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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 documentTable of Contents
Registrant ☒
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Filed by a Party other than the Registrant ☐
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
Check the Securities Exchange Act of 1934appropriate box:
(Amendment No. )
| ☐ | ||
Preliminary Proxy Statement | ||
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | 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 all boxes that apply):
| ☒ | ||||
No fee required. | ||||
☐ | Fee paid previously with preliminary materials. |
| ☐ | Fee computed on table | |||
NOTICE
and
PROXY STATEMENT
for
 | INSMED INCORPORATED 700 US HIGHWAY 202/206 BRIDGEWATER, NEW JERSEY 08807 (908) 977-9900 |
ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 2020
700 US Highway 202/206Bridgewater, New Jersey 08807
Insmed Incorporated700 US Highway 202/206Bridgewater, New Jersey 08807(908) 977-9900
March 31, 20202023
To Our Shareholders:
We cordially invite
On behalf of the Board of Directors, I would like to thank you for your ongoing support of Insmed Incorporated (Insmed)and your belief in our vision to become a globally recognized leading biotechnology company.
2022 ACHIEVEMENTS
Throughout 2022, we continued to advance the Phase 3 ASPEN study of brensocatib in bronchiectasis and have completed enrollment in adult patients in this study as of March 31, 2023. We also advanced a Phase 2 pharmacokinetics/pharmacodynamics study of brensocatib in patients with cystic fibrosis and reported topline results from this study in early 2023. We continued to advance the Phase 2 development of TPIP and made meaningful progress on our early-stage research programs, encompassing a wide range of technologies and modalities.
4INSMED PROXY STATEMENT
Finally, we strengthened our cash position significantly by completing three strategic financings resulting in aggregate gross proceeds of $775 million. We ended the year with approximately $1.15 billion in cash, cash equivalents, and marketable securities, putting us in a strong financial position that will take us through the key anticipated milestones over the next year and a half.
OUR CULTURE
At Insmed, we are powered by a shared sense of purpose to serve patients with serious and rare diseases. Driven by our core values of collaboration, accountability, passion, respect, and integrity, we have built a strong and unique culture in which employees feel motivated to do their best work and empowered to deliver on the promise of great science. In 2022, we were honored to be named Science magazine’s No. 1 Top Employer for the second year in lighta row.
ESG STRATEGY
Insmed has always held a strong sense of corporate citizenship, and as our company grows, we continuously challenge ourselves to do better. Since 2021, we have advanced a more formal framework to enhance our focus on environmental, social, and governance (ESG) matters, led by an ESG working group and sponsored by members of our Executive Committee. Our Nominations and Governance Committee is tasked with overseeing our ESG strategy and, along with the full Board, receives regular updates on ESG matters. We look forward to publishing our inaugural Responsibility Report in 2023.
COMMITMENT TO SHAREHOLDERS
We are grateful to you, our shareholders, for your support of Insmed. We are committed to providing long-term, sustainable growth and believe that remaining focused on the needs of our patients and their families will yield these results. We look forward to your continued support and feedback in 2023.
Sincerely yours,
WILLIAM H. LEWIS
Chair of the COVID-19 pandemic and related public health concerns, will be held virtually via the Internet at www.virtualshareholdermeeting.com/INSM2020 on May 12, 2020, at 9:00 a.m. Eastern 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:Board
1.election of three Class II directors, Clarissa Desjardins, Ph.D., David W.J. McGirr, and Elizabeth McKee Anderson, to serve until the 2023 Annual Meeting of Shareholders;2.an advisory vote on the 2019 compensation of our named executive officers;3.ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2020;4.approval of an amendment to the Insmed Incorporated 2019 Incentive Plan; and5.transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
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 attend the Annual 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 and regardless of the number of shares of Insmed common stock you own, please vote by proxy prior to the Annual Meeting.
This Proxy Statement is first being mailed to shareholders on or about March 31, 2020.2023.
5INSMED PROXY STATEMENT
| INSMED INCORPORATED 700 US HIGHWAY 202/206 BRIDGEWATER, NEW JERSEY 08807 (908) 977-9900 |
Notice of Annual Meeting of Shareholders to be Held on May 11, 2023
INSMED INCORPORATED700 US Highway 202/206Bridgewater, New Jersey 08807(908) 977-9900
NOTICE OF ANNUAL MEETING OF SHAREHOLDERSTO BE HELD ON MAY 12, 2020
NOTICE IS HEREBY GIVEN that the 20202023 Annual Meeting of Shareholders (the “Annual Meeting”) of Insmed Incorporated (Insmed)(“Insmed”) will be held virtually via the Internet at www.virtualshareholdermeeting.com/INSM2020,INSM2023, on May 12, 2020,11, 2023, at 9:00 a.m. Eastern time (the Annual Meeting),Time, and at any adjournment or postponement thereof, for the following purposes:
1.To elect three Class II directors, Clarissa Desjardins, Ph.D., David W.J. McGirr, and Elizabeth McKee Anderson, to serve until the 2023 Annual Meeting of Shareholders;2.To conduct an advisory vote on the 2019 compensation of our named executive officers;3.To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2020;4.To approve an amendment to the Insmed Incorporated 2019 Incentive Plan; and5.To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
Due to the COVID-19 pandemic and public health concerns,
| 1. | To elect three Class II directors, Elizabeth McKee Anderson, Clarissa Desjardins, Ph.D., and David W.J. McGirr, to serve until the 2026 Annual Meeting of Shareholders; |
| 2. | To conduct an advisory vote on the 2022 compensation of our named executive officers (“NEOs”); |
| 3. | To conduct an advisory vote on the frequency of future shareholder advisory votes on the compensation of our NEOs; |
| 4. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2023; |
| 5. | To approve the Insmed Incorporated Amended and Restated 2019 Incentive Plan; and |
| 6. | To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
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 18, 202014, 2023 will be entitled to vote at the Annual Meeting.
You are requested to vote promptly in advance of the Annual Meeting by telephone by dialing 1-800-690-6903, electronically through the Internet by visiting www.proxyvote.com, or by returning a completed proxy card by mail regardless of whether you expect to attend the Annual Meeting. If you attend the Annual Meeting, you may vote even if you already have sent in your proxy. If you are a beneficial owner, youYou may not vote your shares at the Annual Meeting unless you request and obtain a validenter the 16-digit control number found on your notice, proxy from your brokercard, or other agent.proxy materials.
By Order of the Board
MICHAEL A. SMITH
Corporate Secretary
March 31, 20202023
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE INSMED INCORPORATED ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 12, 2020:11, 2023: The Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 20192022 are available atwww.proxyvote.com. www.proxyvote.com.
6INSMED PROXY STATEMENT
| PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS OF INSMED INCORPORATED TO BE HELD MAY 11, 2023 |
Table of Contents
PROXY STATEMENTforANNUAL MEETING OF SHAREHOLDERSofINSMED INCORPORATEDTo be held May 12, 2020
| Proposal No. 1 Election of Class II Directors
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| Corporate Governance
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| Audit Committee Report and Independent Auditor Fees
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| Certain Relationships and Related Party Transactions
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| Delinquent Section 16(a) Reports
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| Security Ownership of Certain Beneficial Owners, Directors, and Management
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| Proposal No. 2 Advisory Vote on the 2022 Compensation of our Named Executive Officers
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| Compensation Discussion and Analysis
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| Compensation Committee Report
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| Compensation Committee Interlocks and Insider Participation
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| Dodd-Frank Mandated Pay Ratio Disclosure
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| Dodd-Frank Mandated Pay Versus Performance Disclosure
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| Director Compensation
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| Proposal No. 5 Approval of the Insmed Incorporated Amended and Restated 2019 Incentive Plan
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| Proposals for 2024 Annual Meeting
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| Annual Report on Form 10-K
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| Separate Copies for Beneficial Holders
| 96 | |
| General Information About The Annual Meeting and Voting | 97 | |
| Appendix A: Insmed Incorporated Amended and Restated 2019 Incentive Plan | A-1 |
In this Proxy Statement, we use the words "Insmed Incorporated"“Insmed Incorporated” to refer to Insmed Incorporated, a Virginia corporation, and we use the words "Company," "Insmed," "we," "us"“Company,” “Insmed,” “we,” “us,” and "our"“our” to refer to Insmed Incorporated and its consolidated subsidiaries. Insmed CONVERT and ARIKAYCE 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.
7INSMED PROXY STATEMENTforANNUAL MEETING OF SHAREHOLDERSofINSMED INCORPORATEDTo be held May 12, 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 on May 12, 2020, at 9:00 a.m. Eastern 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 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 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 18, 2020 (the Record Date), will be entitled to notice of and to vote at the Annual Meeting. As of the Record Date, we had 89,859,549 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.Proposal No. 1
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 in advance or at the Annual Meeting.
If you are a shareholder of record, you may vote or submit a proxy as follows:
1.By Internet—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 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/INSM2020.2.By Telephone—Dial 1-800-690-6903 using any touch-tone phone to transmit your voting instructions through 11:59 p.m. Eastern Time on Monday, May 11, 2020. Have your proxy card in hand when you call and follow the voting instructions given to you over the phone.3.By Mail—Complete and sign the proxy card and mail it in accordance with the instructions on the proxy card. Completed proxy cards must be received by 11:59 p.m. Eastern Time on Monday, May 11, 2020.
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 instead 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 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 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 44,929,775 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 II 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 2019 Incentive Plan (the 2019 Incentive Plan), are non-routine matters. Proposal 3, the ratification of the appointment of our 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 will not be voted on "non-routine" matters and your shares will be "broker non-votes" with respect to those 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 1, the election of Class II directors, requires 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 2019 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, 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 2019 Incentive Plan, requires the affirmative vote of a majority of the votes cast 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:
•FOR the election of each of the three Class II nominees for director;•FOR the approval of the 2019 compensation of our named executive officers;•FOR the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2020; and•FOR the approval of an amendment to the 2019 Incentive Plan.
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 exercised by voting 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 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 700 US Highway 202/206, Bridgewater, New Jersey 08807.
PROPOSAL NO. 1
ELECTION OF CLASS II DIRECTORS
Our Bylaws currently provide that our Board will consist of not less than six or more than 10 directors. Our Board has adopted resolutions providing for up to nine10 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 II directors will expire at the Annual Meeting. Accordingly, the Board has nominated Elizabeth McKee Anderson, Clarissa Desjardins, Ph.D., and David W.J. McGirr and Elizabeth McKee Anderson for election as Class II directors.
Each of the nominees was recommended for election by the Nominations and Governance Committee, and such recommendation was approved by the Board. If elected, the term of office for these nominees will expire at our 20232026 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 Ms. Anderson, Dr. Desjardins, and Mr. McGirrMcGirr.
Elizabeth McKee Anderson, age 65
Career Highlights: •
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Janssen Pharmaceuticals, Inc., a Johnson & Johnson company (2003 - 2014)
• Worldwide Vice President, Global Strategic Marketing and Market Access, Infectious Diseases and Vaccines
• Worldwide Vice President, Global Strategic Marketing and Market Access, Vaccines
• Worldwide Vice President, Immunology, Global Strategic Marketing
• Worldwide Vice President, BIO Strategic Marketing
• Vice President, Global Biologics Strategic Marketing, Centocor
• Vice President, Strategic Planning & Market Research, Centocor • Wyeth (1997 - 2002)
• Vice President & General Manager, Wyeth Lederle Vaccines • Rhone-Poulenc Rorer Pharmaceuticals Inc. (1993 - 1997)
• Senior Vice President and General Manager, North America, Centeon LLC
• Vice President and General Manager, | North America, Armour Pharmaceutical Company
• Vice President, Worldwide Business Operations, Armour Pharmaceutical Company • American National Red Cross (1983 - 1993) • Mobay Chemical Company (1979 - 1983) | Current Public Board Service:
• Director, GSK plc (LSE/NYSE: GSK) • Director, BioMarin Pharmaceutical Inc. (Nasdaq: BMRN) • Director, Revolution Medicines, Inc. (Nasdaq: RVMD) Current Private Board and Other Service: • Director, Aro Biotherapeutics Inc. • Member of the Board of Trustees, The Wistar Institute
Education: • Loyola University Maryland - M.B.A., finance • Rutgers University - B.S., engineering | ||||||
8INSMED PROXY STATEMENT
Qualifications: Ms. Anderson has more than 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.
Clarissa Desjardins, Ph.D., age 56
Career Highlights:
Current Public Board Service:
Education:
Qualifications:
Dr. Desjardins has more than 25 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.
9INSMED PROXY STATEMENT
David W.J. McGirr, age 68
Career Highlights:
S.G. Warburg & Co., Inc.
Current Public Board Service:
Education:
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.
VOTE REQUIRED FOR ELECTION OF DIRECTOR NOMINEES
Our Class II directors will be elected by a plurality of the votes properly cast on this proposal at the Annual Meeting. Votes withheld and broker non-votes will not have any effect on the outcome of this vote.
Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE "FOR"“FOR” EACH OF THE CLASS II DIRECTOR NOMINEES.
10INSMED PROXY STATEMENT
OUR REMAINING BOARD MEMBERS
The information below describes the primary experience, qualifications, and skills of each of our Class III directors, David R. Brennan, Leo Lee, Carol A. Schafer, and Melvin Sharoky, M.D., and Leo Lee, andour 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 20212024 Annual Meeting of Shareholders, and the term of the Class I directors will expire at the 20222025 Annual Meeting of Shareholders.
Incumbent Directors Whose Term Expires at the 20212024 Annual Meeting of Shareholders (Class III Directors)
David R. Brennan, age 69
Career Highlights:
Current Public Board Service:
Education:
Qualifications:
Mr. Brennan has more than 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.
11INSMED PROXY STATEMENT
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Leo Lee, age 53
Career Highlights:
Current Public Board Service:
Education:
Qualifications:
Mr. Lee has more than 25 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 expands in this geography.
12INSMED PROXY STATEMENT
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Carol A. Schafer, age 59
Career Highlights:
Current Public Board Service:
Education:
Qualifications:
Ms. Schafer has more than 35 years of experience in investment banking, corporate finance and business development, including significant experience in financing and equity capital markets in the pharmaceutical and biotechnology industries, making her a valuable asset to the Board.
13INSMED PROXY STATEMENT
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Melvin Sharoky, M.D., age 72
Career Highlights:
Current Public Board Service:
Education:
Qualifications:
Dr. Sharoky has more than 35 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.
14INSMED PROXY STATEMENT
Incumbent Directors Whose Term Expires at the 20222025 Annual Meeting of Shareholders (Class I Directors)
Alfred F. Altomari, age 64
Career Highlights:
Current Public Board Service:
Education:
Qualifications:
Mr. Altomari is a pharmaceutical industry veteran with 40 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.
15INSMED PROXY STATEMENT
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William H. Lewis, age 54
Career Highlights:
Current Public Board Service:
Current Private Board and Other Service:
Education:
Mr. Lewis has more than 15 years of Contentsexecutive experience in the life sciences industry and a track record of success for over 25 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 Chair 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.
16INSMED PROXY STATEMENT
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BOARD DIVERSITY MATRIX (AS OF MARCH 14, 2023)
Our Board values the diversity of Contentsits members and believes varied perspectives expand the Board’s ability to provide relevant guidance to our business. The table below provides certain self-identified diversity information regarding our Board as of March 14, 2023. Each of the categories listed in the below table has the meaning used in Nasdaq Listing Rule 5605(f).
| TOTAL NUMBER OF DIRECTORS | 9 | |||
| FEMALE | MALE | NON- BINARY | DID NOT DISCLOSE GENDER | |
| Part I: Gender Identity | ||||
| Directors | 3 | 6 | 0 | 0 |
| Part II: Demographic Background | ||||
| African American or Black | 0 | 0 | 0 | 0 |
| Alaskan Native or Native American | 0 | 0 | 0 | 0 |
| Asian | 0 | 1 | 0 | 0 |
| Hispanic or Latinx | 1 | 0 | 0 | 0 |
| Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 |
| White | 2 | 4 | 0 | 0 |
| Two or More Races or Ethnicities | 0 | 0 | 0 | 0 |
| LGBTQ+ | 0 | 0 | 0 | 0 |
| Did Not Disclose Demographic Background | 0 | 1 | 0 | 0 |
17INSMED PROXY STATEMENT
|
| |||||
Executive Officers
EXECUTIVE OFFICERS
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 AT THE COMPANY | ||||
| William H. Lewis | 54 | President and CEO | September 2012—Present | ||||
| Sara Bonstein | 42 | Chief Financial Officer | January 2020—Present | ||||
| Roger Adsett | 54 | Chief Operating Officer | September 2016—Present | ||||
| Martina Flammer, M.D. | 59 | Chief Medical Officer | |||||
| S. Nicole Schaeffer | 54 | Chief People Strategy Officer | January 2013—Present | ||||
| 46 | General Counsel, SVP | ||||||
| Drayton Wise | 48 | Chief | |||||
William H. Lewis. Mr. Lewis's biographical information is summarized above under "Incumbent Directors Whose Term Expires at the 2022 Annual Meeting of Shareholders (Class I Directors)."
Sara Bonstein. Ms. Bonstein joined Insmed as Chief Financial Officer in January 2020. Ms. Bonstein brings more than 15 years of operational and financial leadership in the life sciences
 | Mr. Lewis’s biographical information is summarized above under “Incumbent Directors Whose Term Expires at the 2025 Annual Meeting of Shareholders (Class I Directors).” |
18INSMED PROXY STATEMENT
 | Ms. Bonstein joined Insmed as Chief Financial Officer in January 2020. Ms. Bonstein brings more than 15 years of operational and financial leadership in the life sciences industry. Prior to joining the Company, Ms. Bonstein was Chief Financial Officer and Chief Operating Officer of OncoSec Medical Incorporated, positions 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 January 2012 to February 2014. From August 2004 to December 2011, Ms. Bonstein served in various finance roles at ImClone Systems (acquired by Lilly in 2008), including Director of Development Finance. From 2001 to 2004, Ms. Bonstein served in various roles at Johnson & Johnson. Ms. Bonstein has served on the board of directors of scPharmaceuticals Inc. (Nasdaq: SCPH) since July 2020 and Xilio Therapeutics, Inc. (Nasdaq: XLO) since August 2021. Ms. Bonstein holds a Master of Business Administration from Rider University and a Bachelor of Science in Finance from The College of New Jersey. |
 | Mr. Adsett joined Insmed as Chief Commercial Officer in September 2016 and was promoted to Chief Operating Officer in November 2019. Mr. Adsett has more than 25 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 (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, a multinational pharmaceutical and biopharmaceutical company. Mr. Adsett was a senior analyst at Accenture PLC, a global professional services company, from September 1991 to November 1994. Mr. Adsett has served on the board of Landos Biopharma, Inc. (Nasdaq: LABP) since March 2022. Mr. Adsett holds a Master of Business Administration from The Wharton School at the University of Pennsylvania and a Bachelor of Arts in English and Economics from Bucknell University. |
19INSMED PROXY STATEMENT
 | Dr. Flammer joined Insmed as Chief Medical Officer in December 2019. Dr. Flammer has over 20 years of experience in both medical and commercial 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 at Boehringer Ingelheim International. From 2012 to 2018, Dr. Flammer held various positions at Boehringer Ingelheim, including Vice President, Clinical Development and Medical Affairs (2016 - 2018), Vice President of Medicine, Regulatory Affairs & Pharmacovigilance (2014 - 2016), and Senior Global Medical Director, Clinical Development & Medical Affairs Virology (2012 - 2014). Prior to her time at Boehringer Ingelheim, Dr. Flammer served in various roles at Pfizer, Inc. from 2000 to 2011. Dr. Flammer holds a Master of Business Administration from New York University Stern School of Business and an M.D. from University of Vienna Medical School. |
 | 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 Master of Business Administration degree from Boston University. |
20INSMED PROXY STATEMENT
 | Mr. Smith joined Insmed as Corporate Counsel in April 2014 and was promoted several times, including to the positions of Vice President, Corporate Counsel (September 2016 to June 2020) and Senior Vice President, General Counsel – US (July 2020 to July 2021). Most recently, Mr. Smith was promoted to General Counsel, Senior Vice President in July 2021. Mr. Smith served as Associate General Counsel at ViroPharma Incorporated from April 2008 until its acquisition by Shire plc in 2014. Prior to that, Mr. Smith served as Counsel at ConvaTec from June 2006 to April 2008. From May 2005 to June 2006, Mr. Smith was an Associate Attorney at Reed Smith LLP. Mr. Smith received his Bachelor of Science degree in Biology from Duquesne University and his Juris Doctor degree from Duquesne University School of Law. |
 | Mr. Wise joined Insmed as Senior Director, Global Commercial Operations in February 2014 and has held several positions within the Company, including Senior Director, Global Marketing & Commercial Operations (October 2014 to October 2015), Vice President, Marketing & Sales (October 2015 to October 2016), Vice President, General Manager – ALIS (October 2016 to November 2019) and Senior Vice President, Head of US & General Manager, ARIKAYCE (November 2019 to May 2022). Most recently, Mr. Wise was promoted to Chief Commercial Officer in May 2022. Prior to joining the Company, Mr. Wise held various sales and commercial roles at Novartis from 1999 to 2014. Mr. Wise holds a Bachelor of Science degree in Business Administration from The Citadel and a Master of Business Administration from Emory University’s Goizueta Business School. |
21INSMED PROXY STATEMENT
industry. Prior to joining the Company, Ms. Bonstein was Chief Financial Officer & Chief Operating Officer of OncoSec 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 January 2012 to February 2014. From August 2004 to December 2011, Ms. Bonstein served in various finance roles at ImClone Systems (acquired by Lilly in 2008), including Director of Development Finance. From May 2001 to August 2004, Ms. Bonstein was a financial analyst at Johnson & Johnson in both the Ortho McNeil Pharmaceuticals and Ortho Biotech divisions. Ms. Bonstein holds a Masters of Business Administration from Rider University and a Bachelor of Science in Finance from The College of New Jersey.
Roger Adsett. Mr. Adsett joined Insmed as Chief Commercial Officer in September 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 (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, a multinational pharmaceutical and biopharmaceutical company. Mr. Adsett was a senior analyst at Accenture PLC, 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.
Martina Flammer, M.D. Dr. Flammer joined Insmed as Chief Medical Officer in December 2019. Dr. Flammer has over 17 years of experience in both medical and commercial 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 at Boehringer Ingelheim International. From 2012 to 2018, Dr. Flammer held various positions at Boehringer Ingelheim, including Vice President, Clinical Development and Medical Affairs (2016 - 2018), Vice President of Medicine, Regulatory Affairs & Pharmacovigilance (2014 - 2016), and Senior Global Medical Director, Clinical Development & Medical Affairs Virology (2012 - 2014). Prior to her time at Boehringer Ingelheim, Dr. Flammer served in various roles at Pfizer, Inc. from 2000 to 2011. Dr. Flammer holds an M.B.A. from New York University Stern School of Business and an M.D. from University of Vienna Medical 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. 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 Matters
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 "Investors—“Investors—Corporate Governance."” None of the information inon or that can be accessed through our website is incorporated by reference in this Proxy Statement. Our corporate governance practices include the following:
•- The Board currently has a lead independent director, which our Corporate Governance Guidelines require
in the event thatif the positions ofChairmanChair and CEO are combined, and allofour non-employee directors andboardBoard committee members are independent.•The Board has adopted a director resignation policyinfor uncontested director elections.•The Board oversees succession planning for executive officers, including the CEO.•Directors have access to all levels of management and are provided with opportunities to meet with members of management on a regular basis.•Directors may retain their own independent advisors, at our expense.•The Board and each committee thereof conduct self-evaluations at least once per year to assess their performance and ways in which performance could be improved.•Our Board addresses the importance ofincorporating new viewpoints on the Boardboard refreshment and succession planning through the director evaluation and nominationprocess.process to incorporate new viewpoints on the Board. Our director composition reflects a mix of tenure on the Board (ranging fromless than one yearapproximately two years to20over 10 years), which we believe provides an effective balance of historical perspective and an understanding of the evolution of the Company with fresh perspectives and insights.•Directors are limited to four public company boards, including the Company, and CEOs are limited to two public company boards, including the Company.Share ownership guidelines are in place for our directors and executive officers.Our Board oversees our environmental, social and governance (“ESG”) sustainability efforts and initiatives and has designated responsibilities for various components of ESG to our Nominations and Governance Committee.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
"Investors—“Investors— Corporate Governance."”22INSMED PROXY STATEMENT
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.
Meetings of the Board.
The Board held
10eight meetings during2019.2022. Each director attended at least 75% of the aggregate number of Board and committee meetings that occurred in20192022 during his or her tenure on the Board.Director Resignation Policy.
Any nominee for director in an uncontested election who has a greater number of votes
"withheld"“withheld” from his or her election than votes cast"for"“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"“for” their election than votes"withheld,"“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 adirector'sdirector’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
theour 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, Ms. Anderson, Mr. Brennan, Dr. Desjardins,
Dr. Engelsen,Mr. Lee, Mr. McGirr, Ms.Anderson,Schafer, and Dr.Sharoky and Mr. Lee.Sharoky. Mr. Lewis is not considered independent because he is currently employed by the Company. The Board also determined thatMr. Hayden,Dr. Steinar Engelsen, whoresigned as a director in May 2019,did not stand for re-election at the 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”), was an independent director.23INSMED PROXY STATEMENT
Board'sBoard’s Role in Strategy.The Board actively participates in Company strategy decisions and oversight throughout the year. The Board annually reviews the
company'scompany’s strategic plan, including key risks and decisions facing the Company.Director Nominating Process
Our Nominations and Governance Committee, which is described more fully below under
"Corporate“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 annuallyreviews 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
directorsnominees 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 and perspectives 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, independence, the ability to commit sufficient time to the Board, and the extent to which the candidate would fill a present need on the 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 above. The Nominations and Governance Committee evaluates a
candidate'scandidate’s qualifications to serve as a member of the Board based on the skills and characteristics of such individual Board member, as well as the composition of the Board as a whole. In addition, the Nominations and Governance Committee will evaluate acandidate'scandidate’s independence, diversity, skills and experience in the context of theBoard's needs.Board’s needs and its oversight of long-term strategy.Director Candidate Recommendations and Nominations by Shareholders.
The Nominations and Governance
Committee'sCommittee’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“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 intheour Bylaws and summarized in this Proxy Statement under the heading"Proposals“Proposals for20212024 Annual Meeting."”24INSMED PROXY STATEMENT
Communications with the Board
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,Mr. Michael A. Smith, Corporate Secretary, Insmed Incorporated, 700 US Highway 202/206, Bridgewater, New Jersey, 08807. All communications sent toMs. PellizzariMr. Smith 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,Dr. Engelsen, attended the20192022 AnnualMeeting of Shareholders.Meeting.Board Leadership Structure
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 ChairmanLewis, our CEO, was appointed Chair of the Boardand was succeeded by Mr. Lewis. Mr. Lewis continued as President and CEO of the Companyand Mr. Brennan was elected as Lead Independent Director. The Board believes that its current leadership structure, with Mr. Lewis serving as CEO andChairmanChair and Mr. Brennan serving as our Lead Independent Director, is appropriate for the Company at this time. Both Mr. Lewis and Mr. Brennan 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 Lead Independent Director has a greater focus on governance of the Company, including oversight of the Board. We believe the combined role of CEO andChairmanChair balanced with the shared leadership with the Lead Independent Director is a strength for the Company. As our Lead Independent Director, Mr. Brennan 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.Committees of the Board
Our Bylaws provide that the Board may create one or more committees of the Board. Currently, the Board has four standing committees: the Audit Committee, the Compensation Committee, the Nominations and Governance Committee, and the Science and Technology Committee.
Audit CommitteeComposition and Attendance.Our Audit Committee consists of Mr. McGirr (Chairman), Dr. Engelsen, and Mr. Altomari, each of whom is an independent Board member. During 2019, the Audit Committee held seven meetings.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 as well as overseeing our compliance with applicable legal and regulatory requirements. The Committee reviews and oversees:25INSMED PROXY STATEMENT•the auditing, accounting, and financial reporting processes, including the audits of our financial statements;•our systems of internal controls regarding finance and accounting that we have established;•the qualifications and independence of our independent registered public accounting firm;•the appointment, retention and performance of our independent registered public accounting firm and the performance of any internal audit functions; and•our compliance with legal and regulatory requirements.
AUDIT COMMITTEE
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 as well as overseeing our compliance with applicable legal and regulatory requirements. The Committee reviews and oversees:
● the auditing, accounting, and financial reporting processes, including the audits of our financial statements;
● our systems of internal controls regarding finance and accounting that we have established;
● the qualifications and independence of our independent registered public accounting firm;
● the appointment, retention, and performance of our independent registered public accounting firm and the performance of any internal audit functions; and
● our compliance with legal and regulatory requirements.
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 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, consolidated statement of comprehensive income/loss, consolidated statement of cash flows, and consolidated statement of shareholders’ equity. Our Board also has determined that each of Mr. McGirr and Ms. Schafer 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.
Composition and Meetings:
Committee Members:
● Mr. McGirr
(Chair)● Mr. Altomari
● Ms. Schafer
Number of meetings during 2022:
6The 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).26INSMED PROXY STATEMENT
COMPENSATION COMMITTEE
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:
● creates a direct relationship between pay levels and corporate performance and returns to shareholders;
● provides overall competitive pay levels to effectively attract and retain executive talent;
● creates proper incentives to enhance shareholder value; and
● rewards performance.
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 three of the current Compensation Committee members 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”).
Composition and Meetings:
Committee Members:
● Mr. Brennan
(Chair)● Mr. Altomari
● Mr. Lee
Number of meetings during 2022:
8Financial 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.27INSMED PROXY STATEMENT
NOMINATIONS
AND
GOVERNANCE
COMMITTEEResponsibilities 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:
● assists the Board by identifying individuals qualified to become Board members and recommending to the Board the director nominees for election at shareholder meetings and to fill vacancies on the Board;
● makes recommendations to the Board regarding Board and committee organization, structure, and composition;
● evaluates the overall effectiveness of the Board and its committees;
● develops and assesses the Company’s corporate governance policies and practices, including risks related to such policies and practices; and
● oversees and guides the Company’s strategy and risks related to material ESG matters.
The Nominations and Governance Committee reviews and reassesses the adequacy of its charter at least annually.
Composition and Meetings:
Committee Members:
● Ms. Anderson
(Chair)● Ms. Schafer
● Dr. Sharoky
Number of meetings during 2022:
4Compensation CommitteeComposition and Attendance.Our Compensation Committee consists of Mr. Altomari (Chair), Mr. Brennan, and Mr. Lee, each of whom is an independent Board member. During 2019, the Compensation Committee held seven meetings.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:•creates a direct relationship between pay levels and corporate performance and returns to shareholders;•provides overall competitive pay levels to effectively attract and retain executive talent;•creates proper incentives to enhance shareholder value; and•rewards performance.
SCIENCE AND
TECHNOLOGY
COMMITTEEResponsibilities 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:
● reviews with the Company the third-party competitive landscape related to the Company’s preclinical R&D and clinical development activities;
● monitors and identifies significant new and emerging trends in science and technology, including R&D, and provides strategic advice to the Board regarding such issues and trends;
● reviews with the Company current and planned technology initiatives and provides feedback to the Board regarding such initiatives;
● advises the Board on the scientific aspects of business development transactions; and
● assists the Company in reviewing, as requested, the capabilities of the Company’s current and prospective key scientific personnel and the depth and breadth of the Company’s scientific resources.
The Science and Technology Committee reviews and reassesses the adequacy of its charter at least annually.
Composition and Meetings:
Committee Members:
● Dr. Desjardins
(Chair)● Mr. Lee
● Dr. Sharoky
Number of meetings during 2022:
3The Compensation Committee reviews and reassesses the adequacy of its charter at least annually.Committee Independence and Related Requirements.Our Board has determined that all three of the current Compensation Committee members, Mr. Altomari, Mr. Brennan, and 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 CommitteeComposition and Attendance.Our Nominations and Governance Committee consists of Ms. Anderson (Chair) and Dr. Sharoky, each of whom is an independent Board member. During 2019, the Nominations and Governance Committee held four meetings.Responsibilities and Duties.The Nominations and Governance Committee identifies and nominates qualified candidates for directorship and serves in a leadership role in shaping our corporate28INSMED PROXY STATEMENTgovernance and overseeing the evaluation of the Board and its committees. The Nominations and Governance Committee:•assists the Board by identifying individuals qualified to become Board members and recommending to the Board the director nominees for election at shareholder meetings and to fill vacancies on the Board;•makes recommendations to the Board regarding Board and committee organization, structure and composition;•evaluates the overall effectiveness of the Board and its committees; and•develops and assesses the Company's corporate governance policies and practices, including risks related to such policies and practices.
The Nominations and Governance Committee reviews and reassesses the adequacy of its charter at least annually.Science and Technology CommitteeComposition 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:•reviews with the Company the third-party competitive landscape related to the Company's preclinical R&D and clinical development activities;•monitors and identifies significant new and emerging trends in science and technology, including R&D, and provides strategic advice to the Board regarding such issues and trends;•reviews with the Company current and planned technology initiatives and provides feedback to the Board regarding such initiatives;•advises the Board on the scientific aspects of business development transactions; and•assists the Company in reviewing, as requested, the capabilities of the Company's current and prospective key scientific personnel and the depth and breadth of the Company's scientific resources.
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'sCompany’s risk management. The Board administers its oversight responsibility for risk management directly and through its committees.Each committee
chairmanchair reports to the Board regarding thecommittee'scommittee’s considerations ofmanagement'smanagement’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, ourresearch and developmentR&D 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'sCompany’s program for identifying, evaluating, and controlling significant risks. The Audit Committee periodically discusses with management and the independent auditor theCompany'sCompany’s major risk exposures, including financial, legal, regulatory, and cybersecurity risk exposures, and the steps taken to monitor, control and minimize 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, theChief Legal Officer, the Chief Compliance Officer,General Counsel, the 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
hashave 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. InJuly 2019, the Company selected Willis Towers Watson as its new independent compensation consultant. In February 2019,2022, the Compensation Committee, with the assistance ofFrederic W. Cook & Co., Inc. (FW Cook),WTW, theCompany's formerCompensation Committee’s independent compensation consultant,reviewedconducted an in-depth risk review of the executive compensation program and sales incentive programs, and determined that the design of the compensation policies, including the components, weightings and focus of the elements, do not encourage management or employees that participate in the sales incentive plans to assume excessive or inappropriate risks. When approving the 2022 awards of performance-based restricted stock units (“PSUs”), described in the Compensation Discussion and Analysis, the Compensation Committee gave consideration to whether the conditions and design would promote inappropriate or excessive risk-taking. The Compensation Committee determined that the right governance protocols were in place and that the combination of performance requirements did not promote inappropriate risk-taking. In the first quarter of 2023, the Compensation Committee and WTW reviewed areas that had changed since the 2022 assessment and again found that our executive compensation program and sales incentive plans program do not encourage management to assume excessive or inappropriaterisks.risks, and have appropriate safeguards and governance protocols in place.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'sBoard’s performance, oversees the self-evaluation of each of theBoard'sBoard’s committees, oversees our corporate governance and formulates and recommends corporate governance standards to our Board. The Nominations and Governance Committee also oversees and guides the Company’s strategy and risks related to material ESG matters.The Science and Technology Committee oversees the
Company'sCompany’s efforts related to clinical activities, R&D, business development and intellectual property. The Science and Technology Committee reviews the competitive landscape related to theCompany'sCompany’s preclinical R&D and research activities and advises the Board on the scientific aspects of business development transactions.29INSMED PROXY STATEMENT
Environmental, Social, and Governance Considerations
As a company driven by its mission to transform patients’ lives, we take our responsibility to patients, employees, the medical community, and the communities in which we live and work very seriously. As we grow, we are enhancing our focus on a variety of ESG considerations. Our Nominations and Governance Committee receives updates on ESG matters from our CEO, General Counsel, and ESG team, a cross-functional group of employees including members from corporate communications, investor relations, and legal. The ESG team works with employees across the organization in addressing ESG initiatives. While we continue to expand our ESG strategy, we already focus on the following areas:
PATIENT SUPPORT
Patients are at the center of our mission. We operate a robust patient support program, partake in regular, compliant interaction with patient advocacy groups and invite patients to share their experiences in-person and virtually. Furthermore, we are committed to providing patients with access to our medicines and work with numerous stakeholders to enable this access as appropriate. Our Expanded Access Programs help address patient needs by making certain investigational medical products or unapproved products available to eligible patients, in accordance with applicable local laws. Finally, we continue to monitor product safety in our clinical development programs and for our marketed product via our pharmacovigilance program.
DIVERSITY, EQUITY AND INCLUSION
We are committed to promoting diversity in our workforce and to taking steps to support equity and inclusion for all.
● Gender – Women represent 67% of our Class II director nominees to serve until the 2026 Annual Meeting of Shareholders. As of the Record Date, women represented 33% of the Board and 37.5% of our Executive Committee. As of September 26, 2022 (the most recent measurement date and based on self-identified information), women comprised 51% of our overall workforce and 28% of our leadership (Vice President level and above). ● Racial and Ethnic – As of the Record Date (based on self-identified information), 67% of our Board identifies as non-minority, 22% identifies as minority, and 11% did not identify. As of September 26, 2022 (the most recent measurement date and based on self-identified information), 67% of our US workforce identifies as non-minority, 32% identifies as minority, and 1% did not identify. As of the same date, 83% of our US leadership (Vice President level and above) identifies as non-minority, and 17% identifies as minority. We will continue to measure and share our diversity statistics in the future. We expect to continue to enhance our Board, leadership and workforce diversity, advance the development of diverse talent, and ensure diverse succession plans in our employee workforce, leadership and our Board. In 2022, our Employee Resource Groups (“ERGs”) met routinely with the aim of fostering a sense of community and cultural awareness among our employees. Our current ERGs include groups supporting female employees, working caregivers and Hispanic/Latinx colleagues. Most recently, in February 2023, we announced the creation of a new ERG, BEING (Black Employees of Insmed Networking Group).
30INSMED PROXY STATEMENT
In 2022, we established an Inclusion Council that acts as an advisor to the Chief People Strategy Officer and senior leadership on our general strategy related to diversity, equity, inclusion, and belonging. In addition, we are committed to equitable pay for all employees and use industry benchmarks and annual compensation reviews to ensure a fair and bias-free compensation system.
EMPLOYEE WELLNESS
After receiving the same honors in 2021, we were again ranked as the top company to work for in the biopharma industry in Science’s 2022 Top Employers Survey and certified in the US as a Great Place To Work. Additionally, in 2022, we were ranked number 2 in Fortune’s 25 Best Small and Medium Workplaces in Biotechnology and Pharmaceuticals. We are dedicated to investing in our employees and workplace culture. As part of this effort, we have put in place several financial wellness programs for the benefit of our workforce, including an Employee Stock Purchase Plan and 401(k) match program.
In 2022, we introduced Thriveful, an internal platform offering a diverse array of programs and resources designed to support employee health, financial wellness, professional development and social wellbeing. Examples include health screenings, reproductive care benefits, financial and equity education, skills training, and opportunities for connectedness and relationship building.
COVID-19 SUPPORT
Our employees (other than our laboratory personnel) have been provided the ability to work virtually in order to flexibly manage business and home responsibilities. We have enhanced our internal communications and touch points to ensure connectivity to our workforce. We will continue to manage this situation with a focus on the safety of our employees, ARIKAYCE physicians, caregivers and patients.
ENVIRONMENTAL IMPACT
We are cognizant of our responsibility to our broader environment and have supported several green measures at our headquarters in an effort to reduce our Company’s carbon footprint, including increasing recycling efforts, using energy-efficient rooftop HVAC units, installing electric car chargers, and limiting waste in food service distribution. In our research laboratories, hazardous and chemical waste are responsibly managed and tracked in line with regulatory requirements. We continue to explore ways to improve our sustainability efforts.
COMMUNITY SERVICE
We are committed to giving back to our communities, with a focus on three key areas: health, education, and human services. We partake in several employee-led community service initiatives both in the US and abroad.
In 2022, we held our inaugural Global Day of Good, a company-wide community service effort. More than 500 employees participated globally in service activities that focused on three key areas of impact: health, education and human services. Volunteer activities focused on bringing positive change to the communities where employees live and work while exemplifying our core values.
31INSMED PROXY STATEMENT
AUDIT COMMITTEE REPORT AND INDEPENDENT AUDITOR FEESReport of the Audit Committee
The Audit Committee
approvesselects theselection of the Company'sCompany’s independent registered public accounting firm and regularly meets with and holds discussions with management and theCompany'sCompany’s independent registered public accounting firm.The Audit Committee oversees the
Company'sCompany’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 theCompany'sCompany’s Annual Report on Form 10-K for the year ended December 31,20192022 (theAnnual Report)“Annual Report”) with management, including a discussion of 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'sCompany’s accounting principles, and such other matters as are required to be discussed with the Audit Committee by Public Company Accounting Oversight Board(PCAOB)(“PCAOB”) standards.In addition, the Audit Committee 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'saccountant’s communications with the Audit Committee concerning independence, and 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'sCompany’s Annual Report for filing with the SEC.THE AUDIT COMMITTEEThe Audit Committee
David W.J. McGirr,
Chairman
ChairAlfred F. Altomari
Steinar J. Engelsen, M.D., C.E.F.A.Audit Committee Pre-Approval PolicyCarol A. Schafer
32INSMED PROXY STATEMENT
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'sCompany’s independent registered public accounting firm in an effort to ensure 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 pre-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 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 AuditCommittee'sCommittee’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 31,20192022 were pre-approved in accordance with the pre-approval policy.Independent Registered Public Accounting Firm Fee DisclosureINDEPENDENT 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,
20192022 and2018,2021, which were as follows:2019 2018 Audit Fees
$1,196,177 $975,910 Audit-Related Fees
— — Tax Fees
— — All Other Fees
1,995 1,995 Total Fees
$1,198,172 $977,905 2022 2021 Audit Fees $2,560,659 $1,912,500 Audit-Related Fees 225,000 — Tax Fees — — All Other Fees 222,667 — Total Fees $3,008,326 $1,912,500 Audit fees in
20192022 and20182021 include fees for services performed to comply with generally accepted auditing standards. These services include the integrated year-end audit of our consolidated financial statements, attestation services with respect to our internal control over financial reporting, 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 2019,$225,000 and$115,000, with respect to 2018,$300,000 paid to Ernst & Young for consent and comfort letter procedures for registration statements filed in20192022 and2018,2021, respectively. Audit-related fees in 2022 include fees related to the implementation of the Company’s new global enterprise resource planning system. Amounts reflected in “All Other Fees” included fees related to an expanded/early access and compassionate use assessment and compliance program assessment in 2022.33INSMED PROXY STATEMENT
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'sparty’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 thecircumstances, 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.
Related Party Transactions
Since January 1,
2019,2022, 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) REPORTS
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,
2019,2022, our executive officers, directors, and beneficial owners of more than 10% of our Common Stock timely filed all reports required under Section16, except for the following instances: (1) on May 16, 2019, Mr. Lee filed a Form 3 that inadvertently omitted 10,000 shares16.Security Ownership 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,Certain Beneficial Owners, Directors, andthe 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
ManagementThe following tables set forth information about the beneficial ownership of our Common Stock as of the Record Date (except as otherwise noted), by:
•each person, or group of persons, who beneficially owns more than five percent (5%) of our Common Stock, based on reports filed with the SEC pursuant to Section 13(d) of the Exchange Act;•each of our directors and director nominees;•each of our named executive officers; and•all directors and executive officers as a group.
● each person, or group of persons, who beneficially owns more than five percent (5%) of our Common Stock, based on reports filed with the SEC pursuant to Section 13(d) of the Exchange Act; ● each of our directors and director nominees; ● each of our NEOs; and ● all directors and executive officers as a group. 34INSMED PROXY STATEMENT
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 (“RSUs”) 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'sshareholder’s name. As of the Record Date, there were89,859,549136,428,466 shares of Common Stock outstanding.SHARES BENEFICIALLY OWNED1 NAME AND ADDRESS NUMBER PERCENTAGE Greater Than Five Percent (5%) Shareholders The Vanguard Group2
100 Vanguard Blvd., Malvern, PA 1935513,040,831 9.6% BlackRock, Inc.3
55 East 52nd Street, New York, NY 1005511,113,787 8.1% T. Rowe Price Associates, Inc.4
100 E. Pratt Street, Baltimore, Maryland 212029,977,911 7.3% T. Rowe Price Investment Management, Inc.5
100 E. Pratt Street, Baltimore, Maryland 212028,374,675 6.1% State Street Corporation6
One Lincoln Street, Boston, MA 021116,886,687 5.0% 1. All information in this table, including the footnotes thereto, is derived from third-party filings made with the SEC, as described in the footnotes. We have not independently verified this information. 2. Based solely on a Schedule 13G/A filed with the SEC on February 9, 2023, as of December 31, 2022, The Vanguard Group reported an aggregate beneficial ownership of 13,040,831 shares of our Common Stock, with shared voting power over 231,734 shares, sole dispositive power over 12,673,172 shares and shared dispositive power over 367,659 shares. 3. Based solely on a Schedule 13G/A filed with the SEC on February 3, 2023, as of December 31, 2022, BlackRock, Inc. reported an aggregate beneficial ownership of 11,113,787 shares of our Common Stock, with sole voting power over 10,963,344 shares and sole dispositive power over 11,113,787 shares, including shares held by a number of its subsidiaries. 4. Based solely on a Schedule 13G/A filed with the SEC on February 14, 2023, as of December 31, 2022, T. Rowe Price Associates, Inc. reported an aggregate beneficial ownership of 9,977,911 shares of our Common Stock, with sole voting power over 1,950,951 shares and sole dispositive power over 9,977,911 shares. 5. Based solely on a Schedule 13G filed with the SEC on February 14, 2023, as of December 31, 2022, T. Rowe Price Investment Management, Inc. reported an aggregate beneficial ownership of 8,374,675 shares of our Common Stock, with sole voting power over 2,598,627 shares and sole dispositive power over 8,374,675 shares. 6. Based solely on a Schedule 13G filed with the SEC on February 3, 2023, as of December 31, 2022, State Street Corporation reported an aggregate beneficial ownership of 6,886,687 shares of our Common Stock, with shared voting power over 6,602,948 shares and shared dispositive power over 6,886,687 shares. 35INSMED PROXY STATEMENT
Shares Beneficially
Owned(1)Name and AddressNumber 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
(1)All information in this table, including the footnotes thereto, is derived from third-party filings made with the SEC, as described in the footnotes. We have not independently verified this information.(2)As of December 31, 2019, FMR LLC (FMR) reported an aggregate beneficial ownership of 13,401,528 shares of our Common Stock, with sole voting power over 421,846 shares and sole dispositive power over 13,401,528 shares.
SHARES BENEFICIALLY OWNED NAME NUMBER PERCENTAGE Directors and Executive Officers Alfred F. Altomari1 43,141 * Elizabeth M. Anderson1 42,317 * David R. Brennan1 95,521 * Clarissa Desjardins, M.D.2 35,595 * Leo Lee1 98,265 * David W.J. McGirr1 72,561 * Carol A. Schafer3 31,905 * Melvin Sharoky, M.D.4 309,266 * William H. Lewis5 2,604,150 1.9% Roger Adsett6 916,156 * Sara Bonstein7 257,498 * Martina Flammer, M.D.8 333,112 * Drayton Wise9 324,462 * All current directors and executive
officers as a group (15 persons)6,076,590 4.3% Members of the Johnson family, including Abigail P. Johnson, 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 (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 InvestmentCompany 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.(3)As of December 31, 2019, Janus Henderson Group plc (Janus Henderson) reported an aggregate beneficial ownership of 11,667,278 shares of our Common Stock, with shared voting and dispositive power over 11,667,278 shares. Janus Henderson has an indirect 97% ownership stake in Intech Investment Management LLC and a 100% ownership stake in Janus Capital Management LLC (JCM), Perkins Investment Management LLC, Geneva Capital Management LLC, Henderson Global Investors Limited and Janus Henderson Investors Australia Institutional Funds Management Limited (each an Asset Manager and collectively the Asset Managers). Due to the above ownership structure, holdings for the Asset Managers are aggregated for purposes of Schedule 13G filings. Each Asset Manager is an investment adviser registered or authorized in its relevant jurisdiction and each furnishing investment advice to various fund, individual and/or institutional clients (collectively referred to as Managed Portfolios).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.(4)As of December 31, 2019, The Vanguard Group and its affiliates named in the Schedule 13G/A reported aggregate beneficial ownership of 8,176,076 shares of our Common Stock, with sole voting power over 185,819 shares, shared voting power over 14,985 shares, sole dispositive power over 7,985,282 shares and shared dispositive power over 190,794 shares. Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 175,809 shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 24,995 shares as a result of its serving as investment manager of Australian investment offerings.(5)As of December 31, 2019, BlackRock, Inc. reported an aggregate beneficial ownership of 7,456,517 shares of our Common Stock with sole dispositive power over 7,456,517 shares and sole voting power over 7,225,867 shares, including shares held by a number of its subsidiaries.(6)As of December 31, 2019, Palo Alto Investors LP (Palo Alto), PAI LLC, Dr. Patrick Lee and Dr. Anthony Joonkyoo Yun (together, the Palo Alto Investors) reported an aggregate beneficial ownership of 6,848,760 shares of our Common Stock with shared dispositive power over 6,848,760 shares and shared voting power over 6,848,760 shares. The Palo Alto Investors filed the Schedule 13G jointly, but not as members of a group, and each of them expressly disclaims membership in a group. Each filer disclaims beneficial ownership of our Common Stock except to the extent of that filer's pecuniary interest therein.Palo Alto is a registered investment adviser and investment adviser of investment limited partnerships, and is the investment adviser to other investment funds. PAI LLC is the general partner of investment 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.(7)As of December 31, 2019, T. Rowe Price Associates, Inc. (Price Associates) reported an aggregate beneficial ownership of 6,530,775 shares of our Common Stock, with sole voting power over 1,353,471 of the shares and sole dispositive power over the 6,530,775 shares. For the purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is the beneficial owner of such securities.
Shares Beneficially
OwnedNameNumber 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% *
- Denotes ownership of less than 1% of the outstanding shares of our Common Stock.
(1)Includes 6,899 restricted stock units (RSUs) that will vest within 60 days of the Record Date.(2)Includes 2,222,143 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 12,936 RSUs that will vest within 60 days of the Record Date.(3)Includes 294,525 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 5,390 RSUs that will vest within 60 days of the Record Date.(4)Includes 109,712 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 1,078 RSUs that will vest within 60 days of the Record Date.(5)Includes 547,729 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 6,468 RSUs that will vest within 60 days of the Record Date.
1. Includes 14,645 RSUs that will vest within 60 days of the Record Date. 2. Includes 14,645 RSUs that will vest within 60 days of the Record Date and 20,950 shares of our Common Stock that are held by 3669661 Canada Inc., a holding company wholly owned by Dr. Desjardins. 3. Includes 14,645 RSUs that will vest within 60 days of the Record Date and that are held by the Carol A. Schafer Revocable Trust. 4. Includes (a) 14,645 RSUs that will vest within 60 days of the Record Date, (b) 7,714 shares of our Common Stock held by The Sharoky Family Foundation, Inc., (c) 15,900 shares of our Common Stock held by Baby Gator LLC, (d) 1,847 shares of our Common Stock held by Mr. Sharoky’s spouse, (e) 1,184 shares of our Common Stock held by Melvin Sharoky C/F Sophie C. Wink UTMA/FL and (f) 1,600 shares of our Common Stock held by Melvin Sharoky C/F Nolan M. Wink UTMA/FL. 36INSMED PROXY STATEMENT
5. Includes (a) 1,521,179 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 18,985 RSUs that will vest within 60 days of the Record Date, (b) 281,030 shares of our Common Stock that are subject to stock options held by the ARTICLE 4 TRUST UNDER WILLIAM LEWIS FAMILY LEGACY TRUST U/A 11/2/2020 and (c) 536,874 shares of our Common Stock that are subject to stock options held by the ARTICLE 4 TRUST UNDER KATIE PROCTER DYNASTY TRUST. 6. Includes 780,669 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 10,408 RSUs that will vest within 60 days of the Record Date. 7. Includes 191,467 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 8,577 RSUs that will vest within 60 days of the Record Date. 8. Includes 260,349 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 9,035 RSUs that will vest within 60 days of the Record Date. 9. Includes 247,190 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 1,927 RSUs that will vest within 60 days of the Record Date. 37INSMED PROXY STATEMENT
(6)Includes 384,010 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 3,665 RSUs that will vest within 60 days of the Record Date.(7)Includes 3,508,205 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 79,986 RSUs that will vest within 60 days of the Record Date..
PROPOSAL NO. 2
ADVISORY VOTE ON THE20192022 COMPENSATIONOF OUR NAMED EXECUTIVE OFFICERS
Information Regarding the Advisory Vote on the
20192022 Compensation of our Named Executive OfficersPursuant 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“Compensation Discussion andAnalysis"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'sCompany’s named executive officers, disclosed pursuant to Item 402 of Regulation S-K in theCompany'sCompany’s ProxyStatement.Statement for the 2023 Annual Meeting.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:
•- align management interests with the interests of our shareholders;
•emphasize the use of"at-risk"“at-risk” and performance-based compensation to motivate executives to advance our interests; and•provide executive compensation packages that are competitive in order to attract and retain executives whose skills are critical to the current and long-term success of the Company.Please read the
"Compensation“Compensation Discussion andAnalysis"Analysis” section starting on page3239 of this Proxy Statement for a detailed discussion about our executive compensation programs, including information about the20192022 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 on this proposal 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
20192022 compensation of our named executive officers, we will consider ourshareholders'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.Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE
"FOR"“FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE20192022 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.38INSMED PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSISThis Compensation Discussion and Analysis (the
CD&A)“CD&A”) explains our compensation philosophy, policies and decisions for20192022 for the following executives, whom we refer to in this CD&A and in the following tables as our named executive officers:1.William H. Lewis, President and CEO, responsible for developing, in connection with the Board, our corporate mission and objectives and providing direction and leadership to ensure the execution of our corporate strategy and achievement of our objectives. Mr. Lewis was appointed as our Chairman in November 2018.2.Roger Adsett, Chief Operating Officer, responsible for oversight of overall business operations, including marketing, sales and commercial activities, technical operations and supply chain activities.3.John Goll, Chief Accounting Officer, served as our principal financial officer from July 2019 to January 2020.4.Christine Pellizzari, Chief Legal Officer, responsible for oversight of all corporate and litigation-related legal matters, government affairs and for providing ongoing legal support with respect to regulatory strategy, financing opportunities, business development initiatives, and intellectual property matters.5.S. Nicole Schaeffer, Chief People Strategy Officer, responsible for all aspects of human resources and corporate services inclusive of organizational and leadership development, total compensation and employee communications, facilities, environmental health and safety, and information technology.6.Paolo Tombesi, former Chief Financial Officer, stepped down as our Chief Financial Officer and his employment with the Company ended on June 2, 2019.
1. William H. Lewis, President and Chief Executive Officer, responsible for developing, in participation with the Board, our corporate mission and objectives and providing direction and leadership to ensure the execution of our corporate strategy and achievement of our objectives. Mr. Lewis was appointed as our Chair in November 2018. 2. Sara Bonstein, Chief Financial Officer, responsible for managing all financial activities, including internal and external reporting, financial planning and analysis, treasury, accounting, tax, global compliance and investor relations. 3. Roger Adsett, Chief Operating Officer, responsible for oversight of overall business operations, including business development, program management, technical operations and supply chain activities. 4. Martina Flammer, M.D., Chief Medical Officer, responsible for leading global clinical development, clinical operations, regulatory affairs, drug safety and pharmacovigilance, and medical affairs. 5. Drayton Wise, Chief Commercial Officer, responsible for global marketing, sales and commercial activities. Executive Summary of Our
20192022 Business and Strategic AchievementsWe are a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. Our first commercial product, ARIKAYCE, is approved in the US as ARIKAYCE® (amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion, and in Japan as ARIKAYCE inhalation 590mg (amikacin sulfate inhalation drug product). ARIKAYCE received accelerated approval in the
United States (US)US in September 2018 for the treatment ofMycobacterium avium complex(MAC)(“MAC”) lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options in a refractorysetting, as definedsetting. In October 2020, the European Commission (“EC”) approved ARIKAYCE for the treatment of nontuberculous mycobacterial (“NTM”) lung infections caused bypatientsMAC in adults with limited treatment options who do notachieve negative sputum cultures after a minimumhave cystic fibrosis (“CF”). In March 2021, Japan’s Ministry ofsix consecutive monthsHealth, Labour and Welfare (“MHLW”) approved ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrugbackground regimen therapy. Nontuberculous mycobacterial (NTM)regimen. 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.In
2019,2022, our named executive officers played critical roles in the furtherance of our mission. Wesuccessfully completed our first yearcontinued to focus on the execution and successful US commercialization ofcommercializationARIKAYCE and subsequently have observed strongperformancegrowth in US sales as compared to 2021. The Company also continued its efforts to advance ARIKAYCE globally and has achieved a 30% year over year increase from 2021 in global ARIKAYCE revenues. In Europe, theUS launch of ARIKAYCE. In July 2019, we filedCompany recently secured amarketing authorization application (MAA) with the European Medicines Agency (EMA)favorable reimbursement approval for ARIKAYCEforin England. ARIKAYCE is now commercially available in Germany, France, thetreatmentNetherlands, the United Kingdom, Italy, and Belgium.In 2022, we also continued to advance the post-marketing confirmatory frontline clinical trial program of ARIKAYCE in patients with
persistent MACNTM lunginfection, and the filing was subsequently validated. In 2019, we also advanced our Japanese new drug application (JNDA), resultingdisease caused by MAC. The ARISE trial, an interventional study of ARIKAYCE designed to validate a patient-reported outcome (“PRO”) tool inthe submission of the JNDA to Japan's Ministry of Health, Labour and Welfare (MHLW) in March 2020 for ARIKAYCE for the treatment of patients withMAC lung disease,who do not respond sufficientlyfully enrolled in 2022. The ENCORE trial is designed toprior treatment.Tableestablish the clinical benefits and evaluate the safety ofContentsARIKAYCE in patients with newly diagnosed MAC lung disease using the PRO tool validated in the ARISE trial. The ENCORE study is currently enrolling patients and is expected to complete enrollment by the end of 2023.39INSMED PROXY STATEMENT
We also have a robust pipeline which includes the following clinical-stage product candidates:
PIPELINE STAGE PRODUCT CANDIDATE POTENTIAL DISEASE AREA(S) Pipeline StageProduct CandidatePotential Rare Disease Area(s)Clinical Stage
(Phase 3)brensocatib INS1007Therapeutic potential in non cystic fibrosis (non-CF)bronchiectasis and otherinflammatoryneutrophil-mediated diseasesClinical Stage
(Phase 2)TPIPPre-Clinical StageINS1009Formulation that may offer a differentiated product profile for rare pulmonary disorders, includingpatients with pulmonary arterial hypertension (“PAH”) and pulmonary hypertension associated with interstitial lung disease (“PH-ILD”)Early Stage
(Preclinical)Various
preclinical
compoundsVarious pre-clinical compoundsOpportunities 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 biofilmTo complement our internal research and development, we actively evaluate in-licensing and acquisition opportunities for a broad range of rare diseases.In May 2019,Throughout 2022, wecompleted enrollment of patients incontinued to advance theWILLOWPhase 3 ASPEN study, a global, randomized, double-blind, placebo-controlledPhase 2 clinical study evaluatingtrial to assess the efficacy, safety, andpharmacokineticstolerability ofINS1007 administered once daily for 24 weeksbrensocatib inadultspatients withnon-CFbronchiectasis.In February 2020, we announced positive top-lineThe ASPEN study completed enrollment in adult patients as of March 31, 2023 and enrolled over 1,700 patients (over 560 in each arm) at approximately 460 sites in 40 countries. We received the Phase 2 results from theWILLOW study.Company’s Phase 2 pharmacokinetics/pharmacodynamics multiple-dose study in CF in 2022 and shared those results in early 2023.We currently have two parallel Phase 2 studies ongoing: a Phase 2 study in patients with PH-ILD over a 16-week treatment period to assess safety and tolerability and a Phase 2b study in PAH patients over a 16-week treatment period to evaluate the effect of TPIP on pulmonary vascular resistance and six-minute walk distance. In 2022, we continued to advance the Phase 2 development work in both PH-ILD and PAH.
Our early-stage research efforts are comprised of our preclinical programs, advanced through internal research and development and augmented through business development activities. In March 2021, we acquired a proprietary protein deimmunization platform, called Deimmunized by Design, focused on the reengineering of therapeutic proteins to evade immune recognition and reaction. In August 2021, we acquired Motus Biosciences, Inc. and AlgaeneX, Inc. preclinical stage companies engaged in the research, development and manufacturing of gene therapies for rare genetic disorders. In January 2023, we acquired Vertuis Bio, Inc., a privately held, preclinical stage company engaged in the research and development of gene therapies for rare genetic disorders. We believe that animal studies may demonstrate the viability of these potential medicines to address serious unmet medical needs in various therapeutic areas. Our initial therapeutic areas of focus include musculoskeletal, CNS, ocular, and rheumatologic diseases. We anticipate submitting our first IND filing in the first half of 2023. Preclinical data in musculoskeletal and CNS indications are also expected in the first half of 2023 and clinical data from the first trial in a musculoskeletal disease are anticipated in the first half of 2024.
More broadly from a strategic and operational standpoint, in
20192022 we expanded our leadership team with talented executives in key financial, medical, commercial, sales, and clinical roles.40INSMED PROXY STATEMENT
Compensation Philosophy and Principles
We operate in a competitive, rapidly changing, and
heavily-regulatedheavily regulated industry. The long-term success of our business requires us to be resourceful, adaptable, and innovative, and the skills, talent, and dedication of our executive officers are critical components to this 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. TheCompany'sCompany’s compensation program for named executive officers is structured to implement the following guiding principles:AlignmentAlign Executives’ Interests withShareholder Interests.those of our Shareholders.A significant portion of our named executive
officers'officers’ compensation is in the form of equity awards based on our belief that equity awards alignmanagement'smanagement’s interests with the creation offuturesustainable long-term shareholder value. Executive officers are also subject to share ownership guidelines which require them to maintain a minimum interest in Insmed stock.Use
of "At-Risk"“At-Risk” Compensation to Incentivize Executives.A substantial portion of our named executive
officers'officers’ compensation is based on"at“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. In2019,2022, approximately 90% of ourCEO'sCEO’s annual target direct compensation was"at“at risk,"” and82%86% of our other named executiveofficers'officers’ annual target direct compensation was"at risk".“at risk.” Annual target direct compensation as shown below consists of base salary, the target annual incentive award and the grant date fair value of RSUs and stock options granted in 2022. Thecharts below reflecting compensation to our non-CEO named executive officerspay mix excludes PSUs granted in 2022 (discussed further in this CD&A) given they do notinclude compensation paid to Mr. Tombesi, who stepped down as Chief Financial Officer duringform part of thefirst half of 2019.annual equity award mix.CEO TARGET DIRECT COMPENSATION
90% at-risk pay 2019 CEO CompensationVariable Performance-Based vs.Guaranteed CEO Compensation for 2019
Salary &
Other
Comp.
7%AI
83%Equity
2019 Other NEO CompensationVariable Performance-Based vs.GuaranteedOther NEO Compensation for 2019
75% Stock Options
25% RSUsAnnual incentive (AI)
based on achievement of
corporate performance
Options and RSUs vest
over a four-year period
41INSMED PROXY STATEMENT
OTHER NEO TARGET DIRECT COMPENSATION (AVERAGE)
86% at-risk pay 14%
Salary &
Other
Comp.
5%
AI
81%
Equity
100% Cash 75% Stock Options 25% RSUs Annual incentive (AI)
based on achievement of
corporate and individual
performanceOptions and RSUs vest
over a four-year period
Pay for Performance.
We reward the named executive officers for attaining established
businessCompany 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 long-term success of the Company and the maximization of shareholder value. A significant portion of the named executiveofficers'officers’ compensation is based both on Company and individual performance, andtheour executive 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 share price appreciation.Pay competitivelyIn 2022, toattractalign a select group of senior leaders, that includes our NEOs, and retainskilledthem through a critical period for the company in relation to the brensocatib clinical trials, an incremental award of PSUs was also made. The vesting of these awards is subject to robust goals based on the achievement of key milestones within a defined window, and a total shareholder return (“TSR”) assessment relative to the Nasdaq Biotechnology Index (the “Nasdaq Biotech Index”). If the milestone conditions are not achieved, if TSR is negative or below the 25th percentile relative to the Nasdaq Biotech Index constituents, or if an executiveofficers.does not remain in continuous employment for a defined period, no PSUs will vest. This further aligns the compensation of our executives with the performance of Insmed, and our success in unlocking long-term value for our shareholders in a timely manner. If the milestones are not achieved, none of the PSUs will vest. Further details on the PSUs can be found in “2022 Performance-Based Restricted Stock Units”.Pay Competitively to Attract and Retain Skilled Executive Officers.
TheOur executive 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 competition for top talent is intense in our industry, institutional knowledge is of material value, and loss of critical talent can be highly disruptive, retention is a key objective of
theour executive compensation program. The compensation program is designed toappropriately 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'sCompany’s long-term success. We seek to achieve this objective by setting target compensation levels appropriately relative to market, granting equityas a combinationthat vests based on continued service, and, in respect of the PSU awards, the additional achievement of performance milestones. Stock options further enhance retention given their alignment with long-term stockoptionsprice performance, andRSU awards.provisions that reduce exercise periods to no longer than three months on separation.42INSMED PROXY STATEMENT
Say on Pay.
At our
20192022 Annual Meeting,of Shareholders,we held an advisory vote on the compensation of our named executive officers.OverApproximately 95% of the shares voted were voted in favor of our say-on-pay proposal. Additionally, the Company has discussed executive compensation matters with certain of our investors. The Compensation Committee considered these voting results and discussions and believes they affirm theCompany'sCompany’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 bythe following aspects of our executive compensationprogram:program reflect our commitment to strong corporate governance:•- Our Compensation Committee has overall responsibility for executive compensation plans, policies, and programs, although our independent Board members approve recommendations made by our Compensation Committee regarding the compensation of our President and CEO;
•Performance metrics that govern incentive compensation aredefinedestablished by our Compensation Committee at the start of each fiscal year and are reviewed by our Compensation Committee at the end of the year;•Our executive compensation program, in the aggregate, rewards performancein a variety of ways, aimed at a balanced assessment based onand aims to drive theCompany'sCompany’s strategic objectives;•IndividualPayouts made pursuant to individual and corporate multiplier rangesin our incentive compensation program are developed and implemented such that payoutsare capped at a predetermined maximum amount, irrespective of performance that exceeds objectives;•Our Compensation Committee has the ability to exercise its discretion to reduce or eliminate incentive compensation payouts;•We have several risk mitigation policies, detailed below, including an annual compensation risk review that includes sales plans below the executive level, share ownership guidelines,in place for our Presidenta compensation recoupment policy, andCEO, pursuant to which he must hold shares of Common Stock, vested in-the-money stock optionsan insider trading policy with anti- hedging andunvested restricted stock units in an aggregate amount equal to at least three times his base salary within 5 years of the adoption of the guidelines or date of hire, whichever is later. As of the Record Date, Mr. Lewis satisfied these guidelines;•We also have share ownership guidelines in place for certain of our other senior executives, pursuant to which they must hold shares of Common Stock, vested in-the-money stock options and unvested restricted stock units in an aggregate amount equal to his or her base salary within 5 years of the adoption of the guidelines or date of hire, whichever is later. As of the Record Date, Mr. Adsett, Ms. Pellizzari and Ms. Schaeffer satisfied these guidelines. Mr. Goll and Mr. Tombesi are no longer subject to our share ownership guidelines;•- -pledging provisions;
Our Compensation Committee regularly meets in executivesessionsessions without members of management present;•- Our independent compensation consultant reports directly to the Compensation Committee and meets regularly with the Compensation Committee without members of management present;
•
The employment agreements for our named executive officers do not provide for tax"gross-ups"“gross-ups” orseverancepayments on a change in control absent termination of the named executiveofficer'sofficer’s employment;•- and
Our executive compensation program seeks to balance short-term pay opportunities through annual cash incentives with long-term incentive opportunities through equity awards and employs both fixed compensation components (base salary) and variable compensation components (annual cash incentives and equity awards);.43INSMED PROXY STATEMENT
Risk Mitigation Policies and
•- Practices
Insmed recognizes the importance of a robust risk management environment, and our compensation programs are an important part of this.
Annual Compensation Risk Review.
Each year the Compensation Committee receives an update on the global incentive compensation programs and executive compensation program to identify potential areas of risk and actions taken to mitigate that risk. These reviews seek to determine whether each risk is appropriate, and that sufficient controls are in place from a governance standpoint. The 2022 update confirmed that no inappropriate risks were identified. The Compensation Committee does not believe that our executive compensation program is reasonably likely to have a material adverse effect on the Company based on our compensation philosophy and principles and the governance principles described above.
Stock Ownership Guidelines.
Senior executives, including all of our named executive officers, are subject to stock ownership guidelines which require them to maintain a minimum interest in Insmed Common Stock. These guidelines further align the interests of our executives with those of our shareholders, encourage them to think like long-term owners and stewards of the company, and discourage decisions focused only on the short-term.
Minimum ownership requirement • President & CEO: 300% of base salary
• Other named executive officers: 100% of base salary
Equity interests considering in assessing compliance • Common Stock held by the executive (directly or indirectly)
• Stock options that are fully vested and in-the-money
• Restricted stock units that are unvested
Time horizon for compliance • Five years from date of appointment as a named executive officer Compliance with the guidelines is assessed annually, and to the extent an executive is not meeting their requirement or showing sufficient progress within the defined window, the Compensation Committee may take action. As of the Record Date, all named executive officers had satisfied their respective requirements.
Compensation Recoupment Policy.
Our recoupment policy allows our Board to recover cash incentive or equity-based compensation paid to an executive officer, including pursuant to the Insmed Incorporated 2019 Incentive Plan (the “2019 Incentive Plan”), in the three-year period preceding any year in which we are required to restate our financial results filed with the SEC as a result of the executive officer’s intentional misconduct.
Insider Trading Policy.
Our insider trading policy prohibits our employees, including officers and directors, from (i) engaging in hedging transactions (whether through the use of financial instruments such as prepaid variable forwards, equity swaps, collars, exchange funds, or otherwise) involving the
Company'sCompany’s securities and (ii) pledging theCompany'sCompany’s securities as collateral for loans of any type without the prior approval of the Chief Financial Officer or General Counsel. Executive officers seeking to pledge the Company’s securities as collateral must receive approval from the Compensation Committee. No such pledges were approved during2019.
In addition, the Compensation Committee annually reviews a compensation risk assessment conducted by management. The Compensation Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on the 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 individual elements of total compensation for Mr. Lewis for 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 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 from the President and CEO 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 consideredmanagement'sthe President and CEO’s assessment along with the input of its independent compensation consultant when making20192022 compensationdecisions.decisions for our named executive officers (other than our President and CEO).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 Committee2022, WTW, in addition to attending meetings, provided support onits compensation risk assessment, and provided data and recommendations onmatters including long-term incentive design, executive officercompensation. 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 ourand director compensation,program for senior executives,investor engagement, anddata and recommendations on executive officer compensation.regulatory updates. The Compensation Committee evaluates the independence of its compensation consultant on an annual basis and has concluded thateach of FW Cook, its former compensation consultant, and Willis Towers Watson, its current compensation consultant,WTW was independent duringtheir respectiveits tenure in2019.2022.Shareholder Feedback.
At our 2022 Annual Meeting, we held an advisory vote on the compensation of our named executive officers. Of the shares voted, approximately 95% were voted in favor of our say-on-pay proposal which indicates continued strong support for the design and operation of our executive compensation program. Additionally, as part of ongoing engagement between the Company and investors, we provide a forum for direct feedback on executive compensation matters. The Compensation Committee considers the say-on-pay outcome, proxy advisor views, and any feedback received from investors annually when reviewing the compensation program.
Taking into account the sustained high voting outcome and feedback received, the Compensation Committee believes this reaffirms the Company’s compensation philosophy, design, and operation as disclosed in this Compensation Discussion and Analysis.
45INSMED PROXY STATEMENT
Compensation Evaluation Processes and Criteria.
Given the high demand for the experienced and well-qualified executives 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-CEOeach named executiveofficers,officer other than the President and CEO, our Compensation Committee reviews the performance of each executive officer holistically. In setting compensation levels forour executivesuch officers for2019,2022, our Compensation Committee considered many factors, including, but not limited to, the following factors:•- our achievement of certain product development, financial, strategic planning, and other goals;
•for eachnon-CEOnamed executiveofficer'sofficer other than the President and CEO, such officer’s individual performance againstcertainpre-established goals, as discussed in more detail below;•the scope and strategic impact of each executiveofficer'sofficer’s responsibilities;•our past business performance;•our long-term goals and strategies;•the experience of each executive officer;•past compensation levels of each executive officer and of the executives as a group;•internal equity and the relative levels of pay among executive officers;•the amount of each element of compensation in the context of the executiveofficer'sofficer’s total compensation and other benefits;•for each executive officer other than the President and CEO, the evaluations and recommendations of our President and CEO; and•the competitiveness of our compensation relative to selected peer group companies and other survey data, which are describedin detailbelow.Consideration of these factors is subjective. No relative weights or rankings are assigned to them except as otherwise discussed in this CD&A.
For the President and
CEO'sCEO’s compensation, the Compensation Committee reviews and evaluates the performance of the President and CEO and recommends to the independent Board members the individual elements of his totalcompensation, considering,compensation. This takes into consideration, among other things, individual performance,experience, prior compensation levels, alignment of compensation outcomes and potential compensation with Company performance, retention concerns, our general performance objectives,
as well asand the compensation practices of peer companies and the markets in which we compete for executive talent. The Board then must approve the President andCEO'sCEO’s compensation. The President and CEO may not be present during voting or deliberations on his compensation.46INSMED PROXY STATEMENT
Selection of Peer Companies and Benchmarking.
In November 2018,The Compensation Committee, with the support of its independent compensation consultant, conducts an annual review of the peer group used for benchmarking compensation levels. The peer group used to inform 2022 compensation was approved by the Compensation Committee
upon advice received from FW Cook, its former compensation consultant, selected the companies that comprised our 2019 peer group through a screening process that consideredin August 2021. In assessing potential peers, consideration is given to publicly traded biopharmaceutical companies that are similar tousthe Company innumberterms ofemployees,market capitalization, revenue, research andstage of product development. This review resulteddevelopment expense, pipeline profile, and headcount. There is a focus on maintaining stability inmodificationspeers over time, while ensuring the group remains sufficiently robust and relevant. The 2022 peer group reflects the following changes from our20182021 peergroup as describedgroup: (i) the removal of Immunomedics, Inc. following the completion of Gilead’s acquisition in 2020, and (ii) the addition of the companies that are marked by an asterisk below. The table below depicts our 2022 peer group:Acadia Pharmaceuticals Inc. Corcept Therapeutics Incorporated Omeros Corporation Acceleron Pharma Inc. Editas Medicine, Inc.* PTC Therapeutics, Inc. Agios Pharmaceuticals, Inc. Halozyme Therapeutics, Inc. Sangamo Therapeutics, Inc. Amicus Therapeutics, Inc. Heron Therapeutics, Inc. Sarepta Therapeutics, Inc. bluebird bio, Inc.* Intercept Pharmaceuticals, Inc. Ultragenyx Pharmaceutical Inc. Clovis Oncology, Inc. Nektar Therapeutics The number of employees at the companies in our
20192022 peer group ranged from59136 to520,1,201, with a median of255483 employees, and these companies had market capitalizations that ranged from approximately$1.39 billion$578 million to$8.60$9.8 billion, with a median of$2.89approximately $3.2 billion. Employee numbers were as of the most recently reported fiscal year-end prior toNovember 2018August 2021 and market capitalizations were the trailing twelve-month average as ofJuly 25, 2018.June 1, 2021. The peer group was identified assuminga successful launch of ARIKAYCE in 2019, withan estimated430521 Company employees, and an estimated market capitalization for the Company ofapproximately $3.00 billion. The table below depicts our 2019 peer group:$2.9 billion to $3.4 billion (reflecting spot and trailing twelve-month average references, respectively, as of June 1, 2021). Insmed was positioned at the 53rdpercentile on trailing twelve-month market capitalization and the 58thpercentile on headcount.ACADIA Pharmaceuticals Inc.Corcept Therapeutics IncorporatedSage TherapeuticsAcceleron Pharma Inc.Halozyme Therapeutics, Inc.Sangamo BioSciences, Inc.Aerie Pharmaceuticals, Inc.*Heron Therapeutics, Inc.Sarepta Therapeutics, Inc.Agios Pharmaceuticals, Inc.Immunomedics, Inc.*Spark Therapeutics, Inc.Amicus Therapeutics, Inc.Intercept Pharmaceuticals, Inc.Ultragenyx Pharmaceutical Inc.Array BioPharma Inc.Loxo Oncology, Inc.*Clovis Oncology, Inc.Puma Biotechnology, Inc.The 2019 peer group reflects the following changes from our 2018 peer group: (i) the removal of Keryx Biopharmaceuticals, Inc. and ZIOPHARM Oncology, Inc. and (ii) the addition of the companies above that are marked by an asterisk.The Compensation Committee concluded that
these adjustmentsthis adjustment to the peer groupwerewas appropriate givenchanges inthe 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 CookWTW provided comparative data regarding base salaries, short-term cash
compensation,incentives, and long-term equity incentivesand short-term incentives tofor relevant executiveofficersofficer roles at companies in the20192022 peer group. Using this compensation data and relevant survey data, the Compensation Committee established benchmarks for the purpose of evaluating compensation ranges for base salary, annual cash incentive targets, and long-term equity incentives for each of our named executive officers.Components of Compensation
In summary, the compensation paid to our executive officers in
20192022 included the following components:COMPONENT PURPOSE OF COMPONENT ComponentPurpose of ComponentBase Salary
Provide our executive officers with a level of stability and certainty each year.year based on role, evolving responsibilities, experience, and competitive market positioning.Annual Cash Incentives
Motivate and reward executive officers for short termshort-term corporate performance and, other than our President and CEO, individual performance.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.
Attract, motivate, and retain talented employees.
Health, Welfare, and Retirement Programs
Provide market competitive benefits to protect employees'employees’ and their covereddependents'dependents’ health and welfare. Provide a program to foster retirement savings.Severance and Change in Control Benefits
Discourage turnover and mitigate the influence of a potential change in control on an executive officer'sofficer’s decision-making due to concerns regarding job security.48INSMED PROXY STATEMENT
The components of our compensation program and compensation decisions for
20192022 for each named executive officer are described in more detail below:Base
SalarySalary.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 and (ii) reflect individual performance contributions. Our Compensation Committee reviews variances between the salary levels for each of our executive officers and the 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.
All of ourOur named executive officers receivedmerit-basedincreases to their base salaries in January2019, which adjustments are reflected2022, as shown 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 ANNUAL RATE ANNUAL RATE NAME APPROVED APPROVED % INCREASE IN 2021 IN 2022 William H. Lewis $710,000 $734,850 3.50% Sara Bonstein1 $460,320 $477,580 3.75% Roger Adsett2 $529,730 $560,190 5.75% Martina Flammer, M.D. $517,500 $534,320 3.25% Drayton Wise3 $430,550 $500,000 16.13% 1. The Compensation Committee approved a 0.5% increase as a market adjustment for Ms. Bonstein in 2022 to position her compensation closer to the market median, in addition to the 3.25% merit increase on her base salary. 2. The Compensation Committee approved a 2.5% increase as a market adjustment for Mr. Adsett in 2022 to position his compensation closer to the market median, in addition to the 3.25% merit increase on his base salary. 3 Mr. Wise received a 3.5% merit increase to his base salary, effective in January 2022. In May 2022, the Compensation Committee approved an increase to Mr. Wise’s base salary from $445,620 to $500,000 in connection with his promotion from SVP, Head of US and General Manager, ARIKAYCE to Chief Commercial Officer. 49INSMED PROXY STATEMENT
Base Salaries NameAnnual Rate Approved
in 2018Annual Rate Approved
in 2019% Increase William H. Lewis
$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
$442,620 $455,900 3.0% The base salaries of Mr. Adsett and Mr. Goll were further adjusted in 2019 to reflect their respective promotions. Mr. Adsett's base 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 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%.Annual Cash
IncentivesIncentives.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 2019, there were no changes to targetTarget cash incentive award percentages
thatin 2022 wereset in 2018.unchanged for all named executive officers except Mr. Wise, whose target increased to reflect his promotion to Chief Commercial Officer.Target Cash
Incentive Award
Opportunity as a
Percentage of Base
SalaryName2018 2019 William H. Lewis
60% 60% Roger Adsett
40% 40% John Goll
35% 35% Christine Pellizzari
40% 40% S. Nicole Schaeffer
40% 40% Paolo Tombesi
40% 40% For 2019, the Compensation Committee determined that theTARGET CASH INCENTIVE AWARD OPPORTUNITY AS A PERCENTAGE OF BASE SALARY NAME 2021 2022 William H. Lewis 70% 70% Sara Bonstein 40% 40% Roger Adsett 50% 50% Martina Flammer, M.D. 40% 40% Drayton Wise 35% 40% The cash incentive award for our named executive officers other than Mr. Lewis
would beis determined by reference to both corporate and individual goals, with 75% tied to corporate goals and 25% tied to individual goals. The Compensation Committeebelievedbelieves that includingthe achievement ofa component linked to individual goalsas a component of our 2019 cash incentive award payouts wasis important toincentivize our non-CEO named executive officers, andappropriately reflect theiractual individual performance.achievements in areas of focused accountability relative to goals established in the first quarter of the year. Given Mr.Lewis'sLewis’s substantial influence on and accountability for theoverall performance of the Company, the Compensation Committee
believedand Board believe itwasis appropriate and in the best interests of our shareholders tocontinue tohave Mr.Lewis'sLewis’s cash incentive awardbebased solely upon the achievement of corporateobjectives, and the Board concurred in this view.objectives.Payouts for corporate goals were based upon the product of each named executive
officer'sofficer’s respective target award and an overall corporate multiplier (ranging between 0% and 200%), which was determined based on Company performance during2019.2022. Forour non-CEOeach named executiveofficers,officer other than the CEO, payouts for individual objectives were based on the product of each named executiveofficer'sofficer’s respective target award times an individual multiplier (ranging between25%0% and150%175%), which was determined based on achievement of individual goals for2019.2022.50INSMED PROXY STATEMENT
Corporate
GoalsGoals.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
2019:Corporate ObjectivesWeighting (% ofCorporateObjectives)Advance ARIKAYCE franchise80%Advance future pipeline10%Improve corporate operations10%Total100%Each objective2022. While each area hadat least twospecific goals,associated with it, such as net revenue, patient start rate or pipeline milestones. At that time, the Compensation Committee believed thatthe goalsassociated with these corporate objectives were challenging but attainable, and that attainment was uncertain.While the specific goalsthemselves are not disclosedfor each objective given their potentialbelow due to commercialsensitivity, thesensitivity.CORPORATE OBJECTIVES WEIGHTING (% OF
CORPORATE OBJECTIVES)Advance commercial operations 45% Advance pipeline 45% Enhance corporate operations 10% Total 100% 51INSMED PROXY STATEMENT
The following achievements
in 2019were factors taken into consideration when assessing Companyperformance:performance relative to the pre-set performance goals for 2022:CORPORATE
OBJECTIVECorporate ObjectiveKey AchievementsAdvance ARIKAYCE FranchiseAchieved target net revenue goal and goals related to certain patient metrics, including enrollment forms, patient start rate and adherence rateKEY ACHIEVEMENTSAdvance Commercial Operations Continued dialogueAchieved 30% global revenue growth for ARIKAYCE in 2022 compared with 2021Exceeded US revenue expectations
ARIKAYCE commercially launched in all parts of the
FoodUK, as well as in Germany, the Netherlands, Italy, andDrug Administration (FDA) on protocol for post-marketing requirement and advanced additional life-cycle management plansBelgiumAdvance Pipeline Advanced international filings (filed MAA with EMAContinued to advance the post-marketing confirmatory, frontline clinical trial program for ARIAKYCE, consisting of the ARISE trial andadvanced Japanese submission with MHLW)Ensured adequate supply to cover forecast and built inventory reserveAdvance Future Pipelinethe ENCORE trial. Completed enrollment in the WILLOWARISE trial and randomized 90% of ENCORE patients in 2022Advanced the Phase 3 ASPEN trial, a global, randomized, double-blind, placebo-controlled Phase 3 study
during 1H 2019to assess the efficacy, safety, and tolerability of brensocatib in patients with bronchiectasisReceived topline data from the Phase 2 pharmacokinetic/pharmacodynamic study of brensocatib in patients with CF and observed a clear dose-dependent and exposure-dependent inhibition of blood neutrophil serine proteases in patients treated with brensocatib across all doses in the study
Improve Corporate Operations
Completed three strategic financings resulting in aggregate gross proceeds of $775 million
Stayed within
timelineoperating expense budgetEnsured adequate clinical trial supplies for all programs
Implemented a new global enterprise resource planning (“ERP”) system, which went live in the third quarter of 2022, to facilitate better transactional processing, enhanced reporting and
budgetoversight, and function as an important component of our transactional and reporting controls and proceduresRanked as the top company to work for in the
building of new corporate headquartersEnhanced internal communication, transparencybiopharma industry in Science’s 2022 Top Employers Survey for second year in a row andculture of feedback at all employee levelscertified again in the United States by Great Place To Work52INSMED PROXY STATEMENT
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
2019:2022:CORPORATE
OBJECTIVESWEIGHTING
(% OF
CORPORATE
OBJECTIVES)ACTUAL
PERFORMANCE
ACTUAL % OF
CORPORATE
OBJECTIVES
EARNEDAdvance commercial operations 45% 95% 42% Advance pipeline 45% 105% 47% Improve corporate operations 10% 110% 11% Total 100% 100% 53INSMED PROXY STATEMENT
Corporate ObjectivesWeighting
(% of
Corporate
Objectives)Actual
PerformanceActual % of
Corporate
Objectives
EarnedAdvance ARIKAYCE franchise
80% 129% 103% Advance future pipeline
10% 100% 10% Improve corporate operations
10% 100% 10% Total
100% 123% 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
20192022 that (i) were specific to each named executiveofficer'sofficer’s area of responsibility and (ii) were intended to support our corporate objectives for2019.2022. These individual goals were then recommended to and approved by our Compensation Committee. At the time these goals were established, the Compensation Committeebelieved they were challenging but attainable, and attainment was uncertain.
The individual goals for each named executive officer, other than Mr. Lewis, for 2019 included the following:NAMED
EXECUTIVE
OFFICERNamed Executive OfficerIndividual GoalsRoger AdsettAchieve target net revenue for ARIKAYCEINDIVIDUAL GOALSSara Bonstein
Operationalize life-cycle management plan for ARIKAYCEEnsure accurate and timely production of financial statements and reporting thresholds are met
Lead key Company functions and programs, including the Company’s procurement process, implementation of the new global ERP system, and ESG initiatives
Oversee the Company’s compliance program to ensure the Company is meeting high standards of integrity and ethics while conducting business
Access capital as needed and evaluate continuously the optimal balance sheet and cash reserves to support the Company’s programs
Promote a culture of inquiry within our finance team that pushes us to question assumptions about acceptable levels of expenditures and enhances our financial decision-making
Roger Adsett
Ensure adequate supplyGuide each program’s General Manager to
to likewise empower and increase the accountability of each program’s global project teamcover forecastbecome more effective andbuild inventory reserve for ARIKAYCEContinue to direct the cross functional cooperation between the technical operations and research teams with specific attention to the San Diego organization
Advance program management efforts around enrollment patterns with the aim of successful achievement of timelines
Advise senior leaders on the effective management of their teams and functional responsibilities
Martina Flammer, M.D.
Advance international filingsImplement global expansion plansAdvance future pipelineJohn GollSupport pre-commercial international growthEnsure clinical trials enroll and
global tax structuringMaintain financial forecasts toadvance with quality in a timely fashionPrioritize management of leadership as Company initiates additional clinical trials
Ensure Medical Affairs support
external financial guidance, accessing capital and corporate defense purposesEnsure and monitor a cost-disciplined approach to investments consistent with strategic priorities of the organizationEnsure timely and accurate financial statement preparation and filings in compliance with the Sarbanes-Oxley Act of 2002Christine PellizzariContinue to supportfor ARIKAYCE launch inthe USJapan and potential frontline launchpreparednessin theEuropean UnionUSEnsure pharmacovigilance and
Japandrug safety functions are operating effectivelyScale clinical development function within the organization to support additional program capacity
54INSMED PROXY STATEMENT
NAMED
EXECUTIVE
OFFICERINDIVIDUAL GOALS Drayton Wise
Advance companyDrive ARIKAYCE revenue growth
through successful identification, diligenceglobally andexecution of strategic acquisitionsEffectively manage Board interactions and be responsive to Board needsComplete successful public financings to provide capital necessary for continued operationsS. Nicole SchaefferContinue to drive leadership and collaboration of executive leadersProvide tools and measurement to hold executive committee accountable for 2019 company survey commitmentsIncrease pipeline and talent strategies for hiringHire key senior executive and executive level positions for 2019Paolo TombesiImprove corporate operationsbymaking our financial planning and analysis team a trusted and valuable business partnerEnsure timely and accurate financial statement preparation and filings in complianceregion with theSarbanes-Oxley Acthighest standards of2002Raise company profile across media, public opinionethics, integrity, andemployees through corporate communicationsAdvance strategic procurement functioncomplianceTransform the organization to ensure the successful launches of ARIKAYCE in front-line MAC and brensocatib in bronchiectasis
Ensure appropriate pricing and market access for ARIKAYCE in each region
Elevate the Company’s presence and reputation in NTM and bronchiectasis
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
ourthese named executive officersother than our President and CEOwith regard to his or her respective individual performance objectives.Based upon 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
2019:2022:ALLOCATION OF BONUS ACTUAL BONUS ACHIEVEMENT NAME BASE
SALARYTARGET
BONUS %CORPORATE
GOALSINDIVIDUAL
GOALSCORPORATE
GOALSINDIVIDUAL
GOALS2022 CASH
BONUSWilliam H. Lewis $734,850 70% 100% — 100% — $514,400 Sara Bonstein $477,580 40% 75% 25% 100% 100% $191,100 Roger Adsett $560,190 50% 75% 25% 100% 75% $262,600 Martina Flammer, M.D. $534,320 40% 75% 25% 100% 100% $213,800 Drayton Wise $500,000 40% 75% 25% 100% 100% $200,000 55INSMED PROXY STATEMENT
Allocation of Bonus Actual Bonus Achievement NameBase
SalaryTarget
Bonus %Corporate
GoalsIndividual
GoalsCorporate
GoalsIndividual
Goals2019 Cash
BonusWilliam 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 (1)Effective in November 2019, Mr. Adsett was promoted from Chief Commercial Officer to Chief Operating Officer and his base salary increased to $500,000. Mr. Adsett's base salary was prorated for purposes of the calculation of his cash bonus.(2)Effective in March 2019, Mr. Goll was promoted from Vice President, Corporate Controller to Senior Vice President, Chief Accounting Officer and his base salary increased to $335,000. Mr. Goll's cash bonus was based on his increased base salary.(3)Mr. Tombesi stepped down as our Chief Financial Officer, and his employment with the Company ended in June 2019. Mr. Tombesi's 2019 cash bonus was prorated and paid as severance according to the terms of his separation agreement.
Annual Long-term Equity
IncentivesIncentives.One of the guiding principles of our executive compensation program is pay for performance, and we believe that a significant portion of our
executives'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 toIn addition, thelong-term success of the Company. TheCompensation Committee believesthat 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 timeandalignsconsiders theinterests of our named executive officersfollowing in approving equity plan design andother key employees with those of our shareholders.award values: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.● Equity-based compensation creates an ownership culture that rewards our executives for maximizing shareholder value sustainably over time, and, in combination with stock ownership, aligns our executives’ interests with those of our shareholders ● Equity incentives reward our executives for their contributions to the long-term success of the Company ● The combination of stock options and RSUs drives performance and a long-term mindset while encouraging retention ● We believe stock options are a form of performance-based incentive compensation because they require stock price appreciation to deliver value to the holder, thereby aligning compensation earned with value shareholders receive over the same period of time In determining the equity compensation awards to grant to our named executive officers in
2019,2022, the Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, considered each named executiveofficer'sofficer’s role,asdescribed above, along withthe advice ofFW Cook,ourformerindependent compensation consultant,includingand information regarding comparative equity compensation awards received by the executives in our peergroup.group in the context of total compensation. Individual performance prior to the grant date was also considered. Generally, 75% of 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'sofficer’s expanded duties and responsibilities or continuing contributions to theCompany'sCompany’s performance. In connection with Mr. Drayton’s promotion to Chief Commercial Officer, an additional award of stock options and RSUs was made to reflect his expanded role and to better align total compensation for his new role relative to market.Based on these considerations, our named executive officers received the following annual equity incentive awards in
2019.2022.56INSMED PROXY STATEMENT
NAME DATE OF
GRANTOPTIONS
GRANTED1,2RSUs
GRANTED3William H. Lewis 1/6/2022
5/11/2022148,540
224,45030,741
47,598Sara Bonstein 1/6/2022
5/11/202262,840
94,96013,006
20,137Roger Adsett 1/6/2022
5/11/202285,690
129,49017,735
27,460Martina Flammer, M.D. 1/6/2022
5/11/202268,560
103,59014,188
21,968Drayton Wise4 1/6/2022
5/11/2022
5/23/202214,850
22,440
164,5803,074
4,759
26,2361. Options granted on January 6, 2022 and May 11, 2022 have an exercise price of $26.43 and $17.07, respectively, the per-share closing price of our Common Stock on that date. 2. Shares of our Common Stock underlying these options vest over a four-year period, with 25% of the shares vesting on the first anniversary of the date of grant and 12.5% of the shares vesting every six months thereafter until the fourth anniversary of the date of grant. 3. NameDateThe RSUs vest 25% on each anniversary ofGrantNumberthe date ofOptionsGranted(1)Numbergrant through the fourth anniversary ofRestrictedStock Units Granted(2)William H. Lewis1/3/2019555,140—5/15/2019—51,741Roger Adsett(3)1/3/2019231,310—5/15/2019—21,55911/18/2019—24,863John Goll1/3/201927,760—5/15/2019—4,311Christine Pellizzari(4)1/3/2019157,290—5/15/2019—25,870S. Nicole Schaeffer1/3/2019157,290—5/15/2019—14,660Paolo Tombesi(5)1/3/2019120,280—the date of grant.(1)4. On May 23, 2022, Mr. Wise received an award of options and RSUs in connection with his promotion to Chief Commercial Officer. Options granted on May 23, 2022 have an exercise price of $20.01, the per-share closing price of our Common Stock on that date. 2022 Performance-Based Restricted Stock Units.
In January
3, 2019 had an exercise price of $13.91, the per-share closing price of2022, select senior leaders, including ourCommon Stock on that date. Shares of our Common Stock underlying these options vest over a four-year period, with 25% of the shares vesting on the first anniversary of the date of grant and 12.5% of the shares vesting every six months thereafter until the fourth anniversary of the date of grant.(2)The restricted stock units vest and become available as follows: 25% on each anniversary of the date of grant through the fourth anniversary date of the grant.(3)On November 18, 2019, Mr. Adsettnamed executive officers, also received an award of PSUs. These awards reflected a combination of objectives to complement the existing annual awards of stock options and RSUs,in connectionwhich included retaining senior leaders through a critical period related to brensocatib and aligning senior leaders withhis promotionunlocking value for our shareholders on an appropriately aggressive timeline.The PSUs can vest upon the achievement of performance conditions based on brensocatib milestones, our TSR relative to
Chief Operating Officer.(4)- the Nasdaq Biotech Index constituents, and service, as summarized below. The Compensation Committee and Board believe these goals to be appropriately challenging with strong alignment to shareholder interests as it relates to the time horizon, total shareholder return modifier and final vesting being tied to the FDA accepting a new drug application (“NDA”) from Insmed for brensocatib. If the milestone conditions are not achieved, if Insmed’s TSR is negative or below the 25th percentile relative to the Nasdaq Biotech Index constituents, if an executive does not remain in continuous employment as explained below, or if the FDA does not accept the NDA, no PSUs will vest.
57INSMED PROXY STATEMENT
Milestone Conditions The issuance of a press release announcing certain top-line results from the ASPEN trial within a defined time horizon and the acceptance of an NDA by the FDA for brensocatib.
If the milestone conditions are achieved, the PSUs would vest subject to the two further requirements summarized below.
Relative TSR Modifier To ensure any results related to brensocatib align with the creation of value for our long-term shareholders, a relative TSR modifier will be applied to any PSUs that vest as a result of achieving the milestone conditions. TSR will be assessed through the 30-days following a press release filing, with comparisons made to the Nasdaq Biotech Index constituents as follows:
● If Insmed’s TSR is negative, or if Insmed’s TSR ranks below the 25th percentile, no PSUs will vest regardless of milestone and service achievements
● If Insmed’s TSR is at or above the 25th percentile and less than the 50th percentile, a 0.5x modifier will apply, reducing the number of PSUs that vest by 50%
● If Insmed’s TSR is at or above the 50th percentile and less than the 75th percentile, a 1.0x modifier will apply
● If Insmed’s TSR is at or above the 75th percentile, and less than the 90th percentile, a 2.0x modifier will apply
● If Insmed’s TSR is at or above the 90th percentile, indicating significant value has been created for our shareholders relative to peers, a 2.5x modifier will apply
Service Conditions ● To ensure PSUs meet the objective of retaining senior leaders during this period, a recipient must remain in continuous employment with the Company through the later of the third anniversary of the grant date and the date an NDA for brensocatib is accepted by the FDA.
● If Insmed does not file an NDA due to the clinical trial results, or the FDA does not accept an NDA, for brensocatib, PSUs will not vest.
58INSMED PROXY STATEMENT
In determining the value of these incremental awards, the Compensation Committee considered the objectives of the award, the challenging nature of the performance goals and the target values for the annual equity grants. Based on these considerations, our named executive officers received the following PSU awards in 2022.
NAME DATE OF
GRANTNUMBER OF
PSUs GRANTEDWilliam H. Lewis 1/6/2022 61,484 Sara Bonstein 1/6/2022 26,013 Roger Adsett 1/6/2022 35,472 Martina Flammer, M.D. 1/6/2022 28,377 Drayton Wise 1/6/2022 6,149 On the date the PSUs were granted, the performance conditions necessary for vesting were not deemed probable given the nature of the milestone goals. Accordingly, and reflecting the required accounting treatment for the PSUs, no value is attributed to them in the Summary Compensation Table at this time. In approving the awards, the Compensation Committee considered the potential value of the awards under various scenarios and determined that an
increase to Ms. Pellizzari's awardappropriate “target” value would be 25% ofrestricted stock units was appropriate given her individual performance contributions. (5)Mr. Tombesi stepped down as our Chief Financial Officer,a named executive officer’s annual equity grant value if both the milestone goals andhis employment with the Company ended in June 2019. He forfeited this option grant in its entirety at the time of his termination.
a 1.0 relative TSR modifier were achieved.
Other
BenefitsBenefits.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. With respect to our 401(k) plan, the Company will deposit a matching contribution of 100% of deferrals up to 4% of an
employee'semployee’s eligible compensation (subject to any maximum applicable limits under the Internal 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
BenefitsBenefits.As discussed in further detail
below,in “Potential Payments Upon Termination,” 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 mitigate the influence of a potential change in control on an executiveofficer'sofficer’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.In connection with the termination of Mr. Tombesi's employment, we entered into a separation agreement providing for certain cash and other benefits.See"Potential“Potential Payments UponTermination"Termination” for additional information.59INSMED PROXY STATEMENT
COMPENSATION COMMITTEE 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'sCompany’s Annual Report.THE COMPENSATION COMMITTEE
The Compensation CommitteeDavid R. Brennan, Chair
Alfred F. Altomari
ChairmanDavid R. BrennanLeo Lee
Summary Compensation
Table
Table.The following table sets forth information regarding compensation earned by the named executive officers in
2019, 2018,2022, 2021 and2017.Table of Contents2020.To improve readability, the following columns have been removed from the table as there is no reportable information with respect to these items:
"Change“Change in PensionValue"Value” and"Nonqualified“Nonqualified Deferred Compensation Earnings."”NAME AND
PRINCIPAL
POSITIONYEAR SALARY
($)BONUS
($)STOCK
AWARDS
($)1OPTION
AWARDS
($)2NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)3ALL OTHER
COMPENSATION
($)4TOTAL
($)William H. Lewis 2022 $734,850 — $1,624,982 $4,872,967 $514,400 $42,699 $7,789,898 President and 2021 $710,000 — $1,499,969 $4,499,673 $601,400 $11,600 $7,322,642 CEO 2020 $659,720 — $1,249,986 $3,749,998 $514,600 $11,400 $6,185,704 Sara Bonstein 2022 $477,580 — $687,487 $2,061,581 $191,100 $15,500 $3,433,248 Chief Financial 2021 $460,320 — $687,489 $2,062,368 $227,000 $14,900 $3,452,077 Officer 2020 $386,615 $75,000 — $2,024,075 $224,700 $11,400 $2,721,791 Roger Adsett 2022 $560,190 — $937,478 $2,811,222 $262,600 $71,905 $4,643,395 Chief Operating 2021 $529,730 — $749,968 $2,249,837 $326,500 $14,900 $3,870,935 Officer 2020 $514,300 — $624,981 $1,875,065 $264,900 $14,700 $3,293,946 Martina Flammer,
M.D.
Chief Medical
Officer2022
2021
2020$534,320
$517,500
$500,000—
—
$150,000$749,983
$749,968
$249,993$2,249,087
$2,249,837
$2,749,964$213,800
$255,200
$267,600$15,500
$14,900
$16,813$3,762,690
$3,787,405
$3,934,370Drayton Wise
Chief Commercial
Officer2022 $478,563 — $687,464 $2,580,651 $200,000 $71,436 $4,018,114 60INSMED PROXY STATEMENT
Name and Principal PositionYear Salary
($)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 1 Amounts in this column reflect grant date fair values of RSUs granted each year, calculated in accordance with FASB ASC Topic 718. Amounts are based on the closing price of our Common Stock on the Nasdaq Global Select Market on the date of grant. On January 6, 2022, PSUs were granted to each of our named executive officers, the vesting of which are subject to performance conditions. On the grant date, the performance conditions were deemed not probable and, therefore, no value is included in the Stock Awards or Total columns for the PSUs. Assuming the highest level of performance conditions will be achieved, the grant date fair values of the PSUs granted on January 6, 2022, calculated in accordance with FASB ASC Topic 718, are as follows: Mr. Lewis, $6,013,135; Ms. Bonstein, $2,544,091; Mr. Adsett, $3,469,162; Dr. Flammer, $2,775,290; and Mr. Wise, $601,392. 2. Amounts in this column reflect grant date fair values of stock option awards granted each year, calculated in accordance with FASB ASC Topic 718. The stock options expire 10 years from the date of grant, and the exercise price equals the closing price of our Common Stock on the date of grant. See Note 10, “Stock-Based Compensation” of the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, regarding assumptions underlying valuation of all equity awards. 3. Amounts in this column represent annual cash incentive awards paid to each executive officer under our annual cash incentive program. For further information, see “Components of Compensation—Annual Cash Incentives.” 4. The amounts in the “All Other Compensation” column consist of the following amounts: • In 2020, 2021, and 2022, Mr. Lewis received $11,400, $11,600 and $12,200, respectively, pursuant to our 401(k) plan. In 2022, we also paid $30,499 in travel expenses on Mr. Lewis’ behalf. • In 2020, 2021, and 2022, Ms. Bonstein received $11,400, $11,600 and $12,200, respectively, pursuant to our 401(k) plan. In 2021, and 2022, Ms. Bonstein also received an additional $3,300 per year in health savings account (“HSA”) contributions pursuant to her participation in a tax qualified HSA. • In 2020, 2021, and 2022, Mr. Adsett received $11,400, $11,600, and $12,200, respectively, pursuant to our 401(k) plan. In 2020, 2021, and 2022, Mr. Adsett also received an additional $3,300 per year in HSA contributions pursuant to his participation in a tax qualified HSA. In 2022, we also paid $56,405 in travel expenses on Mr. Adsett’s behalf. • In 2020, 2021, and 2022, Dr. Flammer received $11,400, $11,600, and $12,200, respectively, pursuant to our 401(k) plan. In 2020, 2021, and 2022, Dr. Flammer also received an additional $3,300 in HSA contributions pursuant to her participation in a tax qualified HSA. In 2020, Dr. Flammer was reimbursed $2,113 in relocation expenses. • In 2022, Mr. Wise received $12,200, pursuant to our 401(k) plan. In 2022, we also paid $59,236 in travel expenses on Mr. Wise’s behalf. 61INSMED PROXY STATEMENT
(1)Represents a retention bonus paid to Mr. Goll in 2017 and a sign-on bonus compensation paid to Mr. Tombesi upon commencement of employment in 2017.(2)Amounts in this column reflect grant date fair values of RSUs granted in 2018 and 2019, calculated in accordance with FASB ASC Topic 718, except the assumption of forfeitures is not made. Amounts are based on the closing price of our common stock on the Nasdaq Global Market on the date of grant.(3)Amounts in this column reflect grant date fair values of stock option awards granted each year, calculated in accordance with FASB ASC Topic 718, except the assumption of forfeitures is not made. The stock options expire 10 years from the date of grant, and the exercise price equals the closing price of our Common Stock on the date of grant. See Note 10, "Stock-Based Compensation" of the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, regarding assumptions underlying valuation of all equity awards.(4)Amounts in this column represent annual cash incentive awards paid to each executive officer under our annual cash incentive program. For further information, see "Components of Compensation—Annual Cash Incentives."(5)The amounts in the "All Other Compensation" column consist of the following amounts:•In 2017, 2018 and 2019, Mr. Lewis received $8,100, $11,000 and $11,200, respectively, pursuant to our 401(k) plan. In 2019, we also paid $50,462 in legal fees on Mr. Lewis' behalf, including in connection with his sale of shares of our Common Stock in a registered offering.•In 2017 and 2018, Mr. Tombesi received $7,200 and $11,000, respectively, pursuant to our 401(k) plan. In 2017, Mr. Tombesi received an additional $4,887 as reimbursement for legal fees in connection with his entry into an employment agreement with the Company. In 2019, Mr. Tombesi earned $362,237 as compensation pursuant to the terms of his separation agreement, as described in more detail under "Potential Payments Upon Termination" below.
•In 2017, 2018 and 2019, Mr. Adsett received $8,100, $11,000 and $11,200, respectively, pursuant to our 401(k) plan. In 2018 and 2019, Mr. Adsett also received an additional $3,300 per year in health savings account (HSA) contributions pursuant to his participation in a tax qualified HSA.•In 2017, 2018 and 2019, Ms. Pellizzari and Mr. Goll each received $8,100, $11,000 and $11,200, respectively, pursuant to our 401(k) plan.•In 2017, 2018 and 2019, Ms. Schaeffer received $8,100, $11,000 and $11,200, respectively, pursuant to our 401(k) plan. In 2017, 2018 and 2019, Ms. Schaeffer also received an additional $3,300 each year in HSA contributions pursuant to her participation in a tax qualified HSA.
(6)Mr. Tombesi's 2017 salary covers the period from his date of hire on June 1, 2017 through December 31, 2017. Mr. Tombesi's annual salary as of his hire date was $435,000. Mr. Tombesi stepped down as our Chief Financial Officer and his employment with the Company ended on June 2, 2019.
20192022 Grants of Plan-Based AwardsThe following table sets forth certain information regarding the annual cash incentive awards and equity grants made to our named executive officers during the year ended December 31,
2019.2022. No other plan-based awards were granted to any of our named executive officers during2019.2022.ESTIMATED POSSIBLE
PAYOUTS UNDER
NON-EQUITY
INCENTIVE PLAN
AWARDS1ESTIMATED POSSIBLE
PAYOUTS UNDER
EQUITY
INCENTIVE PLAN
AWARDS2NAME GRANT DATE THRESHOLD
($)TARGET
($)MAXIMUM
($)THRESHOLD
(#)TARGET
(#)MAXIMUM
(#)ALL OTHER
STOCK
AWARDS:
NUMBER OF
SHARES OF
RESTRICTED
STOCK
UNITS
(RSUS) (#)3ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS
(#)4EXERCISE
OR BASE
PRICE OF
OPTION
AWARDS
($/SH)GRANT
DATE
FAIR VALUE
OF STOCK
AND
OPTION
AWARDS
($)5— — 514,395 1,028,790 — — — — — — — 1/6/2022 (options) — — — — — — — 148,540 26.43 2,437,437 William 1/6/2022 (RSUs) — — — — — — 30,741 — — 812,485 H. Lewis 1/6/2022 (PSUs) — — — — 61,484 153,710 — — — — 5/11/2022 (options) — — — — — — — 224,450 17.07 2,435,529 5/11/2022 (RSUs) — — — — — — 47,598 — — 812,498 — — 191,032 417,883 — — — — — — — 1/6/2022 (options) — — — — — — — 62,840 26.43 1,031,160 Sara 1/6/2022 (RSUs) — — — — — — 13,006 — — 343,749 Bonstein 1/6/2022 (PSUs) — — — — 26,013 65,033 — — — — 5/11/2022 (options) — — — — — — — 94,960 17.07 1,030,420 5/11/2022 (RSUs) — — — — — — 20,137 — — 343,739 — — 280,095 612,708 — — — — — — — 1/6/2022 (options) — — — — — — — 85,690 26.43 1,406,113 Roger 1/6/2022 (RSUs) — — — — — — 17,735 — — 468,736 Adsett 1/6/2022 (PSUs) — — — — 35,472 88,680 — — — — 5/11/2022 (options) — — — — — — — 129,490 17.07 1,405,109 5/11/2022 (RSUs) — — — — — — 27,460 — — 468,742 Martina
Flammer,
M.D.—
1/6/2022 (options)
1/6/2022 (RSUs)
1/6/2022 (PSUs)
5/11/2022 (options)
5/11/2022 (RSUs)—
—
—
—
—
—213,728
—
—
—
—
—467,530
—
—
—
—
——
—
—
—
—
——
—
—
28,377
—
——
—
—
70,943
—
——
—
14,188
—
—
21,968—
68,560
—
—
103,590
——
26.43
—
—
17.07
——
1,125,022
374,989
—
1,124,065
374,994— — 200,000 437,500 — — — — — — — 1/6/2022 (options) — — — — — — — 14,850 26.43 243,678 1/6/2022 (RSUs) — — — — — — 3,074 — — 81,246 Drayton 1/6/2022 (PSUs) — — — — 6,149 15,373 — — — — Wise 5/11/2022 (options) — — — — — — — 22,440 17.07 243,499 5/11/2022 (RSUs) — — — — — — 4,759 — — 81,236 5/23/2022 (options) — — — — — — — 164,580 20.01 2,093,474 5/23/2022 (RSUs) — — — — — — 26,236 — — 524,982 62INSMED PROXY STATEMENT
All Other
Stock
Awards:
Number of
Shares of
Restricted
Stock
Units
(RSUs)
(#)(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
($/Sh)Grant Date
Fair Value
of Stock
and Option
Awards
($)(4)NameGrant Date Threshold
($)Target
($)Maximum
($)William H. Lewis
— — $384,300 $768,600 — — — — 1/3/2019 — — — — 555,140 $13.91 $4,499,965 5/15/2019 — — — 51,741 — — $1,499,972 Roger Adsett
— $12,500 $200,000 $375,000 — — — 1/3/2019 — — — — 231,310 $13.91 $1,874,999 5/15/2019 — — — 21,559 — — $624,995 11/18/2019 — — — 24,863 — — $499,995 John Goll
— $7,328 $117,250 $219,844 — — — — 1/3/2019 — — — — 27,760 $13.91 $225,023 5/15/2019 — — — 4,311 — — $124,976 Christine Pellizzari
— $11,230 $179,680 $336,900 — — — — 1/3/2019 — — — — 157,290 $13.91 $1,274,993 5/15/2019 — — — 25,870 — — $749,971 S. Nicole Schaeffer
— $10,000 $160,004 $300,008 — — — — 1/3/2019 — — — — 157,290 $13.91 $1,274,993 5/15/2019 — — — 14,660 — — $424,993 Paolo Tombesi.
— $11,398 $182,360 $341,925 — — — — 1/3/2019 — — — — 120,280 $13.91 $974,990 (1)Constitutes threshold, target and maximum award opportunities for our named executive officers under our annual cash incentive program. See "Compensation Discussion and Analysis—Components of Compensation—Annual Cash Incentives" for information regarding the criteria applied in determining the amounts payable under the awards. The actual amounts paid with respect to these awards are included in the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table.(2)The amounts shown in this column reflect RSUs granted to our named executive offivers pursuant to our equity incentive plans. The vesting schedule for these grants is as follows: 25% on each anniversary of the date of grant through the fourth anniversary date of the grant.
(3)The amounts shown in this column reflect stock options granted to our named executive officers pursuant to our 2017 Incentive Plan. The vesting schedule for these grants is as follows: 25% on the first anniversary 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.(4)Reflects grant date fair values of RSU and option awards granted during the applicable year, calculated in accordance with FASB ASC Topic 718, except the assumption of forfeitures is not made. See Note 10, "Stock-Based Compensation" of the consolidated financial statements in the Company's Annual Report on Form 10-K for year ended December 31, 2019 regarding assumptions underlying valuation of all equity awards.
1 Constitutes threshold, target, and maximum award opportunities for our named executive officers under our annual cash incentive program. See “Components of Compensation—Annual Cash Incentives” for information regarding the criteria applied in determining the amounts payable under the awards. The actual amounts paid with respect to these awards are included in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table. 2. PSUs were granted to our named executive officers on January 6, 2022 pursuant to the 2019 Incentive Plan. The PSUs vest upon the achievement of two performance conditions, a service condition, and a market condition. The performance conditions are the issuance of a press release announcing certain top-line results from the ASPEN trial within a defined time horizon and the acceptance of an NDA by the FDA for brensocatib. The service condition is continuous employment with the Company through the later of (i) the third anniversary of the grant date of the PSU award and (ii) the date an NDA for brensocatib is accepted by the FDA. The potential payout of the awards ranges from 0% to 250% of the target, dependent on a market condition that is based on the Company’s TSR compared to Nasdaq Biotech Index constituents. 3. The amounts shown in this column reflect RSUs granted to our named executive officers pursuant to our equity incentive plans. The vesting schedule for these grants is 25% on each anniversary of the date of grant through the fourth anniversary of the date of grant. 4. The amounts shown in this column reflect stock options granted to our named executive officers pursuant to our 2019 Incentive Plan. The vesting schedule for these grants is 25% on the first anniversary 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. 5. Reflects grant date fair values of option, RSU and PSU and option awards granted during the applicable year, calculated in accordance with FASB ASC Topic 718. See Note 10, “Stock-Based Compensation” of the consolidated financial statements in the Company’s Annual Report on Form 10-K for year ended December 31, 2022, regarding assumptions underlying valuation of all equity awards. Narrative Disclosure to Summary Compensation Table and
20192022 Grants of Plan-Based Awards TableThe employment agreements for our named executive officers generally provide for no fixed termination or other expiration dates. See
"Potential“Potential Payments UponTermination"Termination” for information regarding the terms of these agreements that would be relevant in the event of theexecutive'sexecutive’s termination or upon a change in control.63INSMED PROXY STATEMENT
Outstanding Equity Awards at
20192022 FiscalYear-End
Year EndThe following table sets forth certain information regarding the equity awards held by each of our named executive officers as of December 31,
2019.2022.OPTION AWARDS STOCK AWARDS NAME NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLENUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLEEQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
UNEARNED
OPTIONS (#)OPTION
EXERCISE
PRICE ($)OPTION
EXPIRATION
DATE1NUMBER
OF
SHARES
OR
UNITS OF
STOCK
THAT
HAVE NOT
VESTED
(#)MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT VESTED
(#)2EQUITY
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 45,120 — — $20.49 01/10/2024 — — — — 150,000 — — $22.76 05/21/2025 — — — — 142,080 — — $17.16 05/17/2027 — — — — 200,290 — — $30.46 01/04/2028 — — — — 485,747 69,393 — $13.91 01/03/2029 — — — — 176,619 105,971 — $23.75 01/03/2030 — — — — 41,040 68,400 — $34.03 01/07/2031 — — — — 51,480 85,800 — $26.46 05/12/2031 — — — — — 148,540 — $26.43 01/06/2032 — — — — — 224,450 — $17.07 05/11/2032 — — — — — — — — — 155,3773 $3,104,432 — — — — — — — 61,4844 $1,228,450 — — 55,500(5) — — $14.24 10/31/2023 — — — — 50,000(5) — — $12.58 6/2/2024 — — — — 175,530(5) — — $13.67 1/5/2027 — — — — 67,257(6) — — $12.44 5/23/2023 — — — — 83,334(6) — — $12.44 5/23/2023 — — — — 83,333(6) — — $12.44 5/23/2023 — — — — 57,000(6) — — $14.24 10/31/2023 — — — — 245,950(6) — — $10.85 5/19/2026 — — — — 57,275 34,365 — $28.88 02/03/2030 — — — — 21,806 13,084 — $24.70 05/12/2030 — — — — 17,100 28,500 — $34.03 01/07/2031 — — — — Sara Bonstein 25,740 42,900 — $26.46 05/12/2031 — — — — — 62,840 — $26.43 01/06/2032 — — — — — 94,960 — $17.07 05/11/2032 — — — — — — — — — 50,6603 $1,012,187 — — — — — — — 26,0134 $519,740 — — 88,060 — — $14.56 10/03/2026 — — — — 82,280 — — $13.67 01/05/2027 — — — — 76,600 — — $17.16 05/17/2027 — — — — 80,970 — — $30.46 01/04/2028 — — — — 202,396 28,914 — $13.91 01/03/2029 — — — — Roger Adsett 88,312 52,988 — $23.75 01/03/2030 — — — — 20,520 34,200 — $34.03 01/07/2031 — — — — 25,740 42,900 — $26.46 05/12/2031 — — — — — 85,690 — $26.43 01/06/2032 — — — — — 129,490 — $17.07 05/11/2032 — — — — — — — — — 82,6353 $1,651,047 — — — — — — — 35,4724 $708,731 — — 64INSMED PROXY STATEMENT
OPTION AWARDS STOCK AWARDS NAME NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLENUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLEEQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
UNEARNED
OPTIONS (#)OPTION
EXERCISE
PRICE ($)OPTION
EXPIRATION
DATE1NUMBER
OF
SHARES
OR
UNITS OF
STOCK
THAT
HAVE NOT
VESTED
(#)MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT VESTED
(#)2EQUITY
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 (#)94,369 56,621 — $23.66 01/02/2030 — — — — 35,325 21,195 — $23.75 01/03/2030 — — — — 20,520 34,200 — $34.03 01/07/2031 — — — — Martina Flammer 25,740 42,900 — $26.46 05/12/2031 — — — — — 68,560 — $26.43 01/06/2032 — — — — — 103,590 — $17.07 05/11/2032 — — — — — — — — — 60,3123 $1,205,034 — — — — — — — 28,3774 $566,972 — — 20,071 — — $19.11 02/10/2024 — — — — 6,250 — — $12.58 06/02/2024 — — — — 10,000 — — $16.07 01/08/2025 — — — — 7,000 — — $22.76 05/21/2025 — — — — 20,000 — — $19.25 10/27/2025 — — — — 11,500 — — $16.16 01/07/2026 — — — — 20,500 — — $10.85 05/19/2026 — — — — 17,000 — — $13.67 01/05/2027 — — — — 19,040 — — $17.16 05/17/2027 — — — — Drayton Wise 18,110 — — $30.46 01/04/2028 — — — — 36,435 5,205 — $13.91 01/03/2029 — — — — 28,256 16,954 — $23.75 01/03/2030 — — — — 4,275 7,125 — $34.03 01/07/2031 — — — — 5,362 8,938 — $26.46 05/12/2031 — — — — — 14,850 — $26.43 01/06/2032 — — — — — 22,440 — $17.07 05/11/2032 — — — — — 164,580 — $20.01 05/23/2032 — — — — — — — — — 45,7723 $914,525 — — — — — — — 6,1494 $122,857 — — Option Awards Stock Awards NameNumber of
Securities
Underlying
Unexercised Options (#)
ExercisableNumber of
Securities
Underlying
Unexercised
Options (#)
UnexercisableEquity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)Option
Exercise
Price ($)Option
Expiration
DateNumber 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) — — 1. These stock options have a vesting schedule of 25% on the first anniversary of the date of grant and 12.5% on each six-month anniversary thereafter until the fourth anniversary of the date of grant. 2. Reflects the closing price of $19.98 per share of the Company’s Common Stock on the Nasdaq Global Select Market on December 30, 2022. 3. RSUs have a vesting schedule of 25% on each anniversary of the date of grant through the fourth anniversary of the date of grant. 4. PSUs vest upon the achievement of two performance conditions, a service condition, and a market condition. The performance conditions are the issuance of a press release announcing certain top-line results from the ASPEN trial within a defined time horizon and the acceptance of an NDA by the FDA for brensocatib. The service condition is continuous employment with the Company through the later of (i) the third anniversary of the grant date of the PSU award and (ii) the date an NDA for brensocatib is accepted by the FDA. The potential payout of the awards ranges from 0% to 250% of the target, dependent on a market condition that is based on the Company’s TSR compared to Nasdaq Biotech Index constituents. 5 Awards are held indirectly by William H. Lewis through Article 4 Trust under William Lewis Family Legacy Trust U/A 11/2/2020. 6 Awards are held indirectly by William H. Lewis through Article 4 Trust under Katie Procter Dynasty Trust. 65INSMED PROXY STATEMENT
Option Awards Stock Awards NameNumber of
Securities
Underlying
Unexercised Options (#)
ExercisableNumber of
Securities
Underlying
Unexercised
Options (#)
UnexercisableEquity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)Option
Exercise
Price ($)Option
Expiration
DateNumber 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
— — — — — — — — — (1)These stock options have a vesting schedule of 25% on the first anniversary of the date of grant and 12.5% on each six-month anniversary thereafter until the fourth anniversary of the date of grant.(2)One-half of the shares subject to the option vested upon receipt of the written acceptance of our MAA filing for ARIKAYCE by the EMA in February 2015, and one-half of the shares subject to the option vested upon FDA approval of ARIKAYCE in September 2018.
(3)The RSUs have a vesting schedule as follows: 25% on each anniversary of the date of grant through the fourth anniversary date of the grant.(4)Reflects the closing price of $23.88 per share of the Company's common stock on the Nasdaq Global Market on December 31, 2019.
Option Exercises and Stock Vested During
2019
2022The following table sets forth information with respect to stock options exercised and stock vested during the year ended December 31,
2019.2022.Option Awards Stock Awards NameNumber of
Shares
Acquired on
Exercise (#)Value
Realized on
Exercise
($)Number of
Shares
Acquired on
Vesting (#)Value
Realized on
Vesting
($)William H. Lewis
277,684 6,275,658 9,644 143,213 Roger Adsett
— — 3,899 57,900 John Goll
25,000 186,539 565 8,390 Christine Pellizzari
— — 2,668 39,620 S. Nicole Schaeffer
12,000 195,319 2,668 39,620 Paolo Tombesi
79,475 67,241 2,668 39,620 OPTION AWARDS STOCK AWARDS NAME NUMBER OF
SHARES
ACQUIRED
ON
EXERCISE (#)VALUE
REALIZED ON
EXERCISE
($)NUMBER OF
SHARES
ACQUIRED
ON
VESTING (#)VALUE
REALIZED ON
VESTING
($)William H. Lewis 410,028 6,480,258 48,331 1,138,609 Sara Bonstein — — 5,838 120,000 Roger Adsett — — 47,027 1,008,709 Martina Flammer — — 8,929 205,858 Drayton Wise — — 22,082 458,108 Potential Payments Upon Termination
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 mitigate the influence of a potential change in control on an executive
officer'sofficer’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'sLewis’s employment is terminated by us without cause or by Mr. Lewis for good reason within two years after a change in control of the Company, Mr. Lewis will receive payment of accrued obligations (including any unpaid bonus for any completed fiscal year ending on or prior to his termination date and any accrued but unused vacation pay), a lump sum severance payment equal to two times the sum of his then applicable annual base salary plus two 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 thatthe ExecutiveMr. Lewis was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all equity awards (other than any PSUs, which will vest in accordance with the applicable award agreement), and continuation for up to 18 months of health benefits provided he elects continued coverage under COBRA. Should Mr.Lewis'sLewis’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 two 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 for the year of termination (payable over an 18-month period)for the year of termination,, his pro-rata bonus would be based on actual performance for the year oftermination, 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'sLewis’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.66INSMED PROXY STATEMENT
If Ms. Bonstein’s, Mr.
Adsett'sAdsett’s, Dr. Flammer’s, or Mr. Wise’s employment is terminated by us without cause or byMr. Adsettthe departing executive for good reason within two years after a change in control of the Company,Mr. Adsettthe departing executive will receive payment of accrued obligations, any earned but unpaid bonus for any completed fiscal year ending on or prior to his or her termination date, a lump sum severance payment equal to one and one-half times his or her then applicable annual base salary plus one and one-half times his or her annual target bonus plus a pro-rata portion of hisannual 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 causeorby 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, Mr. Goll will receive payment of accrued obligations, a lump sum severance payment equal to his then applicable annual base salary 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 12 months of health benefits provided he elects continued coverage under COBRA. Should Mr. Goll's employment be terminated by us without cause or by Mr. Goll for good reason prior to the date of a change in control or more than one year after a change in control, Mr. 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 terminationmultiplied 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 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. Pellizzari's employment be terminated due to her death or disability, Ms. Pellizzari 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.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 the 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 ofher 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 (other than any PSUs, which will vest in accordance with the applicable award agreement), and a continuation of up to 18 months of health benefits provided he or she elects continued coverage under COBRA. Should Ms.Schaeffer'sBonstein’s, Mr. Adsett’s, Dr. Flammer’s, or Mr. Wise’s employment be terminated by us without cause or byMs. Schaefferthe departing executive for good reason prior to the date of a change in control or more than two years after a change in control,Ms. Schaefferthe departing executive would be entitled to receive all of the foregoing benefits provided that his or her severance payment would be limited to his or her then applicable annual base salary and instead be payable over a 12-month period, his or her pro-rata bonus would be based on actual performance for the year of termination,andhis or 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 his or her terminationdate.date, and his or her continuation of health benefits under COBRA would be limited to up to 12 months. ShouldMs. Schaeffer'sthe departing executive’s employment be terminated due to his or her death or disability,Ms. Schaefferthe executive or his 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, any earned but unpaid bonus for any completed fiscal year ending on or prior to his or her termination date, 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.67INSMED PROXY STATEMENT
For purposes of the employment agreements, the term
"cause"“cause” generally includes:(a)a conviction of the executive, or a plea of nolo contendere, to a felony involving moral turpitude;(b)willful misconduct or gross negligence by the executive resulting, in either case, in material economic harm to the Company or any related entities;(c)a willful failure by the executive to carry out the reasonable and lawful directions of the Board and failure by the executive to remedy such willful failure within 30 days after receipt of written notice of same, by the Board;(d)fraud, embezzlement, theft or dishonesty of a material nature by the executive against the Company or any related entity, or a willful material violation by the executive of a policy or procedure of the Company or any related entity, resulting, in any case, in material economic harm to the Company or any related entity; or(e)a willful material breach by the executive of his or her employment agreement and failure by the executive to remedy the material breach within 30 days after receipt of written notice thereof from the Board.
a. a conviction of the executive, or a plea of nolo contendere, to a felony involving moral turpitude; b. willful misconduct or gross negligence by the executive resulting, in either case, in material economic harm to the Company or any related entities; c. a willful failure by the executive to carry out the reasonable and lawful directions of the Board and failure by the executive to remedy such willful failure within 30 days after receipt of written notice from the Board; d. fraud, embezzlement, theft or dishonesty of a material nature by the executive against the Company or any related entity, or a willful material violation by the executive of a policy or procedure of the Company or any related entity, resulting, in any case, in material economic harm to the Company or any related entity; or e. a willful material breach by the executive of his or her employment agreement and failure by the executive to remedy the material breach within 30 days after receipt of written notice from the Board. For purposes of the employment agreements, the term
"good reason"“good reason” generally includes:(a)a material diminution in the executive's base compensation;(b)a material diminution in the executive's authority, duties, or responsibilities;(c)a material diminution in the authority, duties, or responsibilities of the supervisor to whom the executive is required to report;(d)the Company's or related entity's requiring the executive to be based at any office or location outside of 50 miles from the location of employment or service as of the effective date of his or her employment agreement, except for travel reasonably required in the performance of the executive's responsibilities; or(e)any other action or inaction that constitutes a material breach by the Company of the executive's employment agreement.
a. a material diminution in the executive’s base compensation; b. a material diminution in the executive’s authority, duties, or responsibilities; c. a material diminution in the authority, duties, or responsibilities of the supervisor to whom the executive is required to report (including, for Mr. Lewis, a requirement that Mr. Lewis report to a corporate officer or executive instead of reporting directly to the Board); d. the Company’s or related entity’s requiring the executive to be based at any office or location outside of 50 miles from the location of employment or service as of the effective date of his or her employment agreement, except for travel reasonably required in the performance of the executive’s responsibilities; or e. any other action or inaction that constitutes a material breach by the Company of the executive’s employment agreement. For purposes of the employment agreements, the term
"change“change incontrol"control” generally includes:(a)the acquisition by another person of beneficial ownership of 40% or more of our Common Stock;(b)a proxy contest that results in the replacement of a majority of the members of our Board;(c)a merger after which our shareholders own less than 60% of the surviving corporation's stock; or(d)approval by our shareholders of a complete liquidation or dissolution of our Company.
a. the acquisition by another person of beneficial ownership of 40% or more of our Common Stock; b. a proxy contest that results in the replacement of a majority of the members of our Board; c. a reorganization, merger, statutory share exchange, or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries, after which our shareholders change in proportion by more than 40%, or after which half or more of our Board has changed; or d. approval by our shareholders of a complete liquidation or dissolution of our Company. To protect our business and goodwill, during the employment term and for a period of
12��12 months after the termination of anexecutive'sexecutive’s employment with us, each executive has agreed that he or she will not:1.engage in any activity in material competition with the business in which we engaged while the executive was employed by us;2.directly or indirectly recruit or solicit any person who is then our employee or was our employee at any time within six months prior to such solicitation; or3.solicit, divert or take away, or attempt to divert or to take away, the business or patronage of any of our clients or customers, or prospective clients or customers.
1. engage in any activity in material competition with the business in which we engaged while the executive was employed by us; 2. directly or indirectly recruit or solicit any person who is then our employee or was our employee at any time within six months prior to such solicitation; or 3. solicit, divert or take away, or attempt to divert or to take away, the business or patronage of any of our clients or customers, or prospective clients or customers. 68INSMED PROXY STATEMENT
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"“golden parachute” rules of Section 280G of the Code and the excise tax ofCodeSection4999.4999 of the Code. If these payments are determined to be parachute payments, as calculated by our independent registered public accounting firm, the parachute payments will be reducedif, and onlyto the extentthat, a reduction will allownecessary to avoid any payments becoming nondeductible under Section 280G of theexecutivesCode or subject toreceive a greater net afterthe excise taxamount thanunder Section 4999 of theexecutives would receive absent a reduction.Code. All severance benefits (other than accrued obligations and certain insurance benefits to which the executive may be entitled upon death or disability) are also subject to the execution and non-revocation of a general release of claims against the Company.The table below summarizes the hypothetical payments that could have been
incurredmade 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 31,20192022 as a result of termination without cause or for good reason during the two-year period immediately following a change in control.CASH
SEVERANCE1PRO-RATA
BONUS2VALUE OF
ACCELERATED
EQUITY3TOTAL William
H. Lewis$2,498,490 $514,395 $5,407,248 $8,420,133 Sara Bonstein $1,002,918 $191,032 $1,808,264 $3,002,214 Roger Adsett $1,260,428 $280,095 $2,912,102 $4,452,625 Martina
Flammer,
M.D.$1,122,072 $213,728 $2,073,457 $3,409,257 Drayton
Wise$1,050,000 $200,000 $1,134,280 $2,384,280 1. These payments would be payable to the executive upon a qualified termination under the applicable agreement. The cash severance figure for Mr. Lewis includes salary for two years plus two times the target bonus. The cash severance figures for Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Mr. Wise include one and one-half times their salary and one and one-half times their target bonus. 2. The value used in the table assumes the full target bonus for the year. 3. The value represents the acceleration of all applicable equity awards outstanding as of December 31, 2022. The value realized upon the accelerated vesting of (i) stock options is calculated by multiplying the number of stock options subject to accelerated vesting by the difference between $19.98 the closing price of our Common Stock on December 30, 2022, and the exercise price of the options, and (ii) RSUs is calculated by multiplying the number of RSUs subject to accelerated vesting by $19.98. 69INSMED PROXY STATEMENT
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 (1)These payments would be payable to the executive upon a qualified termination under the applicable agreement. The cash severance figure for Mr. Lewis includes salary for two years plus two times the target bonus. The cash severance figures for Mr. Adsett, Ms. Pellizzari and Ms. Schaeffer include one and one-half times their salary and one and one-half times their target bonus. The cash severance figure for Mr. Goll includes one year's salary.(2)The value used in the table assumes the full target bonus for the year.(3)The value represents the acceleration of all applicable equity awards outstanding as of December 31, 2019. The value realized upon the accelerated vesting of (i) stock options is calculated by multiplying the number of stock options subject to accelerated vesting by the difference between $23.88, the closing price of our Common Stock on December 31, 2019, and the exercise price of the options, and (ii) RSUs is calculated by multiplying the number of shares of RSUs subject to accelerated vesting by $23.88.
The following table summarizes the hypothetical payments that could have been
incurredmade 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 31,20192022 as a result of termination without cause or for good reason prior to the date of a change in control or following theone- ortwo-year periodas applicable,after a change in control.CASH
SEVERANCE1PRO-RATA
BONUS2VALUE OF
ACCELERATED
EQUITY3TOTAL William
H. Lewis$1,616,670 $514,395 $1,960,435 $4,091,500 Sara
Bonstein$477,580 $191,032 $385,823 $1,054,435 Roger
Adsett$560,190 $280,095 $907,500 $1,747,785 Martina
Flammer,
M.D.$534,320 $213,728 $472,043 $1,220,091 Drayton
Wise$500,000 $200,000 $365,572 $1,065,572 1. These payments and other benefits would be payable to the executive upon a qualified termination under the applicable agreement. The cash severance figure for Mr. Lewis consists of one and one-half times his base salary plus target bonus for one year, while the figures for Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Mr. Wise consist of their respective base salaries for one year. 2. The value used in the table assumes the full target bonus for the year. 3. For Mr. Lewis, the value represents the acceleration of all time-based vesting equity outstanding as of December 31, 2022 granted at least one year prior to the termination date. For Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Mr. Wise, the value represents accelerated vesting of all time-based equity that would have otherwise vested within 12 months following the termination date. The value realized upon the accelerated vesting of (i) stock options is calculated by multiplying the number of stock options subject to accelerated vesting by the difference between $19.98, the closing price of our Common Stock on December 30, 2022, and the exercise price of the options, and (ii) RSUs is calculated by multiplying the number of RSUs subject to accelerated vesting by $19.98. 70INSMED PROXY STATEMENT
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 (1)These payments and other benefits would be payable to the executive upon a qualified termination under the applicable agreement. The cash severance figure for Mr. Lewis consists of one and one-half times his base salary plus target bonus for one year, while the figures for Mr. Adsett, Ms. Pellizzari and Ms. Schaeffer consist of their respective base salaries for one year. The cash severance figure for Mr. Goll consists of six months of his base salary.(2)The value used in the table assumes the full target bonus for the year.
(3)For Mr. Lewis, the value represents the acceleration of all time-based vesting equity outstanding as of December 31, 2019 granted at least one year prior to the termination date. For Mr. Adsett, Ms. Pellizzari, Ms. Schaeffer and Mr. Goll, the value represents accelerated vesting of all time-based equity that would have otherwise vested within 12 months following the termination date. The value realized upon the accelerated vesting of (i) stock options is calculated by multiplying the number of stock options subject to accelerated vesting by the difference between $23.88, the closing price of our Common Stock on December 31, 2019, and the exercise price of the options, and (ii) RSUs is calculated by multiplying the number of shares of RSUs subject to accelerated vesting by $23.88.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONThe 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,
2019.DODD-FRANK MANDATED CEO PAY RATIO
2022.Dodd-Frank Mandated Pay Ratio Disclosure
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.
•In 2019, we determined the median of the annual total compensation of all employees of our company (other than Mr. Lewis) for 2019 was $237,800.•For 2019, the annual total compensation of Mr. Lewis, as reported in the Summary Compensation Table, is $7,175,094.
● In 2022, we determined the median of the annual total compensation of all employees of our company (other than Mr. Lewis) for 2022 was $256,516. ● For 2022, the annual total compensation of Mr. Lewis, as reported in the Summary Compensation Table, is $7,789,898. Based on this information, 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
30.17.30.37.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:
1.We determined that, as of December 31, 2019, our employee population, excluding Mr. Lewis, consisted of approximately 434 individuals working either at Insmed Incorporated or one of our consolidated subsidiaries. This population consisted of our full-time, part-time and temporary employees and, as permitted by SEC rules, excluded independent contractors or similar non-employee workers during 2019. We did not exclude any non-US employees from these calculations.2.To identify the "median employee" from our employee population, we compared the sum of each employee's wages, aggregate fair value of equity awards and target cash bonus for 2019. In doing so, we annualized the compensation of all permanent
3.After identifying the median employee, we calculated annual total compensation for the employee using the same methodology we use for our named executive officers, as set forth in the Summary Compensation Table. This process resulted in a median employee with annual total compensation of $237,800 for 2019.
1. We determined that, as of December 31, 2022, our employee population, excluding Mr. Lewis, consisted of approximately 735 individuals working either at Insmed Incorporated or one of our consolidated subsidiaries. This population consisted of our full-time, part-time, and temporary employees and, as permitted by SEC rules, excluded independent contractors or similar non-employee workers during 2022. We did not exclude any non-US employees from these calculations. employees who were hired in 20192. To identify the “median employee” from our employee population, we compared the sum of each employee’s wages, aggregate fair value of equity awards, and target cash bonus for 2022. In doing so, we annualized the salary of all permanent employees who were hired in 2022 but did not work for us the entire fiscal year. The fair value of option awards granted during 2022 was calculated using the Black-Scholes valuation model pursuant to the assumptions described in Note 10, “Stock-Based Compensation” of the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. We did not make any cost-of-living adjustments in identifying the median employee. 3. After identifying the median employee, we calculated annual total compensation for the employee using the same methodology we use for our named executive officers, as set forth in the Summary Compensation Table. This process resulted in a median employee with annual total compensation of $256,516 for 2022. The
fair value of option awards granted during 2019 was calculated using the Black-Scholes valuation model pursuant to the assumptions described in Note 10, "Stock-Based Compensation" of the consolidated financial statements included in our Annual 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.The SEC'sSEC’s rules for identifying the median employee and calculating the pay ratio based on thatemployee'semployee’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 ratios 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.71INSMED PROXY STATEMENT
DIRECTOR COMPENSATION
DODD-FRANK MANDATED PAY VERSUS PERFORMANCE DISCLOSUREAs required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, the Company must annually disclose in its proxy statement the relationship between Company performance and the “compensation actually paid” (CAP) to the Principal Executive Officer and other NEOs.
The following tables and related disclosures contain information regarding “compensation actually paid” to our Principal Executive Officer (“PEO”) and the average “compensation actually paid” to our NEOs for each of 2020, 2021 and 2022. The table also provides information regarding company performance over the same periods as well as the relationship of “compensation actually paid” to our PEO and NEOs to company performance. For information about how the Compensation Committee seeks to align pay with performance when making compensation decisions, see “Compensation Discussion and Analysis”.
Pay Versus Performance Table
VALUE OF INITIAL
FIXED $100 INVESTMENT
BASED ON:YEAR SUMMARY
COMPENSATION
TABLE TOTAL
FOR PEO1COMPENSATION
ACTUALLY PAID
TO PEO2,3AVERAGE
SUMMARY
COMPENSATION
TABLE TOTAL
FOR NON-PEO
NAMED EXECUTIVE
OFFICERS4AVERAGE
COMPENSATION
ACTUALLY
PAID TO NON-
PEO NAMED
EXECUTIVE
OFFICERS3,4,5TOTAL
SHAREHOLDER
RETURN6PEER GROUP
TOTAL
SHAREHOLDER
RETURN7NET INCOME
(IN THOUSANDS)2022 $7,789,898 $4,334,915 $3,964,362 $2,740,466 $84 $111 $(481,534) 2021 $7,322,642 $2,807,467 $3,323,439 $1,870,969 $114 $125 $(434,654) 2020 $6,185,704 $12,656,157 $2,839,276 $4,418,181 $139 $126 $(294,090) 1. Reflects compensation (as reported in the Summary Compensation Table (“SCT”)) for our Chairman and Chief Executive Officer, Mr. Lewis, who served as our PEO in 2020, 2021, and 2022. 2. Calculated in accordance with Item 402(v)(2) of Regulation S-K. The following adjustments were made to Mr. Lewis’ total compensation as reported in the SCT for each year to determine “compensation actually paid”. 72INSMED PROXY STATEMENT
YEAR SUMMARY
COMPENSATION
TABLE TOTALDEDUCTIONS FOR
REPORTED GRANT DATE
FAIR VALUE OF STOCK
AWARDSADEDUCTIONS FOR
REPORTED GRANT DATE
FAIR VALUE OF OPTION
AWARDSAADDITIONS FOR PAY
VERSUS PERFORMANCE
EQUITY ADJUSTMENTSBCOMPENSATION
ACTUALLY PAID2022 $7,789,898 $(1,624,982) $(4,872,967) $3,042,966 $4,334,915 2021 $7,322,642 $(1,499,969) $(4,499,673) $1,484,467 $2,807,467 2020 $6,185,704 $(1,249,986) $(3,749,998) $11,470,437 $12,656,157 A. Reflects the amounts reported in the Stock Awards and Option Awards columns of the SCT in the relevant years. B. The pay versus performance equity adjustments reflect the aggregated sum of the following values for the respective years. YEAR YEAR-END FAIR VALUE OF
OUTSTANDING AND UNVESTED
EQUITY AWARDS GRANTED IN
THE COVERED YEARYEAR OVER YEAR CHANGE IN
FAIR VALUE OF OUTSTANDING
AND UNVESTED EQUITY
AWARDS GRANTED IN PRIOR
YEARSYEAR OVER YEAR CHANGE
IN FAIR VALUE OF EQUITY
AWARDS GRANTED IN PRIOR
YEARS THAT VESTED IN THE
COVERED YEARTOTAL PAY VERSUS
PERFORMANCE EQUITY
ADJUSTMENTS2022 $6,205,073 $(2,171,008) $(991,099) $3,042,966 2021 $5,178,718 $(2,774,420) $(919,831) $1,484,467 2020 $7,254,113 $3,693,320 $(523,003) $11,470,437 3. Measurement date equity fair values are calculated with assumptions derived on a basis consistent with those used for grant date fair value purposes. RSUs are valued based on the closing stock price on the relevant measurement date. PSUs are valued with an assumed payout factor of 0%, consistent with the assumption for ASC 718 purposes. Stock options are valued using a Black-Scholes model as at the relevant measurement dates. 4. Reflects compensation for the following non-PEO NEOs:
2022: Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Mr. Wise2021: Ms. Bonstein, Mr. Adsett, Dr. Flammer, Ms. Schaeffer, and Ms. Pellizzari
2020: Ms. Bonstein, Mr. Adsett, Dr. Flammer, Ms. Pellizzari, and Mr. Goll5. Average “compensation actually paid” for the non-PEO NEOs has been calculated in accordance with Item 402(v)(2) of Regulation S-K. The following adjustments were made to average SCT total compensation for each year to determine average “compensation actually paid.” 73INSMED PROXY STATEMENT
YEAR AVERAGE SUMMARY
COMPENSATION
TABLE TOTALDEDUCTIONS FOR
AVERAGE REPORTED
GRANT DATE FAIR VALUE
OF STOCK AWARDSADEDUCTIONS FOR
AVERAGE REPORTED
GRANT DATE FAIR VALUE
OF OPTION AWARDSAADDITIONS FOR
AVERAGE PAY VERSUS
PERFORMANCE EQUITY
ADJUSTMENTSBAVERAGE
COMPENSATION
ACTUALLY PAID2022 $3,964,362 $(765,603) $(2,425,635) $1,967,342 $2,740,466 2021 $3,323,439 $(662,479) $(1,987,359) $1,197,368 $1,870,969 2020 $2,839,276 $(324,990) $(1,779,836) $3,683,731 $4,418,181 A. Reflects the average amounts reported in the Stock Awards and Option Awards columns of the SCT in the relevant years. B. The pay versus performance equity adjustments reflect the aggregated sum of the following values for the respective years. YEAR AVERAGE YEAR-END FAIR
VALUE OF OUTSTANDING
AND UNVESTED EQUITY
AWARDS GRANTED IN
THE COVERED YEARAVERAGE YEAR OVER YEAR
CHANGE IN FAIR VALUE
OF OUTSTANDING AND
UNVESTED EQUITY AWARDS
GRANTED IN PRIOR YEARSAVERAGE YEAR OVER YEAR
CHANGE IN FAIR VALUE OF
EQUITY AWARDS GRANTED IN
PRIOR YEARS THAT VESTED
IN THE COVERED YEARTOTAL PAY VERSUS
PERFORMANCE
EQUITY
ADJUSTMENTS2022 $3,073,419 $(725,458) $(380,619) $1,967,342 2021 $2,293,306 $(852,103) $(243,835) $1,197,368 2020 $2,962,880 $630,498 $90,353 $3,683,731 6. Total shareholder return is the only financial performance measure that is currently, and was through the years presented in the table, used by the Company to link “compensation actually paid” to our NEOs to Company performance. 7. The Nasdaq Biotechnology Index is the selected Peer Group for TSR comparisons. 74INSMED PROXY STATEMENT
Compensation Actually Paid Versus Company Performance
The following graph visually describes the relationship between “compensation actually paid” to our PEO and the average “compensation actually paid” to our non-PEO NEOs, to the cumulative total shareholder return of Insmed. In addition, it compares the cumulative total shareholder return of Insmed to our selected peer group, the Nasdaq Biotechnology Index.
75INSMED PROXY STATEMENT
The following graph visually describes the relationship between “compensation actually paid” to our PEO and the average “compensation actually paid” to our non-PEO NEOs, to net income (loss). Insmed does not consider net income (loss) as a relevant measure for determining our executive compensation given the lifecycle stage of our company. The movement in “compensation actually paid” across the three-year time horizon does not move meaningfully or deliberately in relation to the reported net income (loss).
76INSMED PROXY STATEMENT
Tabular List of Company Performance Measures
As further described in our CD&A, we believe that the compensation opportunities for our NEOs should be predominantly variable with a significant portion in the form of short-term and long-term incentives. Given the current life-cycle stage of Insmed, financial measures do not feature meaningfully in our incentive plan design, which instead focuses on pipeline progress across our four pillars and stock price performance. For the fiscal year ending December 31, 2022, the only financial performance measure used to link “compensation actually paid” to our NEOs to company performance was total shareholder return. Total shareholder return will be used on a relative basis to assess performance in respect of the 2022 PSU awards, which currently remain unvested and outstanding, at the conclusion of the performance period. As a result of total shareholder return already being included in the pay versus performance table, no company-selected measure is reported.
TABULAR LIST OF MOST IMPORTANT
MEASURES
(1) Total Shareholder Return
77INSMED PROXY STATEMENT
Director Compensation
Our Board determines the compensation of our non-employee directors based in part on recommendations made by the Compensation Committee.
TheBased on data and advice provided by their independent consultant WTW, the Compensation Committee evaluates the form and amount of compensation for non-employee directorsat leastannually and recommends changes to our Board when appropriate. Our Board is currently compensated through a combination 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,This is achieved through setting compensation levels and practices informed by market median practices, using the same compensation peer group that is considered for our named executive officers. In addition, we have share ownership guidelines in place for our non-employee directors, with a target share ownership of three times the amount of eachdirector'sdirector’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 exceeded 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“Compensation Discussion and Analysis—Corporate Governance Perspectives on our Executive CompensationProgram"Program” above. No other director is an employee of the Company.Fees Earned or Paid in
Cash
Cash.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
2019,2022, each non-employee director was paid a retainer totaling $50,000 annually. Mr. Brennan, the Lead Independent Director, was paid an additional retainer totaling $25,000. The Chair of the Nominations and Governance Committee was paid an additional annual fee of $10,000; the Chair of the Compensation Committee was paid an additional annual fee of $15,000; the Chair of the Audit Committee was paid an additional annual fee of $20,000; and 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, $7,500; members of the AuditCommittee, $10,000; and members of the Science and Technology Committee, $7,500.
Retainers are paid on a quarterly basis.Grant of Restricted Stock
Units
Units.During 2019,On May 11, 2022 each non-employee director, other than
Mr. Hayden andDr.Desjardins,Engelsen, received an annual equity-based grant with a grant date fair value of approximately$200,000$250,000 in the form of RSUs.Mr. Hayden resigned fromDr. Engelsen did not stand for re-election at theBoard in May 20192022 Annual Meeting and did not receive an equity-based grant as aresult, while Dr. Desjardins's compensation was prorated to reflect her appointment as of November 12, 2019.result. The RSUs vest on the first anniversary of the date of the award, provided that the director attends at least 75% of the meetings of the Board during the year in which the award is made.Other.
We reimburse all of our directors for expenses incurred in connection with their attendance at Board or committee meetings. We also provide director and officer insurance for all directors.
In 2019, we made a payment to Mr. Hayden in recognition of his service to the Board, as described further below.The following table sets forth a summary of the compensation we paid to our non-employee directors in
2019.2022.To improve readability, only the columns
"Fees“Fees Earned or Paid in Cash," "Stock” “Stock Awards," "All Other Compensation"” and"Total"“Total” have been included in the table. All other columns have been removed as there is no reportable information with respect to those compensation items.78INSMED PROXY STATEMENT
FEES EARNED NAME OR PAID STOCK AWARDS IN CASH ($) ($)123 TOTAL ($) Alfred F. Altomari $62,699 $250,000 $312,699 Elizabeth M. Anderson $60,000 $250,000 $310,000 David R. Brennan $92,301 $250,000 $342,301 Clarissa Desjardins,
Ph.D.
$65,000
$250,000
$315,000
Steinar J. Engelsen, M.D. $24,478 — $24,478 Leo Lee $65,000 $250,000 $315,000 David W.J. McGirr $70,000 $250,000 $320,000 Carol A. Schafer $65,000 $250,000 $315,000 Melvin Sharoky, M.D. $62,500 $250,000 $312,500 NameFees Earned
or Paid
in Cash ($)Stock Awards ($)(1)(2)(3) All Other
Compensation ($)(4)Total ($) Alfred F. Altomari
$75,000 $200,000 — $275,000 Elizabeth M. Anderson
$55,000 $200,000 — $255,000 David R. Brennan
$82,500 $200,000 — $282,500 Steinar J. Engelsen, M.D.
$72,500 $200,000 — $272,500 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
$70,000 $200,000 — $270,000 Melvin Sharoky, M.D.
$62,500 $200,000 — $262,500 1. Amounts in this column reflect grant date fair values of stock awards granted during 2022, calculated in accordance with FASB ASC Topic 718. 2. Each of our non-employee directors, except for Dr. Engelsen, who did not stand for re-election at the 2022 Annual Meeting, received a grant of 14,645 RSUs in May 2022. As of December 31, 2022, each of our non-employee directors held 14,645 RSUs. 3. No option awards were granted to our directors in 2022. None of our non-employee directors held options as of December 31, 2022. 79INSMED PROXY STATEMENT
(1)Amounts in this column reflect grant date fair values of stock awards granted during 2019, calculated in accordance with FASB ASC Topic 718, except
Proposal No. 3
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
In Proposal 2, we are providing our shareholders the
assumption of forfeitures is not made.(2)Mr. Altomari, Ms. Anderson, Mr. Brennan, Dr. Engelsen, Mr. Lee, Mr. McGirr, and Dr. Sharoky each received a grant of 6,899 RSUs in May 2019. Dr. Desjardins received a grant of 5,295 RSUs in November 2019. As of December 31, 2019, eachopportunity to vote to approve, on an advisory, non-binding basis, the compensation of ourdirectors held 6,899 RSUs except for Dr. Desjardins, who held 5,295 RSUs.(3)No option awards were grantednamed executive officers. In this Proposal 3, we are asking our shareholders toour directors in 2019. Nonecast a non-binding advisory vote regarding the frequency of future advisory votes on the compensation of ourother non-employee directors held optionsnamed executive officers. Shareholders may vote for a frequency of every one, two, or three years, or may abstain from voting.Our Board has determined that an annual vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers is the most appropriate option for the Company. Accordingly, our Board recommends that the advisory vote on the compensation of our named executive officers occurs every year. Our Board believes that an annual advisory vote on the compensation of our named executive officers will allow our shareholders to provide timely, direct input on our executive compensation philosophy, policies, and practices as disclosure in the proxy statement each year.
Vote Required for Approval of
December 31, 2019.(4)Fees earnedthis ProposalShareholders have the choice of voting for advisory votes on named executive officer compensation to occur once every one, two, or three years, or abstaining from the vote. The choice receiving the highest number of votes will be given due regard by,
Mr. Hayden in 2019 include $50,000 paid in connection with Mr. Hayden's retirement, in recognition of his service tobut will not be binding on, the Board.(5)Dr. Desjardins'sAbstentions and broker non-votes will not have any effect on the outcome of this proposal. However, the Board will take into account the outcome of the vote when making future decisions about how often the Company conducts an advisory shareholder vote on the compensationwas prorated to reflect her appointment asofNovember 12, 2019.Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE, ON AN ADVISORY BASIS, FOR A SHAREHOLDER VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION TO TAKE PLACE EVERY YEAR.
80INSMED PROXY STATEMENT
Table of ContentsProposal No. 4PROPOSAL NO. 3
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMInformation 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,
2020.2023. 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 attend 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'sCommittee’s pre-approval policies and procedures, are detailed under"Audit“Audit Committee Report and Independent Auditor Fees."”Vote Required for Approval of this Proposal
Ratification of the appointment of Ernst & Young as the
Company'sCompany’s independent registered public accounting firm for the year ending December 31,20202023 requires the affirmative vote of a majority of the votes properly cast on this proposal 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.
Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE
"FOR"“FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31,2020.2023.81INSMED PROXY STATEMENT
Proposal No. 5
AMENDMENT NO. 1 TOAPPROVAL OF THE INSMED INCORPORATED AMENDED AND RESTATED 2019 INCENTIVE PLANThe 2019 Incentive Plan was approved by our shareholders at the 2019 Annual Meeting of Shareholders.
The Board of Directors adopted on March 30, 2020, subject to shareholder approval,Amendment No. 1,to the 2019 Incentive Plan (the Amendment) to providewhich provided for the issuance of 4,500,000 additional shares of Common Stock under the 2019 IncentivePlan.Plan, was approved by our shareholders at the 2020 Annual Meeting of Shareholders. The 2019 Incentive Plan was further amended by the Omnibus Amendment to Insmed Incorporated Incentive Plans, dated December 10, 2020, to permit the transfer of certain awards for estate-planning purposes. Amendment No. 2, which provided for the issuance of 2,750,000 additional shares of Common Stock under the 2019 Incentive Plan, was approved by our shareholders at the 2021 Annual Meeting of Shareholders. Amendment No. 3, which provided for the issuance of 3,000,000 additional shares of Common Stock under the 2019 Incentive Plan, among other changes, was approved by our shareholders at the 2022 Annual Meeting. The Board of Directors adopted on March 29, 2023, subject to shareholder approval, the Amended and Restated 2019 Incentive Plan (the “Amended and Restated 2019 Incentive Plan”), which amends and restates the 2019 Incentive Plan to provide for the issuance of 10,500,000 additional shares of Common Stock thereunder. In addition, the Amended and Restated 2019 Incentive Plan also (i) provides that each share of Common Stock subject to a full value award will be counted as 1.45 shares for purposes of calculating the number of shares of Common Stock available for issuance thereunder, (ii) limits the exceptions to the minimum vesting requirement, (iii) clarifies the term of tandem SARs (as defined below), (iv) clarifies the payment timing of dividends and dividend equivalents, and (v) provides the administrator with discretion to cancel awards in exchange for cash and/or other consideration in connection with a change in control. No other changes to the 2019 Incentive Plan are proposed or recommended. TheAmendmentAmended and Restated 2019 Incentive Plan is attached hereto as Appendix A.Background and Purpose
If the
AmendmentAmended and Restated 2019 Incentive Plan is not approved, we will have remaining only736,091186,657 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.WeAmong other activities, we continue to focus on the successful commercialization of ARIKAYCE in the US, Europe and Japan for appropriate patients,are seeking regulatory approvalscontinue to advance the post-approval confirmatory, frontline clinical trial program for ARIKAYCE,outsidethrough theUS, such as in EuropeARISE trial andJapan,the ENCORE trial, andexpectcontinue todesign and conduct a Phase 3 program for INS1007 through which we willadvance the ASPEN trial of brensocatib, to seek to confirm the positive results seen in the WILLOWstudy.trial and to support a new drug application. We expect these activities to result in continued increases in our employeeheadcount and toheadcount. To ensure that we have sufficient equity plan capacity to compensate and incentivize our employees as we undertake these activities, the Board adopted theAmendmentAmended and Restated 2019 Incentive Plan and strongly recommends that our shareholders approve theAmendment.Amended and Restated 2019 Incentive Plan.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. In 2022, we began granting PSUs to our executive officers and other key employees. We believe that providing these equity awards incentivizes employees, including management, to create
long-termlong 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.82INSMED PROXY STATEMENT
The Board currently intends that the
4,500,00010,500,000 shares requested under theAmendment,Amended and Restated 2019 Incentive Plan, in addition to the736,091186,657 shares available for future grant under the Amended and Restated 2019 Incentive Plan (plus any shares that might be returned to the Amended and Restated 2019 Incentive Plan as a result of future cancellations, terminations, expirations, forfeitures and lapses), will be sufficient to fund theCompany'sCompany’s annual stock option and RSU grants to current employees, PSU grants to our executive officers and other current key employees, as well as equity grants to new hires forat least the next year,up to two years, which it believes appropriate taking into account theCompany'sCompany’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 theAmendmentAmended and Restated 2019 Incentive Plan 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.In addition, the Amended and Restated 2019 Incentive Plan also provides that (i) each share of
ContentsCommon Stock subject to a full value award granted thereunder will reduce the number of shares of Common Stock available for issuance by 1.45 shares, and that each share of Common Stock subject to a full value award that is added back to the Amended and Restated 2019 Incentive Plan in accordance with the terms thereof will count towards such number as 1.45 shares, (ii) awards granted under the Amended and Restated 2019 Incentive Plan are subject to a minimum vesting period of one year, except in the case of substitute awards issued in connection with acquisitions, awards that vest in connection with the participant’s death or disability, or awards granted pursuant to the 5% share pool exception described in further detail below, (iii) tandem SARs shall have the same term (including any extension thereof) as the stock option to which they relate, (iv) no dividends or dividend equivalents will be paid in either cash or shares (other than shares subject to the same restrictions as the associated restricted stock) prior to the vesting of the portion of the award to which such dividends or dividend equivalents relate. We believe that these changes reflect best compensation governance practices in furtherance of shareholder interests, and (v) in the event of a change in control, the administrator may in its discretion provide that outstanding awards will be cancelled in exchange for cash and/or other consideration based on the fair market value of a share of Common Stock on the date of such change in control.Key Considerations for Requesting Additional Shares
In determining the number of shares to be authorized under the Amended and Restated 2019 Incentive Plan,
as proposed to be amended,the Board considered the following principal factors:•Number of Shares Available for Grant under Existing Plan:As of the Record Date, 736,091 shares remained available for issuance under the 2019 Incentive Plan. There were no shares available to grant under prior incentive plans.•Number of Outstanding Awards Under All Plans:As of the Record Date, there were 13,155,696 outstanding stock options, which had a weighted average exercise price of $17.96 and a weighted average remaining contractual life of 7.30 years, and there were 931,384 RSU awards outstanding.•Burn Rate:Burn rate measures our usage of shares for our stock plans as a percentage of our outstanding shares. For 2019, 2018, and 2017, our burn rate was 3.42%, 1.95%, and 2.88%, respectively, resulting in an average annual burn rate of 2.75% over a three-year period. The rates were calculated by dividing the number of shares subject to awards granted during the year net of forfeitures and cancellations by the weighted average number of shares outstanding during the year.
● Number of Shares Available for Grant under Existing Plan: As of the Record Date, 186,657 shares remained available for issuance under the 2019 Incentive Plan. There were no shares available to grant under prior incentive plans. ● Number of Outstanding Awards Under All Plans: As of the Record Date, there were 19,216,126 outstanding stock options, which had a weighted average exercise price of $21.75 and a weighted average remaining contractual life of 7.13 years, there were 2,062,463 RSU awards outstanding, and there were 268,445 PSU awards outstanding at the target level. ● Burn Rate: Burn rate measures our usage of shares for our stock plans as a percentage of our outstanding shares. For 2022, 2021, and 2020, our burn rate was 4.47%, 3.15%, and 4.05%, respectively, resulting in an average annual burn rate of 3.89% over a three-year period. The rates were calculated by dividing the number of shares subject to awards granted during the year net of forfeitures and cancellations by the weighted average number of shares outstanding during the year. 83INSMED PROXY STATEMENT
New Plan Benefits
Awards under the Amended and Restated 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 during20192022 can be found under the heading"Compensation“Compensation Discussion and Analysis—20192022 Grants of Plan-BasedAwards"Awards” and"Director“Director Compensation—Grant of Restricted Stock Units,"” respectively. During2019,2022, awards covering1,429,3552,181,724 plan shares of Common Stock were granted to our executive officers, awards covering66,985146,450 plan shares were granted to our non-employee directors and awards covering2,447,4994,182,168 plan shares were granted to our other employees.Amended and Restated 2019 Incentive Plan Summary
The following is a description of the material features of the Amended and Restated 2019 Incentive
Plan, as proposed to be amended.Plan. The following discussion is qualified in all respects by reference to the full text of(i)theplan, attached as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the year ended December 31,Amended and Restated 2019and (ii) the Amendment,Incentive Plan, attached hereto as Appendix A. The term"employees"“employees” in the following discussion is used to refer to officers and directors and other employees of the Company and its affiliates, where applicable.Purpose and
EligibilityEligibility.The purpose of the Amended and Restated 2019 Incentive Plan is to advance the interests of the Company by aligning the individual interests of employees, officers, non-employee directors and other service providers, in each case who are selected to be participants, with the interests of Company shareholders, and by providing such individuals with an incentive to continue working toward and contributing to the success and progress of the Company. Employees of the Company and its affiliates, members of the Board, and other non-employee advisors or service providers are eligible to be considered for the grant of awards
under the Amended and Restated 2019 Incentive Plan. As of the Record Date, approximately
8 nonemployeeeight non-employee directors,7seven executive officers and432773 other employees of the Company were so eligible.Shares Subject to the Amended and Restated 2019 Incentive Plan and to
AwardsAwards.If the
AmendmentAmended and Restated 2019 Incentive Plan is approved, the maximum number of shares of Common Stock authorizedunder the 2019 Incentive Planthereunder is8,000,000,24,250,000, including the4,500,00010,500,000 shares that would be addedtoby the Amended and Restated 2019 Incentive Plan,under the Amendment,plus any shares of Common Stock subject to outstanding awards under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan, as oftheMay 16, 2019 (the effective date of the 2019 IncentivePlan,Plan), that, after such date, are canceled, terminate unearned, expire, are forfeited or lapse for any reason, or are settled in cash without the delivery of shares. Shares of Common Stock issued under the Amended and Restated 2019 Incentive Plan may either be authorized and unissued shares or previously issued shares acquired by the Company, including shares purchased in the open market. The number of shares of Common Stock available for issuance under the Amended and Restated 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)(“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)1.251.45 shares for each share of Common Stock subject to a full value award(e.g.(e.g., restricted stock orRSUs)RSUs (including PSUs)).85INSMED PROXY STATEMENT
The number of shares of Common Stock available for issuance under the Amended and Restated 2019 Incentive Plan will be increased to the extent that an award under the Amended and Restated 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
theMay 16, 2019 (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 Amended and Restated 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 Amended and Restated 2019 Incentive Plan will not be counted against the shares available for issuance under the Amended and Restated 2019 Incentive Plan. Any shares of Common Stock with respect to awards issued under the Amended and Restated 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) as1.251.45 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 Amended and Restated 2019 Incentive Plan and added back to the share pool as one share in all other cases.If the
AmendmentAmended and Restated 2019 Incentive Plan is approved, the aggregate number of shares of Common Stock that may be issued pursuant to the exercise of incentive stock options(ISOs)(“ISOs”) granted under the Amended and Restated 2019 Incentive Plan will not exceed8,000,000,24,250,000, including the4,500,00010,500,000 that are addedtoby the Amended and Restated 2019 IncentivePlan under the Amendment.Plan.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 Amended and Restated 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 Amended and Restated 2019 Incentive Plan and will not reduce the shares authorized for issuance under the Amended and Restated 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.
AdministrationAdministration.
The Amended and Restated 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 Amended and Restated 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 Amended and Restated 2019 Incentive Plan to one or more officers or employees of the Company or any subsidiary, and/or to one or more agents.
85INSMED PROXY STATEMENT
Subject to the provisions of the Amended and Restated 2019 Incentive Plan, the administrator has the authority to select 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 interpretations 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.
AwardsAwards.
The Amended and Restated 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 Amended and Restated 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.the participant’s death or disability. Additionally, the administrator has the authority to grant awards covering up to 5% of theplan'splan’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.TableThe administrator may not accelerate the vesting or exercisability ofContentsall or any portion of an award following the grant date of such award unless (i) explicitly provided under the terms of an award agreement (subject to the minimum vesting requirement), (ii) explicitly provided under the terms of an employment or service agreement, or (iii) in connection with a change in control or a grantee’s death or disability.Stock Options.Stock options granted under the Amended and Restated 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'sCompany’s stock (a10% Shareholder)“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 deliverable 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 an ISO granted to a 10% Shareholder, five years), provided that the term of a non-qualified stock option will be automatically extended if, at the time of its scheduled expiration, the participant holding such option is prohibited by law or by theCompany'sCompany’s insider trading policy from exercising such option. Any such extension will expire on the30th30th day following the date such prohibition no longer applies.86INSMED PROXY STATEMENT
Other than in connection with a change in the
Company'sCompany’s capitalization, at any time when the exercise price of 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 Amended and Restated 2019 Incentive Plan in consideration for, and will not be conditioned upon the delivery of shares to the Company in payment 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 holder 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.$18.32.Restricted Stock and Restricted Stock
Units.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 additional 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 dividend equivalents may be paid in cash or shares (other than shares subject to the same restrictions as the associated restricted stock) with respect to an award of restricted stock or RSUs prior to the vesting of the portion of the award to which such dividends or dividend equivalents relate. Unless otherwise determined by the administrator, participants holding shares of restricted stock may exercise full voting rights with respect to those shares during the period of restriction. Participants holding RSUs will not have voting rights with respect to the underlying shares until they become the holder of record of the underlying shares.
Stock Appreciation
Rights.Rights. A SAR entitles the participant, upon settlement, to receive a payment based on the excess of the aggregate market price of a specified number of shares of Common Stock at the time of the exercise over the exercise price of the right. SARs may be granted on a stand-alone basis or in tandem with a related stock option. The exercise price may 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 the exercise price of the stock option to which it relates, as well as the same term (including any extensions thereof) 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 theCompany'sCompany’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.87INSMED PROXY STATEMENT
Adjustment and Change in
ControlControl.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 Amended and Restated 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 Amended and Restated 2019 Incentive Plan and subject to awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such shares to reflect a deemed reinvestment in shares of the amount distributed to the
Company'sCompany’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 foregoing 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 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.Unless otherwise expressly provided for in an award agreement or another agreement, including an employment agreement, in the event of a change in control, unless provision is made in connection with the change in control for (i) assumption of awards previously granted or (ii) substitution for such awards, or unless the administrator exercises the discretion to cancel outstanding awards in exchange for cash and/or other consideration as described further below, (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 option or SAR not previously exercisable, and the unexercised portion of such option or SAR will be cancelled upon on the consummation of the change in control; (2) 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 (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. The administrator is not required to treat all participants, all awards, all awards held by a participant, all portions of a single award, or all awards of the same type identically.
In the event of a change in control, the administrator may in its discretion provide that outstanding awards, whether vested or unvested, will be cancelled in exchange for cash and/or other consideration with a value equal to (i) for awards other than options or SARs, the fair market value of the shares of Common Stock underlying such award on the date of such change in control or (ii) for options or SARs, the excess, if any, of the fair market value of the shares of Common Stock underlying such award on the date of such change in control over the aggregate exercise price. However, if the fair market value of a share of Common Stock on such date does not exceed the per share exercise price of the option or SAR, the administrator may cancel the option or SAR for no consideration.
88INSMED PROXY STATEMENT
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'sparticipant’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.TransferabilityTransferability.
No award may be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated by a participant other than by will or the laws of descent and distribution; provided, however, that a participant may, with the prior approval of the Company’s General Counsel or Chief Financial Officer or one of their designees (provided that no such person may approve a transfer by such person), transfer an award, other than an ISO, for no consideration, to a family member (as defined in the General Instructions to Form S-8 under the Securities Act of 1933), in each case, with respect to whom such award or the exercise thereof (as applicable) is covered by an effective registration statement under the Securities Act of 1933 (collectively, the “Permitted Transferees”). Any award transferred to a Permitted Transferee shall be further transferable only by will or the laws of descent and distribution
andor, for no consideration, to another Permitted Transferee of the participant. During the participant’s lifetime, each option or SARisshall be exercisable only by the participantduringor by his or herlifetime. NotwithstandingPermitted Transferee to whom such options or SARs have been transferred during theforegoing,participant’s lifetime and, after the participant’s death, with respect to outstanding options,may be exercised followingby beneficiaries of theparticipant's deathparticipant, bythe participant's beneficiariesany such Permitted Transferee or as permitted by the administrator.Duration of the Amended and Restated 2019 Incentive
PlanPlan.Awards may not be granted under the Amended and Restated 2019 Incentive Plan after the tenth anniversary of the adoption by the Board of the 2019 Incentive
Plan.Plan, which is April 3, 2029. Notwithstanding the foregoing, the Amended and Restated 2019 Incentive Plan may be terminated at such earlier time as the Board may determine. Termination of the Amended and Restated 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
TerminationTermination.Subject to limitations imposed by law, the Board may amend or terminate the Amended and Restated 2019 Incentive Plan at any time and the administrator may amend or alter any agreement or other document evidencing an award made under the Amended and Restated 2019 Incentive Plan. However, no such amendment may deprive the recipient of an award previously granted under the Amended and Restated 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:
(a)a. increase the maximum number of shares of Common Stock for which awards may be granted under the Amended and Restated 2019 Incentive Plan; 89INSMED PROXY STATEMENT
b. reduce the price at which options may be granted below the price provided for in the Amended and Restated 2019 Incentive Plan; c. reprice outstanding options or SARs; d. extend the term of the Amended and Restated 2019 Incentive Plan; e. change the class of persons eligible to be participants; or f. otherwise amend the Amended and Restated 2019 Incentive Plan in any manner requiring shareholder approval by law or the rules of any stock exchange or market or quotation system on which the Common Stock is traded, listed, or quoted. Recoupment Policy.
Participants and/or awards under the plan, including shares of Common Stock
for which awards may be granted under the 2019 Incentive Plan;(b)reduce the price at which options may be granted below the price provided for in the 2019 Incentive Plan;(c)reprice outstanding options or SARs;(d)extend the term of the 2019 Incentive Plan;(e)change the class of persons eligiblesubject tobe participants; or(f)otherwise amend the 2019 Incentive Plan in any manner requiring shareholder approval by law or the rules of any stock exchange or market or quotation system on which the Common Stock is traded, listed or quoted.
Recoupment PolicyThe administrator has the authority to cause a participant oran award,under the plan to beare subject tothe Company'sany applicable recovery, recoupment, clawback, and/or other forfeiture policiesasmaintained by the Company from time totime.time in accordance with the provisions of such policies.90INSMED PROXY STATEMENT
FEDERAL INCOME TAX TREATMENT
Federal Income Tax TreatmentThe following discussion summarizes the material U.S. federal income tax consequences to the Company and the participants in connection with the Amended and Restated 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
OptionsOptions.—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
OptionsOptions.—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 date the ISO is granted or within one year after the date the ISO is exercised, then the sale is considered a disqualifying sale, and the spread on exercise will be 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 ordinary income recognized by the employee.
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
StockStock.—.
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.
91INSMED PROXY STATEMENT
Generally, when an employee disposes of shares acquired under the Amended and Restated 2019 Incentive Plan, the difference between the sales price and his or her basis in such shares will be treated as long- or short-term capital gain or loss depending upon the holding period for the shares.
Restricted Stock
UnitsUnits.—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
RightsRights.—Upon exercise of a SAR, an employee will recognize taxable income in the amount 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 received. In either
suchcase, the Company will be entitled to an income tax deduction in the amount of such income recognized by the employee.Potential Limitation on
DeductionsDeductions.—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 "coveredCompany’s “covered employees."” The definition of"covered employee"“covered employee” includes anyone who was theCompany'sCompany’s CEO or CFO at any time during the year, as well as theCompany'sCompany’s three other most highly-compensated executive officers during theyear. Anyyear, and any such 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. For taxable years beginning after December 31, 2026, the definition of “covered employee” will also include the employees who are among the five highest compensated employees for the applicable taxable year other than the Company’s CEO, CFO, or three other most highly-compensated executive officers for such year. Accordingly, awards granted to theCompany'sCompany’s covered employees under the Amended and Restated 2019 Incentive Plan may not be fully deductible.Federal Income Tax Consequences to the
CompanyCompany.—To the extent that a recipient recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an
"excess“excess parachutepayment"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).of the Code.Tax
WithholdingWithholding.—To the extent required by applicable federal, state, local or foreign law or practice, a participant will be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations that arise by reason of the award.
92INSMED PROXY STATEMENT
Section
409A409A.—Section 409A of the Code applies to any awards under the Amended and Restated 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 Code, we intend to have the awards comply with Section 409A of the Code.
Equity Compensation Plan Information
In
2019,2022, we made stock-based awards from our 2019 Incentive Plan, andour 2017 Incentive Plan, andhave outstanding grants under our 2017 Incentive Plan, 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, thePlans)“Plans”).The 2019 Incentive Plan was adopted by the Board and approved by our shareholders on May 16, 2019. Under the terms of the 2019 Incentive Plan, we are authorized to grant a variety of incentive awards based on our Common Stock, including stock options (both incentive stock options and non-qualified stock options), performance options/shares and other stock awards, such as RSUs.
The following table presents information as of December 31,
2019,2022 with respect to thePlans.Plan CategoryNumber of Securities
to be Issued
Upon Exercise
of Outstanding
Options and RightsWeighted Average
Exercise Price
of Outstanding
Options and RightsNumber of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation PlansEquity 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 (1)Represents shares of Common Stock issuable upon the exercise of outstanding stock optionsPlans andvesting of outstanding RSUs granted under our 2019 Incentive Plan.
(2)Represents shares of Common Stock issuable upon the exercise of outstanding stock options and vesting of outstanding RSUs granted under our 2017 Incentive Plan. To the extent that awards granted under the 2017 Incentive Plan terminate unearned, expire, or are canceled, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan.(3)Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under our 2015 Incentive Plan. To the extent that awards granted under the 2015 Incentive Plan terminate unearned, expire, or are canceled, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan.(4)Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under our 2013 Stock Incentive Plan. To the extent that awards granted under the 2013 Incentive Plan terminate unearned, expire, or are canceled or, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan.(5)Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under the 2000 Stock Incentive Plan.(6)Represents outstandinginducement grants of stock options we made in connection with the hiring of various employees.The vesting schedule for the shares of Common Stock subject to these options is as follows: 25% on the first anniversary 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.
PLAN CATEGORY NUMBER OF
SECURITIES
TO BE ISSUED
UPON
EXERCISE OF
OUTSTANDING
OPTIONS AND
RIGHTSWEIGHTED
AVERAGE
EXERCISE
PRICE OF
OUTSTANDING
OPTIONS AND
RIGHTS1NUMBER OF
SECURITIES
REMAINING
AVAILABLE
FOR FUTURE
ISSUANCE
UNDER EQUITY
COMPENSATION
PLANSEquity Compensation Plans Approved by Shareholders: 2,465,477 2019 Incentive Plan2 10,925,885 $24.01 2017 Incentive Plan3 2,682,990 $18.35 — 2015 Incentive Plan4 2,138,586 $15.84 — 2013 Stock Incentive Plan5 812,428 $15.25 — 2000 Stock Incentive Plan6 23,900 $6.90 — Equity Compensation Plans Not
Approved by Shareholders:— Individual Compensation
Arrangements73,132,519 $25.09 — Total 19,716,308 2,465,477 93INSMED PROXY STATEMENT
1. Does not include outstanding RSUs or PSUs, which do not require the payment of any exercise price upon their vesting. 2. Represents shares of Common Stock issuable upon the exercise of outstanding stock options and vesting of outstanding RSUs and PSUs granted under our 2019 Incentive Plan. 3. Represents shares of Common Stock issuable upon the exercise of outstanding stock options and vesting of outstanding RSUs granted under our 2017 Incentive Plan. To the extent that awards granted under the 2017 Incentive Plan terminate unearned, expire, or are canceled, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan. 4. Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under our 2015 Incentive Plan. To the extent that awards granted under the 2015 Incentive Plan terminate unearned, expire, or are canceled, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan. 5. Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under our 2013 Stock Incentive Plan. To the extent that awards granted under the 2013 Incentive Plan terminate unearned, expire, or are canceled or, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan. 6. Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under the 2000 Stock Incentive Plan. 7. Represents outstanding inducement grants of stock options we made in connection with the hiring of various employees. The vesting schedule for the shares of Common Stock subject to these options is 25% on the first anniversary 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. Vote Required for Approval of this Proposal
Approval of the
AmendmentAmended and Restated 2019 Incentive Plan requires the affirmative vote of a majority of the votes cast on this proposal at the Annual Meeting. Abstentions and broker non-votes will not have an effect on the outcome of this proposal.Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE
"FOR"“FOR” THE APPROVAL OF THEAMENDMENT TO THEAMENDED AND RESTATED 2019 INCENTIVE PLAN.94INSMED PROXY STATEMENT
Table of ContentsProposals for 2024 Annual MeetingPROPOSALS FOR 2021 ANNUAL MEETINGShareholder proposals intended for inclusion in our proxy statement for the
20212024 Annual Meeting of Shareholders must be received at our offices no later than the close of business on December 1,2020.2023. All such proposals must comply with Rule 14a-8 under the Exchange Act and must be submitted to the Corporate Secretary, Insmed Incorporated, 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
20212024 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 precedingyear'syear’s annual meeting. Accordingly, for the20212024 Annual Meeting of Shareholders, our Corporate Secretary must receive such written notice no earlier than December 13,20202023 and no later than January 12,2021.2024. If the date of the20212024 Annual Meeting of Shareholders is more than 30 days before or more than 60 days after May12, 202111, 2024 (the anniversary of thisyear'syear’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. In addition to satisfying all of the requirements under our Bylaws, any shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees at the 2024 Annual Meeting of Shareholders must also comply with all applicable requirements of Rule 14a-19 under the Exchange Act. The advance notice requirement under Rule 14a-19 does not override or supersede the longer advance notice requirement under our Bylaws. Our Bylaws are available on our website at www.insmed.com under the heading"Investor Relations—“Investors—CorporateGovernance"Governance” or by submitting a written request to the Corporate Secretary, Insmed Incorporated, 700 US Highway 202/206, Bridgewater, New Jersey 08807.95INSMED PROXY STATEMENT
ANNUAL REPORT ON FORMAnnual Report on Form 10-KWe 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,
2019,2022, including the financial statements and financial statement schedules. Requests should be directed toMs. Christine Pellizzari,Mr. Michael A. Smith, Corporate Secretary, Insmed Incorporated, 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 31,2019,2022, and will provide copies of any such exhibit upon the payment of a reasonable fee.SEPARATE COPIES FOR BENEFICIAL HOLDERS
Separate Copies for Beneficial HoldersInstitutions 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 they 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'sCompany’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.96INSMED PROXY STATEMENT
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 2023 Annual Meeting of Shareholders (the “Annual Meeting”) on May 11, 2023, at 9:00 a.m. Eastern Time, and any adjournment or postponement thereof. The Annual Meeting will be held virtually via the Internet at www.virtualshareholdermeeting.com/INSM2023. We intend to make the Proxy Statement and related proxy materials available to our shareholders on or about March 31, 2023.
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 Instead of a Full Set of Proxy Materials?
Pursuant to rules adopted by the Securities and Exchange Commission (the “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 14, 2023 (the “Record Date”), will be entitled to notice of and to vote at the Annual Meeting. As of the Record Date, we had 136,428,466 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. 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/INSM2023, you must enter the 16-digit control number found on your Notice, 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.
97INSMED PROXY STATEMENT
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 in advance or at the Annual Meeting.
If you are a shareholder of record, you may vote or submit a proxy as follows:
1. By Internet— 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 Wednesday, May 10, 2023. 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 Notice or proxy card or other proxy materials and following the instructions at www.virtualshareholdermeeting.com/INSM2023.
2. By Telephone—Dial 1-800-690-6903 using any touch-tone phone to transmit your voting instructions through 11:59 p.m. Eastern Time on Wednesday, May 10, 2023. Have your Notice, proxy card, or other proxy materials in hand when you call and follow the voting instructions given to you over the phone. 3. By Mail—Complete and sign the proxy card and mail it in accordance with the instructions on the proxy card. Completed proxy cards must be received by 11:59 p.m. Eastern Time on Wednesday, May 10, 2023. 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 instead 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 via the Internet at www.virtualshareholdermeeting.com/INSM2023. You may not vote your shares at the Annual Meeting unless you enter the 16-digit control number found on your Notice, proxy card, or other proxy materials.
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 11, 2023. 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.
98INSMED PROXY STATEMENT
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 136,428,466 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 (the “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 II directors, Proposal 2, the advisory vote on the 2022 compensation of our named executive officers, Proposal 3, the advisory vote on the frequency of future advisory votes on the compensation of our named executive officers, and Proposal 5, the approval of the Insmed Incorporated Amended and Restated 2019 Incentive Plan (the “Amended and Restated 2019 Incentive Plan”), are non-routine matters. Proposal 4, the ratification of the appointment of our 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 will not be voted on “non-routine” matters and your shares will be “broker non-votes” with respect to those 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
REQUIREDBOARD
RECOMMENDATION1. Election of three Class II directors Plurality of votes cast FOR 2. Advisory vote to approve the 2022 compensation of our named executive officers Majority of votes cast FOR 3. Advisory vote on the frequency of future shareholder advisory votes on the compensation of our named executive officers
Option receiving the highest number of votes EVERY YEAR 4. Ratification of appointment of Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the year ending December 31, 2023 Majority of votes cast FOR 5. Approval of the Amended and Restated 2019 Incentive Plan Majority of votes cast FOR 99INSMED PROXY STATEMENT
Proposal 1, the election of Class II directors, requires 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 of the Board (the “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.
Proposals 2 and 3, the advisory votes on the 2022 compensation of our named executive officers and the frequency of future advisory votes on the same, are not binding on, nor do they overrule, any decisions of the Company, the Board or the Compensation Committee of the Board (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, and/ or more votes are cast on Proposal 3 for a different frequency than that recommended by the Board, the Board and the Compensation Committee will consider the votes in future decisions on the compensation of our named executive officers and the frequency of future advisory votes on the compensation of our named executive officers.
Proposal 4, the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2023, does not require shareholder ratification under Virginia law, our Articles of Incorporation, or our Amended and Restated Bylaws (the “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 4 is not approved by a majority of votes cast, the Audit Committee will consider the vote in future independent auditor selection decisions.
Proposal 5, the approval of the Amended and Restated 2019 Incentive Plan, requires the affirmative vote of a majority of the votes cast.
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, 3, and 5 are considered “non-routine,” if a beneficial owner does not instruct its broker or other agent how to vote such beneficial owner’s 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 4 is considered “routine,” a beneficial owner’s broker or other agent will have discretion to vote any shares with respect to which such 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:
FOR the election of each of the three Class II nominees for director;FOR the approval of the 2022 compensation of our named executive officers;FOR an advisory vote EVERY YEAR on the compensation of our named executive officers;FOR the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2023; andFOR the approval of the Amended and Restated 2019 Incentive Plan.Unsigned proxy cards will not be voted.
100INSMED PROXY STATEMENT
What If Other Matters Not Described Herein 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 exercised by voting 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 e-mail, proxies may be solicited in person or by telephone by our employees, with no additional remuneration. We have engaged Morrow Sodali 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 $10,000 in total.
PRINCIPAL EXECUTIVE OFFICES OF INSMED
The address of our principal executive offices is 700 US Highway 202/206, Bridgewater, New Jersey 08807.
101INSMED PROXY STATEMENT
APPENDIX A
AMENDMENT NO. 1TO THEINSMED INCORPORATEDAMENDED AND RESTATED 2019 INCENTIVE PLANMarch 31, 2020WHEREAS, Insmed Incorporated (the "1. PurposeThe purpose of the Plan is to advance the interests of the Company
") sponsorsby aligning the individual interests of employees, officers, non-employee directors andmaintainsother service providers, in each case who are selected to be participants, with the interests of Company shareholders and by providing such individuals with an incentive to continue working toward and contributing to the success and progress of the Company. The Plan provides for the grant of Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units, any of which may be performance-based, as determined by the Administrator. The Plan amends and restates the Insmed Incorporated 2019 Incentive Plan, which replaced the Insmed Incorporated 2017 Incentive Plan (the"“2017 Plan”) with respect to future awards granted by the Company, and no future awards will made under the 2017 Plan");after the Effective Date (as defined herein) of the Plan except as otherwise provided herein.WHEREAS,2. Definitions
As used in the Plan, the following terms shall have the meanings set forth below:
a. “Administrator” means the Administrator of the Plan in accordance with Section 6 of the Plan. b. “Affiliate” means any entity in which the Company has a substantial direct or indirect equity interest, as determined by the Committee from time to time. c. “Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto. d. “Approval Date” has the meaning set forth in Section 4 of the Plan. e. “Award” means an Option, Stock Appreciation Right, Restricted Stock, or Restricted Stock Unit granted to a Participant pursuant to the provisions of the Plan. f. “Award Agreement” means any written or electronic agreement or other instrument evidencing any Award, which may (but need not) require execution or acknowledgment by a Participant. g. “Board” means the Board of Directors of the Company. A-1 INSMED PROXY STATEMENT
h. “Change in Control” means the occurrence of any one of the following: 1. any Person becomes the beneficial owner (as such term is defined in Rule 13d-3 under the Act) of at least 50% of (A) the value of the then outstanding shares of Common Stock (the “Outstanding Company Common Stock”) and/or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”) (the foregoing beneficial ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change in Control: (v) any acquisition directly from the Company; (w) any acquisition by the Company; (x) any acquisition by any Person that as of the Effective Date has beneficial ownership of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (3) below; or 2. during any period of two consecutive years (not including any period prior to the Effective Date) individuals who constitute the Board on the Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs after the Effective Date as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 3. consummation of a reorganization, merger, statutory share exchange, or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the Persons who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Acquiring Corporation or any employee benefit plan (or related trust) of the Company or such Acquiring Corporation) beneficially owns, directly or indirectly, more than 50% of the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Board of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or A-2 INSMED PROXY STATEMENT
4. the complete liquidation or dissolution of the Company. Notwithstanding the foregoing, to the extent an Award provides for deferred compensation under Section 409A of the Code and payment is made upon a Change in Control, no event or transaction will constitute a Change in Control hereunder unless it also constitutes a “change in control event” under Section 409A of the Code.
i. “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto, and the rulings and regulations issued thereunder. j. “Committee” means the Compensation Committee of the Board (or any successor committee). k. “Common Stock” means the common stock of the Company, par value $0.01 per share, or such other class or kind of shares or other securities as may be applicable under Section 14 of the Plan. l. “Company” means Insmed Incorporated, a Virginia corporation, and except as utilized in the definition of Change in Control, any successor corporation. m. “Dividend Equivalents” mean an amount payable in cash or Common Stock, as determined by the Administrator, with respect to a Restricted Stock Unit Award equal to what would have been received if the shares underlying the Award had been owned by the Participant. n. “Effective Date” has the meaning set forth in Section 4 of the Plan. o. “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 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) as quoted 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, taking into account factors consistent with Treas. Reg. § 409A-1(b)(5)(iv)(B) as the Administrator deems appropriate. p. “Freestanding SARs” has the meaning set forth in Section 9.a of the Plan. q. “Full-Value Award” means an Award that results in the Company transferring the full value of a share of Common Stock under the Award, whether or not an actual share of stock is issued. Full-Value Awards shall include Restricted Stock and Restricted Stock Units to the extent payable in Common Stock (including, but not limited to, Awards that are performance-based) for which the Company transfers the full value of a share of Common Stock under the Award, but shall not include Dividend Equivalents. r. “Incentive Stock Option” means a stock option that is designated as potentially eligible to qualify as an “incentive stock option” within the meaning of Section 422 of the Code. s. “Nonqualified Stock Option” means a stock option that is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code. t. “Option” means a stock option awarded under Section 8 of the Plan, which may be an Incentive Stock Option or a Nonqualified Stock Option. A-3 INSMED PROXY STATEMENT
u. “Participant” means any individual described in Section 3 of the Plan to whom Awards have been granted or who has received a Substitute Award and any authorized transferee of such individual. v. “Person” shall have the meaning given in Section 3(a)(9) of the Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company. w. “Plan” means the Insmed Incorporated Amended and Restated 2019 Incentive Plan as set forth herein and as amended from time to time. x. “Prior Plan” means the Insmed Incorporated 2013 Incentive Plan, Insmed Incorporated 2015 Incentive Plan or the 2017 Plan. y. “Restricted Stock” means an Award or issuance of Common Stock the grant, issuance, retention, vesting and/ or transferability of which is subject during specified periods of time to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate. z. “Restricted Stock Unit” means an Award denominated in units of Common Stock under which the issuance of shares of Common Stock (or cash payment in lieu thereof) is subject to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate. aa. “Separation from Service” means the termination of Participant’s employment with the Company and all Subsidiaries that constitutes a “separation from service” within the meaning of Section 409A of the Code. bb. “Share Pool” has the meaning set forth in Section 5.a of the Plan. cc. “Stock Appreciation Right” means a right granted pursuant to Section 9 of the Plan that entitles the Participant to receive, in cash or Common Stock or a combination thereof, value equal to the excess of (i) the aggregate market price of a specified number of shares of Common Stock at the time of exercise over (ii) the exercise price of the right, as established by the Administrator on the date of grant. dd. “Subsidiary” means any entity in which the Company, directly or indirectly, possesses 50% or more of the total combined voting power of all classes of its equity interests or, for Incentive Stock Options, a “subsidiary corporation” (as defined in Section 424(f) of the Code). ee. “Substitute Awards” means Awards granted or Common Stock 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 any Subsidiary or with which the Company or any Subsidiary combines. ff. “Tandem SARs” has the meaning set forth in Section 9.a of the Plan. gg. “2017 Plan” has the meaning set forth in Section 1 of the Plan. 3. Eligibility Any employee of the Company or an Affiliate (including an officer or director who is such an employee), member of the Board (whether or not such Board member is employed by the Company or an Affiliate), or other non-employee advisor or service provider of the Company or an Affiliate shall be eligible to receive an Award under the Plan. Notwithstanding the foregoing, a person who would otherwise be eligible to receive an Award under the Plan shall not be eligible in any jurisdiction where such person’s participation in the Plan would be unlawful.
A-4 INSMED PROXY STATEMENT
4. Effective Date and Termination of Plan
The Insmed Incorporated 2019 Incentive Plan was adopted by the Board on April 3, 2019 (the “Approval Date”), and it became effective when it was approved by the Company’s shareholders on May 16, 2019 (the “Effective Date”). The Plan was adopted by the Board on March 29, 2023 and it will become effective when it is approved by the Company’s shareholders. The Plan shall remain available for the grant of Awards until the tenth (10th) anniversary of the Approval Date. Notwithstanding the foregoing, the Plan may be terminated at such earlier time as the Board may determine. Termination of the Plan will not affect the rights and obligations of the Participants and the Company arising under Awards theretofore granted.
5. Shares Subject to the Plan and to Awards
a. Aggregate Limits. The aggregate number of shares of Common Stock issuable under the Plan (the “Share Pool”) shall be equal to the sum of 24,250,000 shares of Common Stock plus any shares of Common Stock subject to outstanding awards under the Prior Plans as of the Effective Date that, after the Effective Date, are canceled, terminate unearned, expire, are forfeited, lapse for any reason, or are settled in cash without the delivery of shares. On the grant date of an Award, the Share Pool shall be reduced either by 1 share of Common Stock for each share subject to an Award other than a Full-Value Award or by 1.45 shares of Common Stock for each share subject to a Full-Value Award. The aggregate number of shares of Common Stock available for grant under the Plan and the number of shares of Common Stock subject to Awards outstanding shall be subject to adjustment as provided in Section 14 of the Plan. The shares of Common Stock issued pursuant to Awards granted 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. b. Issuance of Shares. The Share Pool shall be increased when and to the extent that an Award (or an award under any Prior Plan that is outstanding as of the Effective Date) is canceled, terminates unearned, expires, is forfeited, or lapses for any reason, or an Award (or an award under any Prior Plan that is outstanding as of the Effective Date) is settled in cash without the delivery of shares to the Participant, such that any shares of Common Stock subject to such Award (or such award under any Prior Plan that is outstanding as of the Effective Date) shall again be available for the grant of an Award pursuant to the Plan. Notwithstanding anything to the contrary contained herein, shares subject to an Award (or an award under any Prior Plan that is outstanding as of the Effective Date) shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation, or (c) shares covered by a stock-settled Stock Appreciation Right that were not issued upon full settlement. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the shares available for issuance under the Plan. Any shares of Common Stock with respect to Awards issued under the Plan (or awards issued under a Prior Plan) that again become available for future grants pursuant to this Section 5 shall be added back to the Share Pool as 1 share for each share subject to an Award other than a Full-Value Award or as 1.45 shares for each share subject to a Full-Value Award, and, for purposes of this sentence, awards issued under a Prior Plan shall be (i) considered Full-Value Awards if they would have been Full-Value Awards if issued under this Plan and (ii) added back to the Share Pool as 1 share in all other cases. c. Tax Code Limit. The aggregate number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options granted under the Plan shall not exceed 24,250,000 (subject to adjustment pursuant to Section 14 of the Plan). A-5 INSMED PROXY STATEMENT
d. Substitute Awards. Substitute Awards shall not reduce the shares of Common Stock authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has shares available under a pre-existing plan approved by such acquired company’s shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Common Stock authorized for issuance under the Plan; provided that Awards using such available shares shall not be made after the last day awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall not be granted to individuals who were employed by the Company or its Subsidiaries at the time the acquisition or combination was consummated. 6. Administration of the Plan a. Administrator of the Plan. The Plan shall be administered by the Administrator, which shall be the Committee, or, in the absence of the 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 shall control. b. Powers of Administrator. Subject to the express provisions of the Plan, the Administrator shall be authorized and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of the Plan, including, without limitation: 1. to prescribe, amend and rescind rules and regulations relating to the Plan and to define terms not otherwise defined herein; 2. to determine which persons are eligible to receive Awards under the Plan, to which of such persons, if any, Awards shall be granted hereunder, and the timing of any such Awards; 3. to prescribe and amend the terms of the Award Agreements, to grant Awards and determine the terms and conditions thereof; 4. to establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, retention, vesting, exercisability, or settlement of any Award; 5. to prescribe and amend the terms of or form of any document or notice required to be delivered to the Company by Participants under the Plan; 6. to determine the extent to which adjustments are required pursuant to Section 14 of the Plan; 7. to interpret and construe the Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions if the Administrator, in good faith, determines that it is appropriate to do so; 8. to approve corrections in the documentation or administration of any Award; and 9. to make all other determinations deemed necessary or advisable for the administration of the Plan. A-6 INSMED PROXY STATEMENT
The Administrator may, in its sole and absolute discretion, without amendment to the Plan but subject to the limitations otherwise set forth in Section 18 of the Plan,
reserveswaive or amend the operation of Plan provisions respecting exercise after termination of employment or service to theBoardCompany or an Affiliate. The Administrator may, in its sole and absolute discretion and, except as otherwise provided in Section 18 ofDirectorsthe Plan, waive, settle or adjust any of the terms of any Award so as to avoid unanticipated consequences or address unanticipated events (including any temporary closure of an applicable stock exchange, disruption of communications, or natural catastrophe).c. Determinations by the Administrator. All decisions, determinations and interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and conditions of or operation of any Award granted hereunder, shall be final and binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan or any Award. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations, and interpretations including, without limitation, 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 under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross negligence or willful misconduct in the performance of their duties. d. Delegation of Authority. To the maximum extent permitted by applicable law, the Committee may by resolution delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to perform any or all things that the Administrator is authorized and empowered to do or perform under the Plan, and for all purposes under the Plan, such officer or officers shall be treated as the Administrator; provided, however, that the resolution so authorizing such officer or officers shall 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 shall an officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, individuals who are subject to Section 16 of the Act or who report directly to such officer. No such officer shall designate himself or herself as a recipient of any Awards granted under authority delegated to such officer. In addition, the Administrator may delegate any or all aspects of the day-to-day administration of the Plan to one or more officers or employees of the Company or any Subsidiary, and/or to one or more agents. e. Subsidiary Awards. In the case of a grant of an Award to any Participant employed by a Subsidiary, such grant may, if the Administrator so directs, be implemented by the Company issuing any subject shares of Common Stock to the Subsidiary, for such lawful consideration as the Administrator may determine, upon the condition or understanding that the Subsidiary will transfer the shares of Common Stock to the Participant in accordance with the terms of the Award specified by the Administrator pursuant to the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by and in the name of the Subsidiary and shall be deemed granted on such date as the Administrator shall determine. 7. Plan Awards a. Terms Set Forth in Award Agreement. The terms and conditions of each Award shall be set forth in an Award Agreement in a form approved by the Administrator for such Award, which Award Agreement may contain such terms and conditions as specified from time to time by the Administrator, provided such terms and conditions do not conflict with the Plan. The Award Agreement for any Award, as applicable, shall include the time or times at or within which and the consideration, if any, for which any shares of Common Stock may be acquired from the Company. The terms of Awards may vary among Participants, and the Plan does not impose upon the Administrator any requirement to make Awards subject to uniform terms. Accordingly, the terms of individual Award Agreements may vary. A-7 INSMED PROXY STATEMENT
b. Separation from Service. Subject to the express provisions of the Plan, the Administrator shall specify before, at, or after the time of grant of an Award the provisions governing the effect(s) upon an Award of a Participant’s Separation from Service or other termination of service. c. Rights of a Shareholder. A Participant shall have no rights as a shareholder with respect to shares of Common Stock covered by an Award until the date the Participant becomes the holder of record of such shares of Common Stock. No adjustment shall be made for dividends or other rights for which the record date is prior to such date, except as provided in Section 10.a or Section 14 of the Plan or as otherwise provided by the Administrator. d. Minimum Vesting. Notwithstanding anything in the Plan to the contrary, all Awards granted under the Plan shall be subject to a vesting period of not less than one year from the date of grant; provided, that up to 5% of the Share Pool may be issued pursuant to Awards that are not subject to the minimum vesting requirement set forth in this Section 7(d); provided, further, that the minimum vesting requirement set forth in this Section 7(d) shall not apply with respect to Substitute Awards or with respect to Awards that vest upon a Participant’s death or disability. For the avoidance of doubt, nothing in this Section 7(d) shall limit or restrict the Administrator’s authority to accelerate the vesting or exercisability of all or any portion of an Award following the grant date of such Award in accordance with the provisions of the Plan. e. No Payment of Dividends Prior to Vesting. Notwithstanding anything in the Plan to the contrary, to the extent a Participant is eligible to receive dividends or Dividend Equivalents with respect to an Award granted under the Plan, such dividends or Dividend Equivalents shall in no case be paid to the Participant before the vesting of the portion of the Award to which such dividends or Dividend Equivalents relate. f. Restriction on Acceleration Following Grant. Following the grant date of an Award, the Administrator shall not accelerate the vesting or exercisability of all or any portion of an Award, unless (i) explicitly provided under the terms of an Award Agreement (which shall be subject to the limitations in Section 7(d) above), (ii) explicitly provided under the terms of an employment or service agreement with a Participant, or (iii) in connection with a Change in Control or a Participant’s death or disability. 8. Options a. Grant, Term and Price. The grant, issuance, retention, vesting, and/or settlement of any Option shall occur at such time and be subject to such terms and conditions as determined by the Administrator or under criteria 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. The term of an Option shall in no event be greater than ten years; provided, however, the term of an Option (other than an Incentive Stock Option) shall be automatically extended if, at the time of its scheduled expiration, the Participant holding such Option is prohibited by law or the Company’s insider trading policy from exercising the Option, which extension shall expire on the thirtieth (30th) day following the date such prohibition no longer applies. The Administrator will establish the price at which Common Stock may be purchased upon exercise of an Option, which, in no event will be less than the Fair Market Value of such shares on the date of grant; provided, however, that the exercise price per share of Common Stock with respect to an Option that is granted as a Substitute Award may be less than the Fair Market Value of the shares of Common Stock on the date such Option is granted if such exercise price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger or other acquisition that satisfies the requirements of Section 409A and/or Section 424 of the Code, as applicable. The exercise price of any Option may be paid 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 deliverable upon exercise. A-8 INSMED PROXY STATEMENT
b. No Repricing without Shareholder Approval. Other than in connection with a change in the Company’s capitalization (as described in Section 14 of the Plan), at any time when the exercise price of an Option is above the Fair Market Value of a share of Common Stock, the Company shall 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 Stock Appreciation Right with a lower exercise or base price, or (iii) otherwise reprice such Option. c. No Reload Grants. Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of shares of Common Stock to the Company in payment of the exercise price and/or tax withholding obligation under any other employee stock option. d. Incentive Stock Options. Notwithstanding anything to the contrary in this Section 8, in the case of the grant of an Option intended to qualify as an Incentive Stock Option, if the Participant owns stock possessing more than 10% of the combined voting power of all classes of stock of the Company, the exercise price of such Option must be at least 110% of the Fair Market Value of the shares of Common Stock on the date of grant and the Option must expire within a period of not more than five (5) years from the date of grant. Notwithstanding anything in this Section 8 to the contrary, options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to the extent that either (a) the aggregate Fair Market Value of shares of Common Stock (determined as of the time of grant) with respect to which such Options become exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (b) such Options otherwise remain exercisable but are not exercised within three (3) months (or such other period of time provided in Section 422 of the Code) of separation of service (as determined in accordance with Section 3401(c) of the Code). e. No Shareholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Option or any shares of Common Stock subject to an Option until the Participant has become the holder of record of such shares. 9. Stock Appreciation Rights a. General Terms. The grant, issuance, retention, vesting, and/or settlement of any Stock Appreciation Right shall occur at such time and be subject to such terms and conditions as determined by the Administrator or under criteria 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. Stock Appreciation Rights may be granted to Participants from time to time either in tandem with or as a component of Options granted under the Plan (“tandem SARs”) or not in conjunction with other Awards (“freestanding SARs”). Upon exercise of a tandem SAR as to some or all of the shares covered by the grant, the related Option shall be canceled automatically to the extent of the number of shares covered by such exercise. Conversely, if the related Option is exercised as to some or all of the shares covered by the grant, the related tandem SAR, if any, shall be canceled automatically to the extent of the number of shares covered by the Option exercise. Any Stock Appreciation Right granted in tandem with an Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option, provided that the Fair Market Value of Common Stock on the date of the tandem SAR’s grant is not greater than the exercise price of the related Option. All freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in Section 8 of the Plan and all tandem SARs shall have the same exercise price and the same term (including any extensions thereof) as the Option to which they relate. Subject to the provisions of Section 8 of the Plan and the immediately preceding sentence, the Administrator may impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem appropriate. Stock Appreciation Rights may be settled in Common Stock, cash, or a combination thereof, as determined by the Administrator and set forth in the applicable Award Agreement. A-9 INSMED PROXY STATEMENT
b. No Repricing without Shareholder Approval. Other than in connection with a change in the Company’s capitalization (as described in Section 14 of the Plan), at any time when the exercise price of a Stock Appreciation Right is above the Fair Market Value of a share of Common Stock, the Company shall not, without shareholder approval (i) reduce the exercise or base price of such Stock Appreciation Right, (ii) exchange such Stock Appreciation Right for cash, another Award or a new Option or Stock Appreciation Right with a lower exercise or base price, or (iii) otherwise reprice such Stock Appreciation Right. c. No Shareholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Award of Stock Appreciation Rights or any shares of Common Stock subject to an Award of Stock Appreciation Rights until the Participant has become the holder of record of such shares. 10. Restricted Stock and Restricted Stock Units
a. Vesting and Performance Conditions. The grant, issuance, retention, vesting, and/or settlement of any Restricted Stock or Restricted Stock Unit Award shall occur at such time and be subject to such terms and conditions as determined by the Administrator or under criteria 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. b. Dividends and Distributions. Participants in whose name Restricted Stock is granted shall be entitled to receive all dividends and other distributions paid with respect to those shares of Common Stock, unless determined otherwise by the Administrator. The Administrator will determine whether any such dividends or distributions will be automatically reinvested in additional Restricted Stock and/or subject to the same restrictions on transferability as the Restricted Stock with respect to which they were distributed or whether such dividends or distributions will be paid in cash. Unless otherwise provided in the Award Agreement, during the period prior to shares being issued in the name of a Participant under any Restricted Stock Unit, the Company shall pay or accrue Dividend Equivalents on each date dividends on Common Stock are paid, subject to such conditions as the Administrator may deem appropriate. The time and form of any such payment of Dividend Equivalents shall be specified in the Award Agreement. Notwithstanding anything herein to the contrary, in no event will dividends or Dividend Equivalents be paid in either cash or shares (other than shares subject to the same restrictions as the associated Restricted Stock) with respect to any Award of Restricted Stock or Restricted Stock Units prior to the time specified in Section 7(e). c. Voting Rights. Unless otherwise determined by the Administrator, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares during the period of restriction. Participants shall have no voting rights with respect to shares of Common Stock underlying Restricted Stock Units unless and until such shares are reflected as issued and outstanding shares on the Company’s stock ledger. 11. Performance Awards
a. General Terms. The Administrator may establish performance conditions and level of achievement versus such conditions that shall determine the number of Options, Stock Appreciation Rights or shares of Common Stock to be granted, retained, vested, issued or issuable under or in settlement of, or the cash amount payable pursuant to, an Award. A-10 INSMED PROXY STATEMENT
b. Timing and Form of Payment. The Administrator shall determine the timing of payment of any award subject to performance conditions. Payment of the amount due under such an award may be made in cash or in Common Stock, as determined by the Administrator. c. Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the amount paid under an award subject to either financial performance and/or personal performance evaluations may be adjusted by the Administrator on the basis of such further considerations as the Administrator shall determine. 12. Deferral of Payment and Section 409A
The Administrator may, in an Award Agreement or otherwise, provide for the deferred delivery of shares of Common Stock upon settlement, vesting or other events with respect to Restricted Stock or Restricted Stock Units. Notwithstanding anything herein to the contrary, the Administrator may, in its sole and absolute discretion, deny any deferral of the delivery of shares of Common Stock or any other payment with respect to any Award if the Administrator determines, in its sole and absolute discretion, that the deferral would result in the imposition of the additional tax under Section 409A(a)(1)(B) of the Code. The Plan and each Award Agreement shall be interpreted such that each Award complies with, or is exempt from, Section 409A of the Code. However, the Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Administrator or the Board.
13. Conditions and Restrictions Upon Securities Subject to Awards
The Administrator may provide that the Common Stock issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Administrator in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Common Stock issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Common Stock already owned by the Participant), or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued under an Award, including without limitation (i) restrictions under an insider trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and holders of other Company equity compensation arrangements, (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers, and (iv) provisions requiring Common Stock be sold on the open market or to the Company in order to satisfy tax withholding or other obligations.
14. Adjustment of and Changes in the Stock; Change in Control
a. Adjustments Upon Certain Unusual or Nonrecurring Events. The number and kind of shares of Common Stock available for issuance under the Plan (including under any Awards then outstanding), and the number and kind of shares of Common Stock subject to the limits set forth in Section 5 of the Plan, 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 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 of Common Stock available under the Plan and subject to Awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such shares of Common Stock to reflect a deemed reinvestment in shares of Common Stock of the amount distributed to the Company’s security holders. The terms of any outstanding Award shall also be equitably adjusted by the Administrator as to price, number or kind of shares of Common Stock subject to such Award, vesting, and other terms to reflect the foregoing events, which adjustments need not be uniform as between different Awards or different types of Awards. No fractional shares of Common Stock shall be issued pursuant to such an adjustment. A-11 INSMED PROXY STATEMENT
b. Adjustments Upon Other Events. In the event there shall be 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 shall have been changed, or for which it shall have been exchanged, by reason of a Change in Control, other merger, consolidation or otherwise, then the Administrator shall 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 described in this paragraph, 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 Code, and may provide for cancellation of such accelerated Awards that are not exercised within a time prescribed by the Administrator in its sole and absolute discretion. c. Change in Control. Unless otherwise provided in the applicable Award Agreement, in the event of a Change in Control after the Effective Date, unless provision is made in connection with the Change in Control for (i) assumption of Awards previously granted or (ii) substitution for such Awards of new awards covering stock of a successor corporation or its “parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds of shares and the exercise prices, if applicable, or unless the Administrator exercises its discretion to provide for the treatment described in subparagraph (e) below, (A) the Administrator shall 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 Stock Appreciation Right, the Participant shall have the ability to exercise such Option or Stock Appreciation Right, including any portion of the Option or Stock Appreciation Right not previously exercisable, and the unexercised portion of such Option or Stock Appreciation Right shall be cancelled upon consummation of the Change in Control; (2) in the case of an Award subject to performance conditions, the Participant shall 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 shall have the right to receive a payment equal to the target amount payable); and (3) in the case of outstanding Restricted Stock and/or Restricted Stock Units not subject to performance conditions, all conditions to the grant, issuance, retention, vesting, or transferability of or any other restrictions applicable to, such Award shall immediately lapse. The Administrator shall not be obligated to treat all Participants, all Awards, all Awards held by a Participant, all portions of a single Award, or all Awards of the same type identically. d. Termination Following a Change in Control. Unless otherwise expressly provided for in the Award Agreement or another contract, including an employment agreement, or under the terms of a transaction constituting a Change in Control, the following shall occur upon a Participant’s involuntary termination of employment within twenty-four (24) months following a Change in Control, provided that such termination does not result from the Participant’s termination for disability, cause or gross misconduct: (i) in the case of an Option or Stock Appreciation Right, each Option or Stock Appreciation Right shall immediately become exercisable and shall remain exercisable for three (3) years following such termination (or until the expiration of such Option or Stock Appreciation Right, if earlier); (ii) in the case of an Award subject to performance conditions, the Participant shall 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 shall have the right to receive a payment equal to the target amount payable); and (iii) in the case of outstanding Restricted Stock and/or Restricted Stock Units not subject to performance conditions, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse. e. In the event of a Change in Control, the Administrator may in its discretion provide that outstanding Awards, whether vested or unvested, shall be cancelled in exchange for cash and/or other consideration with a value equal to (i) for Restricted Stock, Restricted Stock Units, or other stock-based Awards (other than Options or Stock Appreciation Rights), the Fair Market Value of the shares of Common Stock underlying such Award on the date of such Change in Control or (ii) for Options or Stock Appreciation Rights, the excess, if any, of the Fair Market Value of the shares of Common Stock underlying such Award on the date of such Change in Control over the aggregate exercise price; provided that, if the Fair Market Value of a share of Common Stock on such date does not exceed the per share exercise price, the Administrator may cancel such Option or Stock Appreciation Right for no consideration. f. The Company shall notify Participants holding Awards subject to any adjustments pursuant to this Section 14 of such adjustment, but (whether or not notice is given) such adjustment shall be effective and binding for all purposes of the Plan. A-12 INSMED PROXY STATEMENT
15. Transferability
No Award may be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated by a Participant other than by will or the laws of descent and distribution; provided, however, that a Participant may, with the prior approval of the Company’s General Counsel or Chief Financial Officer or any designee of the Company’s General Counsel or Chief Financial Officer (provided that no such person may approve a transfer under this Section by such person) and subject to applicable laws, rules, and regulations and such terms and conditions as the Company’s General Counsel or Chief Financial Officer or such designee, as applicable, shall specify, transfer an Award, other than an Incentive Stock Option, for no consideration, to a family member (as defined in the General Instructions to Form S-8 under the Securities Act of 1933) of the Participant, in each case, with respect to whom such Award or the exercise thereof (as applicable) is covered by an effective registration statement under the Securities Act of 1933 (collectively, the “Permitted Transferees”). Any Award transferred to a Permitted Transferee shall be further transferable only by will or the laws of descent and distribution or, for no consideration, to another Permitted Transferee of the Participant. During the Participant’s lifetime, each Option or Stock Appreciation Right shall be exercisable only by the Participant or by his or her Permitted Transferee to whom such Option or Stock Appreciation Right has been transferred in accordance with this paragraph; provided, however, that outstanding Options may be exercised following the Participant’s death by the Participant’s beneficiaries, any such Permitted Transferee or as permitted by the Administrator.
16. Compliance with Laws and Regulations
The Plan, the grant, issuance, vesting, exercise, and settlement of Awards hereunder, and the obligation of the Company
(the "Board") the righttoamend the Plan from time to time; andWHEREAS, the Board desires to amend the Plan in the manner hereinafter provided,sell, issue or deliver shares of Common Stock under such Awards, shall be subject toapprovalall applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant’s name or deliver Common Stock prior to the completion of any registration or qualification of such shares under any foreign, federal, state, or local law or any ruling or regulation of any government body which the Administrator shall determine to be necessary or advisable. To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by theCompany's shareholders.NOW, THEREFORE,Company’s counsel to be necessary to thePlan is amended as follows, effective aslawful issuance and sale of any shares of Common Stock hereunder, thedate of approval by the Company's shareholders:1.The reference to "3,500,000" in Section 5(a) of the Plan is hereby amendedCompany andreplaced with "8,000,000".2.The reference to "3,500,000" in Section 5(c) of the Plan is hereby amended and replaced with "8,000,000".3.This Amendmentits Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell such shares of Common Stock as to which such requisite authority shall not have been obtained. No Option shall be exercisable and no Common Stock shall be issued and/or transferable under any other Award unless a registration statement with respect to the Common Stock underlying such Option ishereby incorporatedeffective and current or the Company has determined that such registration is unnecessary.In the event an Award is granted to or held by a Participant who is employed or providing services outside the United States, the Administrator may, in its sole and
forms a part of,absolute discretion, modify thePlan. All other terms andprovisions of the Plan or of such Award as they pertain to such individual to comply with applicable foreign law or practice, to recognize differences in local law, currency or tax policy, or to foster and promote achievement of the purposes of the Plan locally. The Administrator may also amend the terms of Awards and impose conditions on the grant, issuance, exercise, vesting, settlement, or retention of Awards in order to comply with such foreign law or practice, to achieve such purposes, and/or to minimize the Company’s obligations with respect to tax equalization for Participants employed outside their home country.A-13 INSMED PROXY STATEMENT
17. 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 Award, or the issuance or sale of any shares of Common Stock. The Company shall not be required to recognize any Participant rights under an Award, 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 under such Award or any other award held by the Participant or by the Participant tendering to the Company cash or, if allowed by the Administrator, shares of Common Stock.
18. Amendment of the Plan or Awards
The Board may amend, alter, or discontinue the Plan and the Administrator may amend or alter any agreement or other document evidencing an Award made under the Plan but, except as provided pursuant to the provisions of Section 14 of the Plan, no such amendment shall, without the approval of the shareholders of the Company:
a. increase the maximum number of shares of Common Stock for which Awards may be granted under the Plan; b. reduce the price at which Options may be granted below the price provided for in Section 8.a of the Plan; c. reprice outstanding Options or Stock Appreciation Rights as described in 8.a and 9.a; d. extend the term of the Plan; e. change the class of persons eligible to be Participants; or f. otherwise amend the Plan in any manner requiring shareholder approval by law or the rules of any stock exchange or market or quotation system on which the Common Stock is traded, listed, or quoted. No amendment or alteration to the Plan or an Award or Award Agreement shall be made which would impair the rights of the holder of an Award, without such holder’s consent, provided that no such consent shall be required if the Administrator determines in its sole and absolute discretion and prior to the date of any Change in Control that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan, or the Award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminishment has been adequately compensated.
19. No Liability of Company
The Company, any Subsidiary or Affiliate which is in existence or hereafter comes into existence, the Board and the Administrator shall not be liable to a Participant or any other person as to: (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary for the lawful issuance and sale of any shares of Common Stock hereunder; and (b) any tax consequence expected, but not realized, by any Participant or other person due to the receipt, exercise, or settlement of any Award granted hereunder.
A-14 INSMED PROXY STATEMENT
20. Non-Exclusivity of Plan
Neither the adoption of the Plan by the Board nor the submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including without limitation, the granting of inducement or retention shares or stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
21. Governing Law
The Plan and any agreements or other documents hereunder 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. Any reference in the Plan or in the agreement or other document evidencing any Awards to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule, or regulation of similar effect or applicability.
22. No Right to Employment, Reelection, or Continued Service
Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries, and/or its Affiliates to terminate any Participant’s employment, service on the Board, or service for the Company at any time or for any reason not prohibited by law, nor shall the Plan or an Award itself confer upon any Participant any right to continue his or her employment or service for any specified period of time. Neither an Award nor any benefits arising under the Plan shall constitute an employment contract with the Company, any Subsidiary and/or its Affiliates. Subject to Sections 4 and 18 of the Plan, the Plan and the benefits hereunder may be terminated at any time in the sole and absolute discretion of the Board without giving rise to any liability on the part of the Company, its Subsidiaries, and/or its Affiliates.
23. Forfeiture upon Termination of Employment
Except as otherwise provided by the Administrator in the Award Agreement, unvested Awards shall be forfeited immediately if the Participant terminates his or her employment with the Company, a Subsidiary, or an Affiliate for any reason.
24. Specified Employee Delay
To the extent any payment under the Plan is considered deferred compensation subject to the restrictions contained in Section 409A of the Code, such payment may not be made to a specified employee (as determined in accordance with a uniform policy adopted by the Company with respect to all arrangements subject to Section 409A of the Code) upon Separation from Service before the date that is six months after the specified employee’s Separation form Service (or, if earlier, the specified employee’s death). Any payment that would otherwise be made during this period of delay shall be accumulated and paid on the sixth month plus one day following the specified employee’s Separation from Service (or, if earlier, as soon as administratively practicable after the specified employee’s death).
25. No Liability of Committee Members
No member of the Committee 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 nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee 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 sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud or willful bad faith; provided, however, 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, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
A-15 INSMED PROXY STATEMENT
26. Severability
If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Administrator, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award and the remainder of the Plan and any such Award shall remain
unchanged except as specifically modified by this Amendment.in full force and effect.27. Unfunded Plan
The Plan
as amendedis intended to be an unfunded plan. Participants are and shall at all times be general creditors of the Company with respect to their Awards. If the Administrator or the Company chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such funds shall at all times be subject to the claims of the creditors of the Company in the event of its bankruptcy or insolvency.28. Successors
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
29. Recoupment Policy
Any Participant and/or any Award, including any shares of Common Stock subject to an Award, shall be subject to any applicable recovery, recoupment, clawback, and/or other forfeiture policy maintained by
this Amendment, is hereby ratified and confirmed.
[Signature page follows]Tablethe Company from time to time in accordance with the provisions ofContentssuch policy.A-16 INSMED PROXY STATEMENT
IN WITNESS WHEREOF, the undersigned officer hereby certifies that the foregoing amendment to the Plan was duly adopted by the Board.
INSMED INCORPORATED INSMED INCORPORATEDBy:
By:
/s/ CHRISTINE PELLIZZARIName: Christine Pellizzari
Michael A. SmithTitle: Chief Legal Officer
General Counsel, Senior Vice PresidentA-17 INSMED PROXY STATEMENT
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 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 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 11:59 P.M. Eastern Time on Monday, May 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: D00234-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 II Directors Nominees: 01) 02) 03) Clarissa Desjardins, Ph.D. David W.J. McGirr Elizabeth McKee Anderson For Against Abstain The Board of Directors recommends you vote FOR Items 2, 3 and 4: ! ! ! ! ! ! ! ! ! 2. Advisory vote on the 2019 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, 2020. Approval of an amendment to the Insmed Incorporated 2019 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. D00235-P36864 INSMED INCORPORATED Annual Meeting of Shareholders May 12, 2020 at 9:00 AM Eastern Time This proxy is solicited by the Board of Directors The undersigned hereby appoints 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 12, 2020 at 9:00 AM 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
