consolidated financial statements included in each of our quarterly reports. The aggregate fees billed for each of the last two years for professional services rendered by Ernst & Young, as well as information relating to the Audit Committee's pre-approval policies and procedures, are detailed in theunder "Audit Committee Report and Independent Auditor Fees."
Vote Required for Approval of this Proposal
Ratification of the appointment of Ernst & Young as the Company's independent registered public accounting firm for the year ending December 31, 20182020 requires the affirmative vote of a majority of the votes properly cast in person or by proxy, at the Annual Meeting. Abstentions are not considered votes cast and, therefore, will have no effect on the voting outcome. If your shares are held in street name, your broker or agent has discretionary authority to vote shares held through it in the absence of your instruction regarding how your shares should be voted.
In the event that this proposal is not approved, the Audit Committee plans to consider the vote and the reasons therefore in future decisions on the selection of our independent registered public accounting firm. Even if the appointment is ratified, the Audit Committee may engage different independent auditors at any time during the year if it determines that such a change would be in our best interests and those of our shareholders.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2018.2020.
PROPOSAL NO. 4APPROVAL OF THE 2018 EMPLOYEE STOCK PURCHASE PLAN
We are requesting thatAMENDMENT NO. 1 TO THE INSMED INCORPORATED 2019 INCENTIVE PLAN
The 2019 Incentive Plan was approved by our shareholders vote to approveat the ESPP, which our2019 Annual Meeting of Shareholders. The Board of Directors approvedadopted on April 4, 2018. SubjectMarch 30, 2020, subject to shareholder approval, (i) one million (1,000,000) shares of Common Stockplus (ii) commencing on JanuaryAmendment No. 1 2019 and ending on December 31, 2023, an additional number of shares to be added on the first day of each calendar year equal to the lesser2019 Incentive Plan (the Amendment) to provide for the issuance of (A) 1,200,0004,500,000 additional shares of Common Stock (B) 2% of the number of outstanding shares of Common Stock on such date and (C) an amount determined by the administrator, have been reserved for issuance under the ESPP.2019 Incentive Plan. No other changes to the 2019 Incentive Plan are proposed or recommended. The ESPPAmendment is intended to qualifyattached hereto as an "employee stock purchase plan" under Section 423 of the Code. The purpose of the ESPP is to provide eligible employees with opportunities to purchase shares of Common Stock through payroll deductions at a discounted price.Appendix A.
If the ESPPAmendment is not approved, by shareholders within 12 months followingwe will have remaining only 736,091 shares available for future grant under the 2019 Incentive Plan (plus any shares that might be returned to the 2019 Incentive Plan as a result of future cancellations, terminations, expirations, forfeitures and lapses), based on awards outstanding as of the Record Date, and thereafter we will have limited ability to grant additional equity incentives under the 2019 Incentive Plan. We continue to focus on the successful commercialization of ARIKAYCE in the US for appropriate patients, are seeking regulatory approvals for ARIKAYCE outside the US, such as in Europe and Japan, and expect to design and conduct a Phase 3 program for INS1007 through which we will seek to confirm the positive results seen in the WILLOW study. We expect these activities to result in continued increases in our employee headcount and to ensure that we have sufficient equity plan capacity to compensate and incentivize our employees, the Board approval date,adopted the ESPPAmendment and strongly recommends that our shareholders approve the Amendment.
Equity-based compensation is a vital part of our compensation program for our employees, including our named executive officers, and our non-employee directors. We believe equity-based compensation creates an ownership culture that rewards our executives for maximizing shareholder value over time and aligns the interests of our employees and directors with those of our shareholders. We have traditionally granted stock options to new hires in connection with their commencement of employment and stock options, as well as other forms of equity-based compensation, to key employees as part of their ongoing compensation packages. In 2018, we began granting RSUs to our employees. We believe that providing these equity awards incentivizes employees, including management, to create long-term shareholder value and aids in retention efforts, as awards generally vest over a number of years. In addition, we grant RSUs to non-employee directors annually as part of their compensation for service on the Board.
The Board currently intends that the 4,500,000 shares requested under the Amendment, in addition to the 736,091 shares available for future grant under the 2019 Incentive Plan (plus any shares that might be returned to the 2019 Incentive Plan as a result of future cancellations, terminations, expirations, forfeitures and lapses), will automatically terminate.be sufficient to fund the Company's annual stock option and RSU grants to current employees as well as equity grants to new hires for at least the next year, which it believes appropriate taking into account the Company's planned growth. Upon a review of the remaining shares available for grant under our 2019 Incentive Plan and the anticipated need for future equity award issuances, the Board approved the Amendment and the share pool authorized for issuance thereunder to ensure that we have sufficient equity plan capacity to continue to provide our eligible employees and directors with appropriate equity-based incentives.
SummaryKey Considerations for Requesting Additional Shares
In determining the number of Material Featuresshares to be authorized under the 2019 Incentive Plan, as proposed to be amended, the Board considered the following principal factors:
Awards under the 2019 Incentive Plan, as proposed to be amended, are discretionary and the administrator has not yet determined to whom future awards will be made and the terms and conditions of such awards. As a result, no information is provided concerning the benefits to be delivered under the plan to any individual or group of individuals. Information about awards granted to our named executive officers and directors during 2019 can be found under the heading "Compensation Discussion and Analysis—2019 Grants of Plan-Based Awards" and "Director Compensation—Grant of Restricted Stock Units," respectively. During 2019, awards covering 1,429,355 shares of Common Stock were granted to our executive officers, awards covering 66,985 shares were granted to our non-employee directors and awards covering 2,447,499 shares were granted to our other employees.
The following is a brief summarydescription of the material features of the ESPP. This summary2019 Incentive Plan, as proposed to be amended. The following discussion is qualified in its entiretyall respects by reference to the full text of (i) the ESPP, a copy of which isplan, attached as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and (ii) the Amendment, attached hereto as Appendix A. You are urgedA. The term "employees" in the following discussion is used to read the textrefer to officers and directors and other employees of the ESPP inCompany and its entirety.affiliates, where applicable.
Purpose.Purpose and Eligibility
The purpose of the ESPP2019 Incentive Plan is to advance the interests of the Company by aligning the individual interests of employees, officers, non-employee directors and itsother service providers, in each case who are selected to be participants, with the interests of Company shareholders, and by providing eligible employeessuch individuals with an incentive to continue working toward and contributing to the success and progress of the Company. Employees of the Company and its designated subsidiaries with opportunities to purchase Common Stock at a discounted price through payroll deductions. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423affiliates, members of the Code.Board, and other non-employee advisors or service providers are eligible to be considered for the grant of awards
under the 2019 Incentive Plan. As of the Record Date, approximately 8 nonemployee directors, 7 executive officers and 432 other employees of the Company were so eligible.
Shares Subject to the 2019 Incentive Plan and to Awards
Administration. The ESPP If the Amendment is administered byapproved, the Company's compensation committee, or in the absence of such committee, the Board itself. The administrator has the authority to take all necessary or appropriate actions in connection with the administration of the ESPP, including the adoption of rules or procedures for the ESPP to accommodate the specific requirements of local laws.
Share Pool. The maximum number of shares of Common Stock reserved for issuanceauthorized under the ESPP2019 Incentive Plan is equal8,000,000, including the 4,500,000 shares that would be added to the sum of (i) one million (1,000,000)2019 Incentive Plan under the Amendment, plus any shares of Common Stockplus (ii) commencing on January 1, 2019 and ending on December 31, 2023, an additional number of shares subject to be added onoutstanding awards under the first day of each calendar year equal to2017 Incentive Plan, the lesser of (A) 1,200,000 shares of Common Stock, (B) 2%2015 Incentive Plan or the 2013 Incentive Plan, as of the numbereffective date of outstanding shares of Common Stock onthe 2019 Incentive Plan, that, after such date, and (C) an amount determined byare canceled, terminate unearned, expire, are forfeited or lapse for any reason or are settled in cash without the administrator.delivery of shares. Shares of Common Stock issued under the ESPP2019 Incentive Plan may either be shares that are authorized and unissued shares or previously issued shares that were reacquiredacquired by the Company, including shares purchased in the open market. The number of shares of Common Stock available for issuance under the 2019 Incentive Plan will be reduced by (i) one share for each share of Common Stock subject to a stock option or stock appreciation right (SAR) with an exercise or strike price of at least 100% of the fair market value of the underlying Common Stock on the date of grant, and (ii) 1.25 shares for each share of Common Stock subject to a full value award (e.g., restricted stock or RSUs).
The number of shares of Common Stock available for issuance under the 2019 Incentive Plan will be increased to the extent that an award under the 2019 Incentive Plan (or any award under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan that is outstanding as of the effective date of the 2019 Incentive Plan) is canceled, terminates unearned, expires, is forfeited, or lapses for any reason, or such an award is settled in cash without the delivery of shares to a participant, such that any shares of Common Stock subject to any such award will again be available for the grant of an award pursuant to the 2019 Incentive Plan. Shares will not again be available for issuance under the plan if they are tendered in payment of an option exercise price or delivered or withheld to satisfy any tax withholding obligation. Additionally, shares covered by a stock-settled SAR that are not issued upon full settlement will also not again be available for issuance under the plan. The payment of dividend equivalents in cash in conjunction with any outstanding awards under the 2019 Incentive Plan will not be counted against the shares available for issuance under the 2019 Incentive Plan. Any shares of Common Stock with respect to awards issued under the 2019 Incentive Plan (or an award issued under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan) that again become available for future grants will be added back to the share pool (i) as one share for each share of Common Stock subject to a stock option or SAR, and (ii) as 1.25 shares for each share of Common Stock subject to a full value award, provided, that awards issued under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan will be considered full-value awards if they would have been full-value awards if issued under the 2019 Incentive Plan and added back to the share pool as one share in all other cases.
If the Amendment is approved, the aggregate number of shares of Common Stock that may be issued pursuant to the exercise of incentive stock options (ISOs) granted under the 2019 Incentive Plan will not exceed 8,000,000, including the 4,500,000 that are added to the 2019 Incentive Plan under the Amendment.
Awards granted or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or with which the Company combines will not reduce the shares authorized for issuance under the 2019 Incentive Plan. In addition, in the event that a company acquired by the Company, or with which the Company combines, has shares available under a shareholder-approved, pre-existing equity compensation plan, not adopted in contemplation of such
acquisition or combination, the shares available for grant pursuant to such pre-existing plan (as adjusted in connection with such acquisition or combination) may be used for awards under the 2019 Incentive Plan and will not reduce the shares authorized for issuance under the 2019 Incentive Plan, provided that the awards using such available shares will not be made after the last day awards could have been made under the terms of the pre-existing plan absent the acquisition or combination and will not be granted to individuals who were employed by the Company or its subsidiaries at the time the acquisition or combination was consummated.
Administration
The 2019 Incentive Plan is administered by the Compensation Committee, or, in the absence of the Compensation Committee, the Board itself. Any power of the administrator may also be exercised by the Board. To the extent that any permitted action taken by the Board conflicts with action taken by the administrator, the Board action will control. The Compensation Committee may by resolution authorize one or more officers of the Company to perform any or all things that the administrator is authorized and empowered to do or perform under the 2019 Incentive Plan; provided, however, that such authorization must specify the total number of awards (if any) such officer or officers may award pursuant to such delegated authority, and provided further that in no event may an officer of the Company be delegated the authority to grant awards to, or amend awards held by, the individuals who are subject to Section 16 of the Exchange Act or report directly to such officer. Additionally, no such officer may grant any awards to himself or herself. The administrator may also delegate any or all aspects of the day-to-day administration of the 2019 Incentive Plan to one or more officers or employees of the Company or any subsidiary, and/or to one or more agents.
Subject to the provisions of the 2019 Incentive Plan, the administrator has the authority to equitably adjustselect the participants to receive awards and to grant such awards and to determine the terms and conditions of awards and the number of shares to be issued pursuant thereto, including conditioning the receipt or vesting of awards upon achievement of performance conditions. All decisions, determinations and kindinterpretations by the administrator are final and binding on all participants and all other persons holding or claiming rights under the plan or any award granted thereunder.
Awards
The 2019 Incentive Plan authorizes the grant of awards of stock options, SARs, restricted stock and RSUs. Any award may be subject to performance conditions as determined by the administrator. The terms of awards will be determined by the administrator and set forth in an award agreement. The terms of any awards may vary among participants. Subject to the provisions of the 2019 Incentive Plan, the administrator will specify before, at or after the time of grant the provisions governing the effects upon an award of a separation from service or other termination of service. Unless otherwise provided in an award agreement or another agreement, including an employment agreement, unvested awards will be forfeited immediately if a participant terminates his or her employment with the Company for any reason. Participants will not have any rights as a shareholder with respect to shares covered by an award until the date the participant becomes the holder of record of such shares. Awards granted under the plan are subject to a minimum vesting period of one year, except in the case of substitute awards issued in connection with acquisitions or awards that vest in connection with certain acceleration events. Additionally, the administrator has the authority to grant awards covering up to 5% of the plan's share pool that are not subject to this minimum vesting requirement. With respect to awards that entitle a participant to dividends or dividend equivalents, in no event may such dividends or dividend equivalents, if any, be paid to the participant prior to the vesting of the portion of the award to which such dividends or dividend equivalents relate.
Stock Options. Stock options granted under the 2019 Incentive Plan may be either non-qualified stock options or ISOs under Section 422 of the Code. The exercise price of any stock option granted, other than substitute awards, may not be less than 100% of the fair market value of a share of our Common Stock on the date of grant (provided that the exercise price of an ISO granted to a participant who owns stock possessing more than 10 percent of the combined voting power of all classes of the Company's stock (a 10% Shareholder) will be at least 110% of the fair market value on such date). The option exercise price is payable in cash or such other method as determined by the administrator, including an irrevocable commitment by a broker to pay over such amount from a sale of the shares issuable under an option, the delivery of previously owned shares of Common Stock or withholding of shares of Common Stock reserveddeliverable upon exercise. Vesting may be based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. The term of a stock option will in no event be greater than ten years (or, for issuance underan ISO granted to a 10% Shareholder, five years), provided that the ESPP, as well asterm of a non-qualified stock option will be automatically extended if, at the numbertime of shares andits scheduled expiration, the participant holding such option is prohibited by law or by the Company's insider trading policy from exercising such option. Any such extension will expire on the 30th day following the date such prohibition no longer applies.
Other than in connection with a change in the Company's capitalization, at any time when the exercise price applicable to outstanding optionsof an option is above the fair market value of a share of Common Stock, the Company may not, without shareholder approval: (i) reduce the exercise price of such option, (ii) exchange such option for cash, another award or a new option or SAR with a lower exercise price or (iii) otherwise reprice such option. Options may not be granted under the ESPP,2019 Incentive Plan in consideration for, and will not be conditioned upon the eventdelivery of certain changes to the Company's capitalization.
Eligibility and Participation. Employees of the Company and its designated subsidiaries may generally elect to participate in the ESPP by submitting a participation form authorizing payroll deductionsshares to the Company in accordancepayment of the exercise price and/or tax withholding obligation under, any other option. Holders of a stock option will have no voting rights or rights to receive dividends or dividend equivalents with respect to their stock option until they become the instructionsholder of record of the underlying shares.
As of the Record Date, the fair market value of a share of our Common Stock, determined by the last reported sale price per share on that date as quoted on the Nasdaq Global Select Market, was $14.39.
Restricted Stock and Restricted Stock Units. The grant, issuance, retention, vesting and/or settlement of any restricted stock or RSU award will occur at such time and be subject to such terms and conditions as determined by the administrator or under conditions established by the administrator, which may include conditions based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. Participants who receive restricted stock will be entitled to receive all dividends and other distributions paid with respect to those shares unless determined otherwise by the administrator. The administrator will determine whether such dividends or distributions will be automatically reinvested in such participation form. In order for the participation form to be effective for a particular offering period, the participation form must be submittedadditional restricted stock and/or subject to the same restrictions as the underlying restricted stock, or whether such dividends or distributions will be paid in cash. Unless otherwise set forth in the award agreement, prior to the time shares are issued to a participant under an RSU, the Company will pay or accrue dividend equivalents on each date that dividends are paid, and such dividend equivalents will be paid at the time specified in the award agreement. As described above, no dividends or beforedividend equivalents may be paid with respect to an award of restricted stock or RSUs prior to the 15th dayvesting of the month immediately precedingportion of the month inaward to which the offering period begins.If the ESPP is approvedsuch dividends or dividend equivalents relate. Unless otherwise determined by the Company's shareholders, approximately 313 employees asadministrator, participants holding shares of March 23, 2018 wouldrestricted stock may exercise full voting rights with respect to those shares during the period of restriction. Participants holding RSUs will not have been eligiblevoting rights with respect to participate in the ESPP.underlying shares until they become the holder of record of the underlying shares.
Payroll Deductions. Stock Appreciation Rights. A SAR entitles the participant, may electupon settlement, to have payroll deductions withheld from his or her eligible compensationreceive a payment based on each payroll date during his or her participation in the ESPP in amounts equal to or greater than one percent (1%) but not in excess of fifteen percent (15%) of eligible compensation received on each such payroll date during the offering period, subject to the provisions of the plan. Participants may increase or decrease the amount of payroll deductions for a subsequent offering period by filing an amended participation form with the Company. In order for the amended participation form to be effective for a subsequent offering period, such amended participation form must be submitted to the Company on or before the 15th day of the month immediately preceding the month in which such subsequent offering period begins. Payroll deductions may be made only in whole percentages. Payroll deductions will be credited to an account established under the ESPP for the participant. No separate cash contributions may be made to such account. No interest will accrue on any payroll deductions held under the ESPP.
Restriction on Participation. No participant may be granted an option to purchase shares of Common Stock under the ESPP if: (i) immediately after such grant, the participant (or any other person whose stock ownership would be attributed to such participant pursuant to Section 424(d) of the Code) would own shares of stock (including any shares of stock that the participant may purchase under outstanding options) possessing 5% or more of the total combined voting power or value of all classes of shares of the Company or any of its subsidiaries; or (ii) the participant's rights to purchase shares of Common Stock under all "employee stock purchase plans" (within the meaning of Section 423 of the Code) of the Company and its subsidiaries would accrue at a rate which exceeds $25,000 of the fairaggregate market value of such shares (determined at the time the option is granted) for each calendar year in which the option is outstanding at any time.
Withdrawal and Termination of Employment. Participants may withdraw from participating in the ESPP at any time by submitting a withdrawal notice on or before the 15th day of the month in which the offering period ends. All payroll deductions for a participant will immediately cease upon the participant's withdrawal from the ESPP. Payroll deductions that have accrued for the participant prior to withdrawal shall not be refunded and shall instead continue to be applied towards the purchase of shares at the end of the offering period in which such withdrawal occurs. A withdrawing employee may participate in a subsequent offering period if the employee continues to meet the eligibility requirements and submits a valid participation form to the Company in accordance with the instructions in such participation form. Generally, in the eventprice of a participant's termination of employment, all payroll deductions and rights to purchase shares of Common Stock granted to the participant will immediately cease, and the amount of any accumulated payroll deductions will be refunded to the participant. A transfer of employment between the Company and a designated subsidiary or between one designated subsidiary and another designated subsidiary, or certain leaves of absence, are not considered a termination of employment for purposes of the ESPP.
Offering Period. Each offering period under the ESPP will be of a duration not to exceed 12 months, as determined by the administrator before the start of the applicable offering period. Until the administrator determines otherwise, there will be two six-month offering periods under the ESPP each calendar year, one commencing on January 1 and ending on June 30, and the other commencing on July 1 and ending on December 31. During the offering period, the Company will withhold via payroll deduction the amount elected by the participant for purposes of purchasing Common Stock at the end of the offering period. The initial offering period under the ESPP will run from July 1, 2018 to December 31, 2018. However, no offering period under the ESPP will begin until shareholder approval for the ESPP is obtained.
Grant and Exercise of Option. Participants will be granted an option to purchase Common Stock on the first business day of each offering period, with such option to be automatically exercised on the last
business day of such offering period to purchase a wholespecified number of shares of Common Stock determined by dividingat the accumulated payroll deductionstime of the exercise over the exercise price of the right. SARs may be granted on a stand-alone basis or in the participant's account on such exercise date by the applicable exercise price.tandem with a related stock option. The exercise price ismay not be less than the fair market value of a share of our Common Stock on the date of grant. A SAR granted in tandem with a stock option will have an exercise price equal to 85%the exercise price of the stock option to which it relates. The administrator will determine the vesting requirements and the payment and other terms of a SAR, including the effect of termination of service of a participant. Vesting may be based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. Other than in connection with a change in the Company's capitalization, at any time when the exercise price of a SAR is above the fair market value of a share of Common Stock, the Company may not, without shareholder approval: (i) reduce the exercise price of such SAR, (ii) exchange such SAR for cash, another award or a new option or SAR with a lower exercise price or (iii) otherwise reprice such SAR. Holders of a SAR will have no voting rights or rights to receive dividends or dividend equivalents with respect to their SAR until they become the holder of record of the underlying shares.
Adjustment and Change in Control
The number and kind of shares of Common Stock available for issuance (including under any awards then outstanding), and the number and kind of shares of Common Stock subject to the limits set forth in the 2019 Incentive Plan, will be equitably adjusted by the administrator to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of shares of Common Stock outstanding. Such adjustment may be designed to comply with Section 424 of the Code or may be designed to treat the shares available under the 2019 Incentive Plan and subject to awards as if they were all outstanding on the first business dayrecord date for such event or transaction or to increase the number of such shares to reflect a deemed reinvestment in shares of the offering periodamount distributed to the Company's security holders. The terms of any outstanding award will also be equitably adjusted by the administrator as to price, number or kind of shares subject to such award, vesting, and other terms to reflect the last business dayforegoing events, which adjustments need not be uniform as between different awards or different types of awards. No fractional shares of Common Stock will be issued pursuant to such an adjustment. In the event there is any other change in the number or kind of outstanding shares of Common Stock, or any stock or other securities into which such Common Stock will have been changed, or for which it will have been exchanged, by reason of a change in control, other merger, consolidation or otherwise, then the administrator will determine the appropriate and equitable adjustment to be effected, which adjustments need not be uniform between different awards or different types of awards. In addition, in the event of such change, the administrator may accelerate the time or times at which any award may be exercised, consistent with and as otherwise permitted under Section 409A of the offering period, whichever is lower.Code, and may provide for cancellation of such accelerated awards that are not exercised within a time prescribed by the administrator in its sole discretion.
Corporate Transactions. In Unless otherwise expressly provided for in an award agreement or another agreement, including an employment agreement, in the event of a proposed liquidationchange in control, unless provision is made in connection with the change in control for (i) assumption of awards previously granted or dissolution(ii) substitution for such awards, (A) the administrator will make an adjustment to any or all awards as the administrator deems appropriate to reflect such change in control or (B) (1) in the case of an option or SAR, the participant will have the ability to exercise such option or SAR, including any portion of the Company,option or SAR not previously exercisable, and the administrator has the authority to decide whether to (i) shorten the offering period then in effect, with any outstanding options to be exercised at the endunexercised portion of such shortened period,option or (ii) terminateSAR will be cancelled upon on the offering period then in effect, with any payroll deductions accumulated for such period to be refunded to participants. In the event of a proposed sale of all or substantially allconsummation of the Company's assets, or a merger or consolidation of the Company (except for (x) a transaction the primary purpose of which is to change the Company's jurisdiction of incorporation or (y) a transaction where the acquiring or surviving company is directly or indirectly owned, immediately after such transaction, by the shareholders of the Company in substantially the same proportion as their ownership of stockcontrol; (2) in the Company immediately before such transaction), the administrator may, in its discretion, provide for outstanding options to be assumed or substituted by the successor entity (or its parent or subsidiary) or to take onecase of the courses of action described in sub-clauses (i) and (ii) in the preceding sentence.
Amendment or Termination. The ESPP may be amended or terminated at any time by the Board or the compensation committee, except that no amendment may materially and adversely affect a participant's rights under the ESPP without his or her consent. No amendment to the ESPP will be effective without the approval of the Company's shareholders, where such approval is required by Section 423 of the Code.
Federal Income Tax Consequences
The following generally summarizes certain key U.S. federal income tax consequences that will arise with respect to participation in the ESPP and with respect to the sale of Common Stock acquired under the ESPP. This summary is based on the tax laws in effect as of the date of this proxy statement. Changes to these laws could alter the tax consequences described below. The following summary is not intended to be a complete summary or legal interpretation, and it does not address consequences other than U.S. federal income tax consequences. Participants may also be subject to U.S. state, U.S. local or non-U.S. tax as a result of participating in the ESPP.
Tax Consequences to Participants.
Participants do not incur any U.S. federal income tax consequences upon enrolling in the ESPP. Amounts withheld via payroll deduction for purposes of purchasing shares under the ESPP are included in the participant's income in accordance with the Company's regular income and payroll tax withholding and reporting procedures. Because participants use after-tax dollars to purchase shares at the end of the offering period, there is no income tax at the time the participant purchases shares. As a general matter, additional income tax is not realized until the participant sells the shares acquired under the ESPP.
A participant may have both ordinary income and capital gain income or both ordinary income and a capital loss upon the sale of Common Stock that was acquired under the ESPP. The amount of each type of income and loss will depend on when the participant sells the shares of Common Stock and the price at which the participant sells the shares of Common Stock.an award
Ifsubject to performance conditions, the participant sellswill have the right to receive a payment based on performance through a date determined by the administrator prior to the change in control (unless such performance cannot be determined, in which case the participant will have the right to receive a payment equal to the target amount payable); and (3) in the case of outstanding restricted stock and/or RSUs not subject to performance conditions, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such award will immediately lapse.
Unless otherwise expressly provided for in an award agreement or another agreement, including an employment agreement, or under the terms of a transaction constituting a change in control, the following will occur upon a participant's involuntary termination of employment or other service within 24 months following a change in control, provided that such termination does not result from disability, cause or gross misconduct: (i) in the case of an option or SAR, the participant will have the ability to exercise such option or SAR, including any portion of the option or SAR not previously exercisable, and the option or SAR will remain exercisable for a period of three years following such termination (or until expiration, if earlier), (ii) in the case of an award subject to performance conditions, the participant will have the right to receive a payment based on performance through a date determined by the administrator prior to the change in control (unless such performance cannot be determined, in which case the participant will have the right to receive a payment equal to the target amount payable), and (iii) in the case of outstanding restricted stock and/or RSUs not subject to performance conditions, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such award will immediately lapse.
Transferability
No award may be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated other than by will or the laws of descent and distribution, and each option or SAR is exercisable only by the participant during his or her lifetime. Notwithstanding the foregoing, outstanding options may be exercised following the participant's death by the participant's beneficiaries or as permitted by the administrator.
Duration of the 2019 Incentive Plan
Awards may not be granted under the 2019 Incentive Plan after the tenth anniversary of the adoption by the Board of the 2019 Incentive Plan. Notwithstanding the foregoing, the 2019 Incentive Plan may be terminated at such earlier time as the Board may determine. Termination of the 2019 Incentive Plan will not affect the rights and obligations of the participants and the Company arising under awards granted prior to such termination.
Amendment and Termination
Subject to limitations imposed by law, the Board may amend or terminate the 2019 Incentive Plan at any time and the administrator may amend or alter any agreement or other document evidencing an award made under the 2019 Incentive Plan. However, no such amendment may deprive the recipient of an award previously granted under the 2019 Incentive Plan of any rights thereunder without his or her consent, unless the administrator determines that the amendment (i) is required or advisable to satisfy any law or regulation or avoid adverse financial accounting consequences, or (ii) is not reasonably likely to significantly diminish the benefits provided under the award, or that any
diminishment has been adequately compensated. Notwithstanding the foregoing, no such amendment shall, without the approval of the shareholders of the Company:
Recoupment Policy
The administrator has the authority to cause a participant or an award under the plan to be subject to the Company's recovery, recoupment, clawback and/or other forfeiture policies, as maintained by the Company from time to time.
The following discussion summarizes the material U.S. federal income tax consequences to the Company and the participants in connection with the 2019 Incentive Plan under existing applicable provisions of the Code and the accompanying regulations. The discussion is general in nature and does not address issues relating to the income tax circumstances of any individual participant. The discussion is based on federal income tax laws in effect on the date of this Proxy Statement and is, therefore, subject to possible future changes in the law. The discussion does not address the consequences of state, local or foreign tax laws.
Nonqualified Options—An employee will not recognize any income upon receipt of a nonqualified stock option, and the Company will not be entitled to a deduction for federal income tax purposes at the time of grant. Ordinary income will be realized by the holder at the time the nonqualified stock option is exercised and the shares are transferred to the employee. The amount of such taxable income, in the case of a nonqualified stock option, will be the excess, if any, of the fair market value of the shares on the date of exercise over the exercise price. The Company will generally be entitled to a tax deduction in an amount equal to the ordinary income that an employee recognizes upon exercise.
Incentive Stock Options—An employee who receives an ISO will not recognize any income for federal income tax purposes upon receipt of the ISO, and the Company will not realize a deduction for federal income tax purposes. The holder generally will not be taxed upon exercise, but the excess, if any, of the fair market value of the stock on the date of exercise over the option exercise price may subject the holder to the alternative minimum tax. If the holder does not dispose of the ISO shares within two years from the date the option was granted or within one year after the shares were transferred to him on exercise of the option, then that portion of the gain on the sale of the shares that
is equal to the difference between the sales price and the option exercise price will be treated as a long-term capital gain. The Company will not be entitled to a deduction either at the time the employee exercises the ISO or subsequently sells the ISO shares. However, if the employee sells the ISO shares within two years after the first business day ofdate the offering period during which the Common Stock was purchased and (ii) more thanISO is granted or within one year after the date that the participant purchased the Common Stock under the ESPP,ISO is exercised, then the participantsale is considered a disqualifying sale, and the spread on exercise will havebe taxed as ordinary income. The balance of the gain will be treated as long- or short-term capital gain depending on the length of time the employee held the stock. If the shares decline in value after the date of exercise, the compensation income will be limited to the difference between the sale price and the amount paid for the shares. The tax will be imposed in the year the disqualifying sale is made. The Company will be entitled to a deduction equal to the lesser of: (1)ordinary income recognized by the excessemployee.
With respect to both nonqualified stock options and ISOs, special rules apply if an employee uses shares already held by the employee to pay the exercise price or if the shares received upon exercise of the option are subject to a substantial risk of forfeiture by the employee.
Restricted Stock—Employees receiving restricted stock will not recognize any income upon receipt of the restricted stock. Ordinary income will be realized by the holder at the time that the restrictions on transfer are removed or expire. The amount of ordinary income will be equal to the fair market value of the shares on the date that the restrictions on transfer are removed or expire. The Company will be entitled to a deduction at the same time and in the same amount as the ordinary income the employee is deemed to have realized. However, no later than 30 days after an employee receives the restricted stock, the employee may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the employee will not recognize any additional income. If the employee forfeits the shares to the Company, the employee may not claim a deduction with respect to the income recognized as a result of the election.
Generally, when an employee disposes of shares acquired under the 2019 Incentive Plan, the difference between the sales price and his or her basis in such saleshares will be treated as long- or short-term capital gain or loss depending upon the holding period for the shares.
over Restricted Stock Units—Employees who are granted RSUs do not recognize income at the time of the grant. When the award vests or is paid, participants recognize ordinary income in an amount equal to the fair market value of the units at such time, and the Company will receive a corresponding tax deduction.
Stock Appreciation Rights—Upon exercise price or (2)of a SAR, an employee will recognize taxable income in the excessamount of the cash received. An employee who receives unrestricted shares upon exercise of a SAR will recognize ordinary income in the year of exercise equal to the fair market value of the shares onreceived. In either such case, the first business dayCompany will be entitled to an income tax deduction in the amount of such offering periodoverincome recognized by the exercise price. Any profits in excess of amounts classified as ordinary income will be taxed as long-term capital gain income. If the participant sells the shares of Common Stock at a loss (i.e., if sales proceeds are less than the exercise price) after satisfying these waiting periods, there is no ordinary income and the participant will have a long-term capital loss for the difference between the sale price and the purchase price.
If the participant sells the shares of Common Stock prior to satisfying the waiting periods described above, the participant will have engaged in a disqualifying disposition. Upon a disqualifying disposition, the participant will have ordinary income equal to the value of the Common Stock on the day the participant exercised his or her option to purchase the Common Stock under the ESPPless the exercise price. If the participant's sale proceeds exceed the ordinary income, then the excess proceeds will be a capital gain. If the participant's sale proceeds are less than the ordinary income, then the participant will have a capital loss equal to the value of the Common Stock on the date of exercise less the sales proceeds. This capital gain or loss will be long-term if the participant has held the shares for more than one year and otherwise will be short-term.employee.
Potential Limitation on Deductions—Section 162(m) of the Code places a limit of $1,000,000 on the amount the Company may deduct in any one year for compensation paid to each of the Company's "covered employees." The definition of "covered employee" includes anyone who was the Company's CEO or CFO at any time during the year, as well as the Company's three other most highly-compensated executive officers during the year. Any individual who is or became a covered employee after December 31, 2016 will always be treated as a covered employee, even after termination of employment. Accordingly, awards granted to the Company's covered employees under the 2019 Incentive Plan may not be fully deductible.
Federal Income Tax Consequences to the Company.Company
There will be no tax consequences to—To the Company exceptextent that a recipient recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction whenprovided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an "excess parachute payment" within the meaning of Section 280G of the Code and is not disallowed by the $1,000,000 limitation on certain executive compensation under Section 162(m).
Tax Withholding—To the extent required by applicable federal, state, local or foreign law or practice, a participant has ordinary income upon a disqualifying disposition. Any such deduction will be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations that arise by reason of the award.
Section 409A—Section 409A of the Code applies to any awards under the 2019 Incentive Plan that are deemed to be deferred compensation. If the requirements of Section 409A of the Code are not met, the recipient may be required to include deferred compensation in taxable income, and additional taxes and interest may be assessed on such amounts. If any awards are subject to Section 409A of the limitations ofCode, we intend to have the awards comply with Section 162(m)409A of the Code.
The actual amount or value of shares purchased by any given employee or group of employees is not determinable because it depends on the elections of each employee who chooses to participate in the ESPP. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the ESPP.
The Board of Directors deems the 2018 Employee Stock Purchase Plan to be in the best interests of the Company and its shareholders and recommends a vote "FOR" the approval of the 2018 Employee Stock Purchase Plan.
Equity Compensation Plan Information
In 2017,2019, we made stock-based awards from our 20172019 Incentive Plan and the 2015our 2017 Incentive Plan, and have outstanding grants under our 2015 Incentive Plan, 2013 Incentive Plan and 2000 Stock Incentive Plan (together with the 2019 Incentive Plan, 2017 Incentive Plan, 2015 Incentive Plan and the 2013 Incentive Plan, the Plans).
The 20172019 Incentive Plan was adopted by the Board and approved by our shareholders on May 18, 2017.16, 2019. Under the terms of the 20172019 Incentive Plan, we are authorized to grant a variety of incentive awards based on our Common Stock, including stock options (both ISOsincentive stock options and non-qualified stock options), performance options/shares and other stock awards, such as RSUs, as well as the payment of incentive bonuses to all employees and non-employee directors.
Table of ContentsRSUs.
The following table presents information as of December 31, 2017,2019, with respect to the Plans.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights | Weighted Average Exercise Price of Outstanding Options and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||
---|---|---|---|---|---|---|
Equity Compensation Plans Approved by Shareholders: | ||||||
2019 Incentive Plan(1) | 106,287 | $19.10 | 3,868,698 | |||
2017 Incentive Plan(2) | 4,345,188 | $18.12 | — | |||
2015 Incentive Plan(3) | 3,481,442 | $15.80 | — | |||
2013 Stock Incentive Plan(4) | 1,496,326 | $14.72 | — | |||
2000 Stock Incentive Plan(5) | 677,467 | $3.93 | — | |||
Equity Compensation Plans Not Approved by Shareholders: | — | |||||
Individual Compensation Arrangements(6) | 887,058 | $21.48 | — | |||
| | | | | | |
Total | 10,993,768 | 3,868,698 | ||||
| | | | | | |
| | | | | | |
| | | | | | |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights | Weighted Average Exercise Price of Outstanding Options and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||
---|---|---|---|---|---|---|
Equity Compensation Plans Approved by Shareholders: | ||||||
2017 Incentive Plan(1) | 204,770 | $18.31 | 4,910,002 | |||
2015 Incentive Plan(2) | 4,689,657 | $15.53 | — | |||
2013 Stock Incentive Plan(3) | 2,044,345 | $15.01 | — | |||
2000 Stock Incentive Plan(4) | 1,135,773 | $4.07 | — | |||
Equity Compensation Plans Not Approved by Shareholders: | ||||||
Individual Compensation Arrangement(5) | 227,000 | $18.14 | — | |||
Individual Compensation Arrangement(6) | 88,060 | $14.56 | — | |||
Individual Compensation Arrangement(7) | 127,160 | $15.60 | — | |||
Individual Compensation Arrangement(8) | 109,210 | $15.38 | — | |||
Individual Compensation Arrangement(9) | 29,860 | $31.78 | — | |||
| | | | | | |
Total | 8,655,835 | 4,910,002 | ||||
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Table Vote Required for Approval of Contentsthis Proposal
Approval of stock options totaling 88,060 sharesthe Amendment requires the affirmative vote of Common Stock we made duringa majority of the fourth quarter of 2016 in connection withvotes cast at the appointment of Chief Commercial Officer Roger Adsett. The vesting schedule for the shares of Common Stock subject to this option grant is as follows: 25%Annual Meeting. Abstentions and broker non-votes will not have an effect on the first anniversaryoutcome of the date of grant and 12.5% of the shares vesting on each six month anniversary thereafter until the fourth anniversary of the date of grant.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE 2019 INCENTIVE PLAN.
PROPOSALS FOR 20192021 ANNUAL MEETING
Shareholder proposals intended for inclusion in our proxy statement for the 20192021 Annual Meeting of Shareholders must be received at our offices no later than the close of business on December 6, 2018.1, 2020. All such proposals must comply with Rule 14a-8 under the Exchange Act and must be submitted to the Corporate Secretary, Insmed Incorporated, 10 Finderne Avenue, Building 10,700 US Highway 202/206, Bridgewater, New Jersey 08807.
Under our Bylaws, any shareholder (as defined in our Bylaws) who wishes to present other business or nominate a director candidate at the 20192021 Annual Meeting of Shareholders must give timely written notice of any such business or nomination to our Corporate Secretary in advance of the meeting. Such written notice must comply with the requirements in our Bylaws and must be given, either by personal delivery or by United States registered or certified mail, postage prepaid, to our Corporate Secretary at the address given above no later than 120 days nor more than 150 days before the anniversary of the immediately preceding year's annual meeting. Accordingly, for the 20192021 Annual Meeting of Shareholders, our Corporate Secretary must receive such written notice no earlier than December 16, 201813, 2020 and no later than January 15, 2019.12, 2021. If the date of the 20192021 Annual Meeting of Shareholders is more than 30 days before or more than 60 days after May 15, 201912, 2021 (the anniversary of this year's Annual Meeting), then the written notice must be received no later than the 120th day prior to such Annual Meeting or, if later, the 10th day following the day on which public disclosure of the date of such Annual Meeting was first made. If a shareholder fails to meet these requirements or fails to satisfy the requirements of Rule 14a-4 under the Exchange Act, the named proxies may exercise discretionary voting authority under proxies that we solicit to vote on any such business or nomination in accordance with their best judgment. Our Bylaws are available on our website at www.insmed.com under the heading "Investor Relations—Corporate Governance" or by submitting a written request to the Corporate Secretary, Insmed Incorporated, 10 Finderne Avenue, Building 10,700 US Highway 202/206, Bridgewater, New Jersey 08807.
We will provide without charge to each person to whom this Proxy Statement has been made available on the written request of such person, a printed copy of our Annual Report on Form 10-K for the year ended December 31, 2019, including the financial statements and financial statement schedules. Requests should be directed to Ms. Christine Pellizzari, Corporate Secretary, Insmed Incorporated, 10 Finderne Avenue, Building 10,700 US Highway 202/206, Bridgewater, New Jersey, 08807, (908) 977-9900. In connection with any such request, we will provide a list of exhibits to the Annual Report on Form 10-K for the year ended December 31, 2019, and will provide copies of any such exhibit upon the payment of a reasonable fee.
SEPARATE COPIES FOR BENEFICIAL HOLDERS
Institutions that hold shares in street name for two or more beneficial owners with the same address are permitted to deliver a single set of proxy materials to that address. Only one set of proxy materials will be delivered to such address unless wethey receive contrary directions from one or more of such beneficial owners. Any such beneficial owner can request a separate copy of these proxy materials by contacting our Corporate Secretary as described above, and we will promptly provide a separate copy. If you are the beneficial owner, but not the record holder, of the Company's shares and wish to receive only one copy of our proxy materials in the future, you will need to contact your broker, bank or other agent to request that only a single copy of each document be mailed to all shareholders at the shared address in the future.
April 5, 2018
AMENDMENT NO. 1
TO THE
INSMED INCORPORATED2018 EMPLOYEE STOCK PURCHASE 2019 INCENTIVE PLAN
March 31, 2020
1. PurposeWHEREAS, Insmed Incorporated (the "Company") sponsors and History. The purpose ofmaintains the Insmed Incorporated 2018 Employee Stock Purchase2019 Incentive Plan (the "Plan") is to advance the interests of Insmed Incorporated, a Virginia corporation (the "Company"), and its shareholders by providing Eligible Employees (as defined below) of the Company and its Designated Subsidiaries (as defined below) with an opportunity to acquire an ownership interest in the Company by purchasing Common Stock (as defined below) through payroll deductions. It is the intention of the Company that the Plan qualify as an "employee stock purchase plan" under;
WHEREAS, Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), except with respect to the participation of Non-Corporate Foreign Subsidiaries (as defined below) in the Plan. Accordingly, provisions18 of the Plan shall be construed so asreserves to extend and limit participation in a manner consistent with the requirements of Section 423 of the Code, other than with respect to the participation of Non-Corporate Foreign Subsidiaries in the Plan.
2. Definitions.
(a) "Administrator" has the meaning set forth in Section 3(a).
(b) "Board" means the Board of Directors of the Company.Company (the "Board") the right to amend the Plan from time to time; and
(c) "Code" has WHEREAS, the meaning set forthBoard desires to amend the Plan in the manner hereinafter provided, subject to approval by the Company's shareholders.
NOW, THEREFORE, the Plan is amended as follows, effective as of the date of approval by the Company's shareholders:
(d) "Common Stock" means the common stock5(a) of the Company, par value $0.01 per share, or the kind of shares of stock or other securities into which such common stock may be changedPlan is hereby amended and replaced with "8,000,000".
(e) "Committee" means the Compensation Committee5(c) of the Board (or any successor committee)Plan is hereby amended and replaced with "8,000,000".
(f) "Company" has the meaning set forth
(g) "Compensation" means the total cash compensation from salary, wages, annual bonuses, and other cash incentive compensation paid to an Eligible Employee by reason of his or her employment with the Company orforms a Designated Subsidiary (determined prior to any reduction thereof by operation of a salary reduction election under a plan described in Section 401(k)part of, the Code or Section 125 of the Code), as reported on IRS Form W-2, but excludes (i) any amounts not paid in cash which are required to be accounted for as imputed income on IRS Form W-2, (ii) any reimbursements of expenses, (iii) any housing, relocation, automobile, travel orPlan. All other similar cash allowances, (iv) any overtime payments or shift premiums, (v) any sign-on bonus, (vi) any sales commission payments, (vi) any equity-based awardsterms and (vii) any amounts similar to those described in clauses (i) through (vi).
(h) "Designated Subsidiary" means a Subsidiary, other than any Subsidiary that has been excluded from participation in the Plan by the Administrator.
(i) "Eligible Employee" means, with respect to any Offering Period, an individual who is an employee of the Company or a Designated Subsidiary. In accordance with Treas. Reg. §1.421-1(h)(2), an employee will be considered to be employed during military or sick leave or any
other bona fide leave of absence that does not exceed three months and during any period longer than three months if his or her right to reemployment is guaranteed by statute or contract.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Fair Market Value" means as of any date, the value of the Common Stock determined as follows: (i) if the Common Stock is listed on any established stock exchange, system or market, the closing price for the Common Stock on such date (or if the Common Stock was not traded on such exchange, system, or market on such date, then on the next preceding date on which shares of Common Stock were traded) on such exchange, system or market as reported in the Wall Street Journal or such other source as the Administrator deems reliable; and (ii) in the absence of an established market for the Common Stock, as determined in good faith by the Administrator by the reasonable application of a reasonable valuation method.
(l) "Non-Corporate Foreign Subsidiary" means any non-U.S. subsidiary of the Company that would have satisfied the definition of "Subsidiary" under the Plan but for the fact that it is not a corporation.
(m) "Offering Date" means the first business day of an Offering Period.
(n) "Offering Period" means an offering to Participants to purchase Common Stock under the Plan established pursuant to Section 5.
(o) "Option Price" means an amount equal to 85% of the Fair Market Value of one share of Common Stock on the Offering Date or the Termination Date of the applicable Offering Period, whichever is lower.
(p) "Participant" means an Eligible Employee who elects to participate in one or more Offering Periods under the Plan pursuant to Section 6.
(q) "Participation Form" has the meaning set forth in Section 6(a).
(r) "Plan" has the meaning set forth in Section 1.
(s) "Securities Act" means the Securities Act of 1933, as amended.
(t) "Subsidiary" means any corporation, other than the Company, in an unbroken chain of corporations, beginning with the Company, if, at the time an option is granted under the Plan, each of the corporations, other than the last corporation in the unbroken chain owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain;provided that a Non-Corporate Foreign Subsidiary shall also be deemed to be a Subsidiary for purposes of the Plan.
(u) "Termination Date" means the last business day of the Offering Period.
(v) "Withdrawal Notice" has the meaning set forth in Section 11(a).
3. Plan Administration.
(a) Administration. The Plan shall be administered by the Committee, or, in the absence of the Committee, the Board itself (such administrator, the "Administrator"). Any power of the
Committee may also be exercised by the Board. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.
(b) Powers and Duties of the Administrator. Subject to the express provisions of the Plan the Administrator shall be authorizedremain unchanged except as specifically modified by this Amendment. The Plan, as amended by this Amendment, is hereby ratified and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of the Plan, including:
(i) to prescribe, amend and rescind rules and regulations relating to the Plan and to define terms not otherwise defined in the Plan;
(ii) to determine which persons are eligible to participate in the Plan;
(iii) to interpret and construe the Plan and any rules and regulations under the Plan, and to make exceptions to any such provisions if the Administrator, in good faith, determines that it is appropriate to do so;
(iv) to decide all questions concerning the Plan and to determine all ambiguities, inconsistencies and omissions in the terms of the Plan;
(v) to appoint such agents, counsel, accountants, consultants and other persons as may be required to assist in administering the Plan;
(vi) to allocate and delegate its responsibilities under the Plan and to designate other persons to carry out any of its responsibilities under the Plan;
(vii) to prescribe and amend such forms as may be necessary or appropriate for Eligible Employees to make elections under the Plan or to otherwise administer the Plan; and
(viii) to do such other acts as it deems necessary or appropriate to administer the Plan in accordance with its terms, or as may be provided for or required by law.
(c) Determinations by the Administrator. All decisions, determinations and interpretations by the Administrator regarding the Plan and any rules and regulations under the Plan shall be final and binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, in making such decisions, determinations and interpretations, including the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select. Members of the Board and members of the Committee acting in their capacity as Administrator under the Plan shall be fully protected in relying in good faith upon the advice of counsel.
(d) No Liability of Committee or Board Members. No member of the Committee or the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his or her behalf in his or her capacity as a member of the Committee or the Board nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and the Board and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any amount paid in settlement of a claim) arising out of any act or failure to act in connection with the Plan unless arising out of such person's own fraud or willful bad faith;[provided, howeverSignature page follows, that approval
of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, any contract with the Company, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
(e) Rules for Foreign Jurisdictions. The Administrator may adopt rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures regarding handling of payroll deductions, payment of interest, conversion of local currency, payroll tax, withholding procedures and handling of stock certificates. The Administrator may also adopt sub-plans applicable to particular Designated Subsidiaries or locations.
4. Eligibility to Participate. An Eligible Employee may elect to participate in an Offering Period in accordance with Section 6, with such participation to begin no earlier than the first Offering Date as of which the Eligible Employee's Participation Form (as defined below) becomes effective, subject to the limitations imposed by Section 423 of the Code.
5. Offering Periods.
(a) Shares of Common Stock shall be offered for purchase under the Plan through a series of successive Offering Periods until the earlier of (i) the maximum number of shares of Common Stock available for issuance under the Plan have been purchased and (ii) the termination of the Plan.
(b) Each Offering Period shall be of such duration not to exceed twelve (12) months, as determined by the Administrator prior to the start of the applicable Offering Period. Until such time as the Administrator determines otherwise, each Offering Period shall be of a duration of six (6) months and shall run from January 1 to June 30 and July 1 to December 31 of each year;provided that the initial Offering Period under the Plan will begin on July 1, 2018 and end on December 31, 2018;provided, further, that in the event the Administrator establishes an Offering Period of a different duration or specifies that an Offering Period begins and/or ends on a different date, an individual who is employed by a Non-Corporate Foreign Subsidiary and who is subject to U.S. income taxation shall not be eligible to participate in the Plan to the extent necessary to comply with Section 409A of the Code. Notwithstanding the foregoing, no Offering Period may begin under the Plan until the Company's shareholders have approved the Plan pursuant to the conditions set forth in Section 19(a).
6. Participation in Offering Periods.
(a) An Eligible Employee may elect to participate in an Offering Period under the Plan by completing a participation form authorizing payroll deductions on the form provided by the Company (the "Participation Form"), and filing such Participation Form with the Company in accordance with the instructions in such Participation Form. The Participation Form will become effective on the first Offering Date to occur after such form is properly filed with the Company, so long as such filing occurs on or before the 15th day of the month immediately preceding the month in which such Offering Date occurs. A Participation Form that is filed after such 15th day but before such Offering Date shall be effective as of the next Offering Date to occur after such Offering Date.]
(b) SubjectIN WITNESS WHEREOF, the undersigned officer hereby certifies that the foregoing amendment to the provisions of Section 7, payroll deductions for a Participant shall begin with the first payroll date after the Offering Date as of which the Participant's Participation Form has become effective and shall continue until the Plan is terminated, subject to the Participant's withdrawal or termination of employment as provided in Section 11.
7. Payroll Deductions.
(a) By completing and filing a Participation Form in accordance with the instructions in such Participation Form, an Eligible Employee shall elect to have payroll deductions withheld from his or her Compensation on each payroll date (including payroll dates covering regular payroll, commissions and bonuses) during the time he or she is a Participant in the Plan in amounts equal to or greater than one percent (1%), but not exceeding fifteen percent (15%), of the Compensation which the Participant receives on each such payroll date during the Offering Period, subject to the provisions set forth in Section 8. Such payroll deductions shall be in whole percentages only.
(b) All payroll deductions authorized by a Participant shall be credited to an account established under the Plan for the Participant. The funds represented by such account shall be held as part of the Company's general assets, usable for any corporate purpose, and the Company shall not be obligated to segregate such funds. A Participant may not make any separate cash payment or contribution to such account.
(c) Subject to Section 11 and Section 14, no increases or decreases in the amount of payroll deductions for a Participant may be made during an Offering Period. A Participant may increase or decrease the amount of his or her payroll deductions under the Plan for subsequent Offering Periods by completing an amended Participation Form and filing it with the Company in accordance with the instructions in such Participation Form. The amended Participation Form will become effective on the first Offering Date to occur after such form is properly filed with the Company, so long as such filing occurs on or before the 15th day of the month immediately preceding the month in which such Offering Date occurs. An amended Participation Form that is filed after such 15th day but before such Offering Date shall be effective as of the next Offering Date to occur after such Offering Date.
(d) A Participant may discontinue his or her participation in the Plan at any time as provided in Section 11.
8. Grant and Exercise of Option.
(a) On each Offering Date, a Participant shall be granted, by operation of the Plan, an option to purchase a number of shares of Common Stock at the Option Price, determined in accordance with Section 8(b), subject to the limitations set forth in Section 8(c). Notwithstanding any other provision of the Plan, no Participant shall be granted an option under the Plan for any Offering Period if:
(i) immediately after the grant, the Participant (or any other person whose stock ownership would be attributed to such Participant pursuant to Section 424(d) of the Code) would own shares of stock (including any shares of stock that the Participant may purchase under outstanding options) possessing 5% or more of the total combined voting power or value of all classes of shares of the Company or of any Subsidiary; or
(ii) the Participant's rights to purchase shares of Common Stock under all "employee stock purchase plans" (within the meaning of Section 423 of the Code) of the Company and its Subsidiaries would accrue at a rate which exceeds $25,000 of the Fair Market Value of such shares of Common Stock (determined at the time the option is granted) for each calendar year in which the option is outstanding at any time.
(b) Unless a Participant withdraws from the Plan pursuant to Section 11 or incurs a termination of employment, the Participant's option for an Offering Period shall be automatically exercised on the Termination Date of such Offering Period to purchase such whole number of shares of Common Stock determined by dividing the accumulated payroll deductions in the Participant's account on such Termination Date by the Option Price, subject to the limitations set forth in Section 8(c). No fractional shares will be purchased and any accumulated payroll deductions not used to purchase shares shall be refunded to the Participant;provided, however, that an amount representing a fractional share that was not used to purchase shares during an Offering Period may be carried over to a subsequent Offering Period.
(c) Notwithstanding anything in the Plan to the contrary, the number of shares of Common Stock that a Participant may purchase during an Offering Period may not exceed the maximum number of shares that may be purchased without exceeding the limitation described in Section 8(a)(ii).
9. Delivery of Shares. As soon as practicable after the Termination Date of each Offering Period, the Company will deposit, or cause to be deposited, the shares of Common Stock purchased by each Participant upon exercise of the Participant's option for such Offering Period in an account established for the Participant at a brokerage firm or other financial services firm selected by the Administrator, to be held in book entry form.
10. No Shareholder Rights. No Participant (or other person claiming through such Participant) shall, by reason of the Plan or any rights granted pursuant thereto, or by the fact that there are payroll deductions credited to a Participant's account sufficient to purchase shares of Common Stock, have any rights of a shareholder of the Company until shares of Common Stock have been delivered to such Participant in the manner provided in Section 9.
11. Withdrawal; Termination of Employment.
(a) A Participant may terminate his or her participation in the Plan at any time by giving written notice to the Company ("Withdrawal Notice") on or before the 15th day of the month in which the applicable Termination Date occurs. The Withdrawal Notice shall state that the Participant wishes to terminate his or her participation in the Plan, specify the applicable Termination Date and request the cessation of further payroll deductions under the Plan. No further payroll deductions for the purchase of shares of Common Stock will be made on behalf of the Participant for such Offering Period or for any subsequent Offering Period;provided,however, that previously accumulated payroll deductions for such Offering Period shall not be refunded to the Participant, but shall be applied to the purchase of shares of Common Stock on the Termination Date in accordance with the provisions of Section 8. A Participant's withdrawal from the Plan pursuant to this Section shall not have any effect upon his or her eligibility to participate in a subsequent Offering Period by completing and filing a new Participation Form pursuant to Section 6, or in any similar plan that may hereafter beduly adopted by the Company.Board.
(b) If a Participant ceases to be employed by the Company or by a Designated Subsidiary for any reason, all payroll deductions and all rights to purchase shares of Common Stock granted to the Participant with respect to the Offering Period then in effect shall immediately cease, unless otherwise determined by the Administrator in its sole discretion in compliance with Treas. Reg. §1.423-2(f). The amount of payroll deductions accumulated in such Participant's account shall be refunded to the Participant as soon as practicable (or in the case of the Participant's death, to the executor or administrator of the Participant's estate, or if no such executor or administrator has been appointed, to such other person as the Company may designate) in the currency in which collected. For purposes of the Plan, the date of the Participant's termination of employment shall be the Participant's last date of actual employment and shall not include any period during which such Participant receives any severance payments. A transfer of employment between the Company and a Designated Subsidiary or between one Designated Subsidiary and another Designated Subsidiary, or an absence or leave described in Section 2(i), shall not be deemed a termination of employment under this Section.
12. Interest. No interest shall accrue on a Participant's payroll deductions under the Plan.
13. Common Stock Subject to the Plan.
(a) Subject to Section 13(b), the maximum number of shares of Common Stock reserved for issuance under the Plan is equal to the sum of (i) one million (1,000,000) shares, plus (ii) commencing on January 1, 2019 and ending on December 31, 2023, an additional number of shares to be added on the first day of each calendar year equal to the lesser of (A) 1,200,000 shares of Common Stock, (B) 2% of the number of outstanding shares of Common Stock on such date and (C) an amount determined by the Administrator. The shares of Common Stock issued under the Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market. If, on any Termination Date, the total number of shares of Common Stock that are subject to options granted for the applicable Offering Period exceeds the number of shares then available for issuance under the Plan, the Company shall make a pro rata allocation of the shares of Common Stock remaining available for issuance under the Plan in a uniform and equitable manner, as determined by the Administrator. In such event, the Company shall give written notice of such reduction of the number of shares subject to the option to each affected Participant and shall refund any excess funds accumulated in each Participant's account as soon as practicable after the Termination Date of such Offering Period.
(b) The number of shares available for issuance under the Plan, the maximum number of shares each Participant may purchase per Offering Period, as well as the Option Price and the number of shares of Common Stock covered by each option granted under the Plan which has not yet been exercised shall be equitably adjusted by the Administrator to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other similar event or transaction that affects the number or kind of shares of Common Stock outstanding. Such adjustment shall be made by the Administrator, whose determination shall be final, binding and conclusive. The Administrator shall have the authority to adjust not only the number of securities, but also the class and kind of securities subject to the Plan and to make appropriate adjustments in the price of such securities if other than shares of Common Stock of the Company, so long as any such action complies with applicable law.
14. Corporate Transactions.
(a) In the event of the proposed liquidation or dissolution of the Company, the Administrator shall, in its discretion, provide for one of the following courses of action: (i) the Offering
Period then in effect shall end as of a date selected by the Administrator before the consummation of such liquidation or dissolution of the Company, and each outstanding option granted under the Plan shall be automatically exercised as of such date, or (ii) the Offering Period then in effect shall be terminated as of a date selected by the Administrator before the consummation of such liquidation or dissolution of the Company, and each outstanding option granted under the Plan shall be automatically cancelled and any payroll deductions accumulated for such Offering Period shall be refunded to the applicable Participant as soon as practicable.
(b) In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger or consolidation of the Company (except for (x) a transaction the principal purpose of which is to change the jurisdiction in which the Company is incorporated or (y) a transaction where the acquiring or surviving company is directly or indirectly owned, immediately after such transaction, by the shareholders of the Company in substantially the same proportion as their ownership of stock in the Company immediately before such transaction), the Administrator shall, in its discretion, provide for one of the following courses of action: (i) each outstanding option granted under the Plan shall be assumed or an equivalent option shall be substituted by the successor entity (or a parent or subsidiary thereof), (ii) the Offering Period then in effect shall end as of a date selected by the Administrator before the consummation of such sale, merger or consolidation of the Company, and each outstanding option granted under the Plan shall be automatically exercised as of such date, or (iii) the Offering Period then in effect shall be terminated as of a date selected by the Administrator before the consummation of such sale, merger or consolidation of the Company, and each outstanding option granted under the Plan shall be automatically cancelled and any payroll deductions accumulated for such Offering Period shall be refunded to the applicable Participant as soon as practicable.
15. Transferability. Neither payroll deductions credited to a Participant's account nor any rights relating to the exercise of an option or to receive shares of Common Stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will or the laws of descent and distribution) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw in accordance with Section 11(a). During the Participant's lifetime, a Participant's option to purchase shares of Common Stock under the Plan is exercisable only by the Participant.
16. Restrictions on Issuance and Transfer of Shares.
(a) The issuance of shares of Common Stock under the Plan shall be subject to compliance with all applicable requirements of federal, state or foreign securities laws. An option granted for an Offering Period may not be exercised if the issuance of shares of Common Stock upon such exercise would constitute a violation of any applicable federal, state or foreign securities laws or other laws or regulations. In addition, no option granted for an Offering Period may be exercised unless (i) a registration statement under the Securities Act shall, at the time of exercise, be in effect with respect to the Common Stock issuable upon exercise of the option, or (ii) in the opinion of the legal counsel of the Company, the Common Stock issuable upon exercise of the option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. As a condition to the exercise of an option granted for an Offering Period, the Administrator may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation, and to make any representation or warranty with respect thereto as may be requested by the Administrator. In the event that the issuance of shares of Common Stock under the Plan upon the exercise of an option granted for an Offering Period would not comply with applicable federal, state or foreign securities laws, all payroll deductions accumulated for such Offering Period shall be refunded to the Participant as soon as practicable.
INSMED INCORPORATED | ||||
By: | /s/ CHRISTINE PELLIZZARI Name: Christine Pellizzari Title: Chief Legal Officer |
(b) Notwithstanding any other provision of the Plan to the contrary, to the extent that any Participant is subject to the provisions of Section 16 of the Exchange Act, and the rules and regulations promulgated thereunder, such Participant's participation in the Plan shall be subject to, and such Participant shall be required to comply with, any and all additional restrictions and/or requirements imposed by the Administrator, in its sole discretion, in order to ensure that the exemption made available pursuant to Rule 16b-3 promulgated pursuant to the Exchange Act is available with respect to all transactions pursuant to the Plan effected by or on behalf of any such Participant.
17. Amendment or Termination. The Plan may be amended or terminated at any time and for any reason by the Committee or the Board;provided that, no amendment of the Plan may, without the consent of each Participant holding an outstanding option under the Plan, materially and adversely affect such Participant's rights under the Plan. Notwithstanding the foregoing, no amendment adopted by the Committee or the Board shall be effective without the approval of the shareholders of the Company if shareholder approval of the amendment is then required under Section 423 of the Code.
18. Notices. Except as otherwise provided herein, any notice or other communication given pursuant to the Plan shall be in writing and shall be personally delivered or mailed by United States registered, certified or overnight mail, postage prepaid, return receipt requested, to the Company at its principal place of business or to the Participant at the address on the payroll records of the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing. Additionally, if such notice or communication is by the Company to the Participant, the Company may provide such notice electronically (including via email). Any such notice shall be deemed to have been given on the date of postmark, in the case of notice by mail, or on the date of delivery, if delivered in person or electronically.
19. Miscellaneous.
(a) Effective Date; Shareholder Approval. The Plan is effective as of the date it is adopted by the Board. In accordance with Section 423 of the Code, the Company shall obtain shareholder approval of the Plan within twelve (12) months after the Plan is adopted by the Board. If shareholder approval is not obtained in accordance with the preceding sentence, the Plan shall be terminated.
(b) Governing Law. The Plan shall be interpreted and construed in accordance with the laws of the Commonwealth of Virginia (without regard to any rule or principle of conflicts of laws that otherwise would result in the application of the substantive laws of another jurisdiction) and applicable federal law.
(c) Withholding. To the extent required by applicable federal, state, local or foreign law, the Administrator may and/or a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any option granted under the Plan, or the issuance or sale of any shares of Common Stock. The Company shall not be required to recognize any Participant rights under an option granted under the Plan, to issue shares of Common Stock or to recognize the disposition of such shares of Common Stock until such obligations are satisfied. To the extent permitted or required by the Administrator, these obligations may or shall be satisfied by the Company withholding cash from any compensation otherwise payable to or for the benefit of a Participant, the Company withholding a portion of the shares of Common Stock that otherwise would be issued to a Participant upon exercise of an option granted under the Plan or by the Participant tendering to the Company cash or, if allowed by the Administrator, shares of Common Stock.
(d) Rules of Construction. Whenever used in the Plan, unless the context clearly indicates to the contrary, (i) any references to paragraphs, subparagraphs, sections or subsections are to those parts of the Plan, (ii) the plural includes the singular and the singular includes the plural; (iii) "includes" and "including" are each "without limitation"; (iv) "herein," "hereof," "hereunder" and other similar compounds of the word "here" refer to the entire Plan and not to any particular paragraph, subparagraph, section or subsection; (v) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require; (vi) references to a statute or regulation or statutory or regulatory provision shall refer to that provision (or to a successor provision of similar import) as currently in effect, as amended, or as reenacted, and to any regulations and other formal guidance of general applicability issued thereunder; and (vii) references to a law shall include any statute, regulation, rule, court case, or other requirement established by an exchange or a governmental authority or agency, and applicable law shall include any tax law that imposes requirements in order to avoid adverse tax consequences.
(e) Headings and Captions. The headings to sections, subsections, and paragraphs of the Plan are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.
(f) No Right to Employment. The Plan does not constitute a contract of employment, and participation in the Plan does not give any Eligible Employee or Participant the right to be retained in the employ of the Company, a Designated Subsidiary or any other subsidiary of the Company, nor give any person a right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan.
(g) Severability. If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of the Plan and the Plan shall be construed and enforced as if such provision had not been included.
(h) Unfunded Status of Plan. The Plan is unfunded and shall not create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company, any Designated Subsidiary, or the Administrator and a Participant or any other person.
(i) Annex of Terms and Conditions for Non-US Participants. Notwithstanding any provisions in this Agreement, participation by a Participant located outside the United States may be subject to special terms and conditions set forth in the Annex to this Agreement. The Annex constitutes part of the Plan.
ANNEXSPECIAL TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
This Annex contains special terms and conditions applicable to Participants located outside of the United States. These terms and conditions are in addition to those set forth in the Plan. Any capitalized term used in this Annex shall have the meaning ascribed to it in the Plan.
1. Data Privacy. Each Participant understands that the Company may collect, use and transfer, in electronic or other form, such Participant's personal data as described in the Plan for the exclusive purpose of implementing, administering and managing such Participant's participation in the Plan. Each Participant understands that the Company holds certain personal information about such Participant, including such Participant's name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares or directorships held in the Company, details of all options granted under the Plan, canceled, exercised, or outstanding in such Participant's favor, for the purpose of implementing, administering and managing such Participant's participation in the Plan ("Data"). Each Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of such Participant's participation in the Plan, that these recipients may be located in such Participant's country or elsewhere, and that the recipient's country may have different data privacy laws and protections than such Participant's country. Each Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting such Participant's local human resources representative. Each Participant understands that recipients may receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing such Participant's participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom such Participant may elect to deposit any shares acquired pursuant to an option granted under the Plan. Each Participant understands that Data will be held only as long as is necessary to implement, administer and manage such Participant's participation in the Plan. Each Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data or require any necessary amendments to Data, by contacting in writing such Participant's local human resources representative. For more information on the processing of Data for the purposes set out above, each Participant understands that he or she may contact such Participant's local human resources representative. For Participants located within the European Union, each such Participant understands that Data will always be processed in accordance with the Insmed EU Employee Personal Data Processing Notice, a copy of which is available from such Participant's local human resources representative.
2. Language. If the Plan or any other document related to the Plan is translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
3. No Acquired Rights. The grant of an option to a Participant under the Plan is voluntary and occasional and does not create any contractual or other right to receive future grants of options under the Plan, or benefits in lieu of such options, even if options under the Plan have been granted to a Participant repeatedly in the past. All decisions with respect to future grants of options under the Plan, if any, will be at the sole discretion of the Administrator. The grant of an option to a Participant under the Plan is an extraordinary item that does not constitute compensation of any kind for service of any kind rendered to the Company or its Designated Subsidiaries, and which is outside the scope of a Participant's employment contract, if any. Such grant is not part of normal or expected compensation or salary for any purpose, including calculating any severance, resignation, termination, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
VOTE BY INTERNET Before the Annual Meeting - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information through 11:59 P.M. Eastern Time on Monday, May 14, 2018.11, 2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During the Annual Meeting - www.virtualshareholdermeeting.com/INSM2020 You may attend the meeting via the Internet and vote during the meeting. Have your proxy card in hand when you access the web site and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions through 11:59 P.M. Eastern Time on Monday, May 14, 2018.11, 2020. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Votes must be received by 9:00 A.M.11:59 P.M. Eastern Time on Tuesday,Monday, May 15, 2018. VOTE IN PERSON If you would like to vote in person, please attend the annual meeting. Please find the meeting location on the reverse side.11, 2020. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. C/O BROADRIDGE P.O. BOX 1342 BRENTWOOD, NY 11717 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E42898-P06246D00234-P36864 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. INSMED INCORPORATED For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR Item 1: !! ! 1. Election of Class IIIII Directors Nominees: 01) 02) 03) Clarissa Desjardins, Ph.D. David R. Brennan 02) Melvin Sharoky, M.D.W.J. McGirr Elizabeth McKee Anderson For Against Abstain The Board of Directors recommends you vote FOR Items 2, 3 and 4: For Against Abstain ! ! ! ! ! ! ! ! ! 2. Advisory vote on the 20172019 compensation of our named executive officers. 3. Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for Insmed Incorporated for the year ending December 31, 2018.2020. Approval of an amendment to the Insmed Incorporated 2018 Employee Stock Purchase2019 Incentive Plan. 4. Other business may be considered as may properly come before the meeting or any adjournment or postponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report on Form 10-K and Notice and Proxy Statement are available at www.proxyvote.com. E42899-P06246D00235-P36864 INSMED INCORPORATED Annual Meeting of Shareholders May 15, 201812, 2020 at 9:00 AM Eastern Time This proxy is solicited by the Board of Directors The undersigned hereby appoints Donald Hayden, Jr.,David R. Brennan, William H. Lewis and Christine Pellizzari, or any of them, with full power of substitution in each, as proxies (and if the undersigned is a proxy, substitute proxies) to vote all shares of Common Stock of Insmed Incorporated that the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held on May 15, 201812, 2020 at 9:00 AM at the Bridgewater Marriott, 700 Commons Way, Bridgewater, NJ 08807.Eastern Time. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations or, in the absence of such recommendations, in the judgment of the proxy holders. Continued and to be signed on reverse side