| | Alexander Denner, Ph.D.
common stock granted to non-employee directors at the most recent annual meeting of our stockholders, prorated based on the number of days between the last annual meeting of our stockholders and the date on which the non-employee director began service with us. Such restricted shares will vest in full on the date immediately preceding the date of the next annual meeting of stockholders.
In addition to equity grants, each non-employee director receives an annual retainer under our director compensation policy for his or her service on our board of directors, as well as additional fees for board chair, committee or committee chair service as follows:
![[MISSING IMAGE: tm223551d1-hd_thbluegreen4c.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-048389/tm223551d1-hd_thbluegreen4c.jpg) | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | | | | Andrew Dreyfus | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | | | | | ✓ | | | | | Jon Duane | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ✓ | | | | | Marla Kessler | | | | | | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | | | | | | | | | | | | | ✓ | | | | | | ✓ | | | | | Thomas McCourt | | | | | | | | | | | ✓ | | | | | | ✓ | | | | | | | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | Julie McHugh | | | | | ✓ | | | | | | ✓ | | | | | | | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | Catherine Moukheibir | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | | | | | | | | | | | | Jay Shepard | | | | | ✓ | | | | | | ✓ | | | | | | | | | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | | | | | | | | | Fees | | | Annual retainer for members of the board of directors | | | $50,000 ($80,000 for the chair) | | | Additional annual retainer for members of the audit committee | | | $10,000 ($20,000 for the chair) | | | Additional annual retainer for members of the compensation and HR committee | | | $7,500 ($15,000 for the chair) | | | Additional annual retainer for members of the governance and nominating committee | | | $5,000 ($10,000 for the chair) | |
All cash fees are payable quarterly in arrears and will be prorated for any quarter of partial service. Each non-employee director may elect, prior to January 1 of the year with respect to which such election will be effective, to receive fully vested shares of our Class A common stock at no cost in lieu of his or her annual cash retainer and any additional cash retainers for board chair, committee or committee chair service set forth above. The number of shares of our Class A common stock issued is determined by dividing the applicable cash retainer(s) the director would be eligible to receive by the closing price of our Class A common stock on the Nasdaq Global Select Market (or the stock exchange on which our stock is being actively traded) on the date the cash fees would otherwise be paid, rounded down to the nearest whole share. Further, non-employee directors are reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the board of directors and its committees.
Director Compensation Table
The following table sets forth information regarding the compensation earned during the year ended December 31, 2021 by each of our directors who served in 2021, other than Mr. McCourt, and Mark Mallon, our former chief executive officer and former member of our board of directors. Messrs. McCourt and Mallon did not receive compensation for his respective individual service on our board of directors.
| | Name | | | Fees Earned or
Paid in
Cash ($) | | | Stock Awards
($)(1) | | | Total
($) | | | | Mark Currie, Ph.D. | | | | $ | 50,000 | | | | | $ | 265,907 | | | | | $ | 315,907 | | | | | Alexander Denner, Ph.D. | | | | $ | 54,971(2) | | | | | $ | 265,907 | | | | | $ | 320,878 | | | | | Andrew Dreyfus | | | | $ | 64,978(3) | | | | | $ | 265,907 | | | | | $ | 330,885 | | | | | Jon Duane | | | | $ | 62,500 | | | | | $ | 265,907 | | | | | $ | 328,407 | | | | | Marla Kessler | | | | $ | 57,500 | | | | | $ | 265,907 | | | | | $ | 323,407 | | | | | Julie McHugh | | | | $ | 155,000(4) | | | | | $ | 292,557(4) | | | | | $ | 447,557 | | | | | Catherine Moukheibir | | | | $ | 69,981(5) | | | | | $ | 265,907 | | | | | $ | 335,888 | | | | | Lawrence Olanoff, M.D., Ph.D. | | | | $ | 60,000 | | | | | $ | 265,907 | | | | | $ | 325,907 | | | | | Edward Owens | | | | $ | 60,000 | | | | | $ | 265,907 | | | | | $ | 325,907 | | | | | Jay Shepard | | | | $ | 60,000 | | | | | $ | 265,907 | | | | | $ | 325,907 | | |
(1)
On June 2, 2021, each non-employee member of our board of directors received a restricted stock grant in the amount of 22,766 shares of our Class A common stock for service on our board of directors from the date of our 2021 annual meeting of stockholders to the date of our 2022 annual meeting of stockholders, which shares will vest in full on the date immediately preceding the date of our 2022 annual meeting of stockholders, subject to continued service on our board as of the vesting date. The number of shares subject to the restricted stock grant was determined by dividing (i) $250,000 by (ii) $10.98, which was the average closing price of our Class A common stock on the Nasdaq Global Select Market for the six months preceding the month of the 2021 annual meeting of stockholders. Each such award of restricted stock had a grant date fair value of $11.68 per share and was granted pursuant to the terms of our director compensation policy and our 2019 Plan. As of December 31, 2021, each non-employee director other than Dr. Denner, Ms. McHugh, and Mr. Shepard held 22,766 restricted shares of Class A common stock as a result of this grant and held no other unvested equity awards. As of December 31, 2021, Dr. Denner, Ms. McHugh, and Mr. Shepard held 39,382 restricted shares, 25,266 restricted shares, and 39,250 restricted shares, respectively, of Class A common stock as a result of this and other previously issued grants.
Amounts in the table represent the fair value of these restricted stock grants on the date of grant calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation, or ASC 718. For a discussion of the assumptions used in the valuation of awards made in 2021, see Note 13 to our consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K that we filed with the SEC on February 18, 2022. All values reported exclude the effects of potential forfeitures.
(2)
Dr. Denner elected to receive this annual retainer in unrestricted shares of our Class A common stock. Dr. Denner received a total of 4,812 shares of our Class A common stock for such service in 2021.
(3)
Mr. Dreyfus elected to receive this annual retainer in unrestricted shares of our Class A common stock. Mr. Dreyfus received a total of 5,688 shares of our Class A common stock for such service in 2021.
(4)
As described below under Additional Chair Compensation, in 2021 Ms. McHugh received incremental cash compensation of $60,000 and a restricted stock grant in respect of 2,500 shares of our Class A common stock, which shares vested on March 15, 2022. The restricted stock award had a grant date fair value of $10.66 per share.
(5)
Ms. Moukheibir elected to receive this annual retainer in unrestricted shares of our Class A common stock. Ms. Moukheibir received a total of 6,126 shares of our Class A common stock for such service in 2021.
Additional Chair Compensation
In connection with Mr. Mallon’s resignation as our chief executive officer and a member of our board of directors in March 2021, Ms. McHugh spent additional time providing counsel and guidance to the Company’s senior leadership team during the CEO transition period. In recognition of her expanded responsibilities and additional time commitment, the compensation and HR committee recommended, and the board of directors approved in April 2021 additional incremental cash compensation of $60,000 and a grant of 2,500 shares of restricted stock, which vested in full in March 2022. In making its recommendation to the board, the compensation and HR committee took into account a number of factors, including the scope of additional responsibility and anticipated duration and additional time associated with the expanded role, as well as market data provided by our compensation consultant, Aon’s Human Capital Solutions practice, a division of Aon plc (formerly known as Radford), which we refer to throughout this proxy statement as ‘Aon,’ related to board chair compensation.
Director Stock Ownership Guidelines
In May 2019, we instituted stock ownership guidelines as part of our director compensation policy that provide that each non-employee director must accumulate and continuously hold shares of our Class A common stock with a value equal to or greater than three times the amount of the then-current annual retainer paid to the non-employee director for service on our board of directors (excluding any additional board chair, committee, or committee chair retainers). Non-employee directors were required to achieve this level of ownership by the later of (a) May 30, 2021 (the date which is two years from the date of our 2019 annual meeting of stockholders) and (b) two years from the date the individual began service with us, or the Ownership Date.
Compliance with the stock ownership requirements is measured on the date of the annual meeting of stockholders based on the annual retainer then in effect. Following the Ownership Date, until a non-employee director holds the required ownership level and if such director does not hold the number of shares of our Class A common stock to meet the stock ownership requirements at any time thereafter, such director will be required to retain 100% of any shares of our Class A common stock held or received upon the vesting or settlement of equity awards or the exercise of stock options, in each case, net of shares sold to cover applicable taxes and the payment of any exercise or purchase price (if applicable). Further, following the Ownership Date, to the extent a non-employee director does not hold the number of shares of our Class A common stock that meets this threshold, such director will be automatically deemed to have elected to receive any cash retainer for service on our board of directors or a committee thereof in the form of shares of our Class A common stock in an amount that satisfies the threshold shortfall. As of March 31, 2022, each of our non-employee directors was in compliance with our stock ownership guidelines.
In addition to the stock ownership guidelines described above, no director may transfer any shares of restricted stock granted pursuant to our director compensation policy that was effective between January 2014 and May 2019, whether the shares of restricted stock are vested or not, while such person is a director of Ironwood, subject to limited exceptions.
We believe our stock ownership guidelines and other transfer restrictions ensure that the interests of our directors, each of whom has equity in the business, are aligned with those of our stockholders and further focus our directors on maximizing long-term value.
Proposal No. 1
Election
of Directors
| | | | OUR BOARD RECOMMENDS
THAT YOU VOTE FOR
EACH OF THE DIRECTORS
UP FOR ELECTION
| |
Proposal No. 1
Our board of directors has nominated nine of our eleven current directors — Drs. Currie and Denner, Messrs. Dreyfus, Duane, McCourt and Shepard and Mses. Kessler, McHugh and Moukheibir — for election at the 2022 annual meeting of stockholders. Dr. Olanoff and Mr. Owens have not been nominated for election at the 2022 annual meeting of stockholders. Each of Drs. Currie and Denner, Messrs. Dreyfus, Duane, McCourt and Shepard and Mses. Kessler, McHugh and Moukheibir has indicated his or her willingness to serve if elected and has consented to be named in the proxy statement. Should any nominee become unavailable for election at the annual meeting, the persons named on the enclosed proxy card as proxy holders may vote all proxies given in response to this solicitation for the election of a substitute nominee chosen by our board of directors.
Vote Required
The election of the board of director nominees will be determined by a plurality of the votes cast, meaning that board of director nominees with the greatest number of votes cast for election, even if less than a majority, will be elected as directors to serve for one year and until his or her successor is duly elected and qualified or until their death, resignation or removal. Because there is no minimum vote required, abstentions and broker non-votes will not affect the outcome of this proposal.
Who We Are
The following table sets forth certain information, as of April 21, 2022, with respect to each of our executive officers, other than Mr. McCourt, whose biographical information is included elsewhere in this proxy statement under the caption Our Board of Directors:
| Name | | | Age | | | Position(s) | | | Sravan Emany | | | 44 | | | Senior Vice President, Chief Financial Officer | | | John Minardo | | | 46 | | | Senior Vice President, Chief Legal Officer and Secretary | | | Jason Rickard | | | 50 | | | Senior Vice President, Chief Operating Officer | | | Michael Shetzline, M.D., Ph.D. | | | 63 | | | Senior Vice President, Chief Medical Officer and Head of Research and Drug Development | |
Board Diversity We believe our board of directors should be comprised of individuals reflecting the diversity represented by our employees and our patients. As mentioned above under How We are Selected and Evaluated, we have core criteria that we evaluate each board of director nominee on, including but not limited to, the potential to contribute to the diversity of our board of directors, as a result of the nominee’s professional background, expertise, gender, age, ethnicity or other diversity criteria. Three of our eleven current directors are women, one of whom self-identifies as Middle Eastern. The table below provides additional diversity information regarding our board of directors. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Listing Rule 5605(f). ![[MISSING IMAGE: bc_line-4c.jpg]](/files/DEF 14A/0001104659-23-051441/bc_line-4c.jpg) | | Board Diversity Matrix (as of April 27, 2023) | | | | Board Size: | | | | | | | | | | | | | | | | Total Number of Directors | | | | | | | | | 9 | | | | | | | Gender Identity: | | | Female | | | Male | | | Non-Binary | | | Did Not Disclose Gender | | | | Directors | | | 3 | | | 5 | | | | | | 1 | | | | Demographic Background: | | | | | | | | | | | | | | | | African American or Black | | | | | | | | | | | | | | | | Alaskan Native or Native American | | | | | | | | | | | | | | | | Asian | | | | | | | | | | | | | | | | Hispanic or Latinx | | | | | | | | | | | | | | | | Native Hawaiian or Pacific Islander | | | | | | | | | | | | | | | | White | | | 3 | | | 5 | | | | | | | | | | Two or More Races or Ethnicities | | | | | | | | | | | | | | | | LGBTQ+ | | | | | | | | | | | | | | | | Did Not Disclose Demographic Background | | | | | | | | | 1 | | | | |
| | Directors who self-identify as Middle Eastern: 1 | |
Director Succession Planning We refresh our board of directors and assess our board succession plans regularly. As of April 27, 2023, the average age of our independent directors was 61 years, and the average tenure of our independent directors was approximately 4.8 years. Annual Evaluations Our directors conduct annual evaluations to assess the performance and effectiveness of the board of directors and each committee in which they are a member. In addition, we ask each director to complete a self-evaluation as well as a peer evaluation of each other director. For 2022, directors completed written questionnaires which solicited open- ended and candid feedback on an anonymous basis, and each director was then provided with their individual evaluation. In addition to the director evaluations, we also solicit annual feedback from senior management concerning the board’s performance on an anonymous basis. After the collective board and committee evaluations and comments (including those from senior management) and the self and peer evaluations and comments were compiled, the
chair of the governance and nominating committee met with our chair of the board and Thomas McCourt, our chief executive officer, to discuss the board and committee evaluations and individual evaluations for directors. The chair of the governance and nominating committee then provided the governance and nominating committee with a summary of the individual evaluations for all directors up for election at the 2023 annual meeting of stockholders. The chair of the governance and nominating committee then presented a summary of the collective board and committee evaluations and comments (including those from senior management) to the governance and nominating committee and full board of directors. Director Nomination Process Our governance and nominating committee identifies potential director candidates through referrals and recommendations, including from incumbent directors, management and stockholders, as well as through business and other organizational networks and relationships. We and our board of directors retain executive search firms and other third parties from time to time to assist in finding suitable candidates. Stockholders who wish to recommend candidates may contact the governance and nominating committee in the manner described in Stockholder Communications, Proposals and Nominations for Directorships — Communications. Stockholder recommended candidates whose recommendations comply with these procedures will be evaluated by the governance and nominating committee in the same manner as candidates identified by the governance and nominating committee.
How We are Organized and Governed Corporate Governance Highlights Senior Vice President, Chief Financial Officer of IronwoodPharmaceuticals, Inc.| | Number of Independent Directors/Total Number of Directors | | | 8/9 | | | | All Board Committees Comprised Solely of Independent Directors | | | ✓ | | | | Separate Independent Chair and Chief Executive Officer Positions | | | ✓ | | | | Regular Executive Sessions of Independent Directors | | | ✓ | | | | Annual Board, Committee, and Individual Director Self-assessments | | | ✓ | | | | Annual Election of All Directors | | | ✓ | | | | Annual Advisory Stockholder Vote on Executive Compensation | | | ✓ | | | | Stock Ownership Guidelines for Directors and Executive Officers | | | ✓ | | | | Comprehensive Code of Business Conduct and Ethics | | | ✓ | | | | Corporate Governance Guidelines | | | ✓ | | | | Prohibition of Hedging and Pledging by Executive Officers and Directors | | | ✓ | | | | Anti-Overboarding Policy Limiting the Number of Other Public Company Boards on which our Directors May Serve | | | ✓ | | | | Clawback Policy | | | ✓ | |
Board Size and Terms Our Eleventh Amended and Restated Certificate of Incorporation, as amended, or our Certificate of Incorporation, states that our board of directors shall consist of between one and 15 members, and the precise number of directors shall be fixed by a resolution of our board of directors. Our board of directors currently consists of nine members. Each director holds office until his or her successor is duly elected and qualified or until his or her death, resignation or removal. Any vacancy on the board of directors, including a vacancy that results from an increase in the number of directors, may be filled by a vote of the majority of the directors then in office. All of our directors are elected on an annual basis and can be removed with or without cause by our stockholders. We separate the roles of chair of the board of directors and chief executive officer and rotate the chair approximately every five years, unless the governance and nominating committee recommends otherwise. Our board of directors believes that this structure enhances the board of directors’ oversight of, and independence from, management, and enables the board of directors to carry out its responsibilities on behalf of our stockholders. This leadership structure also allows our chief executive officer to focus his or her time and energy on operating and managing the company, while leveraging the experience and perspective of Ms. McHugh, the current chair of our board of directors. We expect the next chair rotation will take place in 2024. Director Independence Under Nasdaq Rule 5605, a majority of a listed company’s board of directors must be comprised of independent directors. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and governance and nominating committees be independent, and that audit and compensation committee members satisfy the additional independence criteria set forth in Rule 10A-3 and 10C-1, respectively, under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Under Nasdaq Rule 5605(a)(2), a director will
only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors determined that none of Messrs. Dreyfus, Duane and Shepard, Mses. Kessler, McHugh and Moukheibir, and Drs. Currie and Denner, representing eight of our nine directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under Nasdaq Rule 5605(a)(2). Mr. McCourt, our chief executive officer, was not determined to be independent due to his employment with the company. Our board of directors also determined that each of the current members of our audit committee, our governance and nominating committee, and our compensation and HR committee satisfies the independence standards for such committee established by Rule 10A-3 and 10C-1 under the Exchange Act, the SEC rules and the Nasdaq rules, as applicable. In making such determinations, our board of directors considered the information requested from and provided by each director concerning the director’s background, employment and affiliations, including family relationships, the relationships that each such non-employee director has with Ironwood and all other facts and circumstances the board of directors deemed relevant in assessing independence. As part of such determination, the board of directors considered the volume of business between BCBSMA, the company in which Mr. Dreyfus served as president and chief executive officer until December 2022, and Ironwood, which amounted to less than 1% of the annual revenues of BCBSMA in 2022, and Dr. Currie’s previous employment as our senior vice president, chief scientific officer and president of R&D until April 2019. Risk Oversight Our board of directors retains ultimate responsibility for risk oversight and our management team retains the responsibility for risk management. In carrying out its risk oversight responsibilities, our board of directors reviews the long- and short-term internal and external risks facing the company through its participation in long-range strategic planning, and the annual review and evaluation of corporate risks that the audit committee reports. Our board of directors also believes that separating the roles of chair of the board of directors and chief executive officer enhances the board of directors’ ability to oversee risk in an objective manner. We have implemented and continue to refine a formalized enterprise risk management process. On an ongoing basis, we identify key risks, assess their potential impact and likelihood, and, where appropriate, implement operational measures and controls or purchase insurance coverage in order to help ensure adequate risk mitigation. Together with our board of directors, we continue to closely monitor the developments and impact of the COVID-19 pandemic on our business and operations, including employees, and work diligently to quickly address and mitigate risks in the evolving and dynamic environment. On a quarterly basis, key risks, status of mitigation activities and potential new or emerging risks are reported to and discussed with senior management and further addressed with our audit committee and board of directors, as necessary. On at least an annual basis, a long-term comprehensive enterprise risk management update is provided to our board of directors. The long-term goal of our enterprise risk management process is to ingrain a culture of risk awareness and mitigation throughout the organization that can be applied to our current business activities as well as our assessment and pursuit of future business opportunities. As set forth in its charter, our audit committee discusses with management any significant risks or exposures facing Ironwood, evaluates the steps management has taken or proposes to take to mitigate such risks and reviews our compliance with such mitigation plans. As part of fulfilling these responsibilities, the audit committee meets regularly with Ernst & Young LLP, our independent registered public accounting firm, and members of our management, including our chief executive officer and chief financial officer. Our audit committee also discusses with Ernst & Young LLP any significant risks or exposures facing the company to the extent that such risks or exposures relate to accounting and financial reporting and reviews related mitigation plans with Ernst & Young LLP. In addition, our audit committee reviews the risk factors as presented in our annual reports on Form 10-K and our quarterly reports on Form 10-Q, as applicable, that we file with the SEC.
As part of our board of directors’ risk oversight role, our compensation and HR committee reviews and evaluates the risks associated with our compensation programs and succession plans. The compensation and HR committee also is responsible under its charter for approving the compensation of all of our executive officers (other than our chief executive officer), recommending chief executive officer compensation to our board of directors for approval and overseeing the maintenance and presentation to our board of directors of succession plans for members of our senior management. Likewise, our governance and nominating committee is responsible for evaluating the performance, operations and composition of our board of directors and the sufficiency of our corporate governance guidelines, either of which may impact our risk profile from a governance perspective. In performing their risk oversight functions, each committee of our board of directors has full access to management, as well as the ability to engage outside advisors. Hedging and Pledging Policy As part of our insider trading prevention policy, our directors and executive officers are prohibited from engaging in any hedging or monetization transactions of our company securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. In addition, our insider trading prevention policy generally prohibits our directors and executive officers from holding company securities in a margin account or pledging company securities as collateral for a loan. Corporate Governance Guidelines We have adopted corporate governance guidelines which are accessible through the Investors section of our website at www.ironwoodpharma.com, under the heading Corporate Governance — Governance Documents, and which are available in print to any stockholder who requests them from our secretary. Our board of directors believes that sound governance practices and policies provide an important framework to assist it in fulfilling its duties to stockholders and relies on these guidelines to provide that framework. The guidelines help to ensure that our board of directors is independent from management, that our board of directors adequately performs its oversight functions and that the interests of our board of directors and management align with the interests of our stockholders. Among other things, our corporate governance guidelines limit the number of other public company boards on which our directors may serve. Accordingly, our directors should not serve on more than four public company boards of directors, including Ironwood. In addition, our directors who hold the position of chief executive officer of a public company should not serve on more than three public companies, including Ironwood and the board of his or her own company. Our governance and nominating committee conducts an annual review of director commitment levels, and affirms that as of March 31, 2023, all directors were in compliance with our corporate governance guidelines. Diversity, Equity and Inclusion (DE&I) Creating a diverse, equitable and inclusive culture is essential to attracting, motivating and retaining the talent necessary to deliver on our corporate mission. To establish and maintain this culture, we have a simple vision in mind: to make Ironwood an environment rooted in valuing each employee for who they are. This begins with ensuring our workforce represents the diverse populations we serve and reflecting our DE&I principles in our employee-related training and policies. As of December 31, 2022, women represented approximately 52% of our employee base, 27% of our leadership team (vice president and above) and 33% of our board of directors (including our board and audit committee chairs). Additionally, as of December 31, 2022, approximately 18% of our employees were racially or ethnically diverse and in 2022, approximately 28% of our new hires were racially or ethnically diverse. Our DE&I principles are also reflected in our employee training and policies. We are focused on fostering an environment where employees feel included and empowered. This approach includes DE&I initiatives such as learning and development opportunities, strengthened talent acquisition strategies, the support of equality programs in our local communities, and a renewed focus on retention and career advancement of diverse populations. We are also proud to have five strong and growing DE&I employee resource groups: (1) W@IRWD (Women at Ironwood), designed to empower, develop, and sponsor women at Ironwood, (2) ISHINE, which draws undergraduate candidates from Historically Black Colleges and Universities and exposes students to careers in the healthcare field,
(3) ISTAR (Ironwood Stands Together Against Racism), which was created in response to racial equality movements and our employees’ drive to take action, (4) PRIDE@IRWD, which seeks to foster LGBTQ+ visibility for all Ironwood employees and raise awareness about the current workplace and social issues that affect the LGBTQ+ community, and (5) IMPACT, which offers a space for bettering our communities and engaging deeper with one another. In 2022, we continued to advance our DE&I initiatives with strong advocacy from our leadership team and board of directors. We are committed to furthering our DE&I efforts consistent with our long-term DE&I strategy we adopted in 2020, including by incorporating a DE&I scorecard reflecting ten measurable objectives into our corporate goals. As in prior years, our board of directors has again approved a specific DE&I corporate goal for 2023 of achieving at least six out of the ten pre-determined objectives on the company’s 2023 DE&I scorecard. Board Meetings Our board of directors held five meetings during 2022. As stated in our corporate governance guidelines, we expect our directors to rigorously prepare for, attend and participate in all board and applicable committee meetings. Each director is expected to ensure that other existing and planned future commitments do not materially interfere with his or her service as a director. We also expect that all of our directors will attend our annual meeting of stockholders unless a director will not be continuing to serve on the board following such annual meeting. In 2022, each incumbent director attended at least 75% of all meetings of the board of directors and all committees of the board of directors on which he or she served that were held during the period that such director was a member of the board of directors or the applicable committee. All nine directors at the time of our 2022 annual meeting of stockholders were present at the meeting. Committees Our board of directors has established three standing committees: an audit committee, a governance and nominating committee and a compensation and HR committee. Each of the audit committee, the governance and nominating committee and the compensation and HR committee operates under a charter approved by our board of directors. Copies of each charter are accessible through the Investors section of our website at www.ironwoodpharma.com, under the heading Corporate Governance — Governance Documents, and are available in print to any stockholder who requests them from our secretary. The chair of each of our committees is expected to rotate approximately every three to five years, unless the governance and nominating committee recommends otherwise. Audit Committee We have a separately designated standing audit committee established by our board of directors for the purpose of overseeing our accounting and financial reporting processes and audits of our financial statements. The members of our audit committee are Mses. Moukheibir and McHugh and Mr. Shepard. Ms. Moukheibir chairs the audit committee, and our board of directors has determined that Ms. Moukheibir is an audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K. Our audit committee met four times during 2022. Our audit committee assists our board of directors in its oversight of significant risks facing Ironwood, the integrity of our financial statements and our independent registered public accounting firm’s qualifications, independence and performance. Our audit committee’s responsibilities include: •
reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements, earnings releases and related disclosures; •
reviewing and discussing with management and our independent registered public accounting firm and, as needed, internal auditors or any relevant third party, the quality and adequacy of our internal controls and internal auditing procedures, including any material weaknesses or significant deficiencies; •
discussing our accounting policies and all material correcting adjustments with our management and our independent registered public accounting firm;
•
discussing with our management any significant risks or exposures facing the company and the related mitigation plans, and discussing with our independent registered public accounting firm any significant risks or exposures facing the company to the extent that such risks or exposures relate to accounting and financial reporting and related mitigation plans; •
monitoring our internal control over financial reporting and disclosure controls and procedures; •
working with management to formulate a mitigation plan and reviewing the company’s compliance with such mitigation plan in the event of a significant breakdown or security breach affecting the information technology systems of the company or a third party; •
appointing, retaining, evaluating, overseeing, and approving the compensation for and, when necessary, terminating our independent registered public accounting firm; •
approving all audit services and all permitted non-audit, tax and other services to be performed by our independent registered public accounting firm, in each case, in accordance with the audit committee’s pre-approval policy; •
discussing with the independent registered public accounting firm its independence and ensuring that it receives the written disclosures regarding these communications required by the Public Company Accounting Oversight Board, or PCAOB; •
reviewing with the independent registered public accounting firm, to the extent applicable, any matter arising from the audit of the financial statements that was communicated or required to be communicated that both relates to accounts or disclosures that are material to the financial statements and involves especially challenging, subjective or complex auditor judgment; •
reviewing and approving all transactions or series of similar transactions to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements with directors and executive officers; •
recommending whether the audited financial statements should be included in our annual report and preparing the audit committee report required by SEC rules; •
reviewing with our independent registered public accounting firm all material communications between our management and our independent registered public accounting firm; •
reviewing, updating and recommending to our board of directors approval of our code of business conduct and ethics; and •
establishing procedures for the receipt, retention, investigation and treatment of accounting related complaints and concerns.
Audit Committee Report In the course of our oversight of Ironwood’s financial reporting process, we have (i) reviewed and discussed with management the company’s audited financial statements for the fiscal year ended December 31, 2022, (ii) discussed with Ernst & Young LLP, the company’s independent registered public accounting firm, the matters required to be discussed by the applicable requirements of the PCAOB and the SEC, and (iii) received the written disclosures and the letter from Ernst & Young LLP, the company’s independent registered public accounting firm, required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with us concerning independence, discussed with the independent registered public accounting firm its independence, and considered whether the provision of non-audit services by the independent registered public accounting firm is compatible with maintaining its independence. Based on the foregoing review and discussions, we recommended to the board of directors of the company that the audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2022 for filing with the SEC. Age: 44| | | | | By the Audit Committee, | | | | | | | Catherine Moukheibir, Chair
Julie McHugh
Jay Shepard | |
Governance and Nominating Committee The members of our governance and nominating committee are Dr. Denner, Mr. Duane and Ms. McHugh. Dr. Denner chairs the governance and nominating committee. Our governance and nominating committee met three times during 2022. Our governance and nominating committee’s responsibilities include: •
assisting our board of directors in identifying and recruiting individuals qualified to become members of our board of directors; •
recommending to our board of directors the persons to be nominated for election as directors; •
recommending to our board of directors qualified individuals to serve as committee members; •
performing an annual evaluation of our board of directors and each committee of the board of directors; •
evaluating the need and, if necessary, creating a plan for the continuing education of our directors; •
assessing and reviewing our corporate governance guidelines and recommending any changes to our board of directors; •
considering any potential conflicts of interest of members of our board of directors; •
considering our policies with respect to their impact on significant issues of corporate social responsibility; and •
evaluating and approving any requests from our executives to serve on the board of directors of another for- profit company. Compensation and HR Committee The members of our compensation and HR committee are Dr. Currie, Messrs. Dreyfus and Duane and Ms. Kessler. Mr. Dreyfus chairs our compensation and HR committee. Our compensation and HR committee met six times during 2022. Our compensation and HR committee assists our board of directors in fulfilling its responsibilities relating to the compensation of our board of directors and our executive officers, and oversees matters related to human capital management, including DE&I, workplace environment and culture and talent development and retention. Our compensation and HR committee’s responsibilities include: •
evaluating the performance of our chief executive officer and other executive officers in light of pre-determined corporate goals and objectives relevant to the chief executive officer’s or such executive officer’s compensation; •
reviewing and recommending to the board our chief executive officer’s compensation including salary, bonus and incentive compensation, deferred compensation, perquisites, equity compensation, benefits provided upon retirement, severance or other termination of employment, and any other forms of executive compensation; •
reviewing and approving executive officer compensation (other than for the chief executive officer), including salary, bonus and incentive compensation, deferred compensation, perquisites, equity compensation, benefits provided upon retirement, severance or other termination of employment, and any other forms of executive compensation; •
reviewing and approving our peer companies to evaluate our compensation competitiveness and mix of compensation elements; •
overseeing and administering our incentive compensation plans and equity-based plans and recommending the adoption of new incentive compensation plans and equity-based plans to our board of directors; •
reviewing, accessing and making recommendations to our board of directors with respect to director compensation and any stock ownership guidelines applicable to non-employee directors; •
reviewing, approving and overseeing any stock ownership guidelines applicable to executive officers;
•
reviewing and discussing with management the compensation discussion and analysis required to be included in our filings with the SEC and recommending whether the compensation discussion and analysis should be included in such filings; •
preparing the compensation and HR committee report required by the SEC; •
making recommendations to our board of directors with respect to management succession planning, including planning with respect to our chief executive officer; •
overseeing compliance with applicable laws and regulations affecting employee compensation and benefits, including regarding stockholder approval of certain executive compensation matters; •
reviewing the risks associated with our compensation policies and practices; and •
overseeing the company’s strategies and policies related to human capital management, including with respect to matters such as DE&I, workplace environment and culture, and talent development and retention. Compensation Committee Interlocks and Insider Participation None of the members of our compensation and HR committee is or has at any time during the past fiscal year been an officer or employee of Ironwood. None of our executive officers serve, or in the past fiscal year has served, as a member of the board of directors or compensation and HR committee of any other entity that has one or more executive officers serving as a member of our board of directors or compensation and HR committee. None of the members of our compensation and HR committee had any relationship with us that requires disclosure under any paragraph of Item 404 of Regulation S-K under the Exchange Act. How Our Board is Paid Under our amended and restated 2019 non-employee director compensation policy, effective January 1, 2023, or the director compensation policy, the majority of the compensation that our non-employee directors receive for service on our board of directors is paid in the form of restricted shares of our Class A common stock. Vesting of these shares of restricted stock is contingent on each non-employee director continuing to serve as a member of the board of directors on the last day of each applicable vesting period. If a director ceases serving as a member of our board of directors at any time during the vesting period of a restricted stock award, or RSA, unvested shares will be forfeited on the date of such director’s termination of service. Shares of restricted stock granted to directors in 2022 under our director compensation policy were granted under our 2019 Equity Incentive Plan, or our 2019 Plan. Under our 2019 Plan, the aggregate value of all compensation paid or granted to any non-employee director for his or her service as a director in any calendar year may not exceed $600,000. Under our director compensation policy, at each annual meeting of stockholders, our non-employee directors are granted restricted shares of our Class A common stock, with the number of shares subject to the award equal to $250,000 divided by the average closing price of our Class A common stock on the Nasdaq Global Select Market (or the stock exchange on which our stock is being actively traded) for the six months preceding the month in which the award is granted, rounded down to the nearest whole share. Such restricted shares vest in full on the date immediately preceding the date of the next annual meeting of stockholders. Each non-employee director who is first elected to our board of directors will, upon his or her initial election, be granted restricted shares of our Class A common stock, with the number of shares subject to the award equal to $250,000 divided by the average closing price of our Class A common stock on the Nasdaq Global Select Market (or the stock exchange on which our stock is being actively traded) for the six months preceding the month in which the award is granted, rounded down to the nearest whole share. Such restricted shares vest in three equal installments on the first three anniversaries of the grant date. In addition, under our director compensation policy, if a non-employee director is elected other than at an annual meeting of our stockholders, then upon his or her initial election to our board of directors, such director will be granted the number of restricted shares of our Class A
common stock granted to non-employee directors at the most recent annual meeting of our stockholders, prorated based on the number of days between the last annual meeting of our stockholders and the date on which the non- employee director began service with us. Such restricted shares will vest in full on the date immediately preceding the date of the next annual meeting of stockholders. In addition to equity grants, each non-employee director receives an annual retainer under our director compensation policy for his or her service on our board of directors, as well as additional fees for board chair, committee or committee chair service as follows: Joined Ironwood 2021| | | | | Fees | | | | Annual retainer for members of the board of directors | | | $50,000 ($80,000 for the chair) | | | | Additional annual retainer for members of the audit committee | | | $10,000 ($20,000 for the chair) | | | | Additional annual retainer for members of the compensation and HR committee | | | $10,000 ($20,000 for the chair) | | | | Additional annual retainer for members of the governance and nominating committee | | | $5,000 ($10,000 for the chair) | |
All cash fees are payable quarterly in arrears and will be prorated for any quarter of partial service. Each non-employee director may elect, prior to January 1 of the year with respect to which such election will be effective, to receive fully vested shares of our Class A common stock at no cost in lieu of his or her annual cash retainer and any additional cash retainers for board chair, committee or committee chair service set forth above. The number of shares of our Class A common stock issued is determined by dividing the applicable cash retainer(s) the director would be eligible to receive by the closing price of our Class A common stock on the Nasdaq Global Select Market (or the stock exchange on which our stock is being actively traded) on the date the cash fees would otherwise be paid, rounded down to the nearest whole share. Further, non-employee directors are reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the board of directors and its committees.
Director Compensation Table The following table sets forth information regarding the compensation earned during the year ended December 31, 2022 by each of our directors who served in 2022, other than Mr. McCourt, who does not receive compensation for his service on our board of directors. Dr. Olanoff and Mr. Owens were not nominated for election at the 2022 annual meeting of stockholders. | | Name | | | Fees Earned or
Paid in
Cash ($) | | | Stock Awards
($)(1) | | | All Other
Compensation
($) | | | Total
($) | | | | Mark Currie, Ph.D. | | | | $ | 54,368 | | | | | $ | 242,027 | | | | | | — | | | | | $ | 296,395 | | | | | Alexander Denner, Ph.D. | | | | $ | 57,875(2) | | | | | $ | 242,027 | | | | | | — | | | | | $ | 299,902 | | | | | Andrew Dreyfus | | | | $ | 65,000 | | | | | $ | 242,027 | | | | | | — | | | | | $ | 307,027 | | | | | Jon Duane | | | | $ | 62,500 | | | | | $ | 242,027 | | | | | | — | | | | | $ | 304,527 | | | | | Marla Kessler | | | | $ | 57,500 | | | | | $ | 242,027 | | | | | | — | | | | | $ | 299,527 | | | | | Julie McHugh | | | | $ | 95,000 | | | | | $ | 242,027 | | | | | | — | | | | | $ | 337,027 | | | | | Catherine Moukheibir | | | | $ | 69,989(3) | | | | | $ | 242,027 | | | | | | — | | | | | $ | 312,016 | | | | | Lawrence Olanoff, M.D., Ph.D. | | | | $ | 25,055 | | | | | | — | | | | | $ | 750(4) | | | | | $ | 25,805 | | | | | Edward Owens | | | | $ | 25,055 | | | | | | — | | | | | | — | | | | | $ | 25,055 | | | | | Jay Shepard | | | | $ | 60,000 | | | | | $ | 242,027 | | | | | | — | | | | | $ | 302,027 | | |
(1)
On June 1, 2022, each non-employee member of our board of directors received a restricted stock grant in the amount of 21,571 shares of our Class A common stock for service on our board of directors from the date of our 2022 annual meeting of stockholders to the date of our 2023 annual meeting of stockholders, which shares will vest in full on the date immediately preceding the date of our 2023 annual meeting of stockholders, subject to continued service on our board as of the vesting date. The number of shares subject to the restricted stock grant was determined by dividing (i) $250,000 by (ii) $11.59, which was the average closing price of our Class A common stock on the Nasdaq Global Select Market for the six months preceding the month of the 2022 annual meeting of stockholders. Each such award of restricted stock had a grant date fair value of $11.22 per share and was granted pursuant to the terms of our director compensation policy and our 2019 Plan. As of December 31, 2022, each non-employee director other than Dr. Denner and Mr. Shepard held 21,571 restricted shares of Class A common stock as a result of this grant and held no other unvested equity awards. As of December 31, 2022, Dr. Denner and Mr. Shepard held 29,879 restricted shares and 29,813 restricted shares, respectively, of Class A common stock as a result of this and other previously issued grants. Dr. Olanoff and Mr. Owens did not receive a restricted stock grant on June 1, 2022, as they were not nominated for election at the 2022 annual meeting of stockholders. Neither Dr. Olanoff nor Mr. Owens held any restricted shares of Class A common stock as of December 31, 2022. Amounts in the table represent the fair value of these restricted stock grants on the date of grant calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation, or ASC 718. For a discussion of the assumptions used in the valuation of awards made in 2022, see Note 12 to our consolidated financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K that we filed with the SEC on February 16, 2023. All values reported exclude the effects of potential forfeitures. (2)
Dr. Denner elected to receive this annual retainer in unrestricted shares of our Class A common stock. Dr. Denner received a total of 4,992 shares of our Class A common stock for such service in 2022. (3)
Ms. Moukheibir elected to receive this annual retainer in unrestricted shares of our Class A common stock through March 31, 2022. Ms. Moukheibir elected to receive this annual retainer in cash from April 1, 2022 through December 31, 2022. Ms. Moukheibir received a total of 1,466 shares of our Class A common stock for such service in 2022. (4)
On June 1, 2022, Dr. Olanoff’s term as a member of our board of directors ended. In September 2022, the Company and Dr. Olanoff entered into a consulting arrangement, pursuant to which he agreed to provide consultancy services to the Company related to research and development matters in exchange for a consultancy fee calculated at the rate of $750 per hour, for up to 40 hours of service. Following Dr. Olanoff’s transition from our board of directors, he provided one hour of service in 2022 and his “All Other Compensation” includes those fees earned in 2022.
Director Stock Ownership Guidelines We have instituted stock ownership guidelines as part of our director compensation policy that provide that each non-employee director must accumulate and continuously hold shares of our Class A common stock with a value equal to or greater than three times the amount of the then-current annual retainer paid to the non-employee director for service on our board of directors (excluding any additional board chair, committee, or committee chair retainers). Non-employee directors were required to achieve this level of ownership by the later of (a) January 1, 2023 (two years from the effective date of the amended and restated director compensation policy) and (b) two years from the date the individual began service with us, or the Ownership Date. Compliance with the stock ownership requirements is measured on the date of the annual meeting of stockholders based on the annual retainer then in effect. Following the Ownership Date, until a non-employee director holds the required ownership level (or if such director does not hold the number of shares of our Class A common stock to meet the stock ownership requirements at any time thereafter), such director will be required to retain 100% of any shares of our Class A common stock held or received upon the vesting or settlement of equity awards or the exercise of stock options, in each case, net of shares sold to cover applicable taxes and the payment of any exercise or purchase price (if applicable). Further, following the Ownership Date, to the extent a non-employee director does not hold the number of shares of our Class A common stock that meets this threshold, such director will be automatically deemed to have elected to receive any cash retainer for service on our board of directors or a committee thereof in the form of shares of our Class A common stock in an amount that satisfies the threshold shortfall. As of March 31, 2023, each of our non-employee directors was in compliance with our stock ownership guidelines. We believe our stock ownership guidelines ensure that the interests of our directors, each of whom has equity in the business, are aligned with those of our stockholders and further focus our directors on maximizing long-term value.
Proposal No. 1 Election
of Directors | | | •| | | | | OUR BOARD RECOMMENDS
THAT YOU VOTE FOR
EACH OF THE DIRECTORS
UP FOR ELECTION | |
Proposal No. 1 Our board of directors has nominated all of our nine current directors — Drs. Currie and Denner, Messrs. Dreyfus, Duane, McCourt and Shepard and Mses. Kessler, McHugh and Moukheibir — for election at the 2023 annual meeting of stockholders. Each of Drs. Currie and Denner, Messrs. Dreyfus, Duane, McCourt and Shepard and Mses. Kessler, McHugh and Moukheibir has indicated his or her willingness to serve if elected and has consented to be named in the proxy statement. Should any nominee become unavailable for election at the annual meeting, the persons named on the enclosed proxy card as proxy holders may vote all proxies given in response to this solicitation for the election of a substitute nominee chosen by our board of directors. Vote Required The election of the board of director nominees will be determined by a plurality of the votes cast, meaning that board of director nominees with the greatest number of votes cast for election, even if less than a majority, will be elected as directors to serve for one year and until his or her successor is duly elected and qualified or until their death, resignation or removal. Because there is no minimum vote required, abstentions and broker non-votes will not affect the outcome of this proposal.
Who We Are The following table sets forth certain information, as of April 27, 2023, with respect to each of our executive officers, other than Mr. McCourt, whose biographical information is included elsewhere in this proxy statement under the caption Our Board of Directors: Mr. Emany has served as our chief financial officer since December 2021.
•
Prior to joining Ironwood, Mr. Emany served as corporate vice president, commercial excellence and chief strategy officer of Integra LifeSciences Holdings Corporation, a publicly held global healthcare company, since March 2020 and as vice president of strategy, treasury and investor relations from February 2018 to March 2020. Prior to that, Mr. Emany served in various mergers and acquisitions investment banking roles in Bank of America and BofA Securities (formerly Bank of America Merrill Lynch) from September 2008 to February 2018, culminating in his service as managing director in the mergers and acquisitions group where he led numerous mergers and acquisitions in the healthcare sector. Mr. Emany also served in various other financial roles, including with Goldman Sachs Group and Morgan Stanley.
•
Mr. Emany holds a B.A. in international relations from The Johns Hopkins University and an M.A. in international relations and international economics from The Johns Hopkins School of Advanced International Studies.| | Name | | | Age | | | Position(s) | | | | Andrew Davis | | | 37 | | | Senior Vice President, Chief Business Officer | | | | Sravan Emany | | | 45 | | | Senior Vice President, Chief Financial Officer | | | | John Minardo | | | 48 | | | Senior Vice President, Chief Legal Officer and Secretary | | | | Jason Rickard | | | 52 | | | Senior Vice President, Chief Operating Officer | | | | Michael Shetzline, M.D., Ph.D. | | | 64 | | | Senior Vice President, Chief Medical Officer and Head of Research and Drug Development | |
| | | | | | ANDREW DAVIS Senior Vice President, Chief
Business Officer of Ironwood
Pharmaceuticals, Inc. Age: 37 Joined Ironwood 2021 | | | •
Andrew Davis has served as our chief business officer since December 2021 andpreviously served as senior vice president of business development from May 2021 toJuly 2021 and as senior vice president corporate development, strategy, andvaluation from July 2021 to December 2021. •
Before joining Ironwood, Mr. Davis served as the chief business development andM&A officer at iNova Pharmaceuticals from September 2017 to May 2021, leading allcompany transactions and acting as a member of the executive management team.Prior to iNova, Mr. Davis was head of oncology business development for Merck & Co.from November 2016 to September 2017. Before his time at Merck, Mr. Davis was atBausch Health Companies (formerly Valeant Pharmaceuticals), where he held roles ofincreasing responsibility within the business development function, ultimatelyserving as senior vice president of business development and leading all transactionsfor the company, including the acquisitions of Salix Pharmaceuticals and Bausch +Lomb. Mr. Davis began his career as an analyst at McKinsey & Co., where his workfocused on the healthcare space. •
Mr. Davis serves on the board of directors of UTILITY therapeutics Ltd. •
Mr. Davis holds a B.A. in economics from Boston University. | |
| | | | | JOHN MINARDO
Senior Vice President, Chief
Legal Officer and Secretary of Ironwood Pharmaceuticals, Inc.
Age: 46
Joined Ironwood 2021
| | | •
Mr. Minardo has served as our chief legal officer since August 2021.
•
Prior to joining Ironwood, Mr. Minardo was with Seqirus, a pharmaceutical company, where he was vice president, general counsel and a member of the Seqirus executive leadership team, leading a global legal team overseeing activities including business transactions, regulatory matters, corporate governance, compliance and intellectual property from November 2015 to July 2021. Prior to Seqirus, Mr. Minardo was with Novartis in increasing roles of responsibility from October 2007 to November 2015, ultimately serving as vice president, general counsel and chief compliance officer at Novartis Influenza Vaccines. Mr. Minardo started his legal career as a litigator at Kaye Scholer LLP.
•
Mr. Minardo holds a B.A. from Boston College and a J.D. from Brooklyn Law School.| | | | | | SRAVAN EMANY Senior Vice President, Chief Financial Officer of Ironwood Pharmaceuticals, Inc. Age: 45 Joined Ironwood 2021 | | | •
Mr. Emany has served as our chief financial officer since December 2021. •
Prior to joining Ironwood, Mr. Emany served as corporate vice president, commercial excellence and chief strategy officer of Integra LifeSciences Holdings Corporation, a publicly held global healthcare company, since March 2020 and as vice president of strategy, treasury and investor relations from February 2018 to March 2020. Prior to that, Mr. Emany served in various mergers and acquisitions investment banking roles at Bank of America and BofA Securities (formerly Bank of America Merrill Lynch) from September 2008 to February 2018, culminating in his service as managing director in the mergers and acquisitions group where he led numerous mergers and acquisitions in the healthcare sector. Mr. Emany also served in various other financial roles, including with Goldman Sachs Group and Morgan Stanley. •
Mr. Emany holds a B.A. in international relations from The Johns Hopkins University and an M.A. in international relations and international economics from The Johns Hopkins School of Advanced International Studies. | |
| | | | | | JOHN MINARDO
Senior Vice President, Chief Legal Officer and Secretary of Ironwood Pharmaceuticals, Inc.
Age: 48Joined Ironwood 2021 | | | Mr. Minardo has served as our chief legal officer since August 2021. | | | | | JASON RICKARD
Senior Vice President, Chief
Operating Officer of Ironwood
Pharmaceuticals, Inc.
Age: 50
Joined Ironwood 2012
| | | •
Mr. Rickard has served as our chief operating officer since April 2020. Mr. Rickard was also designated by our board of directors as our principal financial officer from July 2021 to December 2021. Prior to his appointment as the company’s senior vice president, chief operating officer, Mr. Rickard had been the company’s senior vice president, operations since July 2018, in which capacity he led the company’s manufacturing, pharmaceutical development, quality, human resources, information technology and facilities functions. Before becoming senior vice president, operations, Mr. Rickard served as the company’s vice president global operations and information technology from July 2015 to July 2018; vice president global operations from 2014 to July 2015; vice president commercial manufacturing supply chain from 2013 to 2014; and head of supply chain from 2012 to 2013.
•
Prior to joining Ironwood, Mr. Rickard was with Genentech, Inc. from 2000 to 2012 in roles of increasing responsibility in manufacturing and supply chain. Mr. Rickard began his career as a mechanical engineer at AMOT Controls Corporation.
•
Mr. Rickard holds an M.S. from California State University — Sacramento and a B.S. from California State University — Chico, both in mechanical engineering.
•
Prior to joining Ironwood, Mr. Minardo was with Seqirus, a pharmaceutical company, where he was vice president, general counsel and a member of the Seqirus executive leadership team, leading a global legal team overseeing activities including business transactions, regulatory matters, corporate governance, compliance and intellectual property from November 2015 to July 2021. Prior to Seqirus, Mr. Minardo was with Novartis in increasing roles of responsibility from October 2007 to November 2015, ultimately serving as vice president, general counsel and chief compliance officer at Novartis Influenza Vaccines. Mr. Minardo started his legal career as a litigator at Kaye Scholer LLP. •
Mr. Minardo holds a B.A. from Boston College and a J.D. from Brooklyn Law School. | |
| | | | | MICHAEL
SHETZLINE,
M.D., Ph.D.
Senior Vice President, Chief Medical
Officer and Head of Research and Drug Development of Ironwood
Pharmaceuticals, Inc.
Age: 63
Joined Ironwood 2019
| | | •
Dr. Shetzline has served as our chief medical officer, and head of research and drug development since October 2021 and had served as chief medical officer, and head of drug development from January 2019 to October 2021. Dr. Shetzline is a gastroenterologist and internist, with more than 25 years of experience in the biopharmaceutical industry and academia.
•
Before joining Ironwood, Dr. Shetzline was vice president and head of gastroenterology clinical sciences at Takeda Pharmaceuticals International Co., or Takeda, a global pharmaceutical company, where he led global clinical development for all GI assets from January 2015 to January 2019.
•
Prior to Dr. Shetzline’s role at Takeda, Dr. Shetzline served as vice president and global head of gastroenterology at Ferring International Pharmascience Center U.S., Inc., or Ferring, from 2012 to January 2015, during which he led Ferring’s clinical development programs in gastroenterology. Before that, Dr. Shetzline was vice president and global program head crossing multiple therapeutic areas and head of translational medicine GI discovery at Novartis Pharmaceuticals AG from 2002 to 2012.
•
Dr. Shetzline also served as gastroenterology program director and assistant professor of medicine at Duke University Medical Center from 1997 to 2002. Dr. Shetzline has published over 40 full papers and book chapters and acted as a reviewer for a range of medicine journals.
•
Dr. Shetzline earned his M.D. and Ph.D. from The Ohio State University in physiology and medicine. Dr. Shetzline completed his internal medicine residency and fellowship in gastroenterology and served on the faculty as a National Institutes of Health supported physician scientist at Duke University Medical Center.
•
Dr. Shetzline is a Fellow of the American College of Physicians, the American College of Gastroenterology, and the American Gastroenterological Association and certified by the American Board of Internal Medicine.| | | | | | JASON RICKARD Senior Vice President, Chief Operating Officer of Ironwood Pharmaceuticals, Inc. Age: 52 Joined Ironwood 2012 | | | •
Mr. Rickard has served as our chief operating officer since April 2020. Mr. Rickard was also designated by our board of directors as our principal financial officer from July 2021 to December 2021. Prior to his appointment as the company’s senior vice president, chief operating officer, Mr. Rickard had been the company’s senior vice president, operations since July 2018, in which capacity he led the company’s manufacturing, pharmaceutical development, quality, human resources, information technology and facilities functions. Before becoming senior vice president, operations, Mr. Rickard served as the company’s vice president global operations and information technology from July 2015 to July 2018; vice president global operations from 2014 to July 2015; vice president commercial manufacturing supply chain from 2013 to 2014; and head of supply chain from 2012 to 2013. On April 10, 2023, the Company determined to eliminate the role of chief operating officer, and, as result, Mr. Rickard’s last day of employment with the Company will be May 12, 2023. •
Prior to joining Ironwood, Mr. Rickard was with Genentech, Inc. from 2000 to 2012 in roles of increasing responsibility in manufacturing and supply chain. Mr. Rickard began his career as a mechanical engineer at AMOT Controls Corporation. •
Mr. Rickard holds an M.S. from California State University — Sacramento and a B.S. from California State University — Chico, both in mechanical engineering. | |
| | | | | | MICHAEL
SHETZLINE,
M.D., Ph.D.
Senior Vice President, Chief Medical
Officer and Head of Research and Drug Development of Ironwood
Pharmaceuticals, Inc.
Age: 64Joined Ironwood 2019 | | | ![[MISSING IMAGE: img2022-bighdleft_bluegreen.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-048389/img2022-bighdleft_bluegreen.jpg) Executive Compensation
•
Compensation DiscussionBefore joining Ironwood, Dr. Shetzline was vice president and Analysishead of gastroenterology clinical sciences at Takeda Pharmaceuticals International Co., or Takeda, a global pharmaceutical company, where he led global clinical development for all GI assets from January 2015 to January 2019.
•
Prior to Dr. Shetzline’s role at Takeda, Dr. Shetzline served as vice president and global head of gastroenterology at Ferring International Pharmascience Center U.S., Inc., or Ferring, from 2012 to January 2015, during which he led Ferring’s clinical development programs in gastroenterology. Before that, Dr. Shetzline was vice president and global program head crossing multiple therapeutic areas and head of translational medicine GI discovery at Novartis Pharmaceuticals AG from 2002 to 2012. •
Dr. Shetzline also served as gastroenterology program director and assistant professor of medicine at Duke University Medical Center from 1997 to 2002. Dr. Shetzline has published over 40 full papers and book chapters and acted as a reviewer for a range of medicine journals. •
Dr. Shetzline earned his M.D. and Ph.D. from The Ohio State University in physiology and medicine. Dr. Shetzline completed his internal medicine residency and fellowship in gastroenterology and served on the faculty as a National Institutes of Health supported physician scientist at Duke University Medical Center. •
Dr. Shetzline is a Fellow of the American College of Physicians, the American College of Gastroenterology, and the American Gastroenterological Association and certified by the American Board of Internal Medicine. | |
Compensation Discussion and Analysis Executive Summary Our executive compensation program for 20212022 remained aligned with market practice and our corporate performance, as we reconstitutedwhich created a strong link between the value of our leadership teamexecutives’ compensation to build towards our future success. Two key highlights forstockholders’ returns. Together with this year as described further below, were: (1) the appointment of Mr. McCourt, who had beenobjective, our presidentcompensation program is also designed to attract, retain, motivate and interim chief executive officer in March 2021reward outstanding talent across Ironwood through well-communicated programs that are aligned with our vision and his subsequent appointment as permanent chief executive officer in June 2021,mission, and (2) the rebuildingsupport a positive company culture and values. The three primary elements of our executive team through the hiring of Mr. Minardo, our new chief legal officer in August 2021 and Mr. Emany, our new chief financial officer, in December 2021. 1.
Chief Executive Officer Transition. In March 2021, our board of directors appointed Mr. McCourt as interim chief executive officer following the resignation of Mr. Mallon, our former chief executive officer. In June 2021, our board of directors appointed Mr. McCourt as permanent chief executive officer and elected him as a board member. In connection with Mr. McCourt’s appointment, he received an increase incompensation program are base salary, cash bonus and long-term equity incentive compensation. Long-term equity incentive compensation, which includes a balanced mix of time-based and performance-based equity awards, represents a significant percentage of each named executive officer’s total direct compensation. We believe this emphasis on equity strongly reinforces the concept of pay-for-performance, as the single largest component of pay is tied to commensurate withfuture increases in the salaries paid to chiefvalue of our stock.
The majority of total compensation for our named executive officers during 2022 consisted of variable pay elements, as reported in our compensation peer group, as described below, and a one-time promotional equity grant. Additional information on Mr. McCourt’s compensation related to his initial appointment as interim chief executive officer and subsequent appointment as permanent chief executive officer is providedthe Summary Compensation Table included elsewhere in this proxy statement understatement. We believe this allocation aligns with our pay-for-performance compensation philosophy of motivating our named executive officers to achieve our performance objectives in the caption 2021 Chief Executive Officer Transition.short term and to grow the business to create sustainable value for our shareholders in the long term. | | 2022 CEO Compensation | | | 2022 Other NEOs Compensation(1) | | | | | | | | |
2.
(1)
Leadership Team. In 2021, we rebuilt our executive leadership throughAs further described in this Compensation Discussion and Analysis section, Sravan Emany was not eligible for time-based and performance-based awards in 2022 due to the hiring of Mr. Minardo, our new chief legal officer,fact that he joined the company in AugustDecember 2021, and therefore this compensation element was excluded for Mr. Emany our new chief financial officer, in December 2021. In connection with their appointments, eachfor the purposes of Messrs. Minardo and Emany received one-time cash and equity awards to compensate them, in part, for outstanding equity awards and cash bonuses they forfeited by leaving their previous employers and therefore is not representative of our expectations for their compensation on a go-forward basis. Additional information on Messrs. Minardo and Emany’s compensation is provided elsewhere in this proxy statement under the captions Chief Legal Officer Appointment and 2021 Chief Financial Officer Transition.
In addition, we implemented certain changes to our program during 2021 intending to be responsive to stockholder concerns to further align the interests of our executives with those of our stockholders, including the following:
•
modifying the terms of our executive severance agreements for new executive hires to reduce certain severance benefits in the event of an involuntary termination not in connection with a change of control (additional information provided elsewhere in this proxy statement under the caption Executive Severance Agreements and Benefits in the Event of a Change of Control);
•
amending our executive stock ownership guidelines so that the value of vested in-the-money stock options no longer counts towards satisfying the ownership requirements (additional information provided elsewhere in this proxy statement under the caption Executive Officer Stock Ownership Guidelines); and
•
adopting relative total stockholder return, or rTSR, as the sole metric for our performance-based restricted stock units, or PSUs (additional information provided elsewhere in this proxy statement under the caption 2022 Annual Equity Awards).chart presentation.
30 Ironwood
2023 Proxy Statement 31
Stockholder Engagement and Say-On-Pay Vote Consideration Feedback from stockholders is an essential part of our executive compensation decision-making process. We value stockholders’ perspectives and have a regular process throughout the year to discuss a range of topics, including our strategy, operations, financial and business performance. Discussions with our stockholders assist us in setting goals and expectations for our performance and facilitate the identification of emerging issues that may affect our strategies, corporate governance, compensation practices, and other aspects of our operations. Our company engages with many of our largest stockholders on a frequent basis year-round. This includes investor conferences, investor events, and one-on-one discussions. We invite feedback on a wide variety of topics, including corporate strategy, capital allocation, governance, human capital management and executive compensation. In 2021, senior management met with the majority of Ironwood’s largest 20 stockholders, which represented approximately 80% of our outstanding shares as of December 31, 2021. Our stockholders also have the opportunity to cast a non-binding advisory vote on named executive officer compensation, or a “say-on-pay” vote, every year.and this year, also to express their preference for the frequency of future say-on-pay votes. This allows our stockholders to provide us with regular, timely and direct input on our executive compensation philosophy, policies and practices. We believe this enables us to further align our compensation programs with our stockholders’ interests and to enhance our ability to consider stockholder feedback as part of our annual compensation review process. We sought stockholder input on our executive compensation program through the say-on-pay vote at our 20212022 annual meeting of stockholders and approximately 99%97% of votes cast by our stockholders voted in support of our named executive officer compensation. In addition, the last time we sought stockholder input with respect to the say-on-pay frequency vote was at our 2017 annual meeting of stockholders, and over 98% of votes cast by our stockholders voted in support of an annual advisory say-on-pay vote. Named Executive Officers: Goals and Accomplishments Named Executive Officers for 20212022 This section discusses the principles underlying our policies and decisions with respect to the compensation of our executive officers who are named in the Summary Compensation Table,, or our named executive officers. Provided below are material factors we believe are relevant to an analysis of these policies and decisions. Our named executive officers for 20212022 were: •
Thomas McCourt, chief executive officer(1);officer; •
Sravan Emany, senior vice president, chief financial officer(2);officer; •
John Minardo, senior vice president, chief legal officer and secretary(3);secretary; •
Jason Rickard, senior vice president, chief operating officer(2)(1); and •
Michael Shetzline, M.D., Ph.D., senior vice president, chief medical officer and head of research and drug development;development. •
Mark Mallon, former chief executive officer(1); and
•
Gina Consylman, former senior vice president, chief financial officer(2).
(1)
Effective March 12, 2021, Mr. Mallon resigned from his position as our chief executive officer and Mr. McCourt became our interim chief executive officer, in addition to his continued service as our president. Mr. McCourt became our permanent chief executive officer effective June 2, 2021. For more information on our chief executive officer transition, please see 2021 Chief Executive Officer Transition elsewhere in this proxy statement.
(2)
Effective July 2, 2021, Ms. Consylman resigned from her position as our senior vice president, chief financial officer. Following Ms. Consylman’s resignation, Mr. Rickard, our senior vice president, chief operating officer, was designated by our board of directors as our principal financial officer until December 6, 2021. Mr. Emany was appointed as our senior vice president, chief financial officer and principal financial officer effective December 6, 2021. For more information on our chief financial officer transition, please see 2021 Chief Financial Officer Transition elsewhere in this proxy statement.
(3)
Mr. Minardo was appointed as our senior vice president, chief legal officer, effective August 2, 2021. For more information on this appointment, please see Chief Legal Officer Appointment elsewhere in this proxy statement.
Goals and Accomplishments In JanuaryDecember 2021, our board, with input from senior management, established corporate performance goals for 2021,2022, the achievement of which we believed would further the accomplishment of our short- and long-term business plan. These goals included maximizing LINZESS net sales growth as well as the attainment of certain financial and pipeline targets, in each case, based on the Company’s board-approved operating plan for 2021.2022. In February 2021,2022, our compensation and HR committee approved the relative weighting of our corporate performance goals for 2021.2022 compensation programs. (1)
On April 10, 2023, the Company determined to eliminate the role of chief operating officer, and, as result, Mr. Rickard’s last day of employment with the Company will be May 12, 2023. The responsibilities of the chief operating officer will be distributed to other members of the leadership team with support from Mr. Rickard to provide a smooth transition. Mr. Rickard’s role elimination is not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Our current named executive officers (except Mr. Emany) were evaluated based on the level of achievement of the 20212022 corporate goals and their achievements against their 20212022 individual goals. Performance measured against the 20212022 corporate and individual goals (as applicable) was used, in part, in determining salary adjustments and cash bonus awards for our named executive officers in early 2022.2023. As described in more detail elsewhere in this proxy statement under Compensation Determination Process, beginning in 2021, our board becameis responsible for assessing the Company’s performance against its pre-determined corporate goals. In January 2022, 2023, our board determined that the 20212022 company performance achievement multiplier, which was used as a key consideration in determining executive compensation awarded for 20212022 performance, was 117%75%.
The level of achievement against our 20212022 corporate performance goals, as determined by our board in early 2022,2023, was as follows: | | | | | Performance Targets (Weights) | | | | | | | | Performance Targets (Weights) | | | | | | | Company Goal | | Not
Achieved | | Partially
Achieved | | Target | | Over
Achieved | | Results | | Company Goal | | Not
Achieved | | Partially
Achieved | | Target | | Over
Achieved | | Results | | | | MAXIMIZE LINZESS | | | | | | | | | | | | MAXIMIZE LINZESS | | | | | | | | | | | | | | LINZESS U.S. Net Sales | | | | | | | Performance Targets (Weights) | | | | | | | Company Goal | | | Not
Achieved | | | Partially
Achieved | | | Target | | | Over
Achieved | | | Results | | | | MAXIMIZE LINZESS | | | | | | | | | | | | | | | | | | | LINZESS U.S. Net Sales | | | $<932M | | | $933M | | | $957M | | | $>980M | | | $1,005.9M(1) | | | | | | | (0%) | | | (3%) | | | (15%) | | | (20%) | | | (20%) | | | | Obtain U.S. FDA approval of modified LINZESS labeling to reflect pediatric clinical safety data | | | Specific goals are not disclosed for
competitive reasons | | | Target(2) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (7%) | | | (5%) | | | | Gain partner alignment and advance LCM opportunity into
mid- / late-stage clinical development | | | Specific goals are not disclosed for
competitive reasons | | | Target(3) | | | | | | | (0%) | | | (5%) | | | (10%) | | | (15%) | | | (10%) | | | | BUILD INNOVATIVE PIPELINE | | | | | | | | | | | | | | | | | | | Secure 1 GI asset aligned with prioritized criteria | | | Specific goals are not disclosed for
competitive reasons | | | Target(4) | | | | | | | (0%) | | | (13%) | | | (17%) | | | (24%) | | | (17%) | | | | Submit IND for IW-3300 in IC / BPS and on track to initiate Phase 1 study in the first quarter of 2022 | | | Specific goals are not disclosed for
competitive reasons | | | Target(5) | | | | | | | (0%) | | | (5%) | | | (8%) | | | (11%) | | | (8%) | | | | STRENGTHEN FINANCIAL PROFILE | | | | | | | | | | | | | | | | | | | Revenue | | | $<368M | | | $368M | | | $380M | | | $≥395M | | | $413.8M(6) | | | | | | | (0%) | | | (1%) | | | (5%) | | | (10%) | | | (10%) | | | | Adjusted EBITDA from organic business (excluding the impact of any corporate development transactions) | | | $<181M | | | $181M | | | $200M | | | $≥223M | | | $233.7M(7) | | | | | | | (0%) | | | (3%) | | | (15%) | | | (20%) | | | (20%) | | | | CREATE GREAT PLACE TO WORK | | | | | | | | | | | | | | | | | | | Achieve at least 7 out of 10 objectives on the corporate EDI scorecard | | | ≤5/10 | | | 6/10 | | | 7/10 | | | 10/10 | | | 7/10(8) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (7%) | | | (5%) | | | | Increase understanding of and confidence in Ironwood’s strategy and culture, measured by >70% positive response rate on annual employee engagement survey | | | ≤60% | | | >60% | | | 70% | | | ≥80% | | | 61%(9) | | | | | | | (0%) | | | (2%) | | | (3%) | | | (5%) | | | (2%) | | | | STRENGTHEN GI CAPABILITIES | | | | | | | | | | | | | | | | | | | Strengthen virtual detailing capability | | | Specific goals are not disclosed for competitive reasons | | | Not
Achieved(10) | | | | | | | (0%) | | | (2%) | | | (3%) | | | (5%) | | | (0%) | | | | Leverage telehealth to increase conversion of monthly LINZESS.com visitors to completed telemedicine visits | | | Specific goals are not disclosed for competitive reasons | | | Not
Achieved(11) | | | | | | | (0%) | | | (3%) | | | (4%) | | | (6%) | | | (0%) | | | | | | | | | | | | | | | | TOTAL | | | 117% | |
| | | | | Performance Targets (Weights) | | | | | | | Company Goal | | | Not
Achieved | | | Partially
Achieved | | | Target | | | Over
Achieved | | | Results | | | | MAXIMIZE LINZESS | | | | | | | | | | | | | | | | | | | LINZESS U.S. Net Sales | | | $≤1,009M | | | $1,016M | | | $1,040M | | | $>1,056M | | | $1,002M(1) | | | | | | | (0%) | | | (20%) | | | (30%) | | | (40%) | | | (0%) | | | | Advance Linaclotide Pediatric Program | | | Specific goals are not disclosed for
competitive reasons | | | Above Target(2) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (10%) | | | (10%) | | | | BUILD INNOVATIVE PIPELINE | | | | | | | | | | | | | | | | | | | Secure 1 asset aligned with prioritized criteria | | | Specific goals are not disclosed for
competitive reasons | | | Below Target(3) | | | | | | | (0%) | | | (10%) | | | (15%) | | | (20%) | | | (10%) | | | | Initiate IW-3300 POC study in IC / BPS by the fourth quarter of 2022 | | | Specific goals are not disclosed for
competitive reasons | | | Below Target(4) | | | | | | | (0%) | | | (5%) | | | (8%) | | | (11%) | | | (0%) | | | | Advance CNP-104 study | | | Specific goals are not disclosed for
competitive reasons | | | Below Target(5) | | | | | | | (0%) | | | (6%) | | | (10%) | | | (16%) | | | (0%) | | | | STRENGTHEN FINANCIAL PROFILE | | | | | | | | | | | | | | | | | | | Revenue | | | $≤414M | | | $420M | | | $425M | | | $>430M | | | $411M(6) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (7%) | | | (0%) | | | | Adjusted EBITDA from organic business (excluding the impact of any corporate development transactions) | | | $≤234M | | | $235M | | | $250M | | | $>275M | | | $252M(7) | | | | | | | (0%) | | | (10%) | | | (20%) | | | (25%) | | | (20%) | | | | CREATE GREAT PLACE TO WORK | | | | | | | | | | | | | | | | | | | Achieve at least 7 out of 10 objectives on the corporate EDI scorecard | | | ≤5/10 | | | 6/10 | | | 7/10 | | | 10/10 | | | 7/10(8) | | | | | | | (0%) | | | (1%) | | | (2%) | | | (5%) | | | (2%) | | | | Increase understanding of and confidence in Ironwood’s strategy and culture, measured by >70% positive response rate on annual employee engagement survey | | | <60% | | | 60% | | | 70% | | | 80% | | | 72%(9) | | | | | | | (0%) | | | (1%) | | | (3%) | | | (5%) | | | (3%) | | | | | | | | | | | | | | | | TOTAL | | | 45% | | | | | | | Adjusted Company Performance Achievement Multiplier | | | 75% | |
lt;932M | | $933M | | $957M | | $>980M | | $1,005.9M(1) | | LINZESS U.S. Net Sales | | $≤1,009M | | $1,016M | | $1,040M | | $>1,056M | | $1,002M(1) | | | | | | (0%) | | (3%) | | (15%) | | (20%) | | (20%) | | | | (0%) | | (20%) | | (30%) | | (40%) | | (0%) | | | | Obtain U.S. FDA approval of modified LINZESS labeling to reflect pediatric clinical safety data | | Specific goals are not disclosed for
competitive reasons | | Target(2) | | Advance Linaclotide Pediatric Program | | Specific goals are not disclosed for
competitive reasons | | Above Target(2) | | | | | | (0%) | | (3%) | | (5%) | | (7%) | | (5%) | | | | (0%) | | (3%) | | (5%) | | (10%) | | (10%) | | | | Gain partner alignment and advance LCM opportunity into
mid- / late-stage clinical development | | Specific goals are not disclosed for
competitive reasons | | Target(3) | | BUILD INNOVATIVE PIPELINE | | | | | | | | | | | | | | | | (0%) | | (5%) | | (10%) | | (15%) | | (10%) | | Secure 1 asset aligned with prioritized criteria | | Specific goals are not disclosed for
competitive reasons | | Below Target(3) | | | | BUILD INNOVATIVE PIPELINE | | | | | | | | | | | | | | (0%) | | (10%) | | (15%) | | (20%) | | (10%) | | | | Secure 1 GI asset aligned with prioritized criteria | | Specific goals are not disclosed for
competitive reasons | | Target(4) | | Initiate IW-3300 POC study in IC / BPS by the fourth quarter of 2022 | | Specific goals are not disclosed for
competitive reasons | | Below Target(4) | | | | | | (0%) | | (13%) | | (17%) | | (24%) | | (17%) | | | | (0%) | | (5%) | | (8%) | | (11%) | | (0%) | | | | Submit IND for IW-3300 in IC / BPS and on track to initiate Phase 1 study in the first quarter of 2022 | | Specific goals are not disclosed for
competitive reasons | | Target(5) | | Advance CNP-104 study | | Specific goals are not disclosed for
competitive reasons | | Below Target(5) | | | | | | (0%) | | (5%) | | (8%) | | (11%) | | (8%) | | | | (0%) | | (6%) | | (10%) | | (16%) | | (0%) | | | | STRENGTHEN FINANCIAL PROFILE | | | | | | | | | | | | STRENGTHEN FINANCIAL PROFILE | | | | | | | | | | | | | | Revenue | | | | | | | Performance Targets (Weights) | | | | | | | Company Goal | | | Not
Achieved | | | Partially
Achieved | | | Target | | | Over
Achieved | | | Results | | | | MAXIMIZE LINZESS | | | | | | | | | | | | | | | | | | | LINZESS U.S. Net Sales | | | $<932M | | | $933M | | | $957M | | | $>980M | | | $1,005.9M(1) | | | | | | | (0%) | | | (3%) | | | (15%) | | | (20%) | | | (20%) | | | | Obtain U.S. FDA approval of modified LINZESS labeling to reflect pediatric clinical safety data | | | Specific goals are not disclosed for
competitive reasons | | | Target(2) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (7%) | | | (5%) | | | | Gain partner alignment and advance LCM opportunity into
mid- / late-stage clinical development | | | Specific goals are not disclosed for
competitive reasons | | | Target(3) | | | | | | | (0%) | | | (5%) | | | (10%) | | | (15%) | | | (10%) | | | | BUILD INNOVATIVE PIPELINE | | | | | | | | | | | | | | | | | | | Secure 1 GI asset aligned with prioritized criteria | | | Specific goals are not disclosed for
competitive reasons | | | Target(4) | | | | | | | (0%) | | | (13%) | | | (17%) | | | (24%) | | | (17%) | | | | Submit IND for IW-3300 in IC / BPS and on track to initiate Phase 1 study in the first quarter of 2022 | | | Specific goals are not disclosed for
competitive reasons | | | Target(5) | | | | | | | (0%) | | | (5%) | | | (8%) | | | (11%) | | | (8%) | | | | STRENGTHEN FINANCIAL PROFILE | | | | | | | | | | | | | | | | | | | Revenue | | | $<368M | | | $368M | | | $380M | | | $≥395M | | | $413.8M(6) | | | | | | | (0%) | | | (1%) | | | (5%) | | | (10%) | | | (10%) | | | | Adjusted EBITDA from organic business (excluding the impact of any corporate development transactions) | | | $<181M | | | $181M | | | $200M | | | $≥223M | | | $233.7M(7) | | | | | | | (0%) | | | (3%) | | | (15%) | | | (20%) | | | (20%) | | | | CREATE GREAT PLACE TO WORK | | | | | | | | | | | | | | | | | | | Achieve at least 7 out of 10 objectives on the corporate EDI scorecard | | | ≤5/10 | | | 6/10 | | | 7/10 | | | 10/10 | | | 7/10(8) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (7%) | | | (5%) | | | | Increase understanding of and confidence in Ironwood’s strategy and culture, measured by >70% positive response rate on annual employee engagement survey | | | ≤60% | | | >60% | | | 70% | | | ≥80% | | | 61%(9) | | | | | | | (0%) | | | (2%) | | | (3%) | | | (5%) | | | (2%) | | | | STRENGTHEN GI CAPABILITIES | | | | | | | | | | | | | | | | | | | Strengthen virtual detailing capability | | | Specific goals are not disclosed for competitive reasons | | | Not
Achieved(10) | | | | | | | (0%) | | | (2%) | | | (3%) | | | (5%) | | | (0%) | | | | Leverage telehealth to increase conversion of monthly LINZESS.com visitors to completed telemedicine visits | | | Specific goals are not disclosed for competitive reasons | | | Not
Achieved(11) | | | | | | | (0%) | | | (3%) | | | (4%) | | | (6%) | | | (0%) | | | | | | | | | | | | | | | | TOTAL | | | 117% | |
| | | | | Performance Targets (Weights) | | | | | | | Company Goal | | | Not
Achieved | | | Partially
Achieved | | | Target | | | Over
Achieved | | | Results | | | | MAXIMIZE LINZESS | | | | | | | | | | | | | | | | | | | LINZESS U.S. Net Sales | | | $≤1,009M | | | $1,016M | | | $1,040M | | | $>1,056M | | | $1,002M(1) | | | | | | | (0%) | | | (20%) | | | (30%) | | | (40%) | | | (0%) | | | | Advance Linaclotide Pediatric Program | | | Specific goals are not disclosed for
competitive reasons | | | Above Target(2) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (10%) | | | (10%) | | | | BUILD INNOVATIVE PIPELINE | | | | | | | | | | | | | | | | | | | Secure 1 asset aligned with prioritized criteria | | | Specific goals are not disclosed for
competitive reasons | | | Below Target(3) | | | | | | | (0%) | | | (10%) | | | (15%) | | | (20%) | | | (10%) | | | | Initiate IW-3300 POC study in IC / BPS by the fourth quarter of 2022 | | | Specific goals are not disclosed for
competitive reasons | | | Below Target(4) | | | | | | | (0%) | | | (5%) | | | (8%) | | | (11%) | | | (0%) | | | | Advance CNP-104 study | | | Specific goals are not disclosed for
competitive reasons | | | Below Target(5) | | | | | | | (0%) | | | (6%) | | | (10%) | | | (16%) | | | (0%) | | | | STRENGTHEN FINANCIAL PROFILE | | | | | | | | | | | | | | | | | | | Revenue | | | $≤414M | | | $420M | | | $425M | | | $>430M | | | $411M(6) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (7%) | | | (0%) | | | | Adjusted EBITDA from organic business (excluding the impact of any corporate development transactions) | | | $≤234M | | | $235M | | | $250M | | | $>275M | | | $252M(7) | | | | | | | (0%) | | | (10%) | | | (20%) | | | (25%) | | | (20%) | | | | CREATE GREAT PLACE TO WORK | | | | | | | | | | | | | | | | | | | Achieve at least 7 out of 10 objectives on the corporate EDI scorecard | | | ≤5/10 | | | 6/10 | | | 7/10 | | | 10/10 | | | 7/10(8) | | | | | | | (0%) | | | (1%) | | | (2%) | | | (5%) | | | (2%) | | | | Increase understanding of and confidence in Ironwood’s strategy and culture, measured by >70% positive response rate on annual employee engagement survey | | | <60% | | | 60% | | | 70% | | | 80% | | | 72%(9) | | | | | | | (0%) | | | (1%) | | | (3%) | | | (5%) | | | (3%) | | | | | | | | | | | | | | | | TOTAL | | | 45% | | | | | | | Adjusted Company Performance Achievement Multiplier | | | 75% | |
lt;368M | | $368M | | $380M | | $≥395M | | $413.8M(6) | | Revenue | | $≤414M | | $420M | | $425M | | $>430M | | $411M(6) | | | | | | (0%) | | (1%) | | (5%) | | (10%) | | (10%) | | | | (0%) | | (3%) | | (5%) | | (7%) | | (0%) | | | | Adjusted EBITDA from organic business (excluding the impact of any corporate development transactions) | | | | | | | Performance Targets (Weights) | | | | | | | Company Goal | | | Not
Achieved | | | Partially
Achieved | | | Target | | | Over
Achieved | | | Results | | | | MAXIMIZE LINZESS | | | | | | | | | | | | | | | | | | | LINZESS U.S. Net Sales | | | $<932M | | | $933M | | | $957M | | | $>980M | | | $1,005.9M(1) | | | | | | | (0%) | | | (3%) | | | (15%) | | | (20%) | | | (20%) | | | | Obtain U.S. FDA approval of modified LINZESS labeling to reflect pediatric clinical safety data | | | Specific goals are not disclosed for
competitive reasons | | | Target(2) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (7%) | | | (5%) | | | | Gain partner alignment and advance LCM opportunity into
mid- / late-stage clinical development | | | Specific goals are not disclosed for
competitive reasons | | | Target(3) | | | | | | | (0%) | | | (5%) | | | (10%) | | | (15%) | | | (10%) | | | | BUILD INNOVATIVE PIPELINE | | | | | | | | | | | | | | | | | | | Secure 1 GI asset aligned with prioritized criteria | | | Specific goals are not disclosed for
competitive reasons | | | Target(4) | | | | | | | (0%) | | | (13%) | | | (17%) | | | (24%) | | | (17%) | | | | Submit IND for IW-3300 in IC / BPS and on track to initiate Phase 1 study in the first quarter of 2022 | | | Specific goals are not disclosed for
competitive reasons | | | Target(5) | | | | | | | (0%) | | | (5%) | | | (8%) | | | (11%) | | | (8%) | | | | STRENGTHEN FINANCIAL PROFILE | | | | | | | | | | | | | | | | | | | Revenue | | | $<368M | | | $368M | | | $380M | | | $≥395M | | | $413.8M(6) | | | | | | | (0%) | | | (1%) | | | (5%) | | | (10%) | | | (10%) | | | | Adjusted EBITDA from organic business (excluding the impact of any corporate development transactions) | | | $<181M | | | $181M | | | $200M | | | $≥223M | | | $233.7M(7) | | | | | | | (0%) | | | (3%) | | | (15%) | | | (20%) | | | (20%) | | | | CREATE GREAT PLACE TO WORK | | | | | | | | | | | | | | | | | | | Achieve at least 7 out of 10 objectives on the corporate EDI scorecard | | | ≤5/10 | | | 6/10 | | | 7/10 | | | 10/10 | | | 7/10(8) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (7%) | | | (5%) | | | | Increase understanding of and confidence in Ironwood’s strategy and culture, measured by >70% positive response rate on annual employee engagement survey | | | ≤60% | | | >60% | | | 70% | | | ≥80% | | | 61%(9) | | | | | | | (0%) | | | (2%) | | | (3%) | | | (5%) | | | (2%) | | | | STRENGTHEN GI CAPABILITIES | | | | | | | | | | | | | | | | | | | Strengthen virtual detailing capability | | | Specific goals are not disclosed for competitive reasons | | | Not
Achieved(10) | | | | | | | (0%) | | | (2%) | | | (3%) | | | (5%) | | | (0%) | | | | Leverage telehealth to increase conversion of monthly LINZESS.com visitors to completed telemedicine visits | | | Specific goals are not disclosed for competitive reasons | | | Not
Achieved(11) | | | | | | | (0%) | | | (3%) | | | (4%) | | | (6%) | | | (0%) | | | | | | | | | | | | | | | | TOTAL | | | 117% | |
| | | | | Performance Targets (Weights) | | | | | | | Company Goal | | | Not
Achieved | | | Partially
Achieved | | | Target | | | Over
Achieved | | | Results | | | | MAXIMIZE LINZESS | | | | | | | | | | | | | | | | | | | LINZESS U.S. Net Sales | | | $≤1,009M | | | $1,016M | | | $1,040M | | | $>1,056M | | | $1,002M(1) | | | | | | | (0%) | | | (20%) | | | (30%) | | | (40%) | | | (0%) | | | | Advance Linaclotide Pediatric Program | | | Specific goals are not disclosed for
competitive reasons | | | Above Target(2) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (10%) | | | (10%) | | | | BUILD INNOVATIVE PIPELINE | | | | | | | | | | | | | | | | | | | Secure 1 asset aligned with prioritized criteria | | | Specific goals are not disclosed for
competitive reasons | | | Below Target(3) | | | | | | | (0%) | | | (10%) | | | (15%) | | | (20%) | | | (10%) | | | | Initiate IW-3300 POC study in IC / BPS by the fourth quarter of 2022 | | | Specific goals are not disclosed for
competitive reasons | | | Below Target(4) | | | | | | | (0%) | | | (5%) | | | (8%) | | | (11%) | | | (0%) | | | | Advance CNP-104 study | | | Specific goals are not disclosed for
competitive reasons | | | Below Target(5) | | | | | | | (0%) | | | (6%) | | | (10%) | | | (16%) | | | (0%) | | | | STRENGTHEN FINANCIAL PROFILE | | | | | | | | | | | | | | | | | | | Revenue | | | $≤414M | | | $420M | | | $425M | | | $>430M | | | $411M(6) | | | | | | | (0%) | | | (3%) | | | (5%) | | | (7%) | | | (0%) | | | | Adjusted EBITDA from organic business (excluding the impact of any corporate development transactions) | | | $≤234M | | | $235M | | | $250M | | | $>275M | | | $252M(7) | | | | | | | (0%) | | | (10%) | | | (20%) | | | (25%) | | | (20%) | | | | CREATE GREAT PLACE TO WORK | | | | | | | | | | | | | | | | | | | Achieve at least 7 out of 10 objectives on the corporate EDI scorecard | | | ≤5/10 | | | 6/10 | | | 7/10 | | | 10/10 | | | 7/10(8) | | | | | | | (0%) | | | (1%) | | | (2%) | | | (5%) | | | (2%) | | | | Increase understanding of and confidence in Ironwood’s strategy and culture, measured by >70% positive response rate on annual employee engagement survey | | | <60% | | | 60% | | | 70% | | | 80% | | | 72%(9) | | | | | | | (0%) | | | (1%) | | | (3%) | | | (5%) | | | (3%) | | | | | | | | | | | | | | | | TOTAL | | | 45% | | | | | | | Adjusted Company Performance Achievement Multiplier | | | 75% | |
lt;181M | | $181M | | $200M | | $≥223M | | $233.7M(7) | | Adjusted EBITDA from organic business (excluding the impact of any corporate development transactions) | | $≤234M | | $235M | | $250M | | $>275M | | $252M(7) | | | | | | (0%) | | (3%) | | (15%) | | (20%) | | (20%) | | | | (0%) | | (10%) | | (20%) | | (25%) | | (20%) | | | | CREATE GREAT PLACE TO WORK | | | | | | | | | | | | CREATE GREAT PLACE TO WORK | | | | | | | | | | | | | | Achieve at least 7 out of 10 objectives on the corporate EDI scorecard | | ≤5/10 | | 6/10 | | 7/10 | | 10/10 | | 7/10(8) | | Achieve at least 7 out of 10 objectives on the corporate EDI scorecard | | ≤5/10 | | 6/10 | | 7/10 | | 10/10 | | 7/10(8) | | | | | | (0%) | | (3%) | | (5%) | | (7%) | | (5%) | | | | (0%) | | (1%) | | (2%) | | (5%) | | (2%) | | | | Increase understanding of and confidence in Ironwood’s strategy and culture, measured by >70% positive response rate on annual employee engagement survey | | ≤60% | | >60% | | 70% | | ≥80% | | 61%(9) | | Increase understanding of and confidence in Ironwood’s strategy and culture, measured by >70% positive response rate on annual employee engagement survey | | <60% | | 60% | | 70% | | 80% | | 72%(9) | | | | | | (0%) | | (2%) | | (3%) | | (5%) | | (2%) | | | | (0%) | | (1%) | | (3%) | | (5%) | | (3%) | | | | STRENGTHEN GI CAPABILITIES | | | | | | | | | | | | | | | | | | | | TOTAL | | 45% | | | | Strengthen virtual detailing capability | | Specific goals are not disclosed for competitive reasons | | Not
Achieved(10) | | | | Adjusted Company Performance Achievement Multiplier | | 75% | | | | | | (0%) | | (2%) | | (3%) | | (5%) | | (0%) | | | | | Leverage telehealth to increase conversion of monthly LINZESS.com visitors to completed telemedicine visits | | Specific goals are not disclosed for competitive reasons | | Not
Achieved(11) | | | | | | | (0%) | | (3%) | | (4%) | | (6%) | | (0%) | | | | | | | | | | | | | TOTAL | | 117% | | |
Notes to 20212022 Company Performance Targets and Results Table (1)
Goal exceeded.was below target. LINZESS U.S. net sales were $1,005.9$1,002 million for the year ended December 31, 2021.2022. LINZESS U.S. net sales are reported by our U.S. partner, AbbVie. (2)
Goal exceeded. In September 2022, Proxy Statement 33
(2)
Goal achieved.we announced positive topline data from a Phase III clinical trial evaluating linaclotide 72 mcg in pediatric patients aged 6-17 with functional constipation. The trial met its primary and secondary endpoints, demonstrating that linaclotide 72 mcg improved frequency of spontaneous bowel movements and stool consistency. In August 2021,December 2022, we and our U.S. partner, AbbVie, submitted an sNDA to the U.S. FDA approvedseeking approval of a revised labelnew indication of LINZESS for LINZESS based on clinical safety data that had been generated thus farFC in pediatric studies. The updated label modified the boxed warning for risk of serious dehydration and contraindication against use in children to those less than two years of age. The boxed warning and contraindication previously applied to all children less than 18 years of age and less than 6 years of age, respectively. The safety and effectiveness of LINZESS in patients less than 18 years of age have not been established.aged 6-17 years. Specific target thresholds are not disclosed for competitive reasons.
(3)
Goal achieved.was below target. Specific details and target thresholds are not disclosed for competitive reasons. (4)
Goal achieved. In November 2021, we entered into a collaboration and license option agreement with COUR Pharmaceutical Development Company, Inc., that grants us an optionAlthough the IW-3300 POC study goal was below target, the board of directors considered the significant progress made in this program when it exercised its discretion to acquire an exclusive license to research, develop, manufacture and commercialize, inadjust the U.S., products containing CNP-104 for the treatment of PBC.performance achievement multiplier as described more fully below. Specific target thresholds are not disclosed for competitive reasons.
(5)
Goal achieved. In December 2021,Although the U.S. FDA accepted our Investigational New Drug Application for IW-3300, andCNP-104 goal was below target, the Phase I clinicalboard of directors considered the significant progress made in this program commenced inwhen it exercised its discretion to adjust the first quarter of 2022 to evaluate the safety and tolerability of IW-3300 in healthy volunteers.performance achievement multiplier as described more fully below. Specific target thresholds are not disclosed for competitive reasons.
(6)
Goal exceeded.was below target. Our total revenues were $413.8$411 million for the year ended December 31, 2021.2022. (7)
Goal exceeded.achieved. Our adjusted EBITDA was $233.7$252 million for the year ended December 31, 2021.2022. Adjusted EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2.25% convertible notes due 2022, restructuring expenses, net interest expense, interest and investment income, taxes,income tax expense and depreciation and amortization from GAAP net income. When excluding the impact of corporate development activity in 2021, consisting of $19.5 million of expense related to the collaboration and license option agreement with COUR, our adjusted EBITDA from our organic business was $253.2M. (8)
Goal achieved. Over the course of the year, we succeeded in attaining our corporate target of achieving 7 out of 10 pre-determined EDI objectives. (9)
Goal was partially achieved. The overall engagement score in our annual employee engagement survey was 61%, which falls within partially achieved range.72%. (10)
As illustrated in the table and the accompanying footnotes, we achieved 45% of our pre-established corporate performance goals for 2022. However, after careful consideration and following the recommendation of the compensation and HR committee, the board of directors exercised its discretion and adjusted the Company’s performance achievement multiplier for 2022 to 75%.
GoalWhen making its decision to exercise discretion with respect to the Company’s performance achievement multiplier, the board of directors took into account the fact that LINZESS U.S. Net Sales was the most heavily weighted goal within the 2022 program and that the $1,002M in LINZESS net sales that was delivered in 2022, although below threshold performance, was 96% of Target and still reflected a strong 9% prescription demand growth compared to 2021. The board further acknowledged that this sales level was achieved as a result of the significant efforts of the entire team, despite unanticipated inventory fluctuations in the retail channel that were outside the control of the Company. The board of directors also considered the Company’s progress towards achieving its product pipeline goals, including the extent of clinical trial start up activities achieved and the expected patient dosing in early 2023 for the Phase II IW-3300 proof of concept study in IC/BPS and the initiation of the clinical study for CNP-104 to evaluate the safety, tolerability, pharmacodynamic effects and efficacy of CNP-104 in PBC patients, including recruitment to support the expectations of early data assessing T-cell response from the patients enrolled in the study in the second half of 2023. Finally, the board believes that its decision to increase the corporate multiplier did not achieved. Duecreate a misalignment with shareholders as the Company achieved a compelling relative total stockholder return compared to our sales representatives achieving physician access near pre-pandemic levelsits peers and the Nasdaq Biotechnology Index in 2021, we determined not2022.
Given all of the above, the board of directors concluded that its limited exercise of discretion to pursue this goal. Specificaward a corporate performance achievement multiplier at a below target thresholds are not disclosedlevel of 75% would provide for competitive reasons.strong accountability for the management team while also more appropriately reflecting the performance of the Company and its employees in 2022.
Goal was not achieved. Specific details and target thresholds are not disclosed for competitive reasons.
In support of the 20212022 corporate goals identified above, our compensation and HR committee assigned a specific subset of individual goals for each of our named executive officers (except for Mr. Emany) as described below. Mr. Emany joined the company in December 2021 and therefore was not assigned individual goals for the year. | Name | | | Summary of Individual Goals | | | Thomas McCourt | | | •
LeadBoard and Investor Relations: Engage with the company through the chief executive officer, chief financial officer, and other talent transitions to re-establish a highly functional executive leadership team recruiting top talent to bolster our capabilities
•
Broaden and deepen business acumen and personal focus on corporate finance, board of directors to align strategic and investor relations, corporate governance,operational objectives to optimize the value of the company. Engage shareholders, analysts, and corporate developmentpotential shareholders to convey the potential value of the company and associated risks and ultimately foster stock price growth.
•
Re-evaluateStrategic Opportunities: Lead the company’sassessment of strategic opportunities and champion efforts where appropriate to drive corporate valuevalue.
•
Ensure achievementOperational Performance: Lead and motivate the business towards the accomplishment of 2021the 2022 corporate goals established by the board of directors.
•
Talent & Leadership: Continue to strengthen the effectiveness of the executive leadership team providing opportunities to advance their professional development and enhance team dynamics. Serve as the cultural champion of the organization. | | | Sravan Emany | | | •
2022 Operating Plan: Collaborate with the commercial and brands teams to ensure proper investment in brand growth drivers and achievement of targeted brand margins. Champion fiscal management including pursuing opportunities to reduce spending. •
Investor Relations: Engage with the board of directors, shareholders, analysts, and potential shareholders to convey the potential value of the company and associated risks and ultimately foster stock price growth. •
Capital Structure Management: Assess and deliver on opportunities to improve our debt and equity positions including debt refinancing and share repurchase. Foster relationships with commercial and investment banks. •
Leadership of Strategic Finance: Partner with the corporate development team in identifying, assessing, and closing on strategic initiatives to expand our product portfolio. •
Internal Controls: Oversee and develop the finance team to ensure appropriate controls were in place over financial reporting and treasury operations. | | | John Minardo | | | •
AssessLinzess Support: Build working relationships with commercial and appropriatelydevelopment leadership. Effectively partner with the senior leadership of our U.S. partner, AbbVie, to better enable joint committees to be held accountable for managing LINZESS in accordance with our collaboration agreement. Oversee our promotional review process and ensure compliance and timely review of the materials.
•
DE&I Champion: Guide the DE&I Council adding new perspectives to the dialogue. Co-lead the Reverse Mentorship Program and engage with our employee resource groups. •
Business Development and M&A Strategy: Lead the legal/intellectual property assessment of potential proposed transactions providing clear guidance on opportunities, risks, and negotiation. •
Strengthen the Legal Team Leadership: Appropriately align and develop our legal capabilities including assessing the capabilities of our legal team, defining clear roles forin corporate governance, contracts, SEC filings, intellectual property, employee matters, public disclosures and corporate compliance, promotional review, etc.
•
Guide our new head of compliance in establishing a comprehensive and sound compliance capability, enabling new promotion messaging, virtual promotion, telemedicine, revised speaker training, and people management
•
Evaluate and reduce risk in our intellectual property program and advise on and reduce risk in corporate development transactions
•
Lead effort to ensure operational excellence of our linaclotide collaborations and provide legal support as neededcompliance.
| |
34 Ironwood
2023 Proxy Statement 35
| Name | | | Summary of Individual Goals | | | Jason Rickard | | | •
Lead the organization’s response to the COVID-19 pandemic, including its impact on employee safety, our selling model, supplier and other financial risks, and our workplace
•
Workplace 2.0: Develop and implement initiatives to sustain employee engagement and productivity, while accounting for remote and hybrid working models and challenging labor market conditionsconditions. Lead the organization’s evolving response to the COVID-19 pandemic, including its impact on employee safety, our selling model, supplier, and other financial risks. •
Achieve functional objectives includingSupply Chain: Deliver on specific pharmaceutical development, manufacturing science, and clinical supply deliverables associated with IW-3300; upgrade selected IT systems;our products and manage overall operational expensesproduct candidates.
•
Support the company through the chief executive officer, chief financial officer,Information Technology, or IT, Infrastructure: Sunset legacy applications and other talent transitions to re-establish a highly functional executive leadership team; lead recruiting for senior executive rolescomplete improvements identified in our IT strategic road map. Align IT capabilities with emerging and fill-in as needed to manage organization during transitionsfuture requirements while reducing operational expenses.
•
Human Resources and Culture: Strengthen the company’s organization and talent development capabilities. Serve as the company’s cultural champion, including EDIand implement updated corporate values and DEI initiatives, to ensure Ironwood continues to be a great place to workwork. | | Michael Shetzline,
M.D., Ph.D. | | | •
LINZESS Life-Cycle Management: Lead the Drug Developmentresearch and drug development team in managing the clinical assessment of functional constipation and IBS-C in children 6-17 years of age and collaborate with our partner, AbbVie, to successfully negotiate and securefile supplemental new drug application with the U.S. FDA updated label that modifies the boxed warning and contraindication applied to all children less than 18 years of age and less than 6 years of age, respectively,with a request for priority review, if appropriateappropriate. •
Advance the pediatric life-cycle managementClinical Development: Collaborate with COUR to initiate proof-of-concept study for LINZESS, accelerate enrollment of functional constipation/IBS-C study,CNP-104 for primary biliary cholangitis. Complete phase 1 trial for IW-3300. Design and gain alignment to include 145 mcg dosewith the U.S. FDA on proof-of-concept study for the functional constipation studytreatment of IC/BPS and initiate next phase study.
•
GI Pipeline Expansion: Expand our GI pipeline by advancing IW-3300 and collaborating with our Corporate Developmentcorporate development team to identify, evaluate and enter into an agreementagreements to secure a new assetassets. •
Research and Drug Development: Strengthen the Drug Developmentresearch and drug development team and establish a team of world-class experts and trusted opinion leaders in gastroenterologygastroenterology. | |
In early 2022,2023, Mr. McCourt evaluated the individual performance in 20212022 of each of the current named executive officers (other than himself and Mr. Emany, who joined the company in December 2021)himself), provided feedback and made recommendations to our compensation and HR committee. The compensation and HR committee then determined the current named executive officers’ compensation, taking into account Ironwood’s level of achievement of its 20212022 corporate goals as determined by our board; the fact that each named executive officer strongly metexceeded or exceededachieved performance expectations for 2021,2022, and peer group and other market data from the competitive assessment undertaken by our compensation and HR committee’s independent compensation consultant, Human Capital Solutions, Aon, or Aon, as discussed below. Additional information on the basis for decisions about 20212022 compensation relating to our named executive officers is available throughout this section and elsewhere in this proxy statement under the captions Role of the Compensation and HR Committee and Role of the Compensation Consultant: Benchmarking and Peer Group Analysis.Analysis. Compensation Decisions for 20212022 Named Executive Officer Compensation Program As in prior years, the three primary elements of our executive compensation program for 20212022 were base salary, cash bonus and long-term equity incentive compensation. Also included in 2021 were (i) increases to Mr. McCourt’s compensation in connection with his appointment as interim chief executive officer and subsequently permanent chief executive officer, including an increase in base salary and target bonus percentage and a promotional equity grant, (ii) new hire compensation packages for Messrs. Minardo and Emany, and (iii) retention cash bonus and retention RSU awards granted to Messrs. McCourt and Rickard, Ms. Consylman and Dr. Shetzline to support continuity of the executive team during the leadership transitions.
2021 Base Salary
Base salaries are determined at an executive’s commencement of employment and are generally re-evaluated annually and adjusted, if warranted, to realign salaries with market levels or in connection with promotions or other changes in role and to reflect the performance of the named executive officer. In determining whether to adjust or recommend an adjustment to a named executive officer’s base salary, our compensation and HR committee takes into
consideration factors such as our corporate performance in prior years, general economic factors and compensation parity among our named executive officers, as well as the abilities, performance and experience of the named executive officer. Our compensation and HR committee also reviews our named executive officers’ past compensation at the company and market data. In addition, our compensation and HR committee recommends, and our board approves, compensation determinations for our chief executive officer. Please see Role of the Compensation and HR Committeeand Role of the Compensation Consultant: Benchmarking and Peer Group Analysis for further information. In February 2021,March 2022, our compensation and HR committee reviewed and approved 2022 base salaries for our named executive officers employed atfor 2022, except for Mr. Emany, due to his joining the company in December 2021, and for Mr. McCourt whose base salary is reviewed and recommended by our compensation and HR committee and approved by our board of directors. In March 2022, following a recommendation by our compensation and HR committee, our board of directors approved Mr. McCourt’s 2022 base salary. The increases in base salary for Messrs. McCourt, Minardo and Rickard and Dr. Shetzline were based on our compensation and HR committee’s (and the board of directors’, in the case of Mr. McCourt) determination that time ineach executive officer achieved or exceeded substantially all of his respective individual goals for 2021. These base salary determinations also took into account peer group and other market data and peer group compensation levels for the comparable executive roles from the Aon competitive assessment conducted by Aon and discussed below, experience and contribution potential of each executive officer and general economic factors. The compensation and HR committee did not recommend, and the board did not increase, Mr. Mallon’s base salary in 2021 because Mr. Mallon had provided notice of his intent to resign from the company at the time salary determinations for 2021 were made. In March 2021, the compensation and HR committee recommended, and our board approved, a further increase to Mr. McCourt’s 2021 base salary from $573,200 to $775,000 in connection with Mr. McCourt being named the company’s interim chief executive officer and president. In June 2021, the board appointed Mr. McCourt as Ironwood’s permanent chief executive officer, and delegated authority to the compensation and HR committee to approve Mr. McCourt’s initial compensation as permanent chief executive officer. The compensation and HR committee determined that his 2021 base salary should remain at $775,000. In June 2021, the compensation and HR committee also approved an additional increase to Mr. Rickard’s 2021 base salary from $484,200 to $500,000 in recognition of the additional workload Mr. Rickard would be assuming in connection with the transition of the company’s chief financial officer role. In approving Messrs. McCourt and Rickard’s respective base salaries, our compensation and HR committee considered a number of factors, including each of Messrs. McCourt and Rickard’s backgrounds, the increase in responsibility and scope of their respective roles, the compensation paid to executives in similar positions at our peer group companies and other benchmark data, and executive compensation parity within Ironwood, as well as input from Aon. Information on Messrs. McCourt and Rickard’s base salary changes is available elsewhere in this proxy statement under the captions 2021 Chief Executive Officer Transition and 2021 Chief Financial Officer Transition.
In August 2021 and December 2021, Messrs. Minardo and Emany were appointed as senior vice president, chief legal officer and senior vice president, chief financial officer, respectively. The compensation and HR committee approved Messrs. Minardo and Emany’s 2021 base salaries of $475,000 and $500,000, respectively. In approving Messrs. Minardo and Emany’s respective base salaries, our compensation and HR committee considered a number of factors, including each of Messrs. Minardo and Emany’s backgrounds, the compensation paid to executives in similar positions at our peer group companies and other benchmark data, and executive compensation parity within Ironwood, as well as input from Aon. Information on Messrs. Minardo and Emany’s respective initial compensation packages is available elsewhere in this proxy statement under the captions Chief Legal Officer Appointment and 2021 Chief Financial Officer Transition.
more detail below. Base salary information for 20212022 compared to base salary information for 20202021 for each of our named executive officers as applicable, is as follows: | | Named Executive Officer | | 2020
Base Salary | | 2021
Base Salary | | Increase ($) | | Increase (%) | | Named Executive Officer | | 2021
Base Salary | | 2022
Base Salary | | Increase ($) | | Increase (%) | | | | Thomas McCourt | | | $ | 556,400 | | | | $ | 775,000(1) | | | | $ | 218,600 | | | | | 39.3% | | | Thomas McCourt | | | $ | 775,000 | | | | $ | 806,000 | | | | $ | 31,000 | | | | | 4.0% | | | | | Sravan Emany | | | | —(2) | | | | $ | 500,000 | | | | | — | | | | | — | | | Sravan Emany* | | | $ | 500,000 | | | | $ | 500,000 | | | | $ | 0 | | | | | 0% | | | | | John Minardo | | | | —(2) | | | | $ | 475,000 | | | | | — | | | | | — | | | John Minardo | | | $ | 475,000 | | | | $ | 494,000 | | | | $ | 19,000 | | | | | 4.0% | | | | | Jason Rickard | | | $ | 456,750 | | | | $ | 500,000(3) | | | | $ | 43,250 | | | | | 9.5% | | | Jason Rickard | | | $ | 500,000 | | | | $ | 520,000 | | | | $ | 20,000 | | | | | 4.0% | | | | | Michael Shetzline, M.D., Ph.D. | | | $ | 448,050 | | | | $ | 484,000 | | | | $ | 35,950 | | | | | 8.0% | | | Michael Shetzline, M.D., Ph.D. | | | $ | 484,000 | | | | $ | 513,040 | | | | $ | 29,040 | | | | | 6.0% | | | | | Mark Mallon | | | $ | 772,500 | | | | $ | 772,500(4) | | | | $ | 0 | | | | | 0% | | | | | | Gina Consylman | | | $ | 494,400 | | | | $ | 509,400 | | | | $ | 15,000 | | | | | 3.0% | | | |
(1)
*
In connection with Mr. McCourt being named the company’s interim chief executive officer and president, in March 2021, the compensation and HR committee recommended, and our board approved, an increase to Mr. McCourt’s 2021 initialEmany’s base salary from $573,200 to $775,000 duringwas not changed for 2022 as part of the chief executive officer transition period. In JuneCompany’s 2021 the board appointed Mr. McCourtperformance review cycle as Ironwood’s permanent chief executive officer, and the compensation and HR committee determined that his 2021 base salary should remain at $775,000. Information on Mr. McCourt’s salary for his service as our interim and subsequently as our permanent chief executive officer is available elsewhere in this proxy statement under the caption 2021 Chief Executive Officer Transition.
(2)
2020 Base Salary is not applicable for Messrs. Emany and Minardo as they were not employed byhe joined the company in 2020.December 2021.
(3)
In June 2021, the compensation and HR committee approved an additional increase to Mr. Rickard’s 2021 base salary from $484,200 to $500,000 in recognition of the additional workload Mr. Rickard would be assuming in connection with the transition of the company’s chief financial officer role.
(4)
The compensation and HR committee did not recommend, and the board did not increase Mr. Mallon’s base salary in 2021 because Mr. Mallon had provided notice of his intent to resign from the company at the time base salary determinations for 2021 were made.
Annual Cash Incentive Program for 20212022 Performance Our annual cash incentive program, or cash bonus award, is designed to reward the achievement of our annual corporate goals and individual goals. The program is also intended to foster and support our performance-driven culture by setting clear, high-value goals, rewarding outstanding performers and making sure our employees know clearly that we value their contributions. Each target bonus award, expressed as a percentage of an executive’s base salary, is determined annually and is based on the extent to which we achieved our corporate goals for the preceding year, as well as the executive’s individual performance in that year against his or her individual goals. In 2021, Mr. McCourt’sgoals as well as peer group and other market data. Target bonus percentages for 2022 for each of our named executive officers, which were unchanged from the respective target bonus percentage was initially 60% of his base salary and was later increased in March 2021 to 75% of his base salary in connection with his appointments as interim chief executive officer and subsequently as permanent chief executive officer, Mr. Minardo’s target bonus percentage was 45% of his base salary but pro-rated to reflect his start in August 2021, Mr. Rickard’s target bonus percentage was 50% of his base salary and Dr. Shetzline’s target bonus percentage was 40% of his base salary. For the purpose of determining Dr. Shetzline’s 2021 bonus in March 2022, our compensation and HR committee increased his target bonus percentage from 40% to 45%percentages for 2021, based on Aon’s competitive assessment and the elevation of his role to report directly to the chief executive officer. Mr. Emany, whose target bonus percentage is 50% of his salary, was not eligible to receive a bonusare as part of the company’s 2021 performance review cycle due to the substantial completion of fiscal year 2021 when he joined Ironwood in December 2021. follows: | | Named Executive Officer | | | 2022 Target Bonus
(as a % of base salary) | | | | Thomas McCourt | | | | | 75% | | | | | Sravan Emany | | | | | 50% | | | | | John Minardo | | | | | 45% | | | | | Jason Rickard | | | | | 50% | | | | | Michael Shetzline, M.D., Ph.D. | | | | | 45% | | |
We believe that these target bonus percentages align the target cash compensation, as defined below, of our named executive officers with that of our peers, place appropriate emphasis on the achievement of our annual performance objectives and facilitate recruiting, retaining, and motivating our executive officers. For each of our current named executive officers, other than our chief executive officer, 70% of each 20212022 cash bonus award was based solely on the achievement of our corporate goals and 30% was based on the named executive officer’s achievement of his individual goals as described above, and our corporate goals. In recommending for approval by
the board the amount of Mr. McCourt’s 20212022 cash bonus, our compensation and HR committee determined to set Mr. McCourt’s individual performance in 20212022 to be equal to the company’s performance factor of 117%75%. The board reviewed and followed this recommendation in approving Mr. McCourt’s cash bonus award for 20212022 performance. The following table summarizes the calculation of our named executive officers’ cash bonus awards, other than for our chief executive officer. Mr. Minardo’s cash bonus was prorated to 42% to reflect that he joined the company in August 2021. Mr. McCourt’s 20212022 cash bonus was calculated by multiplying his target bonus percentage (75%) by the corporate performance factor, as noted above. Messrs. Mallon and Emany, and Ms. Consylman were not eligible for a 2021 cash bonus. | | Component Calculation | | | | Company Performance
Only Component
(Weighted 70%) | | | 70% Weighting | | | × | | | Target Bonus | | | × | | | Corporate Performance
Achievement Multiplier | | | = | | | Company
Performance
Only Component
Payout | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | + | | | | Company and Individual
Performance Component
(Weighted 30%) | | | 30% Weighting | | | × | | | Target Bonus | | | × | | | Corporate
Performance
Achievement
Multiplier | | | × | | | Individual
Performance
Achievement
Multiplier | | | = | | | Company and
Individual
Performance
Only Component
Payout | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Annual
Bonus Payout | | | |
This approach was intended to closely align cash bonus award payouts with the achievement of our corporate goals, while taking into account individual performance (or, in the case of Mr. McCourt, equating company performance with individual performance) and making bonus determinations in a transparent way. As described above, the company performance achievement multiplier for 20212022 was 117%75%. In March 2022,February 2023 our compensation and HR committee, (i) determined that each of our current named executive officers strongly met(other than Mr. McCourt, whose individual performance was equated with company performance) achieved or exceeded pre-established individual goals for 2021,2022, resulting in the following individual performance achievement multipliers and bonus ratios to target bonus percentage (after applying the 70%/30% weighting and taking into account the company performance achievement multiplier of 117%75%);.The compensation and (ii)HR committee then reviewed and approved (or, the board, in the case of Mr. McCourt)McCourt, recommended that the board approve, which recommendation was followed by the board) the following bonuses for 20212022 performance for our current named executive officers, except for Mr. Emany who joined the company in December 2021:officers: | | Named Executive Officer | | Individual Performance | | Actual Bonus to Target Bonus
Ratio | | Annual Cash Incentive Program
for 2021 Performance | | Named Executive Officer | | Individual Performance | | Actual Bonus to Target Bonus
Ratio | | Annual Cash Incentive Program
for 2022 Performance | | | | Thomas McCourt | | | | 117%(1) | | | | | 117% | | | | $ | 680,063 | | | Thomas McCourt | | | | 75%(1) | | | | | 75% | | | | $ | 453,375 | | | | | John Minardo | | | | 100% | | | | | 117% | | | | $ | 105,037(2) | | | Sravan Emany | | | | 120% | | | | | 80% | | | | $ | 198,750 | | | | | Jason Rickard | | | | 140% | | | | | 131% | | | | $ | 327,600 | | | John Minardo | | | | 100% | | | | | 75% | | | | $ | 166,725 | | | | | Michael Shetzline, M.D., Ph.D. | | | | 140% | | | | | 131% | | | | $ | 285,405 | | | Jason Rickard | | | | 125% | | | | | 81% | | | | $ | 209,625 | | | | | | Michael Shetzline, M.D., Ph.D. | | | | 130% | | | | | 82% | | | | $ | 188,735 | | |
(1)
As described above, our compensation and HR committee also recommended, and our board determined that Mr. McCourt’s individual performance achievement multiplier was 117%75% on the basis that such multiplier was equal to the corporate performance achievement multiplier of 117%75%.
(2)
Prorated for the portion of the year that Mr. Minardo was employed.
20212022 Long-Term Equity Awards
Long-term equity incentive compensation granted in 20212022 represented, on average, approximately 79%73% of each named executive officer’s total compensation for the year (based on the grant date fair value of equity awards, with performance-based restricted stock unit, or PSU, awards measured at target). We believe this emphasis on equity, and particularly performance-based equity, strongly reinforces the principle of “pay for performance” and closely ties our executives’ pay outcomes to stockholder value creation. We also use equity awards as our incentive vehicle for long-term compensation to attract, reward and retain our named executive officers and to align the interests of our named executive officers with those of stockholders. We typically grant equity awards in the first quarter of each year based on our performance in the prior year. Throughout the year, our compensation and HR committee may award additional equity grants as circumstances warrant. Our compensation and HR committee does not apply a rigid formula in allocating equity awards to our named executive officers as a group or to any particular named executive officer, but sets an equity pool each year based on peer group and other market data from the Aon competitive assessment discussed below. In addition to peer group and market data, our compensation and HR committee also considers other factors, including input from Aon and the amount of unvested equity held by a named executive officer, in determining the size of individual equity awards. In 2020, our compensation and HR committee introduced PSUs into our executive equity compensation program in an effort to drive accountability to achieve key milestones and deliver stockholder returns. In introducing PSUs and providing for an equal number of PSUs and RSUs to our named executive officers, the compensation and HR committee sought to design an executive equity compensation program that provides the appropriate combination of equity awards to incentivize performance, align executive interests with those of our stockholders, and encourage executive retention.
20212022 Annual Equity Awards
In early 2021,2022, our compensation and HR committee determined that the annual long-term equity incentive compensation awards for our named executive officers should consist of an approximately even number of PSUs and restricted stock units, or RSUs. The compensation and HR committee chose relative total shareholder return, or rTSR performance as the sole PSU performance metric in our 20212022 executive equity compensation program to further tie the compensation of our named executive officers to stockholder value. Aon assisted the compensation and HR committee with identifying a peer group specifically for purposes of the rTSR measurement goal used for PSUs granted in 2021,2022, or the 20212022 rTSR PSUs. The 20212022 rTSR PSUs use the following performance metric and vesting opportunities: | | Performance Metric | | | Performance Period | | | Threshold Goals
(50% attainment) | | | Target Goals
(100% attainment) | | | Stretch Goals
(200% attainment) | | | | 20212022 rTSR PSUs | | | Three-year performance period ending December 31, 20232024 | | | rTSR at the 25th percentile compared to rTSR peer group through 20232024 | | | rTSR at the 50th percentile compared to rTSR peer group through 20232024 | | | rTSR at the 75th percentile compared to rTSR peer group through 2023(1)2024(1) | |
(1)
Attainment for the 20212022 rTSR PSUs is capped at 100% where the Company'sCompany’s total stockholder return is negative. 20222023 Proxy Statement 39
At the time they were designated, the peer group identified for the purposes of the 20212022 rTSR PSUs consisted of commercial pharmaceutical and biotechnology companies that ranged between $750 million and $10 billion in market capitalization; Ironwood’s 30-day market value capitalization as of December 31, 20202021 was at the 39th percentile relative to this custom peer group. Our compensation and HR committee approved the following custom rTSR measurement peer group for the 20212022 rTSR PSUs, which included all of our executive compensation peers with the exceptions of Akcea Therapeutics, Inc., which was acquired, and Horizon Therapeutics plc, which had exceeded the market capitalization range at the time the 2021 rTSR PSU peer group was designated:peers: | | ACADIA Pharmaceuticals, Inc. (Nasdaq: ACAD) | | | JazzIntercept Pharmaceuticals, plcInc. (Nasdaq: ICPT) | | | | Acceleron PharmaAgenus Inc. (Nasdaq: AGEN) | | | Karyopharm Therapeutics Inc.Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) | | | | Agios Pharmaceuticals, Inc. (Nasdaq: AGIO) | | | Kronos Bio,MacroGenics, Inc. (Nasdaq: MGNX) | | | | Alkermes plc | | | Ligand Pharmaceuticals Incorporated | | | Amarin Corporation plc (Nasdaq: ALKS) | | | MannKind Corporation (Nasdaq: MNKD) | | | | Amicus Therapeutics, Inc. (Nasdaq: FOLD) | | | MiMedx Group, Inc.Myovant Sciences Ltd. (Nasdaq: MYOV) | | | | AmphastarApellis Pharmaceuticals, Inc. (Nasdaq: APLS) | | | Neurocrine Biosciences, Inc. (Nasdaq: NBIX) | | | | BioCryst Pharmaceuticals, Inc. (Nasdaq: BCRX) | | | OPKO Health, Inc. (Nasdaq: OPK) | | | | Biohaven Pharmaceutical Holding Company Ltd. (Nasdaq: BHVN) | | | Ocular Therapeutix,Pacira BioSciences, Inc. (Nasdaq: PCRX) | | | | bluebird bio, Inc. (Nasdaq: BLUE) | | | Omeros CorporationPTC Therapeutics, Inc. (Nasdaq: PTCT) | | | | Blueprint Medicines Corporation (Nasdaq: BPMC) | | | OPKORadius Health, Inc. (Nasdaq: RDUS) | | | | BridgeBio Pharma, Inc. (Nasdaq: BBIO) | | | Sage Therapeutics, Inc. (Nasdaq: SAGE) | | | | ChemoCentryx, Inc. (Nasdaq: CCXI) | | | Sarepta Therapeutics, Inc. (Nasdaq: SRPT) | | | | Coherus BioSciences, Inc. (Nasdaq: CHRS) | | | Pacira BioSciences,Sorrento Therapeutics, Inc. (Nasdaq: SRNE) | | | | Corcept Therapeutics Incorporated (Nasdaq: CORT) | | | Perrigo Company plcSupernus Pharmaceuticals, Inc. (Nasdaq: SUPN) | | | | Deciphera Pharmaceuticals, Inc.Dynavax Technologies Corporation (Nasdaq: DVAX) | | | Prestige Consumer HealthcareTG Therapeutics, Inc. (Nasdaq: SUPN) | | | | Emergent BioSolutions Inc. (Nasdaq: EBS) | | | PTCTravere Therapeutics, Inc. | | | Endo International plc | | | Radius Health, Inc. (Nasdaq: TVTX) | | | | Epizyme, Inc. (Nasdaq: EPZM) | | | Revance Therapeutics,Ultragenyx Pharmaceutical Inc. | | | Esperion Therapeutics, Inc. | | | Sage Therapeutics, Inc. (Nasdaq: RARE) | | | | Exelixis, Inc. (Nasdaq: EXEL) | | | SorrentoUnited Therapeutics Inc.Corporation (Nasdaq: UTHR) | | | | Global Blood Therapeutics, Inc. (Nasdaq: GBT) | | | SupernusVanda Pharmaceuticals Inc. | | | GW Pharmaceuticals plc | | | Taro Pharmaceutical Industries Ltd. (Nasdaq: VNDA) | | | | Halozyme Therapeutics, Inc. (Nasdaq: HALO) | | | Theravance Biopharma, Inc. | | | Harmony Biosciences Holdings, Inc. | | | United TherapeuticsVericel Corporation | | | Heron Therapeutics, Inc. | | | Veracyte, Inc. (Nasdaq: VCEL) | | | | Insmed Incorporated (Nasdaq: INSM) | | | Vericel Corporation | | | Intercept Pharmaceuticals, Inc. | | | Viela Bio, Inc. | | | Ionis Pharmaceuticals, Inc. | | | Zogenix, Inc. | |
In February 2021 and March 2021,2022, our named executive officers (other than Mr. Mallon)Emany) were granted RSUs and PSUs, respectively, in each case under our 2019 Plan. RSUs granted in 20212022 vest as to 25% of the underlying shares on each approximate anniversary of the grant date of the award, subject to continued employment on each vesting date, which is the vesting schedule typically used for RSU awards granted to employees. As stateddescribed above, in this proxy statement, the 20212022 PSU awards are subject to a single rTSR performance goal, which is measured over a three-year performance period ending on December 31, 2023.2024.
The RSUs and PSUs granted to our named executive officers (other than Messrs. Emany, Mallon and Minardo)Mr. Emany) in February and March of 2021, respectively,2022 were as follows: | | Named Executive Officer | | 2021 Annual PSU Grant
(# of Shares of Class A common stock
Subject to PSUs) (at target) | | 2021 Annual RSU Grant
(# of Shares of Class A common stock
Subject to RSUs) | | Named Executive Officer | | 2022 Annual PSU Grant
(# of Shares of Class A common stock
Subject to PSUs) (at target) | | 2022 Annual RSU Grant
(# of Shares of Class A common stock
Subject to RSUs) | | | | Thomas McCourt | | | | 144,927 | | | | | 145,631 | | | Thomas McCourt | | | | 248,868 | | | | | 248,869 | | | | | Jason Rickard | | | | 84,541 | | | | | 84,951 | | | Sravan Emany* | | | | 0 | | | | | 0 | | | | | Michael Shetzline, M.D., Ph.D. | | | | 57,971 | | | | | 58,252 | | | John Minardo | | | | 67,873 | | | | | 67,873 | | | | | Gina Consylman | | | | 84,541 | | | | | 84,951 | | | Jason Rickard | | | | 90,497 | | | | | 90,498 | | | | | | Michael Shetzline, M.D., Ph.D. | | | | 81,447 | | | | | 81,448 | | |
*
Mr. Emany was not eligible for a PSU or RSU award in 2022 due to the fact that he joined the company in December 2021. In making its determinations with respect to the size of equity awards awardedgranted to each of our named executive officers (other than Messrs. Emany, Mallon, and Minardo)Mr. Emany), our compensation and HR committee took into account peer group and other market data from the Aon competitive assessment discussed below, as well as other factors including each executive’s current equity holdings, expected future contributions and retention. Mr. Mallon did not receive equity awards in 2021 because he had provided notice of his intent to resign from the company at the time annual equity awards were granted. 2020 Adjusted EBITDArTSR PSUs Payout In 2020, our compensation and HR committee established the following performance goals for our 2020 PSU awards, which were intended to drive executive accountability for delivering value to our stockholders: 1)
Gaining the U.S. FDA’s acceptance of one or more additional NDAs through internal development or acquisition of development-stage or commercial-stage programs, or NDA Acceptance PSUs; 2)
Growing revenue and controlling expenses as measured by cumulative adjusted organic EBITDA, or Adjusted EBITDA PSUs; and 3)
Realizing rTSR goals as described in our 2021 proxy statement filed with the SEC on April 22, 2021 (the “2021 Proxy Statement”), or 2020 rTSR PSUs.
The 2020 PSUs use the following metrics, weighting and vesting opportunities: | Performance Metric | | | Weight | | | Performance Period | | | Threshold Goals
(50% attainment) | | | Target Goals
(100% attainment) | | | Stretch Goals
(200% attainment) | | | NDA Acceptance PSUs | | | 40% | | | Three-year performance period ending December 31, 2022 | | | N/A | | | Acceptance by the U.S. FDA of an NDA for IW-3718 or other internal or external development program | | | Acceptance by the U.S. FDA of two NDAs, including IW-3718 and/or other internal or external development programs | | | Adjusted EBITDA PSUs(1) | | | 30% | | | 2020 — 2021
Cumulative Target | | | $266 million | | | $296 million | | | $355 million | | | 2020 rTSR PSUs | | | 30% | | | Three-year performance period ending December 31, 2022 | | | rTSR at the 25th percentile compared to rTSR peer group through 2022 | | | rTSR at the 50th percentile compared to rTSR peer group through 2022 | | | rTSR at the 75th percentile compared to rTSR peer group through 2022(2) | |
| | Performance Metric | | | Weight | | | Performance Period | | | Threshold Goals
(50% attainment) | | | Target Goals
(100% attainment) | | | Stretch Goals
(200% attainment) | | | Payout | | | Weighted
Payout | | | | NDA Acceptance PSUs | | | 40% | | | Three-year performance period ending December 31, 2022 | | | N/A | | | Acceptance by the U.S. FDA of an NDA for IW-3718 or other internal or external development program | | | Acceptance by the U.S. FDA of two NDAs, including IW-3718 and/or other internal or external development programs | | | 0% | | | 0% | | | | Adjusted EBITDA PSUs(1) | | | 30% | | | 2020 — 2021 Cumulative Target | | | $266 million | | | $296 million | | | $355 million | | | 200% | | | 60% | | | | 2020 rTSR PSUs(2) | | | 30% | | | Three-year performance period ending December 31, 2022 | | | rTSR at the 25th percentile compared to rTSR peer group through 2022 | | | rTSR at the 50th percentile compared to rTSR peer group through 2022 | | | rTSR at the 75th percentile compared to rTSR peer group through 2022(3) | | | 100% | | | 30% | | | | Weighted Average Payout: | | | 90% | |
(1)
Adjusted organic EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2.25% convertible notes due 2022, restructuring expenses, net interest expense, income taxes, depreciation and amortization from GAAP net income, and further adjusted by excluding the impact of any corporate development transactions and stock-based compensation expense. (2)
If the TSR percentile rank falls between Threshold, Target or Stretch goals, the percentage of rTSR PSUs earned shall be interpolated on a straight-line basis. (3)
Attainment for the 2020 rTSR PSUs is capped at 100% where the Company'sCompany’s total stockholder return is negative. In January 2022, our compensation and HR committee certified that, with respect to the Adjusted EBITDA PSUs, the achievement of cumulative adjusted organic EBITDA for the performance period, which ended on December 31, 2021, was $467 million, resulting in a 200% attainment of this performance metric. 2021 Retention Awards
In an effort to promote business continuity following Mr. Mallon’s resignation as the company’s chief executive officer in March 2021,January 2023, our compensation and HR committee approved a cash retention bonus and an RSU retention awardcertified that, with respect to Messrs. McCourt and Rickard, Ms. Consylman and Dr. Shetzline. Cash retention bonuses were valued at 50%the 2020 rTSR PSUs, the achievement of the named executive officer’s 2021 base salary at such time,rTSR percentile rank compared to the rTSR peer group for the performance period, which ended on December 31, 2022, was 67%, resulting in a 100% attainment of this performance metric, since the Company’s total stockholder return was negative. The NDA Acceptance PSUs goal was not met and for Mr. McCourt, his 2021 base salary prior to his appointment as interim chief executive officer, as his retention awards were made in his capacity as president, and not as interim chief executive officer. The cash retention bonuses were payable in two equal payments, with 50%therefore no portion of the cash retention bonus paid in September 2021 and 50% ofNDA Acceptance PSUs vested. Overall, the cash retention bonus to be paid in June 2022, subject to the officer remaining an employee of the company in good standing on each payment date. Each executive would also be entitled to receive both payments in certain circumstances in the event of an involuntary termination of employment prior to June 1, 2022.weighted average payout for our 2020 PSUs performance metrics was 90%. The RSU retention awards were valued at 33% of each executive officer’s 2021 annual equity target, and vest as to 50% of the shares subject to the award on each of May 19, 2022 and May 18, 2023, subject to continued employment at the company. The RSU retention awards are subject to provisions relating to the acceleration of time-based equity awards under each executive officers’ severance agreement, as described elsewhere in this proxy statement under the captions Executive Severance Agreements and Benefits in the Event of a Change of Control and Potential Payments Upon Termination or Change of Control.
In establishing the size of these awards, Aon presented peer group data and assisted our compensation and HR committee with approximating the value that another organization could potentially offer as a sign-on award to recruit our executive talent.
The cash retention bonuses and RSU retention awards were made as follows:
| | Named Executive Officer | | | 2021 Cash Retention Bonus | | | 2021 Retention Grants
(# of Shares of Class A common
stock Subject to RSUs) | | | | Thomas McCourt | | | | $ | 286,600 | | | | | | 96,638 | | | | | Jason Rickard | | | | $ | 242,100 | | | | | | 56,372 | | | | | Michael Shetzline, M.D., Ph.D. | | | | $ | 242,000 | | | | | | 38,665 | | | | | Gina Consylman | | | | $ | 254,700(1) | | | | | | 56,372(1) | | |
(1)
Ms. Consylman forfeited her 2021 cash retention bonus and RSU retention award in connection with her resignation from the company effective July 2, 2021.
Promotional and New Hire Awards
In June 2021, the compensation and HR committee approved equity grants to Mr. McCourt, in recognition of his appointment as the company’s permanent chief executive officer, with a grant date of June 7, 2021, of 104,690 RSUs that will vest annually as to 25% of the underlying shares on each approximate anniversary of the grant date of the award, subject to his continued employment on each vesting date, and 104,690 PSUs that will vest in accordance with the performance vesting criteria adopted and approved by the compensation and HR committee in March 2021. Please see 2021 Chief Executive Officer Transition for further information.
In July 2021, the compensation and HR committee approved a grant of 79,892 RSUs to Mr. Minardo, in recognition of his appointment as senior vice president, chief legal officer, with a grant date of August 2, 2021, which will vest annually as to 25% of the underlying shares on each approximate anniversary of the grant date of the award, subject to his continued employment on each vesting date, and 79,981 PSUs with a grant date of August 2, 2021, which will vest in accordance with the performance vesting criteria adopted and approved by the compensation and HR committee in March 2021. In November 2021, the compensation and HR committee approved a grant of 85,000 RSUs to Mr. Emany, in recognition of his appointment as senior vice president, chief financial officer, with a grant date of December 6, 2021, which vest annually as to 25% of the underlying shares subject to his continued employment on each vesting date, and 85,000 PSUs with a grant date of December 6, 2021, which will vest in accordance with the performance vesting criteria adopted and approved by the compensation and HR committee in March 2021. Please see Chief Legal Officer Appointment and 2021 Chief Financial Officer Transition for further information.
2021 Chief Executive Officer Transition
Effective March 12, 2021, Mr. Mallon resigned from his position as our chief executive officer and a member of our board of directors to pursue another opportunity. Mr. Mallon did not receive severance in connection with the termination of his employment. In addition, Mr. Mallon forfeited 282,231 options, 354,796 RSUs and 221,061 PSUs in connection with his resignation.
In connection with his appointment as interim chief executive officer effective upon Mr. Mallon’s resignation, our compensation and HR committee recommended, and our board determined to increase, Mr. McCourt’s annual base salary from $573,200 to $775,000 and to increase Mr. McCourt’s annual cash incentive bonus target percentage from 60% (of $573,200) to 75% (of $775,000). The increase in annual base salary and annual cash incentive bonus target percentage was intended to align Mr. McCourt’s compensation for his service as our interim chief executive officer with Mr. Mallon’s compensation as our chief executive officer. Mr. McCourt’s increased salary and annual cash incentive bonus target percentage were to remain in place for a minimum of six months and for so long as Mr. McCourt was serving as our interim chief executive officer. Mr. McCourt’s severance arrangements and benefits in the event of a termination of employment in connection with a change of control did not change in connection with his appointment as interim chief executive officer. In making its recommendations to the board relating to these compensation changes for Mr. McCourt’s service as our interim chief executive officer, the compensation and HR committee considered competitive
market practice together with a desire to recognize Mr. McCourt for his willingness to assume the interim chief executive officer role and the increased responsibility associated with such role.
In June 2021, the board appointed Mr. McCourt as the company’s permanent chief executive officer and as a member of the board and delegated authority to the compensation and HR committee to approve Mr. McCourt’s initial compensation as permanent chief executive officer. The compensation and HR committee determined that Mr. McCourt's 2021 base salary and target annual bonus percentage should remain $775,000 and 75% of annual base salary, respectively. In addition, Mr. McCourt also received an additional grant of 104,690 RSUs that will vest annually on each of the first four approximate anniversaries of the date of grant, subject to his continued employment on each vesting date, and 104,690 PSUs that will vest in accordance with the performance vesting criteria adopted and approved by the compensation and HR committee in March 2021. Mr. McCourt also entered into a second amended and restated executive severance agreement, which replaced his prior amended and restated executive severance agreement that was effective as of December 28, 2018, to update certain aspects of Mr. McCourt’s severance entitlements such that they are better aligned with market practices for chief executive officers, including an increase in the lump sum payments due to Mr. McCourt in the event of an involuntary termination related to Mr. McCourt’s base salary and target cash bonus. The material terms of the second amended and restated executive severance agreement are described under the captions Named Executive Officer Severance Arrangements and Benefits in the Event of a Change of Control and Potential Payments Upon Termination or Change of Control.
2021 Chief Financial Officer Transition
Effective July 2, 2021, Ms. Consylman resigned from her position as senior vice president, chief financial officer. Ms. Consylman did not receive severance in connection with the termination of her employment. In addition, Ms. Consylman forfeited 71,279 options, 279,287 RSUs and 152,868 PSUs in connection with her resignation.
Following Ms. Consylman’s resignation, Mr. Rickard was appointed by our board to serve as the company’s principal financial officer, in addition to continuing in his role as senior vice president, chief operating officer. In recognition of Mr. Rickard’s enhanced responsibilities and increased workload, the compensation and HR committee approved an increase to Mr. Rickard’s annual base salary from $484,200 to $500,000 in June 2021.
Mr. Emany commenced employment as the company’s senior vice president, chief financial officer in December 2021. The compensation and HR committee approved Mr. Emany’s base salary of $500,000 and an individual bonus target percentage of 50% of his base salary, subject to the achievement of individual and corporate goals. Mr. Emany also received a one-time sign-on bonus of $200,000, which is subject to certain clawback provisions if Mr. Emany terminates his employment with the company for any reason or if he is terminated by the company for cause, in each case, within two years of him joining the company. Mr. Emany was also awarded 85,000 RSUs, which will vest as to 25% of the number of RSUs subject to the award on each of the first four approximate anniversaries of the date of grant, subject to his continued employment on each vesting date, and 85,000 PSUs, the vesting terms of which are consistent with those applicable to the 2021 PSU awards described elsewhere in this proxy statement. In addition, the company has entered into an indemnification agreement and an executive severance agreement with Mr. Emany. The material terms of the indemnification agreement and executive severance agreement are described under the captions Indemnification Agreement and Named Executive Officer Severance Arrangements and Benefits in the Event of a Change of Control and Potential Payments Upon Termination or Change of Control, respectively.
Chief Legal Officer Appointment
Mr. Minardo was appointed as the company’s senior vice president, chief legal officer, effective August 2, 2021. The compensation and HR committee approved Mr. Minardo’s base salary of $475,000 and an individual bonus target percentage of 45% of his base salary, subject to the achievement of individual and corporate goals. Mr. Minardo also received a one-time sign-on bonus of $250,000, which is subject to certain clawback provisions if Mr. Minardo terminates his employment with the company for any reason or if his employment is terminated by the company for cause, in each case, within two years of him joining the company. Mr. Minardo was also awarded 79,892 RSUs, which will vest as to 25% of the number of RSUs subject to the award on each of the first four approximate anniversaries of the date of grant, subject to his continued employment on each vesting date, and 79,981 PSUs, the vesting terms of which are
consistent with those applicable to the 2021 PSU awards described elsewhere in this proxy statement. In connection with his appointment, Mr. Minardo was eligible for temporary living coverage for a period of up to five months from the date that our headquarters is broadly reopened, not to exceed $40,000 and reasonable and customary travel costs related to return trips between Boston and New York City no more frequently than every other week. These benefits are intended to facilitate Mr. Minardo’s transition to the Boston, Massachusetts area. Such allowance for housing and transportation is subject to Mr. Minardo’s continued employment with us and is provided to Mr. Minardo net of applicable taxes. This temporary living coverage is in lieu of any comparable benefits Mr. Minardo would have otherwise been eligible for under our relocation policy described elsewhere in this proxy statement. In addition, the company has entered into an indemnification agreement and an executive severance agreement with Mr. Minardo. The material terms of the indemnification agreement and executive severance agreement are described under the captions Indemnification Agreement and Named Executive Officer Severance Arrangements and Benefits in the Event of a Change of Control and Potential Payments Upon Termination or Change of Control, respectively.
Executive Severance Agreements and Benefits in the Event of a Change of Control
The severance arrangements that we have with our named executive officers, as well as other benefits provided in the event of a change of control, are described elsewhere in this proxy statement under the captions Named Executive Officer Severance Arrangements and Benefits in the Event of a Change of Control and Potential Payments Upon Termination or Change of Control. Severance benefits are only payable if the named executive officer has complied with all of our rules and policies, has executed a separation agreement that includes a release of claims and complies with his or her post-employment nondisclosure, noncompetition and non-solicitation obligations. We believe that offering these payments and benefits assists us in recruiting, retaining and motivating executive officers, facilitates the operation of our business, allows our named executive officers to better focus their time, attention and capabilities on our business, and provides for a clear and consistent approach to managing departures with mutually understood separation benefits. Our board, through our compensation and HR committee, periodically assesses our executive severance arrangements to, among other things, ensure that such benefits are consistent with those of our peers and the broader market. In 2021, our compensation and HR committee made the determination to amend and restate our form of executive severance agreement to be used for any new executive officers. Specifically, the new executive severance agreement differs from the current form of amended and restated executive severance agreement as follows: (i) removes the six months of contingent salary continuation and subsidized COBRA coverage if the executive does not obtain similar employment within one year from his or her termination, and (ii) removes the provisions that provided for equity vesting acceleration of a portion of outstanding equity awards subject solely to time-based vesting in connection with a termination that does not constitute a change of control termination.
Other Compensation We maintain broad-based benefits, including health insurance, life and disability insurance, dental insurance, transportation (for employees who reside in Massachusetts and neighboring states) and fitness stipends, and a 401(k) plan with a matching contribution equal to the greater of: (a) 100% of employee contributions on the first 3% of eligible compensation and 50% of employee contributions on the next 3% of eligible compensation; or (b) 75% of the first $10,000 of employee contributions, up to $7,500.contributions. We also maintain a relocation program under which we make certain benefits available to newly hired and existing employees, including our named executive officers, who are relocating to accept a new position with the company. Our relocation program covers reasonable expenses associated with the move and certain relocation services, including, as applicable, temporary housing assistance payments and a lump-sum relocation allowance, departure home sale assistance, rental assistance, new home search assistance, home purchase assistance, moving of household goods and vehicles assistance, and reimbursement of final trip expenses to the new area. We also provide tax assistance to our relocating employees to cover the costs associated with certain non-deductible relocation expenses, as we believe that this benefit is important to our ability to attract employees. Under our relocation program, participants are required to pay back the full amount of all relocation reimbursements in the event that they voluntarily terminate their employment or are terminated for “cause” within specified repayment periods.
Other than our broad-based benefits, or as otherwise described herein, none of our named executive officers receive perquisites of any nature. Compensation Decisions for 20222023 20222023 Base Salary
In March 2022,February 2023, our compensation and HR committee reviewed and approved 20222023 base salaries for our current named executive officers, for 2022, except for Mr. Emany, due to his joining the company in December 2021, and for Mr. McCourt, whose base salary is reviewed and recommended by our compensation and HR committee and approved by our board of directors. In March 2023, following a recommendation by our compensation and HR committee, our board of directors approved Mr. McCourt’s base salary. The increases in base salary for Messrs. McCourt, Minardo and Rickard and Dr. Shetzlineour named executive officers were based on our compensation and HR committee’s (and the board of directors’, in the case of Mr. McCourt) determination that each executive officer achieved or exceeded substantially all of his respective individual goals for 2021.2022. These base salary determinations also took into account peer group and other market data from the competitive assessment conducted by Aon and discussed in more detail below. Base salary information for 20222023 compared to base salary information for 20212022 for each of our current named executive officers, is as follows:
| | Named Executive Officer | | | 2021
Base Salary | | | 2022
Base Salary | | | Increase ($) | | | Increase (%) | | | | Thomas McCourt | | | | $ | 775,000 | | | | | $ | 806,000 | | | | | $ | 31,000 | | | | | | 4.0% | | | | | Sravan Emany | | | | $ | 500,000 | | | | | $ | 500,000 | | | | | $ | 0 | | | | | | 0% | | | | | John Minardo | | | | $ | 475,000 | | | | | $ | 494,000 | | | | | $ | 19,000 | | | | | | 4.0% | | | | | Jason Rickard | | | | $ | 500,000 | | | | | $ | 520,000 | | | | | $ | 20,000 | | | | | | 4.0% | | | | | Michael Shetzline, M.D., Ph.D. | | | | $ | 484,000 | | | | | $ | 513,040 | | | | | $ | 29,040 | | | | | | 6.0% | | |
| | Named Executive Officer | | | 2022
Base Salary | | | 2023
Base Salary | | | Increase ($) | | | Increase (%) | | | | Thomas McCourt | | | | $ | 806,000 | | | | | $ | 834,210 | | | | | $ | 28,210 | | | | | | 3.5% | | | | | Sravan Emany | | | | $ | 500,000 | | | | | $ | 520,000 | | | | | $ | 20,000 | | | | | | 4.0% | | | | | John Minardo | | | | $ | 494,000 | | | | | $ | 512,728 | | | | | $ | 18,728 | | | | | | 3.8% | | | | | Jason Rickard | | | | $ | 520,000 | | | | | $ | 540,800 | | | | | $ | 20,800 | | | | | | 4.0% | | | | | Michael Shetzline, M.D., Ph.D. | | | | $ | 513,040 | | | | | $ | 533,562 | | | | | $ | 20,522 | | | | | | 4.0% | | |
2023 Annual Equity Awards In early 2022,2023, the compensation and HR committee again chosedetermined that the annual long-term equity incentive compensation awards for our named executive officers should consist of an approximately even number of PSUs and RSUs. For PSUs, the compensation and HR committee further determined that performance under our PSU awards should be measured against both an absolute TSR (50%) and an rTSR performance as the sole PSU performance metric (50%) in our 2022 executive equity compensation programorder to tie further tie the compensation of our named executive officers to stockholder value. As in 2021, Aon assisted thevalue creation and hold our executives accountable for our stock price performance. The compensation and HR committee with identifying afurther determined that the three-year performance period for the 2023 PSUs should start on March 1, 2023, and end on February 28, 2026. This change will enable both performance metrics to take into account the updated financial information for the fiscal year-end, including any changes in financial guidance that may have affected the stock price of the Company and the rTSR peer group specifically for purposes ofcompanies throughout the rTSR measurement goal for the PSUs granted in 2022, or the 2022 rTSR PSUs.performance period. The 2022 rTSR2023 PSUs use the following performance metricmetrics, weighting and vesting opportunities:opportunity: | | Performance
Metric | | | Performance PeriodWeight | | | Threshold Goals
(50% attainment)Performance
Period | | | Target Goals
(100% attainment)Threshold | | | Stretch Goals
(200% attainment) | | 2022 rTSR PSUsTarget | | | Three-year performance period ending December 31, 2024Above Target | | | Maximum | | | | 2023 Absolute TSR PSUs | | | 50% | | | Ending February 28,
2026 | | | 50% attainment:
30 calendar-day average closing share price of $13.23 or above | | | 100% attainment:
30 calendar-day average closing share price of $13.80 or above | | | 200% attainment:
30 calendar-day average closing share price of $15.53 or above | | | 400% attainment:
30 calendar-day average closing share price of $17.25 or above | | | | 2023 rTSR
PSUs (1) | | | 50% | | | Ending February 28,
2026 | | | 50% attainment:
rTSR at the 25th percentile compared to rTSR peer group through 2024February 2026 | | | 100% attainment:
rTSR at the 50th50th percentile compared to rTSR peer group through 2024February 2026 | | | 200% attainment:
rTSR at the 75th75th percentile compared to rTSR peer group through 2024(1)February 2026 | | | N/A | |
(1)
If the TSR percentile rank falls between Threshold, Target or Stretch goals, the percentage of rTSR PSUs earned shall be interpolated on a straight-line basis. Attainment for the 2022 rTSR PSUs is capped at 100% where the Company'sCompany’s total stockholder return is negative. At the time they were designated, the peer group identified for the purposes of the 20222023 rTSR PSUs consisted of commercial pharmaceutical and biotechnology companies that ranged between $750 million and $10 billion in market capitalization; Ironwood’s 30-day average market value capitalization as of December 31, 20212022 was at the 3947th percentile relative to this custom peer group. Our compensation and HR committee approved the following custom rTSR measurement peer group for the 20222023 rTSR PSUs, which included all of our executive compensation peers: 46 Ironwood
2023 Proxy Statement 43
| | ACADIA Pharmaceuticals, Inc. (Nasdaq: ACAD) | | | Insmed Incorporated (Nasdaq: INSM) | | | | ADMA Biologics, Inc. (Nasdaq: ADMA) | | | Intercept Pharmaceuticals, Inc. | | | Agenus Inc. | | | Ligand Pharmaceuticals Incorporated | | | Agios Pharmaceuticals, Inc. | | | MacroGenics, Inc. (Nasdaq: ICPT) | | | | Alkermes plc (Nasdaq: ALKS) | | | MannKing CorporationIonis Pharmaceuticals, Inc. (Nasdaq: IONS) | | | | Amicus Therapeutics, Inc. (Nasdaq: FOLD) | | | Myovant SciencesKiniksa Pharmaceuticals, Ltd. (Nasdaq: KNSA) | | | | Apellis Pharmaceuticals, Inc. (Nasdaq: APLS) | | | NeurocrineLigand Pharmaceuticals Incorporated (Nasdaq: LGND) | | | | Arcus Biosciences (Nasdaq: RCUS) | | | Myriad Genetics, Inc. (Nasdaq: MYGN) | | | | Arrowhead Pharmaceuticals Inc. (Nasdaq: ARWR) | | | Natera, Inc (Nasdaq: NTRA) | | | | Avid Bioservices, Inc. (Nasdaq: CDMO) | | | Novavax, Inc. (Nasdaq: NVAX) | | | | BioCryst Pharmaceuticals, Inc. (Nasdaq: BCRX) | | | OPKO Health,Organogenesis Holdings Inc. | | | Biohaven Pharmaceutical Holding Company Ltd. | | | Pacira BioSciences, Inc. | | | bluebird bio, Inc. | | | PTC Therapeutics, Inc.(Nasdaq: ORGO) | | | | Blueprint Medicines Corporation (Nasdaq: BPMC) | | | Radius Health,Pacira BioSciences, Inc. (Nasdaq: PCRX) | | | | BridgeBio Pharma,Catalyst Pharmaceuticals, Inc. (Nasdaq: CPRX) | | | SagePTC Therapeutics, Inc. | | | ChemoCentryx, Inc. | | | Sarepta Therapeutics, Inc. (Nasdaq: PTCT) | | | | Coherus BioSciences, Inc. (Nasdaq: CHRS) | | | Sorrento Therapeutics,REGENXBIO Inc. (Nasdaq: RGNX) | | | | Corcept Therapeutics Incorporated (Nasdaq: CORT) | | | Supernus Pharmaceuticals, Inc. (Nasdaq: SUPN) | | | | Cytokinetics, Inc. (Nasdaq: CYTK) | | | Syndax Pharmaceuticals, Inc. (Nasdaq: SNDX) | | | | Deciphera Pharmaceuticals, Inc. (Nasdaq: DCPH) | | | Travere Therapeutics, Inc. (Nasdaq: TVTX) | | | | Denali Therapeutics Inc. (Nasdaq: DNLI) | | | Vanda Pharmaceuticals Inc. (Nasdaq: VNDA) | | | | Dynavax Technologies Corporation (Nasdaq: DVAX) | | | TG Therapeutics,Veracyte, Inc. (Nasdaq: VCYT) | | | | Emergent BioSolutions Inc.Exact Sciences Corporation (Nasdaq: EXAS) | | | Travere Therapeutics, Inc.Vericel Corporation (Nasdaq: VCEL) | | | | Exellis,Exelixis, Inc. (Nasdaq: EXEL) | | | Ultragenyx PharmaceuticalVir Biotechnology, Inc. (Nasdaq: VIR) | | | | Global Blood Therapeutics,FibroGen, Inc. (Nasdaq: FGEN) | | | United Therapeutics CorporationXencor Inc.(Nasdaq: XNCR) | | | | Halozyme Therapeutics, Inc. | | | Vanda Pharmaceuticals Inc. | | | Heron Therapeutics, Inc. | | | Vericel Corporation | | | Insmed Incorporated (Nasdaq: HALO) | | | | |
In March 2022,2023, our current named executive officers (other than Mr. Emany) were granted RSUs and PSUs, in each case under our 2019 Plan. RSUs granted in 20222023 , other than for our chief executive officer, vest as to 25% of the underlying shares on each approximate anniversary of the grant date of the award, subject to continued employment on each vesting date, which is the vesting schedule typically used for RSU awards granted to employees. RSUs granted in 2023 for Mr. McCourt vest as to 33.3% of the underlying shares on each approximate anniversary of the grant date of the award, subject to his continued employment on each vesting date. As stateddescribed above, the 20222023 PSU awards are subject to a singleabsolute TSR and rTSR performance goal, which isgoals, and are measured over a three-year performance period ending December 31, 2024.February 28, 2026. 2022 Proxy Statement 47
44 Ironwood
The RSUs and PSUs granted to our current named executive officers in March of 20222023 were as follows: | | Named Executive Officer | | | 2022 Annual PSU Grant
(# of Shares of Class A common stock
Subject to PSUs) (at target) | | | 2022 Annual RSU Grant
(# of Shares of Class A common stock
Subject to RSUs) | | | | Thomas McCourt | | | | | 248,868 | | | | | | 248,869 | | | | | Sravan Emany* | | | | | 0 | | | | | | 0 | | | | | John Minardo | | | | | 67,873 | | | | | | 67,873 | | | | | Jason Rickard | | | | | 90,497 | | | | | | 90,498 | | | | | Michael Shetzline, M.D., Ph.D. | | | | | 81,447 | | | | | | 81,448 | | |
*
Mr. Emany was not eligible for a PSU or RSU award in 2022 as part of the Company’s 2021 performance review cycle as he joined the company in December 2021.
| | Named Executive Officer | | | 2023 Annual PSU Grant
(# of Shares of Class A common stock
Subject to PSUs) (at target) | | | 2023 Annual RSU Grant
(# of Shares of Class A common stock
Subject to RSUs) | | | | Thomas McCourt | | | | | 240,594 | | | | | | 240,595 | | | | | Sravan Emany | | | | | 74,235 | | | | | | 74,236 | | | | | John Minardo | | | | | 65,502 | | | | | | 65,502 | | | | | Jason Rickard | | | | | 43,668 | | | | | | 43,668 | | | | | Michael Shetzline, M.D., Ph.D. | | | | | 69,869 | | | | | | 69,869 | | |
Basis for Our Compensation Policies and Decisions Our Values and Goals The objectives of our compensation policies are to provide compensation and incentives that align employee actions and motivations with the interests of our stockholders; attract, retain, motivate and reward outstanding talent across Ironwood through well-communicated programs that are aligned with our vision and mission; and support a positive company culture and values. We are guided by the following principles with respect to our compensation determinations: •
design compensation and incentive programs that align employee actions and motivations with the interests of our stockholders, support our business objectives and hold employees accountable for the achievement of key goals and milestones; •
foster and support our performance-driven culture by setting clear, aggressive, high-value goals, rewarding outstanding performers to the extent these goals are achieved, and making sure our best performers know clearly that we value their contributions; •
as with all spending, serve as careful stewards of our stockholders’ assets when making compensation decisions; •
maximize our employees’ sense of ownership so that they have a long-term owner’s perspective, can see the impact of their efforts on our success, and can share in the benefits of that success through the opportunity to become stockholders of Ironwood through equity-based awards; •
recognize that compensation is one of a number of tools to stimulate and reward productivity, great drug development, and successful commercialization, together with recognizing individual growth potential, providing a great workplace culture, and sharing in our success; •
foster a strong team culture, focused on our principles of great drug development and commercialization, which is reinforced through our compensation and incentive programs; •
design compensation and incentive programs that are fair, equitable and competitive; and •
design compensation and incentive programs that are simple and understandable.
Executive Compensation Governance Highlighted procedures and tools that we use to ensure effective governance of compensation plans and decisions include: •
our compensation and HR committee has the authority to hire independent counsel, compensation consultants and other advisors; •
•
our compensation and HR committee conducts a regular review and assessment of risk as it relates to our compensation policies and practices; •
as part of our insider trading prevention policy, our executive officers and directors are prohibited from engaging in any hedging or monetization transactions with respect to our Class A common stock,securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds; •
we have no perquisites, except as otherwise described herein, other than broad-based benefits, including health and welfarewellbeing benefits, transportation, remote work and fitness stipends and a 401(k) plan and a relocation program that we make available to all of our employees; under our relocation program, participants are required to pay back the full amount of all relocation benefits in connection with their departure from Ironwood in certain circumstances; •
our executive severance agreements (i) do not provide for tax gross-ups and (ii) contain double-trigger requirements for equity acceleration and other benefits in the event of a change of control; •
teneight of our elevennine directors are independent, including all members of our compensation and HR committee, and we have instituted stock ownership guidelines that will require directors to accumulate and continuously hold a specified amount of our Class A common stock (see Director Stock Ownership Guidelines elsewhere in this proxy statement for additional information);
•
we have instituted executive stock ownership guidelines that will require executive officers to accumulate and continuously hold a specified amount of our Class A common stock (see Executive Officer Stock Ownership Guidelines elsewhere in this proxy statement for additional information); and •
we have a clawback policy that provides our board of directors, in the event of a financial restatement due to material noncompliance with financial reporting requirements and where an executive engaged in intentional misconduct that caused or partially caused the need for the restatement, with the discretionary right to recover from our current and former executive officers that portion of the bonus or other incentive compensation that was received by the covered executives or effect the cancellation of unvested and vested equity awards previously granted to the covered executives based on our financial performance results and that would not have been awarded based on the restated results. The board of directors’ recovery rights under this policy will be without prejudice to other remedies the company may have for the recovery or adjustment of incentive compensation. Additionally, if we are required to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws as a result of misconduct, our chief executive officer and chief financial officer may be legally required to reimburse us for any bonus or other incentive-basedincentive- based or equity-based compensation they receive in accordance with the provisions of section 304 of the Sarbanes-Oxley Act of 2002. Finally, we intend to update our clawback policy to address the recovery of erroneously-awarded incentive compensation in compliance with the requirements of the Dodd-Frank Act, final SEC rules and applicable listing standards. Compensation Determination Process In December 2020, the board approved updates to our corporate governance guidelines and the charter of the compensation and HR committee to provide that, beginning in 2021, (i) our board would assess the Company’s corporate performance and (ii) our compensation and HR committee would recommend, and our board would approve, the compensation determination for our chief executive officer. In determining the compensation of our chief executive officer, the board deliberates and votes on the chief executive officer’s compensation outside of the presence of the chief executive officer, and the chief executive officer and any other non-independent directors abstain from such determination.
In January 2022,2023, our board met and, following the recusal of non-independent directors, our board approved our corporate goal achievement for 2021.2022. Following the board’s corporate goal assessment, our compensation and HR committee evaluated the performance of our current executive officers (other than Messrs. Emany andMr. McCourt), including performance against goals and objectives relevant to such executive officers’ compensation, and then approved salary increases, 20212022 cash incentive bonuses and 20222023 cash incentive bonus targets and equity awards for 20222023 for
these executives. The compensation and HR committee similarly evaluated Mr. McCourt’s performance and made a recommendation to the board relating to Mr. McCourt’s bonus for 20212022 performance and his annual equity award, base salary and target bonus percentage for 2022. The compensation and HR committee did not evaluate Mr. Emany’s performance against goals and objectives relevant to his compensation due to the substantial completion of fiscal year 2021 when he joined Ironwood in December 2021.2023. In making these compensation-related decisions or recommendations for 20212022 performance, our compensation and HR committee considered the competitive assessment prepared by Aon, as described in more detail below, as well as the other factors described in this Compensation Discussion and Analysis. At its meeting in March 2022, following the recusal of non-independent directors,2023, the board voted onapproved Mr. McCourt’s 20212022 bonus, salary increase, equity awards and target bonus percentage for 2022;2023; Mr. McCourt was not present for the board’s deliberation and determination on his 2021 bonus, salary increase, equity awards or 2022 bonus target percentage.these compensation items. The compensation and HR committee also reviews our bonus pool, which is calibrated based on corporate performance, and approves our equity pools, which are calibrated for competitive market practice, and assigns a portion of each of these pools to all of our employees other than our executive officers. Allocation decisions of these portions are made by members of senior management designated by our compensation and HR committee. Our compensation and HR committee also evaluates our compensation policies annually, taking into consideration our results of operations, our long and short-term goals, individual goals, market data, the competitive market for our executive officers and general economic factors. Additionally, our compensation and HR committee or board (in the case of the determinations relating to chief executive officer compensation) may recommend or decide, as appropriate, to modify the mix or amount of base salary, bonus, and long-term incentives to best fit an executive officer’s specific circumstances or, if warranted by competitive market conditions, to attract, retain and motivate skilled personnel. For example, our compensation and HR committee may recommend or decide, and our board may decide with respect to our chief executive officer, to grant retention or additional equity awards to an executive officer if that executive officer receives a base salary or cash bonus award significantly below that of his or her counterparts in our peer group, despite successful attainment of our corporate goals or his or her individual goals.attract, retain and motivate skilled personnel. We believe that this discretion and flexibility allows our compensation and HR committee and board (in the case of determinations of our chief executive officer’s compensation) to better achieve our compensation objectives. Executive Officer Stock Ownership Guidelines Following a competitive assessment of market data related to executive officer stock ownership requirements provided by Aon and guidance published by Investor Advisory Service, in October 2020, our compensation and HR committee recommended, and, in December 2020, our board approved, Executive Officer Stock Ownership Guidelines. In February 2022, our compensation and HR amended and restated our Executive Officer Stock Ownership Guidelines to exclude the value of vested “in the money” stock options towards satisfying our executive officer stock ownership requirements. We believe our Executive Officer Stock Ownership Guidelines further align the interests of our executive officers with those of our stockholders and also incentivize executive officers to focus on maximizing long-term value. Our Executive Officer Stock Ownership Guidelines, as amended, provide that our chief executive officer is required to hold shares of the Company’s Class A common stock with a value equal to at least four (4) times his or her annual base salary and that each executive officer is required to hold shares of the Company’s Class A common stock with a value equal to one (1) times his or her annual base salary. Executive officers are required to achieve the applicable level of ownership by the later of December 2025 (five years from the date of adoption of the Executive Officer Stock Ownership Guidelines in December 2020) or the fifth anniversary of the date a person was initially designated as an executive officer of the Company. Shares that count towards satisfaction of the Executive Officer Stock Ownership Guidelines include, among other forms of ownership, shares held outright by the executive officer or a member of his or her immediate family and unvested RSUs net of applicable taxes. Vested “in the money” stock options and unearned performance-based awards do not count towards satisfaction of these ownership requirements. Compliance with the stock ownership requirements will be measured on the date of the annual meeting of stockholders of the company each year based on the annualized salary then in effect for each officer. Failure to comply with the 50 Ironwood
2023 Proxy Statement 47
Executive Officer Stock Ownership Guidelines will (among other things, as may be determined by the compensation and HR committee) require executive officers to retain at least 100% of the shares, net of applicable tax withholding and the payment of any exercise or purchase price (if applicable), received upon the vesting or settlement of equity awards or the exercise of stock options. As of March 31, 2023, each of our executive officers was in compliance with our Executive Officer Stock Ownership Guidelines. Role of the Compensation and HR Committee As set forth in its written charter, our compensation and HR committee has the responsibility for evaluating the performance of our executive officers, taking into account the determination of our board with respect to our corporate performance; reviewing and approving the compensation of our executive officers (other than our chief executive officer); reviewing and recommending to the board our chief executive officer’s compensation; recommending to the board the adoption of new compensation plans; administering our existing plans; reviewing and recommending director and committee compensation to the board; reviewing and overseeing our Executive Officer Stock Ownership Guidelines; overseeing succession planning for our senior management; reviewing risks associated with our compensation policies and practices; and overseeing our strategies and policies related to human capital management, including with respect to matters such as diversity and inclusion, workplace environment and culture, and talent development and retention. In addition, our compensation and HR committee is responsible for ensuring that our compensation policies are aligned with our compensation philosophy and guiding principles. In 2021,2022, our compensation and HR committee made all of the compensation determinations with respect to each of our named executive officers, other than Messrs. Mallon and McCourt in his capacity as chief executive officer. With respect to Mr. Mallon, our compensation and HR committee did not recommend, and our board did not approve, compensation determinations for Mr. Mallon, since he had provided notice of his intent to resign from the company at the time salary determinations for 2021 were made. With respect to Mr. McCourt, the compensation and HR committee recommended and the board approved compensation determinations for Mr. McCourt in connection with his service as our interim chief executive officer in March 2021 and as permanent chief executive officer in June 2021.McCourt. In making its determinations relating to compensation for performance in 2021,2022, our compensation and HR committee took into account the feedback and recommendations from Mr. McCourt, as well asincluding the feedback Mr. McCourt received from the named executive officer’s direct reports and other members of our management team. The components of each of our named executive officer’s initial compensation package, including with respect to the 2021 compensation packages of Messrs. Minardo and Emany, were based on numerous factors, including:
•
the individual’s particular background and circumstances, including prior relevant work experience and compensation paid prior to joining us;
•
the individual’s role with us and the compensation paid to similar persons in the companies represented in the compensation data that our compensation and HR committee reviewed;
•
the demand for people with the individual’s specific expertise and experience at the time of hire;
•
performance goals and other expectations for the position;
•
comparison to other executive officers within Ironwood having similar levels of expertise and experience; and
•
uniqueness of industry skills.
Role of the Compensation Consultant: Benchmarking and Peer Group Analysis Our compensation and HR committee has the authority to select and retain independent advisors and consultants to assist it with carrying out its responsibilities, and we are required to pay any related expenses approved by the committee. In 2021,2022, our compensation and HR committee exercised such authority and engaged Aon as its compensation consultant. Aon reported directly to our compensation and HR committee throughout the period of its engagement. Other than the purchase of certain benefits surveys and employee compensation benchmarking data from Aon in 20212022 and certain other accounting and consulting services requested by the company related to equity plan matters, including forfeiture rate analysis, PSU award design, and 20212022 rTSR PSU valuation,valuations, Aon did not provide us with services
in 20212022 other than those requested by our compensation and HR committee and the review of this Compensation Discussion and Analysis for conformance with best practices. Based on the scope of our compensation and HR committee’s engagements with Aon, it was determined that Aon did not have a conflict of interest in its role as compensation consultant under applicable rules. In order to assist our compensation and HR committee in setting 20212022 and 20222023 compensation, respectively, Aon conducted competitive assessments of 20202021 and 20212022 target compensation for our named executive officers, with a focus on the following components of our named executive officer compensation: •
base salary; •
target total cash compensation (which is base salary plus the target bonus); •
long-term equity incentives (which are valued based on grant date fair value); and •
target total direct compensation (which is target total cash compensation plus the grant date value of the most recent long-term incentive grant). In conducting this assessment, Aon analyzed the components of our named executive officer compensation listed above, in each case measured against the 25th, 50th25th, 50th and 75th75th percentiles of our executive compensation peer group.
Our peer group is reviewed at least annually by our compensation and HR committee. In setting our peer group, our compensation and HR committee applies a qualitative lens to help focus the potential group on the companies with which we are competing for talent. Our compensation and HR committee first identifies a potential pool of peer companies from a number of sources, including the companies listing Ironwood in their peer groups and the other companies listed in such peer companies’ peer groups, as well as companies included in third party peer group assessments. Our compensation and HR committee then considers certain size filters including market capitalization, revenue, and number of employees, as well as certain business model filters including commercial focus, and growth. The peer group that Aon proposed and that the compensation and HR committee used as a reference point in connection with 20212022 compensation decisions is composed of the following 1716 companies, which at the time they were designated as our peer group had a median 30-day average market capitalization of approximately $3.1$2.6 billion, median revenue of approximately $260$340 million, a median of 536498 employees, and a commercial drug or drug candidate in later stage development: | | ACADIA Pharmaceuticals, Inc. (Nasdaq: ACAD) | | | Halozyme Therapeutics, Inc. (Nasdaq: HALO) | | | | Agios Pharmaceuticals, Inc. | | | Horizon Therapeutics plc | | | Akcea Therapeutics, Inc. (Nasdaq: AGIO) | | | Intercept Pharmaceuticals, Inc. (Nasdaq: ICPT) | | | | Alkermes plc (Nasdaq: ALKS) | | | Pacira BioSciences, Inc.Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) | | | | Amicus Therapeutics, Inc. (Nasdaq: FOLD) | | | PTC Therapeutics,Pacira BioSciences, Inc. (Nasdaq: PCRX) | | | | bluebird bio, Inc. (Nasdaq: BLUE) | | | Radius Health,PTC Therapeutics, Inc. (Nasdaq: PTCT) | | | | Blueprint Medicines Corporation (Nasdaq: BPMC) | | | Supernus Pharmaceuticals,Radius Health, Inc. (Nasdaq: RDUS) | | | | Coherus BioSciences, Inc. (Nasdaq: CHRS) | | | United Therapeutics CorporationSupernus Pharmaceuticals, Inc. (Nasdaq: SUPN) | | | | Corcept Therapeutics Incorporated (Nasdaq: CORT) | | | Vanda Pharmaceuticals Inc. (Nasdaq: VNDA) | |
In assisting our compensation and HR committee in setting 20212022 compensation, Aon presented proxy peer data as well as results from the Radford Global Life Sciences Survey, or Radford Survey, which was comprised of companies that represent a broader market perspective and similar employee population to us, and a Market Composite, which combined the peer group data and data from the Radford dataSurvey by weighting each source equally. Although this competitive assessment was not used to mandate any specific compensation decisions, our compensation and HR committee considered the results
of this assessment when making base salary, cash bonus and long-term equity incentive award determinations with respect to our then employed named executive officers in early 2021.2022. In July 2021,June 2022, our compensation and HR committee approved a new peer group, which Aon used as a reference point in advising our compensation and HR committee regarding compensation decisions made beginning in the fourth quarter of 2021.2022. Aon and Radford recommended that threetwo companies from our existing peer group be removed because one was acquired during 2020 (Akcea Therapeutics,they no longer met the revenue screening criterium (Agios Pharmaceuticals, Inc. and bluebird bio, Inc.), and the others had a market cap that significantly outpaced the rest of the peer group (Horizon Therapeutics plc and United Therapeutics Corporation), and identified twothree potential companies (Ligand Pharmaceuticals,(Dynavax Technologies Corporation, Organogenesis Holdings Inc. and Vanda Pharmaceuticals,Ultragenyx Pharmaceutical Inc.) to replace the threetwo companies that were recommended to be removed from the prior peer group. This updated peer group is comprised of the following 17 companies, which at the time of approval by our reviewcompensation and HR committee had a median 30-day average market capitalization of approximately $2.6$2.1 billion, median revenue of approximately $340$380 million, a median of 498495 employees and a commercial drug or drug candidate in later stage development:
| | ACADIA Pharmaceuticals, Inc. (Nasdaq: ACAD) | | | Halozyme Therapeutics, Inc. | | | AgiosLigand Pharmaceuticals Inc. | | | Intercept Pharmaceuticals, Inc.Incorporated (Nasdaq: LGND) | | | | Alkermes plc (Nasdaq: ALKS) | | | Ligand Pharmaceuticals,Organogenesis Holdings Inc. (Nasdaq: ORGO) | | | | Amicus Therapeutics, Inc. (Nasdaq: FOLD) | | | Pacira BioSciences, Inc. (Nasdaq: PCRX) | | | | bluebird bio, Inc.Dynavax Technologies Corporation (Nasdaq: DVAX) | | | PTC Therapeutics, Inc. (Nasdaq: PTCT) | | | | Blueprint Medicines Corporation (Nasdaq: BPMC) | | | Radius Health, Inc. (Nasdaq: RDUS) | | | | Coherus BioSciences, Inc. (Nasdaq: CHRS) | | | Supernus Pharmaceuticals, Inc. (Nasdaq: SUPN) | | | | Corcept Therapeutics Incorporated (Nasdaq: CORT) | | | Vanda Pharmaceuticals Inc. (Nasdaq: VNDA) | | | | Halozyme Therapeutics, Inc. (Nasdaq: HALO) | | | Ultragenyx Pharmaceutical Inc. (Nasdaq: RARE) | | | | Intercept Pharmaceuticals, Inc. (Nasdaq: ICPT) | | | | |
Tax and Accounting Considerations While our compensation and HR committee may consider the tax and accounting implications of its executive compensation decisions, neither element was a material consideration in the compensation awarded to our named executive officers in 2021.2022. Executive Compensation Risk Assessment Our compensation and HR committee engaged Aon to conduct a formal compensation risk assessment in December 2021.2022. The compensation and HR committee then reviewed our 20212022 compensation policies as generally applicable to our employees and determined that our policies did not encourage excessive and unnecessary risk-taking, and that the level of risk that they did encourage was not reasonably likely to have a material adverse effect on Ironwood.the Company. Our compensation and HR committee considered the following, among other factors, in reviewing our compensation policies related to 20212022 compensation: •
our use of different types of compensation vehicles provided a balance of long and short-term incentives with fixed and variable components; •
we granted equity-based awards withconsisting of a mixed balance of time-based vesting and performance-based awards, which encouraged participants to look to long-term appreciation in equity values; •
our annual bonus determinations for each employee were dependent on achievement of a diverse set of company-level goals, which we believe promoted long-term value; and •
our system of internal control over financial reporting and code of business conduct and ethics, among other things, reduced the likelihood of manipulation of our financial performance to enhance payments under any of our incentive plans. 2022 Proxy Statement 53
50 Ironwood
Compensation Committee Report We have: 1.
reviewed and discussed with management the Compensation Discussion and Analysis found herein; and 2.
based on the review and discussions referred to in paragraph (1) above, we recommended to the board of directors that the Compensation Discussion and Analysis be included in the company’s proxy statement on Schedule 14A for filing with the SEC. By the Compensation and HR Committee, Andrew Dreyfus, Chair
Mark Currie, Ph.D.
Jon Duane
Marla Kessler 54 Ironwood
2023 Proxy Statement 51
Compensation Tables Summary Compensation Table The following table sets forth information regarding the compensation paid or accrued to, or earned by, each of our named executive officers during the years ended December 31, 2022, 2021 and 2020, and 2019, as applicable (oror such shorter period of the named executive officer’s service).service. | | Name and Principal Position* | | Year | | Salary
($)(1) | | Bonus
($) | | Stock
Awards
($)(2) | | Option
Awards
($)(2) | | Non-Equity
Incentive
Plan
Compensation
($)(3) | | All Other
Compensation
($)(4) | | Total
($) | | Name and Principal Position* | | Year | | Salary
($)(1) | | Bonus
($) | | Stock
Awards
($)(2) | | Option
Awards
($)(2) | | Non-Equity
Incentive
Plan
Compensation
($)(3) | | All Other
Compensation
($)(4) | | Total
($) | | | | Thomas McCourt
Chief Executive Officer | | | | | 2021 | | | | | 732,053 | | | | | 143,300(5) | | | | | 7,236,498(7) | | | | | — | | | | | 680,063 | | | | | 18,090 | | | | | 8,810,004 | | | Thomas McCourt
Chief Executive Officer | | | | | 2022 | | | | | 805,404 | | | | | 143,300(5) | | | | | 6,473,069(6) | | | | | — | | | | | 453,375 | | | | | 18,118 | | | | | 7,893,266 | | | | | | | 2020 | | | | | 576,120 | | | | | — | | | | | 2,465,327 | | | | | — | | | | | 357,409 | | | | | 11,040 | | | | | 3,409,896 | | | | | | 2021 | | | | | 732,053 | | | | | 143,300 | | | | | 7,236,498 | | | | | — | | | | | 680,063 | | | | | 18,090 | | | | | 8,810,004 | | | | | | | 2019 | | | | | 511,250 | | | | | — | | | | | 1,760,143 | | | | | 2,370,159 | | | | | 454,272 | | | | | 8,502 | | | | | 5,104,327 | | | | | | 2020 | | | | | 576,120 | | | | | — | | | | | 2,465,327 | | | | | — | | | | | 357,409 | | | | | 11,040 | | | | | 3,409,896 | | | | | Sravan Emany
Senior Vice President, Chief
Financial Officer | | | | | 2021 | | | | | 28,846 | | | | | 200,000(6) | | | | | 2,300,100(8) | | | | | — | | | | | — | | | | | 46 | | | | | 2,528,992 | | | Sravan Emany
Senior Vice President, Chief
Financial Officer | | | | | 2022 | | | | | 500,000 | | | | | — | | | | | —(7) | | | | | — | | | | | 198,750 | | | | | 13,612 | | | | | 712,362 | | | | | | | 2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 2021 | | | | | 28,846 | | | | | 200,000 | | | | | 2,300,100 | | | | | — | | | | | — | | | | | 46 | | | | | 2,528,992 | | | | | | | 2019 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | John Minardo
Senior Vice President, Chief
Legal Officer and Secretary | | | | | 2021 | | | | | 191,827 | | | | | 250,000(6) | | | | | 2,595,002(9) | | | | | — | | | | | 105,037 | | | | | 6,427 | | | | | 3,148,293 | | | John Minardo
Senior Vice President, Chief
Legal Officer and Secretary | | | | | 2022 | | | | | 493,635 | | | | | — | | | | | 1,734,155(8) | | | | | — | | | | | 166,725 | | | | | 15,525 | | | | | 2,410,040 | | | | | | | 2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 2021 | | | | | 191,827 | | | | | 250,000 | | | | | 2,595,002 | | | | | — | | | | | 105,037 | | | | | 6,427 | | | | | 3,148,293 | | | | | | | 2019 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | Jason Rickard
Senior Vice President, Chief
Operating Officer | | | | | 2021 | | | | | 492,589 | | | | | 121,050(5) | | | | | 2,519,901(10) | | | | | — | | | | | 327,600 | | | | | 18,090 | | | | | 3,479,230 | | | Jason Rickard
Senior Vice President, Chief
Operating Officer | | | | | 2022 | | | | | 519,615 | | | | | 121,050(5) | | | | | 2,312,209(9) | | | | | — | | | | | 209,625 | | | | | 19,156 | | | | | 3,181,655 | | | | | | | 2020 | | | | | 473,314 | | | | | — | | | | | 1,479,191 | | | | | — | | | | | 258,338 | | | | | 11,040 | | | | | 2,221,883 | | | | | | 2021 | | | | | 492,589 | | | | | 121,050 | | | | | 2,519,901 | | | | | — | | | | | 327,600 | | | | | 18,090 | | | | | 3,479,230 | | | | | | | 2019 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 2020 | | | | | 473,314 | | | | | — | | | | | 1,479,191 | | | | | — | | | | | 258,338 | | | | | 11,040 | | | | | 2,221,883 | | | | | Michael Shetzline
Senior Vice President, Chief
Medical Officer, and Head
of Research and Drug
Development | | | | | 2021 | | | | | 483,447 | | | | | 121,000(5) | | | | | 1,727,931(11) | | | | | — | | | | | 285,405 | | | | | 18,090 | | | | | 2,635,873 | | | Michael Shetzline
Senior Vice President, Chief
Medical Officer, and Head of
Research and Drug
Development | | | | | 2022 | | | | | 512,482 | | | | | 121,000(5) | | | | | 2,080,982(10) | | | | | — | | | | | 188,735 | | | | | 15,525 | | | | | 2,918,724 | | | | | | | 2020 | | | | | 464,681 | | | | | 100,000 | | | | | 1,121,001 | | | | | — | | | | | 194,588 | | | | | 11,040 | | | | | 1,891,310 | | | | | | 2021 | | | | | 483,447 | | | | | 121,000 | | | | | 1,727,931 | | | | | — | | | | | 285,405 | | | | | 18,090 | | | | | 2,635,873 | | | | | | | 2019 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 2020 | | | | | 464,681 | | | | | 100,000 | | | | | 1,121,001 | | | | | — | | | | | 194,588 | | | | | 11,040 | | | | | 1,891,310 | | | | | Mark Mallon
Former Chief Executive Officer | | | | | 2021 | | | | | 163,413 | | | | | | | | | | — | | | | | — | | | | | — | | | | | 7,163 | | | | | 170,576 | | | | | | | | 2020 | | | | | 801,173 | | | | | | | | | | 5,423,731 | | | | | — | | | | | 585,169 | | | | | 11,040 | | | | | 6,821,113 | | | | | | | | 2019 | | | | | 750,000 | | | | | 880,000 | | | | | 3,692,810 | | | | | 3,804,331 | | | | | 797,063 | | | | | 144,596 | | | | | 10,068,800 | | | | | | Gina Consylman
Former Senior Vice President, Chief Financial Officer | | | | | 2021 | | | | | 264,265 | | | | | (5) | | | | | 2,519,901(12) | | | | | — | | | | | — | | | | | 8,714 | | | | | 2,792,880 | | | | | | | | 2020 | | | | | 512,751 | | | | | | | | | | 1,676,402 | | | | | — | | | | | 264,652 | | | | | 11,040 | | | | | 2,464,845 | | | | | | | | 2019 | | | | | 480,000 | | | | | 250,000 | | | | | 1,467,731 | | | | | 888,546 | | | | | 358,800 | | | | | 8,502 | | | | | 3,453,579 | | | |
*
Mr. Mallon resigned from the company effective on March 12, 2021. In connection therewith, Mr. McCourt became the company’s interim chief executive officer in addition to his role as the company’s president until appointment as permanent chief executive officer in June 2021. Messrs. Minardo and Emany joined the company in August 2021 and December 2021, respectively, and were therefore not named executive officers in 2019 or 2020. Ms. Consylman resigned from the company effective on July 2, 2021. Mr. Rickard and Dr. Shetzline became executive officers in April 2020, and consequently were not named executive officers in 2019.
(1)
Salaries reported for 2022, 2021 and 2020 reflect amounts actually paid in 2022, 2021 and 2020, respectively (as opposed to annual base salary rates). Fiscal year 2020 included one more pay date than fiscal years 20212022 and 2019.2021. (2)
Reflects the fair value of time-based RSU, PSU and stock option awards on the date of grant calculated in accordance with ASC 718. For a discussion of the assumptions used in the valuation of awards made in 2021,2022, see Note 1312 to our consolidated financial statements for the year ended December 31, 20212022 included in our Annual Report on Form 10-K that we filed with the SEC on February 18, 2022.16, 2023. All values reported exclude the effects of potential forfeitures. With respect to the rTSR PSUs granted to the named executive officers in 2021,2022, the aggregate grant date fair value was determined based on the probable outcome of the performance conditions associated with such awards (target) at the date of grant. Assuming the maximum level of performance (200%) is achieved, the aggregate grant date fair value of the PSUs granted in 20212022 is as follows: $2,221,737 for Ms. Consylman, $7,129,448$7,286,855 for Mr. McCourt, $2,697,000 for Mr. Emany, $3,069,671$1,987,321 for Mr. Minardo, $2,221,737$2,649,752 for Mr. Rickard, and $1,523,478$2,384,768 for Dr. Shetzline. Mr. Mallon and Ms. Consylman forfeited their unvested RSU, PSU and stock option awards upon each individual voluntary termination of their employment effective March 12, 2021 and July 2, 2021, respectively. (3)
Consists of payments made under our annual cash bonus program in 2022 for performance in 2021, as describedthe relevant year. For a description of bonuses paid in 2023 for performance in 2022, see the disclosure included elsewhere in this proxy statement under the caption Annual Cash Incentive Program for 20212022 Performance. (4)
(4)
For each executive officer, consists of matching contributions made under our 401(k) plan, as well as an amount attributable to a transportation stipend (except for Messrs. Emanyremote work and Minardo, who reside outside Massachusetts and neighboring states and thus are not eligible for such stipend) and a fitness stipend.stipends. The 401(k) matching contributions for each named executive officer are as follows: $6,000 for Mr. Mallon, $6,000 for Ms. Consylman, $13,050$13,725 for Mr. McCourt, $0$11,813 for Mr. Emany, $6,173$13,725 for Mr. Minardo, $13,050$13,725 for Mr. Rickard, and $13,050$13,725 for Dr. Shetzline. Amounts for Messrs. McCourt and Rickard also include $2,593 and $3,632, respectively, for the incremental cost of gifts, spousal travel and attendance at certain Ironwood-sponsored events and meetings where the executives’ attendance was requested by the Company, as well as the value of gifts received; these amounts are inclusive of tax gross-ups of $1,150 and $1,610 paid to Messrs. McCourt and Rickard, respectively. (5)
Reflects the 50% portion of the cash retention bonus paid in 2021,2022, pursuant to a cash retention program approved in March 2021, as described elsewhere in thisour 2022 proxy statement, under the caption 2021 Retention Awards, whereby 50% of the cash retention bonus was paid in September 2021 and 50% of the cash retention bonus is payablewas paid in June 2022, in each case, subject to continued employment. Ms. Consylman forfeited her cash retention award totaling $254,700 upon her voluntary termination effective July 2, 2021. (6)
Reflects the sign-on bonuses paid to Messrs. Minardo and Emany during 2021 in connection with the commencement of their employment in August 2021 and December 2021, respectively.
(7)
Includes the aggregate grant date fair value of (a) 145,631248,869 RSUs and 144,927248,868 PSUs awarded to Mr. McCourt in February 2021 and March 2021, respectively,2022, in connection with annual equity awards; (b) 96,638 RSUs awardedawards.
(7)
Mr. Emany was not eligible to Mr. McCourt in March 2021 in connection with the retention awardsreceive an annual equity award as described elsewhere in this proxy statement under the caption 2021 Retention Awards; and (c) 104,690 RSUs and 104,690 PSUs awarded to Mr. McCourt in June 2021 in connection with his appointment as chief executive officerpart of the company.company’s 2021 performance review cycle due to the substantial completion of fiscal year 2021 when he joined Ironwood in December 2021. (8)
Includes the aggregate grant date fair value of 85,00067,873 RSUs and 85,00067,873 PSUs awarded to Mr. EmanyMinardo in December 2021March 2022, in connection with the commencement of his employment in December 2021.annual equity awards. (9)
Includes the aggregate grant date fair value of 79,89290,498 RSUs and 79,98190,497 PSUs awarded to Mr. MinardoRickard in August 2021March 2022, in connection with the commencement of his employment in August 2021.annual equity awards. (10)
Includes the aggregate grant date fair value of (a) 84,95181,448 RSUs and 84,541 PSUs awarded to Mr. Rickard in February 2021 and March 2021, respectively, in connection with annual equity awards and (b) 56,372 RSUs awarded to Mr. Rickard in March 2021 in connection with a retention award as described elsewhere in this proxy statement under the caption 2021 Retention Awards.
(11)
Includes the aggregate grant date fair value of (a) 58,252 RSUs and 57,97181,447 PSUs awarded to Dr. Shetzline in February 2021 and March 2021, respectively,2022, in connection with annual equity awards and (b) 38,655 RSUs awarded to Dr. Shetzline in March 2021 in connection with a retention award as described elsewhere in this proxy statement under the caption 2021 Retention Awards.
(12)
Includes the aggregate grant date fair value of (a) 84,951 RSUs and 84,541 PSUs awarded to Ms. Consylman in February 2021 and March 2021, respectively, in connection with annual equity awards and (b) 56,372 RSUs awarded to Ms. Consylman in March 2021 in connection with the retention awards as described elsewhere in this proxy statement under the caption 2021 Retention Awards. Ms. Consylman forfeited her RSUretention award upon her voluntary termination of her employment effective July 2, 2021.awards.
56 Ironwood
2023 Proxy Statement 53
Grants of Plan-Based Awards The following table sets forth information regarding non-equity and equity awards granted to each of our named executive officers during the year ended December 31, 2021.2022. All non-equity incentive plan awards were made pursuant to our cash bonus program described in more detail elsewhere in this proxy statement under the caption Annual Cash Incentive Program for 20212022 Performance. We granted annual RSUs and PSUs to Messrs. McCourt, andMinardo, Rickard Ms. Consylman and Dr. Shetzline in FebruaryMarch 2022. Mr. Emany was not eligible to receive an annual equity award as part of the company’s 2021 and Marchperformance review cycle due to the substantial completion of fiscal year 2021 and retention RSUs in March 2021. Mr. McCourt was granted additional RSU and PSU awards in connection with his appointment as our chief executive officer in June 2021. Mr. Mallon did not receive equity grants in 2021 becausewhen he had provided notice of his intent to resign from the company at the time equity awards were granted. Messrs. Minardo and Emany were granted RSU and PSU awards in connection with their appointments as senior vice president, chief legal officer in August 2021, and senior vice president, chief financial officerjoined Ironwood in December 2021, respectively.2021. All RSUs and PSUs granted in 20212022 represented the right to receive shares of our Class A common stock upon the vesting of such awards. The vesting schedule of each such award included in the following table is described in the footnotes to the Outstanding Equity Awards at Fiscal Year-End table. | | Name | | Grant Date | | Compensation
and HR
Committee
Approval Date
(if different
than Grant
Date) | | Estimated
Future Payouts
Under Non-Equity
Incentive Plan
Awards(1)
Target ($) | | | Estimated Future Payouts Under
Equity Incentive Plan Awards(2)(#) | | | All Other
Stock Awards:
Number of
Shares of
Stock or
Units
(#)(3) | | Grant Date
Fair Value of
Stock Awards
($)(4) | | Name | | Grant Date | | Estimated
Future Payouts
Under Non-Equity
Incentive Plan
Awards(1)
Target ($) | | | Estimated Future Payouts Under
Equity Incentive Plan Awards(2)(#) | | | All Other
Stock Awards:
Number of
Shares of
Stock or Units
(#)(3) | | Grant Date
Fair Value of
Stock Awards
($)(4) | | | | Threshold | | Target | | Maximum | | | Threshold | | Target | | Maximum | | | | Thomas McCourt | | | | | 2/22/2021 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 145,631 | | | | $ | 1,363,106 | | | Thomas McCourt | | | | | 3/8/2022 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 248,869 | | | | $ | 2,829,641 | | | | | | | 3/26/2021 | | | | | — | | | | | — | | | | | 72,464 | | | | | 144,927 | | | | | 289,854 | | | | | — | | | | $ | 1,904,341 | | | | | | 3/8/2022 | | | | | — | | | | | 124,434 | | | | | 248,868 | | | | | 497,736 | | | | | — | | | | $ | 3,643,428 | | | | | | | 3/26/2021(5) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 96,638 | | | | $ | 1,052,388 | | | | | | — | | | | | 604,500 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 6/7/2021 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 104,690 | | | | $ | 1,256,280 | | | Sravan Emany | | | | — | | | | | 250,000 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 6/7/2021 | | | | | — | | | | | | | | | | 52,345 | | | | | 104,690 | | | | | 209,380 | | | | | — | | | | $ | 1,660,383 | | | John Minardo | | | | | 3/2/2022 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 67,873 | | | | $ | 740,494 | | | | | | | — | | | | | — | | | | | 581,250 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 3/2/2022 | | | | | — | | | | | 33,937 | | | | | 67,873 | | | | | 135,746 | | | | | — | | | | $ | 993,661 | | | | | Sravan Emany | | | | | 12/2/2021(6) | | | | | 11/24/2021 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 85,000 | | | | $ | 951,150 | | | | | | | | | | | 222,300 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 12/2/2021(6) | | | | | 11/24/2021 | | | | | — | | | | | 42,500 | | | | | 85,000 | | | | | 170,000 | | | | | — | | | | $ | 1,348,950 | | | Jason Rickard | | | | | 3/2/2022 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 90,498 | | | | $ | 987,333 | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 3/2/2022 | | | | | — | | | | | 45,249 | | | | | 90,497 | | | | | 180,994 | | | | | — | | | | $ | 1,324,876 | | | | | John Minardo | | | | | 8/2/2021(7) | | | | | 7/20/2021 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 79,892 | | | | $ | 1,060,167 | | | | | | | | | | | — | | | | | — | | | | | 260,000 | | | | | — | | | | | — | | | | | — | | | | | | | 8/2/2021(7) | | | | | 7/20/2021 | | | | | — | | | | | 39,991 | | | | | 79,981 | | | | | 159,962 | | | | | — | | | | $ | 1,534,835 | | | Michael Shetzline | | | | | 3/2/2022 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 81,448 | | | | $ | 888,598 | | | | | | | — | | | | | — | | | | | 89,014 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 3/2/2022 | | | | | — | | | | | 40,724 | | | | | 81,447 | | | | | 162,894 | | | | | — | | | | $ | 1,192,384 | | | | | Jason Rickard | | | | | 2/22/2021 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 84,951 | | | | $ | 795,141 | | | | | | — | | | | | 230,868 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 3/26/2021 | | | | | — | | | | | — | | | | | 42,271 | | | | | 84,541 | | | | | 169,082 | | | | | — | | | | $ | 1,110,869 | | | | | | | | 3/26/2021(5) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 56,372 | | | | $ | 613,891 | | | | | | | | | | — | | | | | — | | | | | 250,000 | | | | | — | | | | | | | | | | | | | | | — | | | | | — | | | | | | Michael Shetzline | | | | | 2/22/2021 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 58,252 | | | | $ | 545,239 | | | | | | | | 3/26/2021 | | | | | — | | | | | — | | | | | 28,986 | | | | | 57,971 | | | | | 115,942 | | | | | — | | | | $ | 761,739 | | | | | | | | 3/26/2021(5) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 38,655 | | | | $ | 420,953 | | | | | | | | — | | | | | — | | | | | 193,600 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | Gina Consylman | | | | | 2/22/2021 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 84,951 | | | | $ | 795,141 | | | | | | | | 3/26/2021 | | | | | — | | | | | — | | | | | 42,271 | | | | | 84,541 | | | | | 169,082 | | | | | — | | | | $ | 1,110,869 | | | | | | | | 3/26/2021(5) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 56,372 | | | | $ | 613,891 | | | | | | | | — | | | | | — | | | | | 254,700 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | |
(1)
Consists of the target cash bonus amount for 20212022 performance under our cash bonus program. As described in more detail elsewhere in this proxy statement under the caption 2021Annual Cash BonusIncentive Program for 2022 Performance, in 2021,2022, Mr. McCourt had an individual bonus target percentage of 75% of his base salary, (which percentage was increased from 60% in connection with his appointment as chief executive officer in June 2021), Mr. Minardo had an individual bonus target percentage of 45% of his base salary (prorated for the portion of the year that he was employed), Mr.Messrs. Emany and Rickard had an individual bonus target percentage of 50% of histheir base salary,salaries, and Mr. Minardo and Dr. Shetzline had an individual bonus target percentage of 40%45% of histheir base salary. However, for the purpose of determining Dr. Shetzline’s 2021 bonus in March 2022, our compensation and HR committee used a bonus target percentage of 45%, as discussed elsewhere in the proxy statement under the caption Annual Cash Incentive Program for 2021 Performance. Mr. Emany was not eligible for a target cash bonus payment due to the substantial completion of fiscal year 2021 when he joined Ironwood in December 2021.salaries. 70% of bonuses awarded for performance in 20212022 were tied solely to the achievement of our corporate goals for 2021,2022, and 30% of bonuses awarded were tied to the achievement of corporate and individual performance goals. In determining
Mr. McCourt’s cash bonus for 2021,2022, the board equated Mr. McCourt’s individual performance with that of the company’s performance. Actual bonus payments for 20212022 performance are set forth in the Summary Compensation Table elsewhere in this proxy statement. (2)
(2)
Awards listed in the “Estimated Future Payouts Under Equity Incentive Plan Awards” column are PSUs, and represent threshold, target and maximum potential future payouts under the rTSR PSUs granted to each of our named executive officers in 2021.2022. The PSUs are eligible to vest based on the achievement of thean rTSR performance goal over a three-year performance period, as described elsewhere under the caption 20212022 Long-Term Equity Awards in the Compensation Discussion &and Analysis above. (3)
Stock awards listed in the “All Other Stock Awards: Number of Shares of Stock or Units (#)” column are RSUs. (4)
Reflects the fair value of RSU and PSU awards on the date of grant calculated in accordance with ASC 718, excluding the effects of potential forfeitures, with the grant date fair value of PSUs determined based on the probable outcome of the performance conditions (target) associated with such awards on the grant date. For a discussion of the assumptions used in the valuation of the RSU and PSU awards granted to our named executive officers in 2021,2022, see footnote 2 to the Summary Compensation Table elsewhere in this proxy statement.
(5)
Reflects RSUs awarded to each of Ms. Consylman, Mr. McCourt, Mr. Rickard, and Dr. Shetzline as a special retention award in March 2021.
(6)
Reflects RSUs and PSUs awarded to Mr. Emany in connection with his appointment as senior vice president, chief financial officer in December 2021.
(7)
Reflects RSUs and PSUs awarded to Mr. Minardo in connection with his appointment as senior vice president, chief legal officer in August 2021.
Outstanding Equity Awards at Fiscal Year-End As described in our proxy statement relating to our 2021 annual meeting of stockholders, filed with the SEC on April 22, 2021,Proxy Statement, portions of certain Ironwood equity awards were converted into Cyclerion equity awards in connection with our separation from Cyclerion Therapeutics, Inc., or Cyclerion, in April 2019, or the Separation, and are subject to substantially the same terms and conditions as were applicable to the Ironwood equity awards prior to the distribution. The following tables set forth information regarding outstanding Ironwood and Cyclerion equity awards held by each of our named executive officers on December 31, 2021,2022, the last day of our last fiscal year. Information presented has been adjusted, as necessary, to reflect the impact of the Separation. As of this date, neither Mr. Mallon nor Ms. Consylman held any Ironwood equity awards. The Cyclerion equity awards were granted to Ms. Consylman and Messrs. McCourt and Rickard in connection with the Separation. Ms. Consylman did not hold any Cyclerion equity awards as of December 31, 2021. None of our other named executive officers hold any Cyclerion equity awards. Ironwood Equity Awards at Fiscal Year-End | | | | Option Awards | | | Stock Awards | | | | Option Awards | | | Stock Awards | | | | Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unearned
Options (#) | | Option
Exercise
Price ($) | | Option
Expiration
Date | | Number of
Shares of
Units of
Stock That
Have Not
Vested (#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(1) | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested (#) | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested ($) | | Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unearned
Options (#) | | Option
Exercise
Price ($) | | Option
Expiration
Date | | Number of
Shares of
Units of
Stock That
Have Not
Vested (#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(1) | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested (#) | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested ($)(1) | | | | Thomas McCourt | | | | | 95,971 | | | | | — | | | | | — | | | | | 13.11 | | | | | 2/1/2022(2) | | | | | | | | | | | | | | | | | | | | | | | Thomas McCourt | | | | | 110,962 | | | | | — | | | | | — | | | | | 11.65 | | | | | 2/1/2023(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | 110,962 | | | | | — | | | | | — | | | | | 11.65 | | | | | 2/1/2023(2) | | | | | | | | | | | | | | | | | | | | | | | | | | 80,504 | | | | | — | | | | | — | | | | | 12.56 | | | | | 3/3/2024(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | 80,504 | | | | | — | | | | | — | | | | | 12.56 | | | | | 3/3/2024(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 97,500 | | | | | — | | | | | — | | | | | 13.91 | | | | | 3/16/2025(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | 97,500 | | | | | — | | | | | — | | | | | 13.91 | | | | | 3/16/2025(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 179,056 | | | | | — | | | | | — | | | | | 9.12 | | | | | 3/1/2026(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | 179,056 | | | | | — | | | | | — | | | | | 9.12 | | | | | 3/1/2026(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 166,018 | | | | | — | | | | | — | | | | | 14.93 | | | | | 2/27/2027(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | 166,018 | | | | | — | | | | | — | | | | | 14.93 | | | | | 2/27/2027(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 142,404 | | | | | — | | | | | — | | | | | 12.95 | | | | | 2/21/2028(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | 139,331 | | | | | 3,073 | | | | | — | | | | | 12.95 | | | | | 2/21/2028(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 376,906 | | | | | 8,076 | | | | | — | | | | | 11.49 | | | | | 1/29/2029(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | 279,994 | | | | | 104,988 | | | | | — | | | | | 11.49 | | | | | 1/29/2029(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 40,943 | | | | | 4,761 | | | | | — | | | | | 11.78 | | | | | 5/1/2029(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,517 | | | | | 16,187 | | | | | — | | | | | 11.78 | | | | | 5/1/2029(3) | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 48,319(4) | | | | | 598,672 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 96,638(4) | | | | | 1,126,799 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 33,494(5) | | | | | 414,991 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 66,988(5) | | | | | 781,080 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 442,322(6) | | | | | 5,480,370 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 267,890(6) | | | | | 3,123,597 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 30,145(7) | | | | | 373,497 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 60,290(7) | | | | | 702,981 | | | | | 30,145(8) | | | | | 351,491 | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 499,234(8) | | | | | 6,185,509 | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 249,617(9) | | | | | 2,910,534 | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 497,736(9) | | | | | 6,166,949 | | | | | Sravan Emany | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 85,000(6) | | | | | 991,100 | | | | | — | | | | | — | | | Sravan Emany | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 63,750(6) | | | | | 789,863 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 85,000(9) | | | | | 991,100 | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 170,000(8) | | | | | 2,106,300 | | | | | John Minardo | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 79,892(6) | | | | | 931,541 | | | | | — | | | | | — | | | John Minardo | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 127,792(6) | | | | | 1,583,343 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 79,981(9) | | | | | 932,578 | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 159,962(8) | | | | | 1,981,929 | | | | | Jason Rickard | | | | | 18,041 | | | | | — | | | | | — | | | | | 11.65 | | | | | 2/1/2023(3) | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 135,746(9) | | | | | 1,681,893 | | | | | | | 7,754 | | | | | — | | | | | — | | | | | 11.76 | | | | | 6/10/2023(3) | | | | | | | | | | | | | | | | | | | | | | | Jason Rickard | | | | | 7,754 | | | | | — | | | | | — | | | | | 11.76 | | | | | 6/10/2023(3) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 10,309 | | | | | — | | | | | — | | | | | 9.66 | | | | | 12/16/2023(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 10,309 | | | | | — | | | | | — | | | | | 9.66 | | | | | 12/16/2023(3) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 40,834 | | | | | — | | | | | — | | | | | 12.02 | | | | | 11/3/2024(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 40,834 | | | | | — | | | | | — | | | | | 12.02 | | | | | 11/3/2024(3) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | 11,236 | | | | | 13.11 | | | | | 2/1/2022(10) | | | | | | | | | | | | | | | | | | | | | | | | | | 15,550 | | | | | — | | | | | — | | | | | 13.91 | | | | | 3/16/2025(3) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 2,000 | | | | | — | | | | | — | | | | | 13.11 | | | | | 2/1/2022(11) | | | | | | | | | | | | | | | | | | | | | | | | | | 6,046 | | | | | — | | | | | — | | | | | 9.79 | | | | | 9/1/2025(3) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 15,550 | | | | | — | | | | | — | | | | | 13.91 | | | | | 3/16/2025(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 17,956 | | | | | — | | | | | — | | | | | 9.12 | | | | | 3/1/2026(3) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 6,046 | | | | | — | | | | | — | | | | | 9.79 | | | | | 9/1/2025(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 81,390 | | | | | 1,743 | | | | | — | | | | | 11.49 | | | | | 1/29/2029(3) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 17,956 | | | | | — | | | | | — | | | | | 9.12 | | | | | 3/1/2026(3) | | | | | | | | | | | | | | | | | | | | | | | | | | 12,282 | | | | | 1,429 | | | | | — | | | | | 11.78 | | | | | 5/1/2029(3) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | 60,462 | | | | | 22,671 | | | | | — | | | | | 11.49 | | | | | 1/29/2029(3) | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 28,186(4) | | | | | 349,225 | | | | | — | | | | | — | | | | | | | 8,854 | | | | | 4,857 | | | | | — | | | | | 11.78 | | | | | 5/1/2029(3) | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 20,097(5) | | | | | 249,002 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 56,372(4) | | | | | 657,298 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 166,387(6) | | | | | 2,061,535 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,193(5) | | | | | 468,650 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 18,087(7) | | | | | 224,098 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 116,958(6) | | | | | 1,363,730 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 169,082(8) | | | | | 2,094,926 | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 36,174(7) | | | | | 421,789 | | | | | 18,087(8) | | | | | 170,971 | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 180,994(9) | | | | | 2,242,516 | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 84,541(9) | | | | | 985,748 | | | |
20222023 Proxy Statement 59
55
| | | | Option Awards | | | Stock Awards | | | | Option Awards | | | Stock Awards | | | | Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unearned
Options (#) | | Option
Exercise
Price ($) | | Option
Expiration
Date | | Number of
Shares of
Units of
Stock That
Have Not
Vested (#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(1) | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested (#) | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested ($) | | Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unearned
Options (#) | | Option
Exercise
Price ($) | | Option
Expiration
Date | | Number of
Shares of
Units of
Stock That
Have Not
Vested (#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(1) | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested (#) | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested ($)(1) | | | | Michael Shetzline,
M.D., Ph.D. | | | | | 67,592 | | | | | 25,106 | | | | | — | | | | | 13.19 | | | |
| 3/1/
2029(12) | | | | | | | | | | | | | | | | | | | | | | | Michael Shetzline | | | | | 90,766 | | | | | 1,932 | | | | | — | | | | | 13.19 | | | | | 3/1/2029(10) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 38,655(4) | | | | | 450,717 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 19,327(4) | | | | | 239,462 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 32,583(5) | | | | | 379,918 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 16,292(5) | | | | | 201,858 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 65,976(6) | | | | | 769,280 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 128,999(6) | | | | | 1,598,298 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 29,326(7) | | | | | 341,941 | | | | | 14,663(8) | | | | | 170,971 | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 14,663(7) | | | | | 181,675 | | | | | — | | | | | — | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 57,971(9) | | | | | 675,942 | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 115,942(8) | | | | | 1,436,521 | | | | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 162,894(9) | | | | | 2,018,257 | | |
(1)
Market value is calculated by multiplying the number of RSUs or PSUs that have not vested by the closing price of our Class A common stock on the Nasdaq Global Select Market on December 31, 2021,30, 2022, which was $11.66.$12.39. (2)
The options vested as to 1.25% on each monthly anniversary of the vesting commencement date for the first 36 months, and as to 4.5833% of the award on each monthly anniversary thereafter, generally subject to the executive’s continued employment with the company on the applicable vesting date. (3)
The options vest as to 1/48th of the shares on each monthly anniversary of the vesting commencement date, generally subject to the executive’s continued employment with the company on the applicable vesting datedate. (4)
RSUs vest over two years as to 50% of the award on each approximate anniversary of the grant thereof, generally subject to continued employment with the company on the applicable vesting date. (5)
RSUs vest over three years as to 33.3% of the award on each approximate anniversary of the grant thereof, generally subject to continued employment with the company on the applicable vesting date. (6)
RSUs vest over four years as to 25% of the award on each approximate anniversary of the grant thereof, generally subject to continued employment with the company on the applicable vesting date. (7)
The Adjusted EBITDA PSUs vest over a two-year period based on the achievement of the Adjusted EBITDA performance metrics discussed elsewhere in this proxy statement under the caption 2020 Adjusted EBITDA PSUs Payout. The number of shares reported herein assumes maximum performance for the Adjusted EBITDA PSUs in accordance with SEC requirements. The payout for the Adjusted EBITDA PSUs, which was certified by the compensation and HR committee on January 19, 2022, was 200% of the target number of PSUs.
(8)
The NDA Acceptance PSUs and the 2020 rTSR PSUs vestvested over a three-year period based on the achievement of the performance metrics discussed elsewhere in this proxy statement under the caption 2020 Adjusted EBITDArTSR PSUs Payout. The number of shares reported in this column assumes, in accordance with SEC requirements, that the NDA Acceptance PSUs target was not achieved, andherein reflects target performance for the 2020 rTSR PSUs. Actual payoutsPSUs in accordance with SEC requirements. The payout for thesethe 2020 rTSR PSUs, could range from 0% to 200%which was certified by the compensation and HR committee on January 17, 2023, was 100% of the target number of PSUs subject to an award based on actual performance results. These PSUs also have a service-based vesting condition that generally will be satisfied by continued employment with the company through the last day of the applicable performance period. For a discussion of the treatment of PSUs following certain terminations of employment and/or a change of control of Ironwood, please see Named Executive Officer Severance Arrangements andBenefits in the Event of a Change of Control elsewhere in this proxy statement.PSUs.
(9)
(8)
The 2021 rTSR PSUs vest over a three-year period based on the achievement of the performance metrics discussed elsewhere in this proxy statement under the caption 2021 Equity Awards.metrics. The number of shares reported in this column assumes target performance for the 2021 rTSR PSUs in accordance with SEC requirements. Actual payouts for these PSUs could range from 0% to 200% of the target number of PSUs subject to an award based on actual performance results. The 2021 rTSR PSUs also have a service-based vesting condition that generally will be satisfied by continued employment with the company through the last day of the applicable performance period. For a discussion of the treatment of PSUs following certain terminations of employment and/or a change of control of Ironwood, please see Named Executive Officer Severance Arrangements and Benefits in the Event of a Change of Control elsewhere in this proxy statement. (10)
(9)
The option vests upon global pharmaceutical product net sales (including partnered or licensed product revenue) exceeding $1 billion. On January 19, 2022 rTSR PSUs vest over a three-year period based on the option vested upon the attainmentachievement of the performance metric, as certifiedmetrics discussed elsewhere in this proxy statement under the caption 2022 Annual Equity Awards. The number of shares reported in this column assumes target performance for the 2022 rTSR PSUs in accordance with SEC requirements. Actual payouts for these PSUs could range from 0% to 200% of the target number of PSUs subject to an award based on actual performance results. The 2022 rTSR PSUs also have a service-based vesting condition that generally will be satisfied by continued employment with the compensationcompany through the last day of the applicable performance period. For a discussion of the treatment of PSUs following certain terminations of employment and/or a change of control of Ironwood, please see Named Executive Officer Severance Arrangements and HR committee.Benefits in the Event of a Change of Control elsewhere in this proxy statement. (11)
This option vested upon the acceptance by the U.S. FDA of an NDA for DUZALLO® (lesinurad).
(12)
(10)
The options vest as to 25% of the shares on the first anniversary of the vesting commencement date and 1/48th of the shares each month thereafter for the next 36 months, generally subject to the executive’s continued employment with the company on the applicable vesting date.
Cyclerion Equity Awards at Fiscal Year-End | | | | Number of Securities Underlying
Unexercised Options Exercisable | | Option
Exercise Price ($) | | Option
Expiration Date | | | | Number of Securities Underlying
Unexercised Options Exercisable | | Option
Exercise Price ($) | | Option
Expiration Date | | | | Thomas McCourt | | | | | 8,713 | | | | | 16.21 | | | | | 2/1/2022 | | | Thomas McCourt | | | | | 10,221 | | | | | 14.40 | | | | | 2/1/2023 | | | | | | | 10,221 | | | | | 14.40 | | | | | 2/1/2023 | | | | | | 7,591 | | | | | 15.54 | | | | | 3/3/2024 | | | | | | | 7,591 | | | | | 15.54 | | | | | 3/3/2024 | | | | | | 9,750 | | | | | 17.20 | | | | | 3/16/2025 | | | | | | | 9,750 | | | | | 17.20 | | | | | 3/16/2025 | | | | | | 14,218 | | | | | 11.28 | | | | | 3/1/2026 | | | | | | | 14,218 | | | | | 11.28 | | | | | 3/1/2026 | | | | | | 8,859 | | | | | 18.47 | | | | | 2/27/2027 | | | | | | | 8,859 | | | | | 18.47 | | | | | 2/27/2027 | | | | | | 4,101 | | | | | 16.02 | | | | | 2/21/2028 | | | | | | | 4,101 | | | | | 16.02 | | | | | 2/21/2028 | | | | | | 2,156 | | | | | 14.21 | | | | | 1/29/2029 | | | | | | | 2,156 | | | | | 14.21 | | | | | 1/29/2029 | | | Jason Rickard | | | | | 857 | | | | | 14.40 | | | | | 2/1/2023 | | | | | Jason Rickard | | | | | 200 | | | | | 16.21 | | | | | 2/1/2022 | | | | | | 543 | | | | | 14.55 | | | | | 6/10/2023 | | | | | | | 857 | | | | | 14.40 | | | | | 2/1/2023 | | | | | | 750 | | | | | 11.95 | | | | | 12/16/2023 | | | | | | | 543 | | | | | 14.55 | | | | | 6/10/2023 | | | | | | 3,324 | | | | | 14.87 | | | | | 11/3/2024 | | | | | | | 750 | | | | | 11.95 | | | | | 12/16/2023 | | | | | | 1,555 | | | | | 17.20 | | | | | 3/16/2025 | | | | | | | 3,324 | | | | | 14.87 | | | | | 11/3/2024 | | | | | | 562 | | | | | 12.11 | | | | | 9/1/2025 | | | | | | | 1,555 | | | | | 17.20 | | | | | 3/16/2025 | | | | | | 1,425 | | | | | 11.28 | | | | | 3/1/2026 | | | | | | | 562 | | | | | 12.11 | | | | | 9/1/2025 | | | | | | 465 | | | | | 14.21 | | | | | 1/29/2029 | | | | | | | 1,425 | | | | | 11.28 | | | | | 3/1/2026 | | | | | | | | 465 | | | | | 14.21 | | | | | 1/29/2029 | | | |
20222023 Proxy Statement 61
57
Option Exercises and Stock Vested Table The following table sets forth certain information regarding the exercise of options to purchase our Class A common stock and the vesting of RSUs that were held by our named executive officers during the year ended December 31, 2021.2022. | | | | Option Awards | | | Stock Awards | | | | Option Awards | | | Stock Awards | | | | Name | | Number of Shares
Acquired on Exercise
(#) | | Value Realized
on Exercise
($)(1) | | Number of Shares
Acquired on Vesting
(#) | | Value Realized
on Vesting
($)(2) | | Name | | Number of Shares
Acquired on Exercise
(#) | | Value Realized
on Exercise
($)(1) | | Number of Shares
Acquired on Vesting
(#) | | Value Realized
on Vesting
($)(2) | | | | Thomas McCourt | | | | — | | | | | — | | | | | 167,945 | | | | $ | 1,877,038 | | | Thomas McCourt | | | | — | | | | | — | | | | | 216,540 | | | | $ | 2,428,008 | | | | | Sravan Emany | | | | — | | | | | — | | | | | — | | | | | — | | | Sravan Emany | | | | — | | | | | — | | | | | 21,250 | | | | $ | 240,763 | | | | | John Minardo | | | | — | | | | | — | | | | | — | | | | | — | | | John Minardo | | | | — | | | | | — | | | | | 19,973 | | | | $ | 230,688 | | | | | Jason Rickard | | | | — | | | | | — | | | | | 89,858 | | | | $ | 961,043 | | | Jason Rickard | | | | 18,041(3) | | | | $ | 1,744 | | | | | 125,525 | | | | $ | 1,400,922 | | | | | Michael Shetzline | | | | — | | | | | — | | | | | 64,023 | | | | $ | 730,237 | | | Michael Shetzline | | | | — | | | | | — | | | | | 83,370 | | | | $ | 933,879 | | | | | Mark Mallon | | | | 104,395(3) | | | | $ | 89,713 | | | | | 99,821 | | | | $ | 928,335 | | | | | | Gina Consylman | | | | 193,151(3) | | | | $ | 252,799 | | | | | 58,942 | | | | $ | 548,161 | | | |
(1)
Computed by determining the difference between the market price of our Class A common stock on the date of exercise and the exercise price of the exercised stock option, multiplied by the number of shares acquired upon exercise of the option. (2)
Computed by multiplying the number of shares of Class A common stock underlying the vested RSUs by the market price of our Class A common stock on the vesting date. (3)
Shares wereRepresents shares of our Class A common stock that Mr. Rickard acquired by Mr. Mallon and Ms. Consylman through an option exercises following their termination,exercise as such stock options were expiring, and then sold on the open market.
Named Executive Officer Severance Arrangements and Benefits in the Event of a Change of Control We have entered into severance arrangements with each of our named executive officers. Under the severance arrangements, our named executive officers are eligible to receive certain payments and benefits in the event of an involuntary termination without “cause” or a “constructive termination.” Each of our executives is also eligible to receive enhanced payments and benefits in the event of a change of control plus an actual or constructive involuntary termination of employment (such double trigger event, a “change of control termination”). For additional information, please see the definition of “change of control termination,” below. The following descriptions reflect the payments and benefits that would have been payable to each of our named executive officers as of December 31, 20212022 under their respective severance arrangements. The benefits for our named executive officers described elsewhere in this proxy statement under the captions Severance Benefits not in Connection with a Change of Control and Change of Control Severance Benefits are only payable if the named executive officer complies with all of Ironwood’s rules and policies, executes a separation agreement that includes a release of claims and complies with any post-employment non-disclosure, non-competition and non-solicitation obligations. The executive severance agreements further provide that in connection with the sale of all or substantially all of the assets of Ironwood, Ironwood would cause the acquirer of such assets to assume the executives’ severance arrangements.
Severance Benefits not in Connection with a Change of Control In the event of a termination without cause or a constructive termination not qualifying as a change of control termination, each of our current named executive officers would be entitled to receive the following: (i) for Messrs. Emany and Minardo, a lump-sum payment equal to 12 months of his base salary for the year of termination; for Mr. McCourt, a lump-sum payment equal to 18 months of his base salary for the year of termination; and for Mr. Rickard and Dr. Shetzline, a lump-sum payment equal to 12 months of his base salary for the year of termination plus an amount equal to a maximum of six months of his base salary for the period beginning as of the first anniversary of his termination date, provided he has not secured new, reasonably similar full-time employment; (ii) a lump-sum payment equal to his target cash bonus for the year of termination, pro-rated based on the percentage of the year worked prior to the triggering
event; (iii) a lump-sum payment equal to his actual bonus for the prior year if not yet paid as of the termination date; (iv) a lump-sum payment equal to his full target cash bonus for the year of termination (for Mr. McCourt, multiplied by 1.5); (v) for Messrs. Emany and Minardo, up to 12 months of subsidized COBRA benefits; for Mr. McCourt, a period of up to 18 months of subsidized COBRA benefits; and for Mr. Rickard and Dr. Shetzline, 12 months of subsidized COBRA benefits plus up to an additional six months of subsidized COBRA benefits for the period beginning as of the first anniversary of his termination date, provided he has not been eligible to participate in the group medical plan of another employer; and (vi) outplacement assistance benefits. The non-equity basednon-equity-based severance benefits described in items (i) through (vi) of this paragraph, collectively, are referred to as the “Non Equity Severance Benefits.” In addition, the executive severance agreement for Messrs. McCourt and Rickard and Dr. Shetzline provides that any outstanding equity awards subject solely to time-based vesting would vest as to (1) the portion of the equity award that would have vested if the named executive officer had remained employed for 18 months following the termination date and (2) an additional portion of the equity award that would have vested on the next regular vesting date after such 18-month period as if the equity award vested on a daily basis from the last regular award vesting date occurring prior to the end of the 18 month period through such next regular vesting date. Any equity awards that do not vest pursuant to the preceding sentence would remain outstanding and eligible to vest upon the occurrence of a change of control termination (as defined below) in the time periods described below for such a termination. Further, the exercisability of any outstanding vested stock options held by the named executive officer as of the termination date (including, other than for Messrs. EmanyMcCourt and Minardo and Dr. Shetzline,Rickard, any vested options to purchase Cyclerion common stock that were granted in connection with the Separation in substitution for or replacement of vested options to purchase Ironwood Class A common stock) would be extended through the earlier of 24 months following the termination date (or, in the event that Ironwood publicly announced it was conducting negotiations leading to a change of control or entered into a definitive agreement that would have resulted in a change of control during such 24 month period , the later of (A) the expiration of the 24 month period or (B) the first to occur of the date that is three months following the change of control and 30 days following the date on which Ironwood announced that such definitive agreement had been terminated or that Ironwood’s efforts to consummate the change of control contemplated by the previously announced negotiations or by a previously executed definitive agreement had been abandoned) or the stock option’s final expiration date. The equity-based severance benefits described in this paragraph are referred to as the “Equity Severance Benefits.” Moreover, with respect to PSUs, in the event of the named executive officer’s involuntary termination without cause or constructive termination (collectively, a “qualifying termination”), the awards, to the extent then outstanding, will not terminate upon such termination of employment and instead will remain eligible to vest based on the attainment of the applicable performance goals. Specifically, the NDA Acceptance2023 Absolute TSR PSUs will generally remain outstanding and eligible to vest based upon the achievement of the NDA Acceptance PSUstheir respective 2023 Absolute TSR performance goalgoals until the earlier of (A) the end of the performance period or (B) the twelve (12)-month period following the date of the qualifying termination.termination, with the number of PSUs actually delivered subject to proration based on the number of days the named executive officer remained employed during the respective performance period. The 2020 rTSR PSUs, 2021 rTSR PSUs, as described in our 2022 proxy statement filed with the SEC on April 22, 2022, or 2021 rTSR PSUs, 2022 rTSR PSUs and 20222023 rTSR PSUs will generally remain outstanding and eligible to vest based upon the achievement of their respective rTSR performance goals, until the end of their respective performance period, with the number of PSUs actually delivered subject to proration based on the number of days the named executive officer remained employed during the respective performance period.
Change of Control Severance Benefits In the event of a change of control termination, each of our current named executive officers would be entitled to receive the following benefits under his or her executive severance agreement: (1) a lump-sum payment in an amount equal to 18 months (for Mr. McCourt, 24 months) of his or her base salary as of the time of termination; (2) a lump-sum payment of his or her target cash bonus for the year of termination, pro-rated based on the percentage of the year worked prior to the triggering event; (3) a lump-sum payment equal to his or her actual bonus for the prior year if not yet paid as of the termination date; (4) a lump-sum payment equal to his or her full target cash bonus for the year of termination, multiplied by 1.5 (for Mr. McCourt, multiplied by 2.0); (5) 18 months (for Mr. McCourt, 24 months) of subsidized COBRA benefits; and (6) outplacement assistance benefits.
In addition, in the event of a change of control termination, each executive severance agreement provides for acceleration of all outstanding equity awards subject solely to time-based vesting as of the later of (1) the termination date or (2) the change of control. Further, the exercisability of any outstanding vested stock options held by the named executive officer as of the termination date (including, other than for Messrs. EmanyMcCourt and Minardo and Dr. Shetzline,Rickard, any vested options to purchase Cyclerion common stock granted in connection with the Separation in substitution for or replacement of vested options to purchase Ironwood Class A common stock) would be extended through the earlier of 24 months following the termination date (or, if later the date that was three months following the change of control) or the stock option’s final expiration date. Under each executive severance agreement, a “change of control termination” consists of an involuntary termination without “cause” or a “constructive termination” (each as defined in the agreement), in either event during the period commencing six months prior to the earlier of (1) the date that Ironwood first publicly announces it is conducting negotiations leading to a change of control, or (2) the date that Ironwood enters into a definitive agreement that would result in a change of control, and ending on the date that is 24 months after the change of control, provided that if such change of control contemplated by a public announcement or such a definitive agreement, in either case, is not consummated, or if an involuntary or constructive termination occurs later than 24 months following the change of control, such involuntary or constructive termination, as the case may be, shall not be a “change of control termination”. Under each executive severance agreement, a change of control occurs when: (I) any person becomes, pursuant to a transaction or a series of transactions not approved by the Ironwood board of directors, the beneficial owner, directly or indirectly, of Ironwood securities representing more than 50% of the total voting power; (II) a merger or consolidation of Ironwood occurs, whether or not approved by the Ironwood board of directors, which results in the holders of Ironwood’s voting securities holding less than 50% of the combined voting power of the surviving entity immediately after such merger or consolidation; (III) the sale or disposition of more than two-thirds of the assets of Ironwood; or (IV) the date a majority of members of the Ironwood board of directors is replaced during any 12-month period by directors whose appointment or election was not endorsed by a majority of members of the Ironwood board of directors before the date of the appointment or election. Treatment of PSUs in the Event of a Change of Control In the event of a change of control of Ironwood, the performance- and service-based vesting conditions applicable to the PSUs, to the extent then outstanding, will generally be treated as follows: the NDA Acceptance2023 Absolute TSR PSUs will become earned at the applicable target level (and subject to vesting as described below) as of immediately prior to the change of control provided that if the NDA Acceptance PSUs had already been earned at target as ofbased on the change of control no additional portion of such NDA Acceptance PSUs will become earned as a result of the change of control.stock price. The 2020 rTSR PSUs, 2021 rTSR PSUs, 2022 rTSR PSUs and 20222023 rTSR PSUs will become earned at target (and subject to vesting as described below) as of immediately prior to the change of control, provided that if the resulting rTSR percentile rank, determined after accounting for the stock price performance of Ironwood stock in connection with the change of control, would result in the 20202021 rTSR PSUs, the 20212022 rTSR PSUs or the 20222023 rTSR PSUs, as applicable, being earned above target, the 20202021 rTSR PSUs,the 2021 2022 rTSR PSUs or the 20222023 rTSR PSUs, as applicable, will be deemed to be earned (and subject to vesting as described below) at such higher level in accordance with the terms of the award.
Any PSUs that become earned in connection with a change of control as described above shall vest in equal installments on a quarterly basis over the remaining portion of the applicable performance period, generally subject to a named executive officer’s continued employment on each such vesting date. In the event of the occurrence of a qualifying termination in connection with or during the 24-month period immediately following the change of control and prior to the completion of the performance period, any earned but unvested PSUs held by the named executive officer will immediately vest in full in connection with such qualifying termination. If a named executive officer underwent a qualifying termination prior to a change of control, any outstanding PSUs held by the named executive officer as of the time of the change of control would become earned as described in the preceding paragraph but, in the case of the 2020 rTSR PSUs, 2021 rTSR PSUs, and 2022 rTSR PSUs, 2023 rTSR PSUs and 2023 Absolute PSUs remain subject to proration based on the number of days the named executive officer remained employed during the applicable performance period. Treatment of Equity in the Event of Death or Permanent Disability For all employees, including our named executive officers, outstanding stock option and RSU awards subject solely to time-based vesting accelerate in full in the event of the death of the award holder. Our forms of stock option and RSU agreements for stock option and RSU awards, respectively, granted under our 2019 Plan, include a similar provision.
In addition, the post-termination exercise window of all vested stock options held by a participant that were granted under our Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan and 2019 Plan is extended to one year (or the stock option’s final expiration date, if earlier) following the participant’s termination of employment by reason of his or her death. With respect to PSUs, in the event of a termination of the named executive officer’s employment as a result of his or her death or permanent disability, the awards, to the extent then outstanding, will not terminate and will remain eligible to vest based on the attainment of the applicable performance goals. Specifically, the NDA Acceptance2023 Absolute TSR PSUs will generally remain outstanding and eligible to vest based upon the achievement of the NDA acceptancetheir respective 2023 Absolute TSR performance goalgoals until the earlier of (A) the end of the performance period or (B) the 12-month period following the death or permanent disability.disability with the number of PSUs actually delivered subject to proration based on the number of days the named executive officer remained employed during the applicable 2023 Absolute TSR performance period. The 2020 rTSR PSUs, 2021 rTSR PSUs, or 2022 rTSR PSUs as the case may be,or 2023 rTSR PSUs will generally remain outstanding and eligible to vest based upon the achievement of the performance goals until the end of the applicable rTSR performance period with the number of PSUs actually delivered subject to proration based on the number of days the named executive officer remained employed during the applicable rTSR performance period. Employee Proprietary Information, Intellectual Property and Non-competition Agreement The employee proprietary information, intellectual property and noncompetition agreement that the company entered into with Messrs. Emany and Minardo provides that as consideration for entering into the noncompetition restrictions set forth in such agreement, each of Messrs. Emany and Minardo will be eligible to participate in our 2019 Plan. The employee proprietary information, intellectual property and noncompetition agreement that the company entered into with Mr. McCourt provides that as additional consideration for entering into the noncompetition restrictions set forth in such agreement, Mr. McCourt will bewas eligible for cash incentive awards for performance in 2021, with the amount of any such incentive award (if any) to be determined solely by our board of directors, or any committee thereof.2021. In addition, the employee proprietary information, intellectual property and noncompetition agreement that the company entered into with Mr. McCourt and Dr. Shetzline provides for an extended exercisability period for vested, unexercised nonqualified stock options for one year from the last date of employment in the event that the company determines to enforce the non-competition restriction included in such agreement. 20222023 Proxy Statement 65
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Potential Payments Upon Termination or Change of Control Except as described in this proxy statement, there are currently no other agreements or arrangements pursuant to which our named executive officers would receive severance or other benefits in the event of a termination of employment or change of control of Ironwood. The following table presents our estimate of the amount of severance and other benefits to which our current named executive officers would be entitled if a triggering event described below occurred on December 31, 2021.2022. The closing price of our Class A common stock as listed on the Nasdaq Global Select Market on December 31, 202130, 2022 was $11.66$12.39 per share. As a result of the elimination of Mr. Rickard’s position as described above, Mr. Mallon and Ms. Consylman terminated employmenthe will be entitled to severance benefits in accordance with the company on March 12, 2021terms, and July 2, 2021, respectively,subject to the conditions, of his executive severance agreement, and as otherwise described above under the captions Severance Benefits not in connectionConnection with such termination, neither executive received any severance benefits from the company.a Change of Control. | | | | | | Involuntary
Termination without
Cause or a Constructive
Termination(1) | | Termination
Following a
Change of
Control | | Death(2) | | | | | | Involuntary
Termination without
Cause or a Constructive
Termination(1) | | Termination
Following a
Change of
Control | | Death(2) | | | | Thomas McCourt | | | Cash Severance | | | $ | 1,162,500 | | | | $ | 1,550,000 | | | | | — | | | Thomas McCourt | | | Cash Severance | | | $ | 1,209,000 | | | | $ | 1,612,000 | | | | | — | | | | | Non-Equity Incentive Plan
Compensation | | | $ | 1,453,125 | | | | $ | 1,743,750 | | | | | — | | | | Non-Equity Incentive Plan
Compensation | | | $ | 1,511,250 | | | | $ | 1,813,500 | | | | | — | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | | Options | | | $ | 17,848 | | | | $ | 17,848 | | | | $ | 17,848 | | | | Options | | | $ | 10,173 | | | | $ | 10,173 | | | | $ | 10,173 | | | | | RSUs | | | $ | 3,762,216 | | | | $ | 5,031,47 | | | | $ | 5,031,477 | | | | RSUs | | | $ | 4,697,074 | | | | $ | 6,494,033 | | | | $ | 6,494,033 | | | | | PSUs | | | | — | | | | $ | 4,433,645 | | | | | — | | | | PSUs | | | | — | | | | $ | 12,571,786 | | | | | — | | | | | Other Benefits(5) | | | $ | 74,796 | | | | $ | 79,728 | | | | | — | | | | Other Benefits(5) | | | $ | 74,868 | | | | $ | 79,824 | | | | | — | | | | | Total | | | $ | 6,470,485 | | | | $ | 12,856,448 | | | | $ | 5,049,325 | | | | Total | | | $ | 7,502,365 | | | | $ | 22,581,316 | | | | $ | 6,504,206 | | | | | Sravan Emany | | | Cash Severance | | | $ | 500,000 | | | | $ | 750,000 | | | | $ | | | | Sravan Emany | | | Cash Severance | | | $ | 500,000 | | | | $ | 750,000 | | | | | — | | | | | Non-Equity Incentive Plan
Compensation | | | $ | 500,000 | | | | $ | 625,000 | | | | | — | | | | Non-Equity Incentive Plan
Compensation | | | $ | 500,000 | | | | $ | 625,000 | | | | | — | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | | Options | | | | — | | | | | — | | | | | — | | | | Options | | | | — | | | | | — | | | | | — | | | | | RSUs | | | | — | | | | $ | 991,100 | | | | $ | 991,100 | | | | RSUs | | | | — | | | | $ | 789,863 | | | | $ | 789,863 | | | | | PSUs | | | | — | | | | $ | 991,100 | | | | | — | | | | PSUs | | | | — | | | | $ | 2,106,300 | | | | | — | | | | | Other Benefits(5) | | | $ | 60,000 | | | | $ | 60,000 | | | | | — | | | | Other Benefits(5) | | | $ | 60,000 | | | | $ | 60,000 | | | | | — | | | | | Total | | | $ | 1,060,000 | | | | $ | 3,417,200 | | | | $ | 991,100 | | | | Total | | | $ | 1,060,000 | | | | $ | 4,331,163 | | | | $ | 789,863 | | | | | John Minardo | | | Cash Severance | | | $ | 475,000 | | | | $ | 712,500 | | | | | — | | | John Minardo | | | Cash Severance | | | $ | 494,000 | | | | $ | 741,000 | | | | | — | | | | | Non-Equity Incentive Plan
Compensation | | | $ | 427,500 | | | | $ | 534,375 | | | | | — | | | | Non-Equity Incentive Plan
Compensation | | | $ | 444,600 | | | | $ | 555,750 | | | | | — | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | | Options | | | | — | | | | | — | | | | | — | | | | Options | | | | — | | | | | — | | | | | — | | | | | RSUs | | | | — | | | | $ | 931,541 | | | | $ | 931,541 | | | | RSUs | | | | — | | | | $ | 1,583,343 | | | | $ | 1,583,343 | | | | | PSUs | | | | — | | | | $ | 932,578 | | | | | — | | | | PSUs | | | | — | | | | $ | 3,621,770 | | | | | — | | | | | Other Benefits(5) | | | $ | 72,012 | | | | $ | 72,012 | | | | | — | | | | Other Benefits(5) | | | $ | 69,240 | | | | $ | 73,860 | | | | | — | | | | | Total | | | $ | 974,512 | | | | $ | 3,183,006 | | | | $ | 931,541 | | | | Total | | | $ | 1,007,840 | | | | $ | 6,575,723 | | | | $ | 1,583,343 | | | | | Jason Rickard | | | Cash Severance(3) | | | $ | 750,000 | | | | $ | 750,000 | | | | | — | | | Jason Rickard | | | Cash Severance(3) | | | $ | 780,000 | | | | $ | 780,000 | | | | | — | | | | | Non-Equity Incentive Plan
Compensation | | | $ | 500,000 | | | | $ | 625,000 | | | | | — | | | | Non-Equity Incentive Plan
Compensation | | | $ | 520,000 | | | | $ | 650,000 | | | | | — | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | | Options | | | $ | 3,854 | | | | $ | 3,854 | | | | $ | 3,854 | | | | Options | | | $ | 2,440 | | | | $ | 2,440 | | | | $ | 2,440 | | | | | RSUs | | | $ | 2,084,283 | | | | $ | 2,489,678 | | | | $ | 2,489,678 | | | | RSUs | | | $ | 2,049,479 | | | | $ | 2,659,761 | | | | $ | 2,659,761 | | | | | PSUs | | | | — | | | | $ | 1,899,612 | | | | | — | | | | PSUs | | | | — | | | | $ | 4,505,475 | | | | | — | | | | | Other Benefits(5) | | | $ | 101,040 | | | | $ | 101,040 | | | | $ | | | | | Other Benefits(5) | | | $ | 101,148 | | | | $ | 101,148 | | | | | — | | | | | Total | | | $ | 3,439,177 | | | | $ | 5,869,184 | | | | $ | 2,493,532 | | | | Total | | | $ | 3,453,067 | | | | $ | 8,698,824 | | | | $ | 2,662,201 | | |
| | | | | | Involuntary
Termination without
Cause or a Constructive
Termination(1) | | Termination
Following a
Change of
Control | | Death(2) | | | | | | Involuntary
Termination without
Cause or a Constructive
Termination(1) | | Termination
Following a
Change of
Control | | Death(2) | | | | Michael Shetzline, M.D., Ph.D. | | | Cash Severance(3) | | | $ | 726,000 | | | | $ | 726,000 | | | | | — | | | Michael Shetzline, M.D., Ph.D. | | | Cash Severance(3) | | | $ | 769,560 | | | | $ | 769,560 | | | | | — | | | | | Non-Equity Incentive Plan
Compensation | | | $ | 387,200 | | | | $ | 484,000 | | | | | — | | | | Non-Equity Incentive Plan
Compensation | | | $ | 461,736 | | | | $ | 577,170 | | | | | — | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | Equity Acceleration(4) | | | | | | | | | | | | | | | | | | | Options | | | | — | | | | | — | | | | | — | | | | Options | | | | — | | | | | — | | | | | — | | | | | RSUs | | | $ | 1,231,856 | | | | $ | 1,509,853 | | | | $ | 1,509,853 | | | | RSUs | | | $ | 1,524,602 | | | | $ | 2,039,617 | | | | $ | 2,039,617 | | | | | PSUs | | | | — | | | | $ | 1,416,795 | | | | | — | | | | PSUs | | | | — | | | | $ | 3,586,001 | | | | | — | | | | | Other Benefits(5) | | | $ | 58,080 | | | | $ | 58,080 | | | | | — | | | | Other Benefits(5) | | | $ | 60,000 | | | | $ | 60,000 | | | | | — | | | | | Total | | | $ | 2,403,136 | | | | $ | 4,194,728 | | | | $ | 1,509,853 | | | | Total | | | $ | 2,815,898 | | | | $ | 7,032,348 | | | | $ | 2,039,617 | | |
(1)
Represents amounts payable under the terms of the named executive officer severance arrangements. Non-equity incentive plan compensation payment amount assumes no bonus amounts for 20212022 have been paid to the executive officer as of December 31, 2021,2022, and that all 20202021 bonus amounts have been paid as of such date, in each case, as would be consistent with Ironwood’s historical practice. (2)
With respect to options, reflects the in-the-money value of the unvested portion of such named executive officer’s options that have vesting provisions based solely on time, and not performance milestones, and that would be fully accelerated, in each case, in accordance with the terms of the award agreements issued under our equity incentive plans in connection with his death. The value is calculated by multiplying the amount (if any) by which $11.66,$12.39, the closing price of our Class A common stock on the Nasdaq Global Select Market on December 31, 2021,30, 2022, exceeds the exercise price of the option by the number of shares subject to the accelerated portion of the option. With respect to RSUs, the value is calculated by multiplying the number of unvested RSUs with vesting provisions based solely on time that would be fully accelerated (if any) in connection with the named executive officer’s death by $11.66,$12.39, the closing price of our Class A common stock on the Nasdaq Global Select Market on December 31, 2021,30, 2022, in accordance with the terms of the award agreements issued under our equity incentive plans. With respect to PSUs, the treatment of such awards in the event of the named executive officer’s death or permanent disability is described elsewhere in this proxy statement under the caption Treatment of Equity in the Event of Death or Permanent Disability and in footnote 4 to this table. (3)
With respect to an involuntary termination of employment without cause or a constructive termination, includes the value of the payment of an additional amount equal to six months of base salary for Mr. Rickard and Dr. Shetzline in the event he does not obtain full-time employment within six months following the one-year anniversary of his termination date. (4)
With respect to options, reflects the in-the-money value of the unvested portion of such named executive officer’s options that have vesting provisions based solely on time, and not performance milestones, and that would be accelerated, in each case, in accordance with the terms of our severance agreements with each executive officer. The value is calculated by multiplying the amount (if any) by which $11.66,$12.39, the closing price of our Class A common stock on the Nasdaq Global Select Market on December 31, 2021,30, 2022, exceeds the exercise price of the option by the number of shares subject to the accelerated portion of the option. With respect to RSUs, the value is calculated by multiplying the number of unvested RSUs with vesting provisions based solely on time that would be accelerated (if any) by $11.66,$12.39, the closing price of our Class A common stock on the Nasdaq Global Select Market on December 31, 2021,30, 2022, in each case, in accordance with the terms of our severance arrangements with each executive officer. With respect to PSUs, the value in the case of a qualifying termination in connection with a change of control is calculated by multiplying the number of unvested and unearned PSUs that would be accelerated (if any) by $11.66,$12.39, the closing price of our Class A common stock on the Nasdaq Global Select Market on December 31, 2021,30, 2022, as described in further detail above under the caption Treatment of PSUs in the Event of a Change of Control. In the case of a qualifying termination or death prior to a change in control, the PSUs will remain eligible to vest based on the attainment of the applicable performance goals, subject to applicable proration, as described above under the captions Severance Benefits not in Connection with a Change of Control and Treatment of Equity in the Event of Death or Permanent Disability. The values in this table assume thatdo not include the PSUs will become earned at target, with the exception of Organic EBITDANDA Acceptance PSUs, for which the performance period ended on December 31, 20212022 and the achievement percentage was determined to be 0% of target. The values in this table include the 2020 rTSR PSUs, for which the performance period ended on December 31, 2022, at 100% of target as the PSUs became earned at 200%100% of the target, with such earned PSUs vesting amount certified by the compensation and HR committee on January 19,17, 2023. The values in this table assume that the 2021 rTSR PSUs and 2022 rTSR PSUs will become earned at 200% and 195% of target, respectively, based on their actual TSR as of December 31, 2022. (5)
Includes outplacement assistance benefits and subsidized COBRA benefits. With respect to an involuntary termination without cause or a constructive termination, includes the value of the payment of an additional amount equal to six months of subsidized COBRA benefits for our named executive officers, except for Messrs. Emany and Minardo, in the event he or she isthey are not eligible to participate in the group medical plan of another employer following the one yearone-year anniversary of his or hereach of their termination date.dates. 20222023 Proxy Statement 67
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CEO Pay Ratio Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the median of the annual total compensation of our employees, the annual total compensation of our principal executive officer on December 31, 2021,2022, Mr. McCourt, and the ratio of these two amounts. During 2021, Mr. Mallon served as our chief executive officer through March 12, 2021 and Mr. McCourt served as our interim and subsequently permanent chief executive officer for the remainder of 2021. In accordance with Instruction 10 to Item 402(u) of Regulation S-K, we have elected to use Mr. McCourt’s compensation for purposes of this pay ratio disclosure as Mr. McCourt was serving as our chief executive officer on December 31, 2021, the date selected by us to identify our median employee. For purposes of computing Mr. McCourt’s compensation for this pay ratio disclosure, we annualized the base salary paid to Mr. McCourt for the period in 2021 in which he served as our interim and subsequently permanent chief executive officer. We included the full amount, of the cash bonus actually paid to Mr. McCourt in 2022, for 2021 performance, which was not pro-rated for the period of service as our chief executive officer because Mr. McCourt was employed by Ironwood throughout 2021.
For 2021, our last completed fiscal year:
•
The estimated median of the annual total compensation of all employees of our company (other than Mr. McCourt) was $248,243;$265,137; and •
Mr. McCourt’s annualizedannual total compensation, foras reported in the periodSummary Compensation Table included elsewhere in 2021 in which he served as our interim and subsequently permanent chief executive officer (as determined and described above)this proxy statement, was $8,852,951.$7,893,266. Based on this information for 2021,2022, we estimate that the ratio of the annual total compensation of Mr. McCourt to the median annual total compensation of all employees was approximately 3630 to 1. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records, and the methodology described below. Because the SEC rules for identifying the median of the annual total compensation of our employees and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio for Ironwood, as other companies have employees based in different locations (including other countries), have different business models and employee needs, have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their pay ratios. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and Mr. McCourt, we took the following steps: •
We determined that it was appropriate to re-identify our median employee for the purposes of the pay ratio disclosure for 2021.2022. We determined that, as of December 31, 2021,2022, our employee population consisted of 219 individuals. This population consisted of our full- and part-time employees. We utilized a December 31, 20212022 identification date as it is consistent with our CEO pay ratio reporting last year, our year-end financial reporting, and other reporting dates used in this proxy statement. The year-end identification date enables us to make such identification in a reasonably efficient and economical manner. •
To identify the “median employee” from our employee population, we started with the gross earnings of our employees as reflected in our payroll records for 20212022 as of the identification date, and as reportable to the Internal Revenue Service on Form W-2. We subtracted 20212022 equity earnings from stock option exercises and stock award vesting and replaced them with the grant-date fair value of equity awards granted in 2021.2022. We subtracted 20202021 annual bonuses (paid in 2021)2022) and replaced them with 20212022 annual bonus awards (paid in 2022)2023). We also added the company’s 401(k) matching contribution. For employees hired during 2021,2022, we annualized base salary and 20212022 bonus amounts, but not the value of equity granted in 20212022 as new hire awards are made on a one-time basis. We did not make any cost-of-living adjustments in identifying the “median employee.” Once we identified the median employee, for purposes of the pay ratio, we calculated his or her compensation in the same manner as we do for Summary Compensation Table purposes.
Pay Versus Performance Under Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are presenting information that demonstrates the relationship between compensation actually paid, as computed under SEC rules, to our named executive officers and certain financial performance measures for the years ended December 31, 2022, 2021, and 2020. The compensation and HR committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the fiscal years shown. For additional information about our performance-based pay philosophy and how we align executive compensation with Ironwood’s performance, please refer to the Compensation Discussion and Analysis section included elsewhere in this proxy statement. | | Year | | | Summary
Compensation
Table Total
for First PEO
[Mark Mallon] | | | Summary
Compensation
Table Total
for Second PEO
[Thomas
McCourt] | | | Compensation
Actually
Paid to
First PEO
[Mark Mallon] | | | Compensation
Actually
Paid to
Second PEO
[Thomas
McCourt] | | | Average
Summary
Compensation
Table Total
for non-PEO
NEOs | | | Average
Compensation
Actually
Paid to
non-PEO
NEOs | | | Value of Initial Fixed $100
Investment Based On: | | | Net Income
(in millions) | | | Adjusted
EBITDA
(in millions) | | | | Total
Shareholder
Return | | | Peer Group
Total
Shareholder
Return | | | | (a) | | | (b)(1) | | | (b)(1) | | | (c)(2) | | | (c)(2) | | | (d)(3) | | | (e)(4) | | | (f)(5) | | | (g)(6) | | | (h)(7) | | | (i)(8) | | | | 2022 | | | | | N/A | | | | | $ | 7,893,266 | | | | | | N/A | | | | | $ | 10,159,660 | | | | | $ | 2,305,695 | | | | | $ | 2,952,674 | | | | | $ | 93.09 | | | | | $ | 111.27 | | | | | $ | 175.07 | | | | | $ | 251.75 | | | | | 2021 | | | | $ | 170,576 | | | | | $ | 8,810,004 | | | | | $ | (8,684,142) | | | | | $ | 9,733,970 | | | | | $ | 2,917,054 | | | | | $ | 2,581,189 | | | | | $ | 87.60 | | | | | $ | 124.89 | | | | | $ | 528.45 | | | | | $ | 233.74 | | | | | 2020 | | | | $ | 6,821,113 | | | | | | N/A | | | | | $ | 4,419,700 | | | | | | N/A | | | | | $ | 2,496,976 | | | | | $ | 2,958,190 | | | | | $ | 85.57 | | | | | $ | 125.69 | | | | | $ | 106.18 | | | | | $ | 160.68 | | |
(1)
The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Mallon, our former chief executive officer, and Mr. McCourt, our current chief executive officer, for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to Summary Compensation Table elsewhere in this proxy statement for information on Mr. McCourt’s compensation. Mr. Mallon served as our chief executive officer during 2020 and 2021. Effective March 12, 2021, Mr. Mallon resigned from his position as chief executive officer and Mr. McCourt became interim chief executive officer and subsequently permanent chief executive officer effective June 2, 2021. (2)
The dollar amounts reported in column (c) represent the “compensation actually paid” to the principal executive officers, or PEOs, Messrs. Mallon and McCourt, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Messrs. Mallon and McCourt, as applicable, during the applicable years, and are based on valuation assumptions required by the SEC, which are unlikely to reflect actual amounts realized at vesting or exercise of equity awards, as applicable. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Messrs. Mallon’s and McCourt’s total compensation for each applicable year to determine the compensation actually paid: | | Year | | | PEO Name | | | Reported
Summary
Compensation
Table Total
for PEO | | | Reported
Value of
Equity
Awards
(a) | | | Equity Award
Adjustments
(b) | | | Compensation
Actually
Paid to PEO | | | | 2022 | | | Thomas McCourt | | | | $ | 7,893,266 | | | | | $ | (6,473,069) | | | | | $ | 8,739,463 | | | | | $ | 10,159,660 | | | | | 2021 | | | Mark Mallon | | | | $ | 170,576 | | | | | $ | 0 | | | | | $ | (8,854,718) | | | | | $ | (8,684,142) | | | | | 2021 | | | Thomas McCourt | | | | $ | 8,810,004 | | | | | $ | (7,236,498) | | | | | $ | 8,160,464 | | | | | $ | 9,733,970 | | | | | 2020 | | | Mark Mallon | | | | $ | 6,821,113 | | | | | $ | (5,423,731) | | | | | $ | 3,022,318 | | | | | $ | 4,419,700 | | |
(a)
Represents the deduction from the “Reported Summary Compensation Table Total for PEO” column for the total grant date fair value of equity awards reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. (b)
The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are
not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. Equity values are calculated in accordance with ASC 718. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: | | Year | | | PEO Name | | | Year End
Fair Value
of Equity
Awards | | | Year over
Year Change
in Fair Value
of Outstanding
and Unvested
Equity Awards | | | Fair Value as
of Vesting
Date of Equity
Awards
Granted and
Vested in
the Year | | | Year over Year
Change in Fair
Value of
Equity Awards
Granted in
Prior Years
that Vested in
the Year | | | Fair Value at
the End of the
Prior Year of
Equity
Awards that
Failed to
Meet Vesting
Conditions in
the Year | | | Value of
Dividends or
Other Earnings
Paid on Stock
or Option
Awards not
Otherwise
Reflected in
Fair Value
or Total
Compensation | | | Total Equity
Award
Adjustments | | | | 2022 | | | Thomas McCourt | | | | $ | 7,807,002 | | | | | $ | 1,076,844 | | | | | | — | | | | | $ | (144,383) | | | | | | — | | | | | | — | | | | | $ | 8,739,463 | | | | | 2021 | | | Mark Mallon | | | | | — | | | | | | — | | | | | | — | | | | | $ | (241,452) | | | | | $ | (8,613,266) | | | | | | — | | | | | $ | (8,854,718) | | | | | 2021 | | | Thomas McCourt | | | | $ | 8,164,222 | | | | | $ | 57,645 | | | | | | — | | | | | $ | (61,403) | | | | | | — | | | | | | — | | | | | $ | 8,160,464 | | | | | 2020 | | | Mark Mallon | | | | $ | 4,811,824 | | | | | $ | (1,031,283) | | | | | | — | | | | | $ | (758,223) | | | | | | — | | | | | | — | | | | | $ | 3,022,318 | | |
(3)
The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s non-PEO named executive officers, or NEOs, as a group in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, Sravan Emany, John Minardo, Jason Rickard and Michael Shetzline; (ii) for 2021, Sravan Emany, John Minardo, Jason Rickard, Michael Shetzline and Gina Consylman; and (iii) for 2020, Gina Consylman, Thomas McCourt, Jason Rickard and Michael Shetzline. (4)
The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the non-PEO NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average total compensation for the non-PEO NEOs as a group for each year to determine the compensation actually paid, using the same methodology described above in Note 2: | | Year | | | Average
Reported
Summary
Compensation
Table Total for
Non-PEO NEOs | | | Average
Reported Value
of Equity Awards
(a) | | | Average
Equity Award
Adjustments
(b) | | | Compensation
Actually Paid to
Non-PEO NEOs | | | | 2022 | | | | $ | 2,305,695 | | | | | $ | (1,531,837) | | | | | $ | 2,178,815 | | | | | $ | 2,952,674 | | | | | 2021 | | | | $ | 2,917,054 | | | | | $ | (2,332,567) | | | | | $ | 1,996,702 | | | | | $ | 2,581,189 | | | | | 2020 | | | | $ | 2,496,976 | | | | | $ | (452,817) | | | | | $ | 914,031 | | | | | $ | 2,958,190 | | |
(a)
Represents the deduction from the “Average Reported Summary Compensation Table Total for Non-PEO NEOs” column for the average total grant date fair value of equity awards reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year.
(b)
The amounts deducted or added in calculating the total average equity award adjustments are as follows: | | Year | | | Average
Year End
Fair Value
of Equity
Awards | | | Year over
Year Average
Change
in Fair Value
of Outstanding
and Unvested
Equity Awards | | | Average Fair
Value as
of Vesting
Date of Equity
Awards
Granted and
Vested in the
Year | | | Year over
Year Average
Change in Fair
Value of
Equity Awards
Granted in
Prior Years
that Vested in
the Year | | | Average Fair
Value at
the End of the
Prior Year of
Equity
Awards that
Failed to
Meet Vesting
Conditions in
the Year | | | Average
Value of
Dividends or
Other Earnings
Paid on Stock
or Option
Awards not
Otherwise
Reflected in
Fair Value
or Total
Compensation | | | Total
Average
Equity
Award
Adjustments | | | | 2022 | | | | $ | 1,880,771 | | | | | $ | 329,381 | | | | | | — | | | | | $ | (31,337) | | | | | | — | | | | | | — | | | | | $ | 2,178,815 | | | | | 2021 | | | | $ | 2,563,358 | | | | | $ | (434) | | | | | | — | | | | | $ | (52,032) | | | | | $ | (514,190) | | | | | | — | | | | | $ | 1,996,702 | | | | | 2020 | | | | $ | 1,512,719 | | | | | $ | (402,588) | | | | | | — | | | | | $ | (196,100) | | | | | | — | | | | | | — | | | | | $ | 914,031 | | |
(5)
Cumulative Total Shareholder Return, or TSR, is calculated by dividing (i) the sum of (A) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (B) the difference between Ironwood’s share price at the end and the beginning of the measurement period, by (ii) Ironwood’s share price at the beginning of the measurement period. (6)
Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the Nasdaq Biotechnology Index, our peer group used for purposes of Item 201(e) of Regulation S-K. (7)
The dollar amounts reported represent the amount of net income reflected in our audited financial statements for the applicable year. Net income for the year ended December 31, 2021 included a $338 million non-cash, non-recurring income tax benefit related to the release of the valuation allowance against the majority of the Company’s deferred tax assets in the second quarter of 2021. (8)
As required by Item 402(v) of Regulation S-K, we have determined that Adjusted EBITDA is the Company Selected Measure, as it is the most important financial performance measure (that is not otherwise required to be disclosed in the table) used to link compensation actually paid to our NEOs to company performance for the most recently completed year. Adjusted EBITDA, which is a non-GAAP measure, is calculated by subtracting mark-to-market adjustments on derivatives related to the Company’s 2022 convertible senior notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization from GAAP net income. Comparative Analysis of the Pay versus Performance Table As described in more detail in the Compensation Discussion and Analysis section included elsewhere in this proxy statement, our compensation program is designed to provide compensation and incentives that align employee actions and motivations with the interests of our stockholders; attract, retain, motivate, and reward outstanding talent across the Company through well-communicated programs that are aligned with our vision and mission, and support a positive company culture. We consider several performance measures to ensure executives are incentivized to accomplish these objectives, many of which are not presented in the pay versus performance table. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance Table above.
Comparison of Ironwood Cumulative TSR to Peer Group Cumulative TSR The graph below shows our cumulative TSR over the three-year period ending with December 31, 2022, as compared to the Nasdaq Biotechnology Index, which reflects the Company’s industry sector and is also the peer group used in our Annual Report on Form 10-K. Comparison of “Compensation Actually Paid” to Cumulative TSR The “compensation actually paid” in the graph below reflects Mr. Mallon’s CAP in 2020, Mr. McCourt’s CAP in 2022 and, for purposes of a graphical representation, a weighted average CAP for both for 2021, or Average PEO CAP. The graph below demonstrates the “compensation actually paid” amounts shown for our PEOs, Messrs. Mallon and McCourt, as applicable, is generally aligned with the Company’s cumulative TSR over the three years presented in the Pay versus Performance Table above. The alignment of compensation actually paid with the Company’s cumulative TSR over the period presented is because a significant portion of the compensation actually paid to the NEOs is comprised of equity awards. As described in more detail in the Compensation Discussion and Analysis section included elsewhere in this proxy statement, in 2022, approximately 82% of the value of total compensation awarded to our CEO and 73% of the value of total compensation awarded to the other NEOs consists of equity awards, including RSU and PSU awards. ![[MISSING IMAGE: bc_tsr-4c.jpg]](/files/DEF 14A/0001104659-23-051441/bc_tsr-4c.jpg) Comparison of “Compensation Actually Paid” to Net Income The graph below reflects the relationship between the Average PEO CAP and average other NEOs CAP and the Company’s net income for the years ended December 31, 2022, 2021, and 2020. Net income for the year ended
December 31, 2021, included a $338 million non-cash, non-recurring income tax benefit related to the release of the valuation allowance against the majority of the Company’s deferred tax assets in the second quarter of 2021.The Company does not use net income as a performance metric in its compensation program to determine our named executive officers’ compensation. Comparison of “Compensation Actually Paid” to Company-Selected Measure (Adjusted EBITDA) The graph below reflects the relationship between the Average PEO CAP and average Other NEOs CAP and the Company’s Adjusted EBITDA, which is the Company Selected Measure, for the years ended December 31, 2020, 2021 and 2022: Company Performance Metrics As described in more detail in the Compensation Discussion and Analysis section included elsewhere in this proxy statement, the performance measures we use in our compensation program are weighted toward long-term equity
incentive compensation as opposed to short-term or cash-based compensation. We believe this better aligns the interests of our named executive officers and our stockholders and serves to focus further our named executive officers on the creation of long-term stockholder value. As required by Item 402(v) of Regulation S-K, we have identified the following financial performance measures as being the most important in linking actual compensation paid to executives to our performance. | | Most Important Performance Measures | | | | Adjusted EBITDA | | | | LINZESS U.S. Net Sales | | | | Revenue | | | | Total Stockholder Return | |
PROPOSAL No. 2 Advisory Vote on Named
Executive Officer
Compensation | | | | | OUR BOARD RECOMMENDS THAT YOU
APPROVE THE COMPENSATION OF
OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT | |
Proposal No. 2 At our 20222023 annual meeting, we are providing our stockholders with the opportunity to cast an advisory (non-binding) vote on named executive officer compensation, or a “say-on-pay” vote. This is a non-binding vote on the compensation of our “named executive officers,” as described in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure, all as set forth in this proxy statement. The objectives of our compensation policies are to provide compensation and incentives that align employee actions and motivations with the interests of our stockholders; attract, retain, motivate and reward outstanding talent across Ironwood through well-communicated programs that are aligned with our vision and mission; and support a positive company culture. In 2021,2022, the compensation program for our named executive officers consisted principally of base salary, cash bonus and long-term equity incentive compensation in the form of performance-based restricted stock units and restricted stock units, and the awards are described under the caption 2021 Retention Awards above.units. While we offer reasonably competitive base salaries and cash bonuses, our compensation program is weighted toward long-term equity incentive compensation as opposed to short-term or cash-based compensation. We believe this better aligns the interests of our named executive officers and our stockholders and serves to further focus our named executive officers on the creation of long-term stockholder value. If we achieve our corporate goals over the long term, we expect our stock price to reflect our performance and the equity awards currently held by our named executive officers to become an even more significant component of overall compensation. Our compensation and HR committee and board believes that this approach to executive compensation links compensation directly to continuous improvements in corporate performance and, ultimately our stock price, and demonstrates our “pay for performance” compensation philosophy. Our previous say-on-pay vote was at our 20212022 annual meeting and was approved by approximately 98%97% of the votes cast on such matter. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as the provisions of Section 14A of the Exchange Act, we must hold the advisory (non-binding) vote on named executive officer compensation at least once every three years. Based on the recommendation of our stockholders in 2017, our board of directors determined to provide our stockholders the opportunity to vote (on an advisory basis) on named executive officer compensation on an annual basis to allow our stockholders to provide us with regular, timely and direct input on our executive compensation philosophy, policies and practices as disclosed in the proxy statement each year. We believe this practice allows us to further align our compensation programs with our stockholders’ interests as stockholder feedback may be taken into consideration as part of the compensation review process. In Proposal No. 3 below, we will again ask our shareholders to vote on the frequency of future say-on-pay proposals. Vote Required Because this proposal seeks a non-binding, advisory vote, there is no “required vote” that would constitute approval. However, our board of directors, including our compensation and HR committee, values the opinions of our stockholders and, to the extent there are a substantial number of votes cast against the executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns and evaluate which actions may be appropriate to address those concerns. Broker nominees do not have discretion to vote on this proposal without your instruction; if you do not instruct your broker nominee how to vote on this proposal, your broker nominee will not vote your shares with respect to this proposal. Any shares that are not voted, whether by abstention, broker non-votes or otherwise, will not affect the outcome of this proposal.
Our Stockholders![[MISSING IMAGE: cv_ifc-4c.jpg]](/files/DEF 14A/0001104659-23-051441/cv_ifc-4c.jpg) PROPOSAL No. 3 Advisory Vote on The Frequency of The Advisory Vote
on Named Executive Officer Compensation | | | | | OUR BOARD RECOMMENDS THAT YOU
VOTE ONE YEAR FOR THE FREQUENCY OF
THE ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION | |
Proposal No. 3 As previously mentioned in Proposal No. 2, we are providing our stockholders with a separate advisory (non-binding) vote for the purpose of expressing their preference for the frequency of future say-on-pay votes. Stockholders may indicate whether they would prefer an advisory vote on executive compensation once every one, two or three-years. We are required, under Section 14A of the Exchange Act, to solicit stockholder votes on the frequency of future say-on-pay proposals at least once every six years, although we may seek stockholder input more frequently. Our board recommends an annual advisory say-on-pay vote, primarily because it will allow our stockholders to provide us with regular, timely and direct input on our executive compensation philosophy, policies and practices as disclosed in the proxy statement each year in order to further align our compensation programs with our stockholders’ interests, and so that timely stockholder feedback may be taken into consideration as part of the compensation review process. In making a recommendation for an annual advisory say-on-pay vote, our board considered how an advisory vote at this frequency might over-emphasize short-term variations in compensation and business results, particularly in our industry, where a long-term focus for our executive compensation program is required because it can take over a decade to bring a drug to the market. Overall, however, our board has determined that the advantages of receiving regular, timely and direct input from our stockholders on our executive compensation philosophy, policies and practices outweigh this concern at this time. For many years, our senior management has consulted with our major stockholders with respect to our compensation program and philosophy. We plan to continue to engage major stockholders on the topic of compensation, and believe that the data we obtain during this dialogue will be a meaningful consideration for our compensation and HR committee during its ongoing review of our compensation program. Vote Required The advisory proposal on the frequency of say-on-pay votes provides a choice among three frequency periods for future advisory say-on-pay votes. The frequency period that receives the most votes (every one, two or three-years) will be deemed to be the recommendation of the stockholders. However, because this vote is advisory and not binding, our board may decide that it is in the best interests of our stockholders and Ironwood to hold an advisory vote on executive compensation more or less frequently than the option selected by a plurality of our stockholders. Broker nominees do not have discretion to vote on this proposal without your instruction; if you do not instruct your nominee how to vote on this proposal, your nominee will deliver a non-vote. Any shares that are not voted, whether by abstentions, broker non-votes or otherwise, will not affect the outcome of this proposal.
PROPOSAL No. 4 Amendment to
Ironwood’s
2019 Equity
Incentive Plan | | | | | OUR BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE AMENDMENT TO THE 2019 PLAN | |
Proposal No. 4 We are asking stockholders to approve an amendment and restatement of our 2019 Equity Incentive Plan, or the 2019 Plan. Our board of directors, upon the recommendation of the compensation and HR committee, approved an amendment to the 2019 Plan, subject to stockholder approval, to, among other things, increase the number of shares of Class A common stock authorized for issuance under the 2019 Plan by 6,000,000 shares. We refer to the 2019 Plan, as so amended, as the “Amended 2019 Plan” throughout this proxy statement. The material terms of the Amended 2019 Plan are described below. The key difference between the terms of the 2019 Plan and the Amended 2019 Plan are: •
Increasing the authorized share number. The Amended 2019 Plan provides that an additional 6,000,000 shares may be issued pursuant to equity awards granted under the Amended 2019 Plan. Under the 2019 Plan, 10,000,000 shares are currently authorized for issuance. •
Adding a non-liberal share recycling provision. Shares underlying awards issued under the Amended 2019 Plan or under prior plans that are settled in cash or that expire, become unexercisable, terminate or are forfeited to or repurchased by the company without the issuance of stock will be recycled into the share pool. However, shares underlying awards issued under the Amended 2019 Plan will not be recycled back into the share pool if they are withheld in satisfaction of tax withholding obligations or the exercise or purchase price of the award. Our Board of Directors believes that the Amended 2019 Plan is an integral part of our long-term compensation philosophy and the Amended 2019 Plan is necessary to continue providing the appropriate levels and types of equity compensation for our employees. Reasons for Seeking Stockholder Approval Our board of directors believes that our company’s success and long-term progress are dependent upon attracting and incentivizing qualified individuals who can serve as directors, officers, employees, consultants, and advisers, and aligning the interests of such individuals with those of our stockholders. Upon the recommendation of our compensation and HR committee, our board of directors approved the Amended 2019 Plan because the board believes that this plan gives us the flexibility to continue to use various forms of incentive awards, including stock options and restricted stock units, as part of our company’s overall compensation programs. With input from Aon, our board of directors determined the number of shares that should be available under the Amended 2019 Plan so that we may continue to grant equity awards in line with our historical practices for approximately two to three more years. When increasing the total size of the share pool under the Amended 2019 Plan to 16,000,000 shares, our board of directors considered the historical amounts of equity awards granted by the company, including our three-year average historical burn rate of 1.79% per year and the total number of shares of our Class A common stock underlying equity awards outstanding as of December 31, 2022, as further shown in the chart below, to ensure that we have the ability to maximize stockholders’ value by granting the appropriate number of equity incentive awards necessary to attract, reward, and retain employees. Based on an analysis by Aon of the remaining shares available under the 2019 Plan (which was 5,263,974 as of April 21, 2023), the number of shares of our Class A common stock underlying equity awards outstanding under the 2019 Plan, our historic and projected burn rate, current and proposed plan features, including the inclusion of a non-liberal share recycle provision and the equity plan guidelines established by proxy advisory firms, our board of directors approved the Amended 2019 Plan and the share pool authorized under it to ensure that we continue to have the ability to provide competitive levels of equity compensation. If the Amended 2019 Plan is not approved by our stockholders, the current 2019 Plan will stay in effect, with the current share pool of 10,000,000 shares and we may no longer be able to grant equity awards to our employees and other service providers beginning in 2024, assuming we maintain our current burn rate. We believe that the inability to
grant equity awards would materially harm our ability to attract and retain key talent. We also believe that the terms of the Amended 2019 Plan, including its increased share pool, are reasonable, appropriate, and in the best interests of our stockholders. Existing Equity Plan Information The table below sets forth information with regard to securities authorized for issuance under our compensation plans as of March 31, 2023. As of March 31, 2023, we had three active equity compensation plans, each of which was approved by our stockholders: •
Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan; •
2019 Plan; and •
Amended and Restated 2010 Employee Stock Purchase Plan, or the A&R 2010 ESPP. | | Plan category | | | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights(1) | | | Weighted-average
exercise price of
outstanding options,
warrants and rights(2) | | | Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities
reflected in column (a))(3) | | | | | | | (a) | | | (b) | | | (c) | | | | Equity compensation plans approved by security holders | | | | | 13,043,417 | | | | | $ | 12.34 | | | | | | 9,686,661 | | | | | Equity compensation plans not approved by security
holders | | | | | — | | | | | | — | | | | | | — | | | | | Total | | | | | 13,043,417 | | | | | $ | 12.34 | | | | | | 9,686,661 | | |
(1)
Amount includes shares subject to issuance upon exercise of outstanding options to purchase 6,270,335 shares and vesting of 6,773,082 RSUs. (2)
Amount includes all outstanding stock options, whose weighted-average term is 3.27 years, but does not include RSUs, which do not have an exercise price. (3)
Amount includes 4,424,472 shares available for future issuance under the A&R 2010 ESPP. Summary of the Amended 2019 Plan The following is a brief summary of the material features of the Amended 2019 Plan. A copy of the Amended 2019 Plan is attached as Appendix A to this proxy statement, and we urge stockholders to read it in its entirety. The following summary is qualified in its entirety by reference to the full text of the Amended 2019 Plan. Purpose. The purpose of the Amended 2019 Plan is to advance the interests of the company by providing for the grant to participants of stock, stock-based and other incentive awards, all as more fully described below. Administration. The Amended 2019 Plan is administered by our compensation and HR committee, which has the discretionary authority to, among other things, interpret the Amended 2019 Plan, determine eligibility for and grant awards, determine, modify or waive the terms and conditions of any award, determine the form of settlement of awards, prescribe forms, rules and procedures relating to the Amended 2019 Plan and awards and otherwise do all things necessary or desirable to carry out the purposes of the Amended 2019 Plan. Determinations of the compensation and HR committee under the Amended 2019 Plan will be conclusive and bind all persons. The compensation and HR committee may delegate certain of its powers under the Amended 2019 Plan to, among others, one or more of its members or members of our board of directors or to one or more officers of the company, to the extent permitted by Section 152 or 157(c) of the Delaware General Corporation Law. As used herein, the term compensation and HR committee refers to our compensation and HR committee or its authorized delegates, as applicable. Eligibility. Employees, directors of and consultants and advisors to the company and its subsidiaries are eligible to participate in the Amended 2019 Plan. Eligibility for stock options intended to be incentive stock options, or ISOs, is
limited to employees of the company or certain affiliates. As of April 21, 2023, we estimate that approximately 209 employees and 8 non-employee directors would be eligible to participate in the Amended 2019 Plan. Authorized Shares. Subject to adjustment as described below, the maximum number of shares of our Class A common stock that may be delivered in satisfaction of awards under the Amended 2019 Plan will be 16,000,000 shares, plus any shares that are subject to awards under the company’s Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan or the 2019 Plan that are forfeited, expired or are cancelled without the delivery of shares of stock, or the Share Pool. The following rules apply in respect of the Share Pool: •
All shares underlying a stock appreciation right, any portion of which is settled in shares of our Class A common stock, will reduce the Share Pool. •
All shares withheld in payment of the exercise price or purchase price of an award or in satisfaction of tax withholding obligations will reduce the Share Pool. •
Shares underlying awards that are settled in cash will not reduce the Share Pool. •
Shares underlying award issued under the Amended 2019 Plan that expire, become unexercisable, or terminate or that are forfeited to or repurchased by the company without the issuance of Stock will not reduce the Share Pool. •
Shares delivered under awards granted in substitution for awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition, or Substitute Awards, will not reduce the Share Pool. •
The Share Pool will not be increased by any shares of stock delivered under the Amended 2019 Plan that are subsequently repurchased using proceeds directly attributable to stock option exercises. Shares that may be delivered under the Amended 2019 Plan may either be (i) authorized but unissued shares of Class A common stock or (ii) previously issued shares of Class A common stock acquired by the company. The closing price of our Class A common stock as reported on the Nasdaq Global Select Market on April 21, 2023 was $10.75 per share. Individual Limits. With respect to any person in any calendar year, the maximum number of shares for which stock options may be granted, the maximum number of shares subject to SARs that may be granted, and the maximum number of shares subject to awards other than stock options, SARs and awards that may be paid or settled in cash that may be granted is, 2,000,000 shares. Director Limits. The aggregate value of all compensation granted or paid to any non-employee director with respect to any calendar year, including awards under the Amended 2019 Plan and other compensation paid by the company for the director’s service to our board of directors, may not exceed $600,000. Types of Awards. The Amended 2019 Plan provides for the grant of stock options, SARs, restricted and unrestricted stock and stock units, performance awards, and other awards that are convertible into or otherwise based on our Class A common stock. Dividend equivalents may also be provided in connection with awards under the Amended 2019 Plan. Dividend equivalents, if any, would be accrued and provided upon vesting of the underlying award and no dividend equivalents are paid currently for unvested awards. •
Stock Options and SARs. Our compensation and HR committee may grant stock options, including ISOs, and SARs. A stock option is a right entitling the holder to acquire shares of our Class A common stock upon payment of the applicable exercise price. A SAR is a right entitling the holder upon exercise to receive an amount (payable in cash or shares of equivalent value) equal to the excess of the fair market value of the shares subject to the right over the base value from which appreciation is measured. The exercise price of each stock option, and the base value of each SAR, granted under the Amended 2019 Plan may not be less than 100% of the fair market value of the shares of our Class A common stock subject to such stock option or SAR on the date of grant (or 110% in the case of certain ISOs). Each stock option and SAR will have a maximum term that does not exceed ten years from the date of grant (or five years, in the case of certain ISOs). No term of an award shall provide for automatic “reload” grants of additional awards upon the exercise of a stock option or SAR,
•
Restricted and Unrestricted Stock and Stock Units. Our compensation and HR committee may grant awards of stock, stock units, restricted stock and restricted stock units. A stock unit is an unfunded and unsecured promise, denominated in shares, to deliver shares or cash measured by the value of shares in the future, and a restricted stock unit is a stock unit that is subject to the satisfaction of specified performance or other vesting conditions. Restricted stock is stock subject to restrictions requiring that it be redelivered or offered for sale to us if specified service- or performance-based conditions are not satisfied. •
Performance Awards. Our compensation and HR committee may grant performance awards, which are awards subject to performance criteria. •
Other Stock- and Cash-Based Awards. Our compensation and HR committee may grant other incentives payable in cash or in shares of our Class A common stock, subject to such terms and conditions as are determined by our compensation and HR committee. •
Substitute Awards. Our compensation and HR committee may grant substitute awards, which may have terms and conditions that are inconsistent with the terms and conditions of the Amended 2019 Plan. Vesting; Terms of Awards. Our compensation and HR committee determines the terms of all awards granted under the Amended 2019 Plan, including the time or times when an award vests or becomes exercisable, the terms on which awards will remain exercisable and the effect of termination of a participant’s employment or service on outstanding awards. Our compensation and HR committee may at any time accelerate the vesting or exercisability of an award. No Repricing. Other than in connection with certain corporate transactions or changes to our capital structure, stock options and SARs granted under the Amended 2019 Plan may not be amended to reduce the exercise price or base value of the stock option or SAR, cancelled and exchanged for stock options or SARs with an exercise price or base value that is less than the exercise price or base value of the original stock option or SAR, or cancelled when the exercise price or base value of the stock option or SAR is greater than the fair market value of a share of our Class A common stock on the date of such cancellation in exchange for cash or other consideration, in each case, without stockholder approval. Transferability of Awards. Except as our compensation and HR committee may otherwise determine, awards may not be transferred other than by will or by the laws of descent and distribution. Performance Criteria. The Amended 2019 Plan provides for grants of performance awards subject to “performance criteria,” which may relate to any, or any combination of, the following (measured either absolutely or comparatively (including, without limitation, by reference to an index or indices or the performance of one or more companies) and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, product or product candidate, project or geographical basis or in combinations thereof), among any other criteria determined by our compensation and HR committee: achievement of research, clinical trial or other drug development objectives; achievement of regulatory objectives; achievement of manufacturing and/or supply chain or other operational objectives; sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures, licenses, collaborations and strategic alliances; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; or any other objectives determined by our compensation and HR committee. Performance criteria and any related targets need not be based on an increase, a positive or improved result or avoidance of loss. Our compensation and HR committee may provide that one or more of the “performance criteria” specified above will be adjusted to reflect events (including, but not limited to, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the applicable performance period that affect the applicable performance criterion or criteria.
Effect of Certain Transactions. In the event of a consolidation, merger or similar transaction in which the company is not the surviving corporation, the sale of all or substantially all of the company’s assets or Class A common stock, or a dissolution or liquidation of the company, our compensation and HR committee may, with respect to outstanding awards, provide for: •
The assumption, continuation or substitution of some or all awards or any portion thereof by the acquirer or surviving entity; •
The cash payment in respect of some or all awards or any portion thereof equal to the difference between the fair market value of the shares subject to the award and its exercise or purchase price, if any, on such terms and conditions as our compensation and HR committee determines; and/or •
The acceleration of exercisability or delivery of shares in respect of some or all awards or any portion thereof. In the case of shares of restricted stock, our compensation and HR committee may require that any amounts delivered, exchanged or otherwise paid in respect of those shares in connection with the transaction be placed in escrow or otherwise made subject to restrictions determined by our compensation and HR committee. Adjustment Provisions. In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in our capital structure, our compensation and HR committee will make appropriate adjustments to the maximum number of shares that may be delivered under the Amended 2019 Plan; the individual award limits; the number and kind of securities subject to, and, if applicable, the exercise or purchase price of, outstanding awards; and any other provisions affected by such event. Clawback. Our compensation and HR committee may provide that outstanding awards and proceeds from the disposition of awards or stock acquired under awards will be subject to forfeiture and disgorgement to the company, with interest and other related earnings, if the participant violates any restrictive covenants by which the participant is bound or any applicable company policy that provides for such forfeiture or disgorgement, or to the extent required by law or applicable stock exchange listing standards and any related company policy. Effective Date, Amendments and Termination. Our board of directors adopted the Amended 2019 Plan on March 8, 2023, subject to approval by our stockholders. If the Amended 2019 Plan is approved by our stockholders, the Amended 2019 Plan will become effective as of the date of such approval. No awards will be granted after May 30, 2029, which is the tenth anniversary of the date the 2019 Plan (and not, for the avoidance of doubt, the Amended 2019 Plan) was adopted by our board of directors. Our compensation and HR committee may at any time amend the Amended 2019 Plan or any outstanding award and may at any time terminate the Amended 2019 Plan as to future grants. However, except as expressly provided in the Amended 2019 Plan, our compensation and HR committee may not alter the terms of an award so as to materially and adversely affect a participant’s rights without the participant’s consent (unless our compensation and HR committee expressly reserved the right to do so at the time the award was granted). Any amendments to the Amended 2019 Plan will be conditioned on stockholder approval to the extent required by law or applicable stock exchange requirements. Certain Federal Income Tax Consequences The following discussion summarizes certain federal income tax consequences associated with certain awards granted under the Amended 2019 Plan under the law as in effect on the date of this proxy statement. The summary does not purport to cover federal employment tax or other U.S. federal tax consequences that may be associated with the Amended 2019 Plan, nor does it cover state, local or non-U.S. taxes. ISOs. In general, an optionee realizes no taxable income upon the grant or exercise of an ISO. However, the exercise of an ISO may result in an alternative minimum tax liability to the optionee. With certain exceptions, a disposition of shares purchased under an ISO within two years from the date of grant or within one year after exercise produces ordinary income to the optionee (and a deduction to company) equal to the value of the shares at the time of exercise less the exercise price. Any additional gain recognized in the disposition is treated as a capital gain for which company is not
entitled to a deduction. If the optionee does not dispose of the shares until after the expiration of these one- and two-year holding periods, any gain or loss recognized upon a subsequent sale is treated as a long-term capital gain or loss for which the company is not entitled to a deduction. NSOs. In general, in the case of an NSO, the optionee has no taxable income at the time of grant but realizes income in connection with the exercise of the option in an amount equal to the excess (at the time of exercise) of the fair market value of the shares acquired upon exercise over the exercise price; a corresponding deduction is available to the company. Upon a subsequent sale or exchange of the shares, any recognized gain or loss after the date of exercise is treated as a capital gain or loss for which the company is not entitled to a deduction. In general, an ISO that is exercised by the optionee more than three months after termination of employment is treated as an NSO. ISOs are also treated as NSOs to the extent they first become exercisable by an individual in any calendar year for shares having a fair market value (determined as of the date of grant) in excess of $100,000. SARs. In general, the grant of a SAR does not itself result in taxable income, nor does taxable income result merely because a SAR becomes exercisable. In general, a participant who exercises a SAR for shares of stock or receives payment in cancellation of a SAR will have ordinary income equal to the amount of any cash and the fair market value of any stock received. A corresponding deduction is generally available to the company. Unrestricted Stock Awards. A participant who purchases or is awarded unrestricted stock generally has ordinary income equal to the excess of the fair market value of the shares at that time over the purchase price, if any, and a corresponding deduction is generally available to the company. Restricted Stock Awards. A participant who is awarded or purchases shares subject to a substantial risk of forfeiture generally does not have income until the risk of forfeiture lapses. When the risk of forfeiture lapses, the participant has ordinary income equal to the excess of the fair market value of the shares at that time over the purchase price, if any, and a corresponding deduction is generally available to the company. However, a participant may make an election under Section 83(b) of the Code to be taxed on restricted stock when it is acquired rather than later, when the substantial risk of forfeiture lapses. A participant who makes an effective 83(b) election will realize ordinary income equal to the fair market value of the shares as of the time of acquisition less any price paid for the shares. A corresponding deduction will generally be available to the company. If a participant makes an effective 83(b) election, no additional income results by reason of the lapsing of the restrictions. For purposes of determining capital gain or loss on a sale of shares awarded under the Amended 2019 Plan, the holding period in the shares begins when the participant recognizes taxable income with respect to the transfer. The participant’s tax basis in the shares equals the amount paid for the shares plus any income realized with respect to the transfer. However, if a participant makes an effective 83(b) election and later forfeits the shares, the tax loss realized as a result of the forfeiture is limited to the excess of what the participant paid for the shares (if anything) over the amount (if any) realized in connection with the forfeiture. Restricted Stock Units. In general, the grant of a restricted stock unit does not itself result in taxable income. Instead, the participant is generally taxed upon the delivery of the underlying shares (and a corresponding deduction is generally available to the company), unless he or she has made a proper election to defer receipt of the shares (or cash if the award is cash settled) under Section 409A of the Code. If the shares delivered are restricted for tax purposes, the participant will instead be subject to the rules described above for restricted stock. Certain Change in Control Payments. Under Section 280G of the Code, the vesting or accelerated exercisability of options or the vesting and payments of other awards in connection with a change in control of a corporation may be required to be valued and taken into account in determining whether participants have received compensatory payments, contingent on the change in control, in excess of certain limits. If these limits are exceeded, a substantial portion of amounts payable to the participant, including income recognized by reason of the grant, vesting or exercise of awards may be subject to an additional 20% federal tax and may be non-deductible to the company. New Plan Benefits The future benefits or amounts that would be received under the Amended 2019 Plan by executive officers, non-executive directors and non-executive officer employees are discretionary and are therefore not determinable at this time.
The following table shows the awards that were granted to our named executive officers, executive officers as a group, non-executive officers as a group and directors as a group, in each case as of March 31, 2023 under our current 2019 Plan (the predecessor to the Amended 2019 Plan): | | Name and Principal Position | | | Number of Shares | | | | Thomas McCourt
Chief Executive Officer | | | | | 481,189 | | | | | Sravan Emany
Senior Vice President, Chief Financial Officer | | | | | 148,471 | | | | | John Minardo
Senior Vice President, Chief Legal Officer and Secretary | | | | | 131,004 | | | | | Jason Rickard
Senior Vice President, Chief Operating Officer | | | | | 87,336 | | | | | Michael Shetzline
Senior Vice President, Chief Medical Officer, and Head of Research and Drug Development | | | | | 139,738 | | | | | All executive officers as a group | | | | | 1,136,209 | | | | | All directors, who are not executive officers, as a group | | | | | 3,115 | | | | | All employees, who are not executive officers, as a group | | | | | 1,478,260 | | |
Vote Required The approval of this proposal requires a majority of the votes cast for or against the proposal. Abstentions and broker non-votes will not affect the outcome of this proposal. Broker nominees do not have discretion to vote on this proposal without your instruction; if you do not instruct your broker nominee how to vote on this proposal, your broker nominee will deliver a broker non-vote. Any shares that are not voted, whether by abstention, broker non-votes, or otherwise, will not affect the outcome of this proposal.
Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information with respect to the beneficial ownership of our Class A common stock at March 31, 20222023 for: •
each person whom we know beneficially owns more than five percent of our Class A common stock; •
each of our directors; •
each of our named executive officers; and •
all of our current directors and executive officers as a group. The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power. Each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable. The percentage of Class A common stock beneficially owned by each person is based on 155,115,155155,346,103 shares of Class A common stock outstanding on March 31, 2022.2023. Shares of Class A common stock that may be acquired within 60 days following March 31, 20222023 pursuant to the exercise of options or the vesting of RSUs, are included in the holdings of each stockholder, as applicable, and are deemed to be outstanding for the purpose of computing the percentage ownership of such holder. Such amounts, however, are not included in the holdings of any other stockholder in the table below and are not deemed to be outstanding for computing the percentage ownership of any other holder shown in the table below. Beneficial ownership representing less than one percent is denoted with an “*.” 20222023 Proxy Statement 71
83
Unless otherwise indicated, the address for each of the stockholders in the table below is c/o Ironwood Pharmaceuticals, Inc., 100 Summer Street, Suite 2300, Boston, Massachusetts 02110. | | Name of Beneficial Owner | | Number of Shares
of our Class A
Common Stock | | Percentage | | Name of Beneficial Owner | | Number of Shares
of our Class A
Common Stock | | Percentage | | | | Named Executive Officers and Directors | | | | | | | | | | | | Named Executive Officers and Directors | | | | | | | | | | | | | | Thomas McCourt(1) | | | | 1,442,150 | | | | | * | | | Thomas McCourt(1) | | | | 1,385,826 | | | | | * | | | | | Sravan Emany | | | | 0 | | | | | * | | | Sravan Emany | | | | 14,672 | | | | | * | | | | | John Minardo | | | | 0 | | | | | * | | | John Minardo | | | | 22,914 | | | | | * | | | | | Jason Rickard(2) | | | | 396,649 | | | | | * | | | Jason Rickard(2) | | | | 417,592 | | | | | * | | | | | Michael Shetzline, M.D., Ph.D.(3) | | | | 189,458 | | | | | * | | | Michael Shetzline, M.D., Ph.D.(3) | | | | 264,072 | | | | | * | | | | | Mark Mallon | | | | 0 | | | | | * | | | Mark Currie, Ph.D.(4) | | | | 1,054,283 | | | | | * | | | | | Gina Consylman | | | | 26,329 | | | | | * | | | Alexander Denner, Ph.D.(5) | | | | 16,483,423 | | | | | 10.5% | | | | | Mark Currie, Ph.D.(4) | | | | 1,293,068 | | | | | * | | | Andrew Dreyfus | | | | 151,639 | | | | | * | | | | | Alexander Denner, Ph.D.(5) | | | | 16,456,574 | | | | | 10.5% | | | Jon Duane | | | | 91,758 | | | | | * | | | | | Andrew Dreyfus | | | | 130,068 | | | | | * | | | Marla Kessler | | | | 84,148 | | | | | * | | | | | Jon Duane | | | | 70,187 | | | | | * | | | Julie McHugh | | | | 139,944 | | | | | * | | | | | Marla Kessler | | | | 70,187 | | | | | * | | | Catherine Moukheibir | | | | 101,027 | | | | | * | | | | | Julie McHugh | | | | 118,373 | | | | | * | | | Jay Shepard | | | | 79,894 | | | | | * | | | | | Catherine Moukheibir | | | | 77,779 | | | | | * | | | All executive officers and directors as a group (14 persons)(6) | | | | 20,340,747 | | | | | 12.9% | | | | | Lawrence Olanoff, M.D., Ph.D. | | | | 91,395 | | | | | * | | | 5% Security Holders | | | | | | | | | | | | | | Edward Owens | | | | 281,720 | | | | | * | | | BlackRock, Inc.(7) | | | | 25,771,192 | | | | | 16.8% | | | | | Jay Shepard | | | | 58,323 | | | | | * | | | Sarissa Capital Management LP(8) | | | | 16,390,000 | | | | | 10.5% | | | | | All current executive officers and directors as a group (15 persons)(6) | | | | 20,675,931 | | | | | 13.1% | | | The Vanguard Group(9) | | | | 14,732,569 | | | | | 9.6% | | | | | 5% Security Holders | | | | | | | | | | | | Wellington Management Group LLP(10) | | | | 13,340,377 | | | | | 8.7% | | | | | Wellington Management Group LLP(7) | | | | 17,339,587 | | | | | 11.2% | | | State Street Corporation(11) | | | | 11,179,578 | | | | | 7.3% | | | | | Sarissa Capital Management LP(8) | | | | 16,390,000 | | | | | 10.6% | | | LSV Asset Management(12) | | | | 7,926,397 | | | | | 5.2% | | | | | Brown Capital Management, LLC(9) | | | | 16,257,899 | | | | | 10.5% | | | | | | BlackRock, Inc.(10) | | | | 14,368,890 | | | | | 9.3% | | | | | | The Vanguard Group(11) | | | | 13,487,762 | | | | | 8.7% | | | | | | Westfield Capital Management Company, LP(12) | | | | 8,145,674 | | | | | 5.3% | | | |
(1)
Includes (i) 1,131,0961,096,168 shares of Class A common stock issuable to Mr. McCourt upon the exercise of options that are exercisable within 60 days following March 31, 20212023 and (ii) 80,205 restricted stock units that vest on May 19, 2022.18, 2023. (2)
(2)
Includes (i) 195,955195,293 shares of Class A common stock issuable to Mr. Rickard upon the exercise of options that are exercisable within 60 days following March 31, 20222023 and (ii) 29,900 restricted stock units that vest on May 19, 2022.18, 2023. (3)
Includes (i) 7,24892,698 shares of Class A common stock issuable to Dr. Shetzline upon the exercise of options that are exercisable within 60 days following March 31, 20222023 and (ii) 26,64126,240 restricted stock units that vest on May 19, 2022.18, 2023. (4)
Includes 824,582532,498 shares of Class A common stock issuable to Dr. Currie upon the exercise of options that are exercisable within 60 days following March 31, 2022.2023. (5)
Includes (i) 39,07993,423 shares of Class A common stock held directly by Dr. Denner and (ii) 16,390,000 shares of Class A common stock held by Sarissa Capital Management LP, or Sarissa. See note 118 below for information regarding the shares of Class A common stock held by Sarissa. (6)
(6)
Includes (i) 2,127,1801,916,657 shares of Class A common stock issuable upon the exercise of options that are exercisable within 60 days following March 31, 20222023 and (ii) 136,346156,345 restricted stock units that vest on May 19, 2022.18, 2023. (7)
Based upon the information provided by Wellington Management Group LLP,BlackRock, Inc., or Wellington, Wellington Group Holdings LLP, or Wellington Group, Wellington Investment Advisors Holdings LLP, or Wellington Investment, and Wellington Management Company LLP, or Wellington Management and, collectively with Wellington, Wellington Group and Wellington Investment, the Wellington Entities,BlackRock, in a Schedule 13G/A filed on February 4, 2022,January 26, 2023, reporting as of December 31, 2021.2022. According to this Schedule 13G/A, (i) WellingtonBlackrock does not have sole voting power or sole dispositive power nor have shared voting or shared dispositive power with respect to any of these shares, and has shared voting power with respect to 17,339,587 of these shares and shared dispositive power with respect to all of these shares, (ii) Wellington Group does not have sole voting or sole dispositive power with respect to any of these shares, and has shared voting power with respect to 17,339,587 of these shares and shared dispositive power with respect to all of these shares, (iii) Wellington Investment does not have sole voting or sole dispositive power with respect to any of these shares, and has shared voting power with respect to 17,339,587 of these shares and shared dispositive power with respect to all of these shares, and (iv) Wellington Management does not have sole voting or sole dispositive power with respect to any of these shares, and has shared voting power with respect to 15,280,091 of these shares and shared dispositive power with respect to 15,280,091 of these shares. The address of the Wellington EntitiesBlackRock is c/o Wellington Management Company LLP, 280 Congress55 East 52nd Street, Boston, MA 02210.New York, NY 10055. (8)
Based upon the information provided by Sarissa and Dr. Denner in a Schedule 13D/A filed on March 1, 2021, reporting as of February 26, 2021, as well as a Form 4 filed on March 17, 2022,2023, reporting as of March 15, 2022.2023. According to this Schedule 13D/A, (i) Sarissa does not have sole voting or sole dispositive power with respect to any of these shares and has shared voting and shared dispositive power with respect to all of these shares, and (ii) Dr. Denner does not have sole voting or sole dispositive power with respect to any of these shares and has shared voting and shared dispositive power with respect to all of these shares. Does not include shares held directly by Dr. Denner, who is a member of our board of directors. The address of each of Sarissa and Dr. Denner is 660 Steamboat Road, Greenwich, CT 06830. (9)
Based upon the information provided by Brown Capital Management, LLC, or Brown Capital, and The Brown Capital Management Small Company Fund, or Brown Capital Small Fund and, collectively with Brown Capital, the Brown Capital Entities, in a Schedule 13G/A filed on February 14, 2022, reporting as of December 31, 2021. According to this Schedule 13G/A, (i) Brown Capital has sole voting power with respect 11,453,039 of these shares, sole dispositive power with respect to all of these shares, and does not have shared voting power or shared dispositive power with respect to any of these shares, and (ii) Brown Capital Small Fund has sole voting and sole dispositive power with respect to 9,980,218 of these shares and does not have shared voting or shared dispositive power with respect to any of these shares. The address of the Brown Capital Entities is 1201 N. Calvert Street, Baltimore, MD 21202.
(10)
Based upon the information provided by BlackRock, Inc., or BlackRock, in a Schedule 13G/A filed on February 3, 2022, reporting as of December 31, 2021. According to this Schedule 13G/A, Blackrock has sole voting power with respect to 13,827,975 of these shares, sole dispositive power with respect to all of these shares, and does not have shared voting or shared dispositive power with respect to any of these shares. The address of BlackRock is 55 East 52nd Street, New York, NY 10055.
(11)
Based upon the information provided by The Vanguard Group, or Vanguard, in a Schedule 13G/A filed on February 10, 2022,9, 2023, reporting as of December 31, 2021.30, 2022. According to this Schedule 13G/A, Vanguard does not have sole voting power with respect to any of these shares, and has sole dispositive power with respect to 13,058,18014,366,224 of these shares, shared voting power with respect to 291,675228,594 of these shares, and shared dispositive power with respect to 429,582366,345 of these shares. The address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355. (12)
(10)
Based upon the information provided by Westfield CapitalWellington Management Group LLP, or Wellington, Wellington Group Holdings LLP, or Wellington Group, Wellington Investment Advisors Holdings LLP, or Wellington Investment, and Wellington Management Company LP,LLP, or Westfield,Wellington Management and, collectively with Wellington, Wellington Group and Wellington Investment, the Wellington Entities, in a Schedule 13G/A filed on February 1, 2022,6, 2023, reporting as of December 31, 2021.2022. According to this Schedule 13G/A, Westfield(i) Wellington does not have sole voting or sole dispositive power with respect to any of these shares, and has shared voting power with respect to 13,147,765 of these shares and shared dispositive power with respect to all of these shares, (ii) Wellington Group does not have sole voting or sole dispositive power with respect to any of these shares, and has shared voting power with respect to 13,147,765 of these shares and shared dispositive power with respect to all of these shares, (iii) Wellington Investment does not have sole voting or sole dispositive power with respect to any of these shares, and has shared voting power with respect to 13,147,765 of these shares and shared dispositive power with respect to all of these shares, and (iv) Wellington Management does not have sole voting or sole dispositive power with respect to any of these shares, and has shared voting power with respect to 13,029,431 of these shares and shared dispositive power with respect to 13,029,431 of these shares. The address of the Wellington Entities is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210. (11)
Based upon the information provided by State Street Corporation, or State Street, in a Schedule 13G filed on February 2, 2023, reporting as of December 31, 2022. According to this Schedule 13G, State Street does not have sole voting or sole dispositive power with respect to any of these shares, have shared voting power with respect to 10,849,469 of these shares and have shared dispositive power with respect to all of these shares. The address of State Street is State Street Financial Center, 1 Lincoln Street, Boston, MA 02111. (12)
Based upon the information provided by LSV Asset Management, or LSV, in a Schedule 13G filed on February 2, 2023, reporting as of December 31, 2022. According to this Schedule 13G, LSV has sole voting power with respect to 7,387,9045,266,118 of these shares, sole dispositive power with respect to all of these shares, and does not have shared voting or shared dispositive power with respect to any of these shares. The address of WestfieldLSV is 1 Financial Center, Boston, MA 02111.155 N. Wacker Drive, Suite 4600, Chicago, IL 60606. 20222023 Proxy Statement 73
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Certain Relationships and Related Person Transactions Since January 1, 2021,2022, except as described below, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements with directors and executive officers, which, with respect to our directors and named executive officers are described under the captions Our Board of Directors — How Our Board is Paid and Executive Compensation appearing elsewhere in this proxy statement. Indemnification Agreements We have entered into indemnification agreements with each of our current directors and our executive officers. These agreements require us to indemnify these individuals to the fullest extent permitted under the General Corporation Law of the State of Delaware against liabilities that may arise by reason of their service to us and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We intend to enter into indemnification agreements with our future directors and executive officers. Procedures for Related Party Transactions Under our code of business conduct and ethics, our directors, officers and employees are discouraged from any activity that may create or give the appearance of a conflict of interest. In addition, they must report any potential conflict of interest, including related party transactions, to their supervisor, certain members of our management or the chair of our audit committee. Pursuant to its charter, our audit committee must review and approve all related party transactions required to be disclosed under Item 404 of Regulation S-K under the Exchange Act. In approving or rejecting a proposed transaction, the audit committee considers the relevant facts and circumstances available to and deemed relevant by the audit committee, including the material terms of the transaction, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director’s independence. Our audit committee will approve only those transactions that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our audit committee determines in the good faith exercise of its discretion. A copy of our code of business conduct and ethics and our audit committee charter are available through the Investors section of our website at www.ironwoodpharma.com, under the heading Corporate Governance.Governance — Governance Documents.
PROPOSAL 3No. 5 Ratification of
Our Selection
of Auditors | | | | | OUR BOARD RECOMMENDS THAT YOU RATIFY THE SELECTION OF ERNST & YOUNG LLP AS OUR AUDITORS FOR FISCAL YEAR 20222023 | |
Proposal No. 35 Our audit committee has appointed Ernst & Young LLP to serve as our auditors for the fiscal year ending December 31, 2022.2023. The firm of Ernst & Young LLP, an independent registered public accounting firm, has served as Ironwood’s auditor since 1998. Detailed disclosure of the audit audit-related, tax and other fees billed for services rendered by Ernst & Young LLP in 20212022 and 20202021 are set forth below. There were no audit-related and tax fees billed for services rendered by Ernst & Young LLP in 20212022 and 2020.2021. Based on these disclosures and information in the audit committee report on page 20 of this proxy statement, our audit committee is satisfied that our auditors are sufficiently independent of management to perform their duties properly. Although not legally required to do so, our board of directors considers it desirable to seek, and recommends, stockholder ratification of its selection of auditors for fiscal year 2022.2023. Representatives of Ernst & Young LLP are expected to attend the virtual annual meeting to answer any questions and they will have the opportunity to make a statement if they wish. The table below presents aggregate fees for professional audit services rendered by Ernst & Young LLP for the audits of our annual financial statements for the years ended December 31, 20212022 and 20202021 and fees billed for other services rendered by Ernst & Young LLP during those periods. It is the audit committee’s policy that all audit and non-audit services to be performed by Ernst & Young LLP be pre-approved. The audit committee annually reviews and pre-approves the permissible services that may be provided by Ernst & Young LLP to assure the provision of such services does not impair the auditor’s independence. In accordance with the pre-approval policy, our management informs the audit committee of each service performed by Ernst & Young LLP pursuant to the pre-approval policy. Requests to provide services that require separate approval by the audit committee are submitted to the audit committee or its designee by our chief financial officer or controller and Ernst & Young LLP. All of the services described in the following fee table were approved in conformity with the audit committee’s pre-approval policy. | | | | | 2021 | | 2020 | | | | | 2022 | | 2021 | | | | Audit | | | $ | 1,175,499 | | | | $ | 1,372,342 | | | Audit | | | $ | 1,132,151 | | | | $ | 1,175,499 | | | | | All other | | | $ | 1,990 | | | | $ | 6,860 | | | All other | | | $ | 4,615 | | | | $ | 1,990 | | | | | Total | | | $ | 1,177,489 | | | | $ | 1,379,202 | | | Total | | | $ | 1,136,766 | | | | $ | 1,177,489 | | |
Audit fees for 20212022 and 20202021 were for professional services rendered for the audits of our financial statements and internal controls over financial reporting, including accounting consultations and reviews of quarterly financial statements, as well as for services that are normally provided in connection with regulatory filings or engagements, including auditor consents.statements. All other services in 20212022 and 20202021 include license fees for a web-based accounting research tool. Other than the foregoing, Ernst & Young LLP did not provide any other services to us in 20212022 or 2020.2021. Vote Required The approval of the proposal to ratify the selection of Ernst & Young LLP as our auditors requires a majority of the votes cast for or against the proposal. Because we believe this matter to be routine, a broker nominee may vote on your behalf if you do not otherwise provide instructions. As a result, we do not expect there will be any broker non-votes on this matter. Abstentions will not affect the outcome of this proposal.
Our board of directors is soliciting proxies for the 20222023 annual meeting of stockholders. This proxy statement explains the agenda, voting information and procedures for the meeting. Please read it carefully. This proxy statement and related materials are first being made available to stockholders on or about April 21, 2022,27, 2023, and the notice of internet availability of proxy materials is first being sent to our stockholders on the same day. All stockholders will also have the ability to access the proxy materials online through the Investors section of our website at www.ironwoodpharma.com, under the heading Financial InformationFinancials — SEC Filings. Who can vote Only stockholders of record of our Class A common stock at the close of business on April 6, 202221, 2023 can vote at the meeting. Quorum In order to hold and complete the business of the annual meeting, we must have a majority of the votes entitled to be cast represented at the meeting or by proxy. On our record date, April 6, 2022,21, 2023, we had 154,956,855155,346,103 shares of our Class A common stock outstanding and entitled to vote. With respect to all matters that will come before the meeting, each share is entitled to one vote. Notice of internet availability of proxy materials Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials via the internet. Accordingly, we are sending a notice of internet availability of proxy materials to our stockholders. All stockholders will have the ability to access the proxy materials on the website referenced in the notice and to request to receive a printed set of the proxy materials by mail. Instructions on how to access the proxy materials over the internet and how to request a printed copy may be found in the notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage stockholders to take advantage of the availability of the proxy materials on the internet or through email to help reduce the environmental impact of our annual meetings. Voting procedures — stockholders of record and beneficial owners You are a stockholder of record if your shares of our stock are registered directly in your own name with our transfer agent, Computershare Trust Company, N.A., or Computershare. You are a beneficial owner if a brokerage firm, bank, trustee or other agent, called a “nominee,” holds your stock. This is often called ownership in “street name” because your name does not appear in the records of Computershare. If you hold your shares in street name, you should receive a voting instruction form from your nominee. How to vote your shares. If you are a stockholder of record, there are four ways to vote: •
Online Before the Meeting. You may vote by proxy via the internet by following the instructions provided on the notice of internet availability of proxy materials or the proxy card. You must have the 16-digit control number that is on either the notice of internet availability of proxy materials or the proxy card when voting. •
Online During the Meeting. You may vote online during the annual meeting through the link www.virtualshareholdermeeting.com/IRWD2022. The 16-digit control number provided on your notice of
internet availability of proxy materials or proxy card is necessary to
access the website. The meeting will begin at 9:00 a.m. Eastern Time (with log-in beginning at 8:45 a.m. Eastern Time) on Wednesday,Tuesday, June 1, 2022.20, 2023. •
By Telephone. If you request printed copies of the proxy materials by mail and you live in the United States or Canada, you may vote by proxy by calling the toll-free number found on the proxy card. You must have the control number that is on the proxy card when voting. •
By Mail. If you request printed copies of the proxy materials by mail, you may vote by proxy by filling out the proxy card and sending it back in the envelope provided. If you are a beneficial owner of shares held in street name, there are four ways to provide voting instructions: •
Online Before the Meeting. You may provide voting instructions via the internet by following the instructions provided on your voting instruction form. You must have the 16-digit control number that is on the voting instruction form when voting. •
Online During the Meeting. You may vote online during the annual meeting through the link www.virtualshareholdermeeting.com/IRWD2022.IRWD2023. The 16-digit control number provided on your voting instruction form is necessary to access the website. The meeting will begin at 9:00 a.m. Eastern Time (with log-in beginning at 8:45 a.m. Eastern Time) on Wednesday,Tuesday, June 1, 2022.20, 2023. •
By Telephone. You may provide voting instructions by calling the toll-free number found on your voting instruction form. You must have the control number that is on the voting instruction form when voting. •
By Mail. You may provide voting instructions by filling out the voting instruction form and sending it back in the envelope provided. How you may revoke your proxy or voting instructions. If you are a stockholder of record, you may revoke or amend your proxy before it is voted at the annual meeting by writing to us directly in a timely manner “revoking” your earlier proxy, submitting a new proxy in a timely manner with a later date by mail, over the telephone or on the internet, or by attending the meeting and voting. Your last dated proxy timely received prior to or vote cast at the annual meeting will be counted. What if you receive more than one notice of internet availability of proxy materials, proxy card or voting instruction form? This means that you may have more than one account at Computershare and/or with a nominee. Your notice of internet availability of proxy materials, proxy card or voting instruction form lists the number of shares you are voting. Please vote the shares on all notices of internet availability of proxy materials, proxy cards and voting instruction forms that you receive. We recommend you consolidate your holdings under the same name, address and tax identification number, if possible. This will eliminate some duplication of mailings and reduce costs. Please contact your nominee to consolidate accounts, or our transfer agent, Computershare, at (800) 368-5948, as applicable. Householding of proxy materials. SEC rules concerning the delivery of proxy materials allow us or your broker to send a single notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family, unless we have received contrary instructions from one or more of the stockholders. This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our notices, annual reports, proxy statements and information statements. We will undertake to deliver promptly, upon written request, a separate copy to a stockholder at a shared address to which a single copy of the notice of internet availability of proxy materials was delivered. You may make a written request by sending a notification to our Secretary at the address below, providing your name, your shared address, and the address to which we should direct the additional copy of the notice of internet availability of proxy materials. Multiple stockholders sharing an address who have received one copy of a mailing and would prefer us to mail each stockholder a separate copy of future mailings should contact us at the below address, as well. Additionally, if current stockholders with a shared address received multiple copies of a mailing and would prefer us to mail one copy of future mailings
to stockholders at the shared address, notification of that request may also be sent to us at the below address. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. Any request relating to receipt of proxy materials should be sent to: Secretary, Ironwood Pharmaceuticals, Inc., 100 Summer Street, Suite 2300, Boston, Massachusetts 02110. Abstentions and “broker non-votes.” If you are a stockholder of record and you vote “abstain” or “withhold” on any matter, your shares will not be voted on that matter and will not be counted as votes cast in the final tally of votes on that matter. However, your shares will be counted for purposes of determining whether a quorum is present. If you are a beneficial owner holding shares through a broker nominee, you may instruct your broker nominee that you wish to abstain from voting on a proposal or withhold authority to vote for one or more nominees for director. A broker nominee generally may not vote on “non-routine” matters without receiving your specific voting instructions. A “broker non-vote” occurs when a broker nominee holding shares in street name votes shares on some matters at the meeting but not others. Like abstentions, broker non-votes are counted as present and entitled to vote for quorum purposes, but are not counted as votes cast. Broker nominees who hold shares for the accounts of their clients have discretionary authority to vote shares if specific instructions are not given with respect to routine matters. Although the determination of whether a broker nominee will have discretionary voting power for a particular item is typically determined only after proxy materials are filed with the SEC, we expect that at the annual meeting of stockholders your broker nominee will not be able to submit a vote on the election of directors, or the advisory votes on named executive officer compensation, the frequency of advisory votes on named executive officer compensation or the amendment of our 2019 Equity Incentive Plan unless it receives your specific instructions, but will be able to vote on the ratification of the selection of our independent auditors even if it does not receive your instructions. As a result, if your broker nominee does not receive your specific instructions for these proposals, it will submit a broker non-vote on the election of directors or the advisory votes on named executive officer compensation andnon-vote. The broker nominee may, however, vote on the ratification of the selection of our independent auditors even if it does not receive your instructions. Discretionary authority. If you are a stockholder of record and you properly submit your proxy card without making any specific selections, your shares will be voted on each matter before the annual meeting in the manner recommended by our board of directors. If other matters not included in this proxy statement properly come before the annual meeting, the persons named on the proxy card, or otherwise designated, will have the authority to vote on those matters for you as they determine, to the extent permitted by Rule 14a-4(c)(1) of the Exchange Act. If you are a beneficial owner of shares held in street name, please see the discussion above regarding broker non-votes and the rules related to voting by broker nominees. Vote required The required vote for each of the proposals expected to be acted upon at the annual meeting is described below. Proposal No. 1 — Election of Directors: The board of director nominees will be determined by a plurality of the votes cast, meaning that board of director nominees with the greatest number of votes cast for election, even if less than a majority, will be elected as directors to serve for one-year terms and until his or her successor is duly elected and qualified or until their death, resignation or removal. We expect that broker nominees will not have discretion to vote on this proposal without your instruction; if you do not instruct your broker nominee how to vote on this proposal, your broker nominee will deliver a broker non-vote.non- vote. Because there is no minimum vote required, abstentions and broker non-votes will not affect the outcome of this proposal. Proposal No. 2 — Advisory (non-binding) Vote on Named Executive Officer Compensation, or “Say-on-Pay”: Because this proposal calls for a non-binding, advisory vote there is no “required vote” that would constitute approval. However, our board of directors, including our compensation and HR committee, values the opinions of our stockholders and, to the extent there are a substantial number of votes cast against the named executive officer
compensation disclosed in this proxy statement, we will consider our stockholders’ concerns and evaluate what actions may be appropriate to address those concerns. We expect that broker nominees will not have discretion to vote on
this proposal without your instruction; if you do not instruct your broker nominee how to vote on this proposal, your broker nominee will deliver a broker non-vote. Any shares that are not voted, whether by abstention, broker non-votes or otherwise, will not affect the outcome of this proposal. Proposal No. 3 — Advisory (non-binding) Vote on Frequency of “Say-on-Pay” Vote: This proposal also calls for a non-binding, advisory vote. This proposal provides a choice among three frequency periods for future advisory say-on-pay votes. The frequency period that receives the most votes (every one, two or three years) will be deemed to be the recommendation of our stockholders. However, because this vote is advisory and not binding on our board, we may decide that it is in the best interests of our stockholders and Ironwood to hold a say-on-pay vote more or less frequently than the option selected by a plurality of our stockholders. We expect that broker nominees will not have discretion to vote on this proposal without your instruction; if you do not instruct your broker nominee how to vote on this proposal, your broker nominee will deliver a broker non-vote. Any shares that are not voted, whether by abstention, broker non-votes or otherwise, will not affect the outcome of this proposal. Proposal No. 4 — Amendment to our 2019 Plan: The approval of this proposal requires a majority of the votes cast for or against the proposal. Abstentions and broker non-votes will not affect the outcome of this proposal. We expect that broker nominees will not have discretion to vote on this proposal without your instruction; if you do not instruct your broker nominee how to vote on this proposal, your broker nominee will deliver a broker non-vote. Any shares that are not voted, whether by abstention, broker non-votes or otherwise, will not affect the outcome of this proposal. Proposal No. 5 — Ratification of Auditors: The approval of this proposal requires a majority of the votes cast for or against the proposal. Abstentions and broker non-votes will not affect the outcome of this proposal. Further, because we believe this matter to be routine, a broker nominee may vote on your behalf if you do not otherwise provide instructions. As a result, we do not expect there will be any broker non-votes on this matter. Results of the voting. We expect to announce the preliminary voting results at the annual meeting. The final voting results will be tallied by the inspector of election and published in a Current Report on Form 8-K, which we are required to file with the SEC, within four business days following the annual meeting. Costs of solicitation and solicitation participants. We will pay the costs of soliciting proxies. These costs also include support for the hosting of the virtual meeting. We will solicit proxies by email from stockholders who are our employees or who previously requested to receive proxy materials electronically. Our directors, our officers and our employees also may solicit proxies on our behalf, personally, electronically or by telephone, facsimile or mail or other means, without additional compensation. We may request that brokerage firms, banks and other agents forward proxy materials to beneficial owners and we would reimburse such institutions for their out-of-pocket expenses incurred. We may also utilize the assistance of third parties in connection with our proxy solicitation efforts and we would compensate such third parties for their efforts. We have engaged one such third party, MacKenzie Partners, to assist in the solicitation of proxies and provide related advice and informational support, for service fees of up to $12,500 and the reimbursement of certain expenses. Additional Meeting Information We encourage you to access the meeting prior to the start time. Please allow sufficient time for online log-in, which begins at 8:45 a.m. Eastern Time. You may check your browser’s compatibility any time prior to the meeting at www.virtualshareholdermeeting.com/IRWD2022IRWD2023. If you want to submit a question you may do so electronically starting at the time of check-in or during the meeting. If you have technical difficulties or trouble accessing the virtual meeting, there will be technicians ready to assist you. If you encounter any technical 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 stockholder meeting log in page.
Stockholder Communications, Proposals and Nominations for Directorships Communications A stockholder may send general communications to our board of directors, any committee of our board of directors or any individual director by directing such communication to Secretary, Ironwood Pharmaceuticals, Inc., 100 Summer Street, Suite 2300, Boston, Massachusetts 02110. All communications will be reviewed by our Secretary and, if requested by the stockholder, forwarded to our board of directors or an individual director, as applicable. Our Secretary reserves the right not to forward to our board of directors or any individual director any abusive, threatening or otherwise inappropriate materials. Any request for materials or other communications directed to our secretary should be sent to: Secretary, Ironwood Pharmaceuticals, Inc., 100 Summer Street, Suite 2300, Boston, Massachusetts 02110. Proposals and Nominations Stockholders who wish to present a proposal for inclusion in our proxy materials for our 20232024 annual meeting should follow the procedures prescribed in Rule 14a-8 under the Exchange Act and our bylaws. Those procedures require that we receive a stockholder proposal in writing no later than December 22, 202229, 2023 in order for such proposal to be included in our proxy materials. Under our bylaws, stockholders who wish to nominate a director or include a proposal in our 20232024 annual meeting of stockholders (but do not wish to include such proposal in our proxy materials) must give us timely notice. To be timely, a notice of director nomination or other proposal for the 20222023 annual meeting of stockholders must be received by us no earlier than March 3, 202322, 2024 and no later than April 2, 2023,21, 2024, unless the date of the 20232024 annual meeting of stockholders is more than 30 days from the anniversary date of the 20222023 annual meeting of stockholders, in which event the notice must be received by us on or before 15 days after the day on which the date of the 20232024 annual meeting of stockholders is first disclosed in a public announcement. The notice must contain specified information that is prescribed in our bylaws about you and the director nominee or the proposal, as applicable. If any director nomination or stockholder proposal is submitted after April 2, 2023,21, 2024, our bylaws provide that the nomination or the proposal shall be disregarded. Any stockholder who intends to solicit proxies in support of a director nominee other than the Company’s nominees must also comply with Rule 14a-19 under the Exchange Act. 20222023 Proxy Statement 81
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We file annual, quarterly and current reports, as well as other information with the SEC. You can obtain any of them from the SEC at its website at www.sec.gov. The documents are also available from us without charge by requesting them in writing or by telephone from Ironwood Pharmaceuticals, Inc., 100 Summer Street, Suite 2300, Boston, Massachusetts 02110, Attention: Corporate Communications, telephone: (617) 621-7722, or by visiting the Investors section of our website at www.ironwoodpharma.com.
Appendix A Amended and Restated 2019 Equity Incentive Plan IRONWOOD PHARMACEUTICALS, INC.
AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN 1.
DEFINED TERMS Exhibit A, which is incorporated by reference, defines the terms used in the Plan and includes certain operational rules related to those terms. 2.
PURPOSE The Plan has been established to advance the interests of the Company by providing for the grant to Participants of Stock, Stock-based and other incentive Awards. The Plan is effective as of the Effective Date. 3.
ADMINISTRATION The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; determine the form of settlement of Awards (whether in cash, shares of Stock, or other property); prescribe forms, rules and procedures relating to the Plan and Awards; and otherwise do all things necessary or desirable to carry out the purposes of the Plan. Determinations of the Administrator made under the Plan are conclusive and bind all persons. 4.
LIMITS ON AWARDS UNDER THE PLAN (a) Number of Shares. Subject to adjustment as provided in Section 7(b), the maximum number of shares of Stock that may be issued in satisfaction of Awards under the Plan is (1) 16,000,000 shares, plus (2) any shares of Stock underlying awards that are forfeited, expired or are cancelled without the delivery of shares of Stock under the Company’s Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan or the Company’s 2019 Equity Incentive Plan on and following the Effective Date (each, a “Prior Plan Award”). Up to the total number of shares of Stock set forth in the preceding sentence may be issued in satisfaction of ISOs, but nothing in this Section 4(a) will be construed as requiring that any, or any fixed number of, ISOs be awarded under the Plan. Further, (i) any shares of Stock withheld by the Company in payment of the exercise price or purchase price of an Award or Prior Plan Award or in satisfaction of tax withholding requirements with respect to an Award or Prior Plan Award and (ii) the full number of shares of Stock covered by any Award or Prior Plan Award that is a SAR any portion of which is settled in Stock (and not only the number of shares of Stock delivered in settlement) will not be available for grant under the Plan. Any shares of Stock underlying any Awards or Prior Plan Awards that are settled in cash or that expire, become unexercisable, terminate or are forfeited to or repurchased by the Company without the issuance of Stock will become available for grant under the Plan upon the cash settlement, expiration, becoming unexercisable, termination, or forfeiture to or repurchase by the Company of such Awards or Prior Plan Awards. For the avoidance of doubt, the number of shares of Stock available for delivery under the Plan will not be increased by any shares of Stock delivered under the Plan that are subsequently repurchased using proceeds directly attributable to Stock Option exercises. The limits set forth in this Section 4(a) will be construed to comply with Section 422. (b) Substitute Awards. The Administrator may grant Substitute Awards under the Plan. To the extent consistent with the requirements of Section 422 and the regulations thereunder and other applicable legal requirements (including applicable stock exchange requirements), Stock issued under Substitute Awards will be in addition to and will not reduce the number of shares available for Awards under the Plan set forth in Section 4(a), but, notwithstanding anything in
Section 4(a) to the contrary, if any Substitute Award is settled in cash, expires, becomes unexercisable, terminates or is forfeited to or repurchased by the Company without the issuance of Stock, the shares of Stock previously subject to such Award will not be available for future grants under the Plan. The Administrator will determine the extent to which the terms and conditions of the Plan apply to Substitute Awards, if at all, provided, however, that Substitute Awards will not be subject to, or counted toward, the per-Participant Award limits described in Section 4(d) below. (c) Type of Shares. Stock delivered by the Company under the Plan may be authorized but unissued Stock, treasury Stock or previously issued Stock acquired by the Company. No fractional shares of Stock will be delivered under the Plan. (d) Individual Limit. (1) Awards comprising no more than 2,000,000 shares of Stock may be granted to any person under the Plan in any calendar year. In applying the foregoing limit, (i) all Awards granted to the same person in the same calendar year are aggregated and made subject to one limit; (ii) the limit as applicable to Stock Options and SARs refers to the number of shares of Stock underlying those Awards; and (iii) the share limit as applicable to Awards other than Stock Options and SARs refers to the maximum number of shares of Stock that may be delivered, or the value of which could be paid in cash or other property, under an Award or Awards assuming a maximum payout. (2) Notwithstanding the foregoing limit, the aggregate value of all compensation granted or paid to any Director with respect to any calendar year, including Awards granted under the Plan and cash fees or other compensation paid by the Company to such Director outside of the Plan, for his or her services as a Director during such calendar year may not exceed $600,000 in the aggregate, calculating the value of any Awards based on the grant date fair value in accordance with the Accounting Rules, assuming a maximum payout. 5.
ELIGIBILITY AND PARTICIPATION The Administrator shall select Participants from among Employees and Directors of, and consultants and advisors to, the Company and its subsidiaries. Eligibility for ISOs is limited to individuals described in the first sentence of this Section 5 who are employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code. Eligibility for Stock Options, other than ISOs, and SARs is limited to individuals described in the first sentence of this Section 5 who are providing direct services on the date of grant of the Award to the Company or to a subsidiary of the Company that would be described in the first sentence of Treas. Regs. §1.409A-1(b)(5)(iii)(E). 6.
RULES APPLICABLE TO AWARDS (a) All Awards. (1) Award Provisions. The Administrator shall determine the terms of all Awards, subject to the limitations provided herein. By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant will be deemed to have agreed to the terms of the Award and the Plan. Notwithstanding any provision of this Plan to the contrary, Substitute Awards may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator. (2) Term of Plan. No Awards may be made after 10 years from the Date of Adoption, but previously granted Awards may continue beyond that date in accordance with their terms. (3) Transferability. Neither ISOs nor, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), other Awards may be transferred other than by will or by the laws of descent and distribution. During a Participant’s lifetime, ISOs and, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), SARs and NSOs may be exercised only by the Participant. The Administrator may permit the gratuitous transfer (i.e., transfer not for value) of Awards other than ISOs, subject to applicable securities and other laws and such limitations as the Administrator may impose. (4) Vesting. The Administrator shall determine the time or times at which an Award vests or becomes exercisable and the terms on which a Stock Option or SAR remains exercisable. Without limiting the foregoing, the
Administrator may at any time accelerate the vesting or exercisability of an Award, including, but not limited to, in connection with providing consideration for a restrictive covenant, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration. Unless the Administrator expressly provides otherwise, the following rules will apply if a Participant’s Employment ceases: (A) Except as provided in (B) and (C) below, immediately upon the cessation of the Participant’s Employment each Stock Option and SAR that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited. (B) Subject to (C) and (D) below, all Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate. (C) Subject to (D) below, all Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment due to death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) the one-year period ending with the first anniversary of the Participant’s cessation of Employment or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate. In addition, if the Participant’s Employment ceases for any reason other than pursuant to (D) below and in the three months following such cessation of Employment the Participant dies or experiences a Disability, the exercisability of all Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, will automatically be extended upon such event and will remain exercisable for the lesser of (i) the one-year period ending with the first anniversary of the Participant’s cessation of Employment or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate. (D) All Stock Options and SARs (whether or not exercisable) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation of Employment if the termination is for Cause or occurs in circumstances that in the determination of the Administrator would have constituted grounds for the Participant’s Employment to be terminated for Cause. (5) Recovery of Compensation. The Administrator may provide in any case that outstanding Awards (whether or not vested or exercisable) and the proceeds from the exercise or disposition of Awards or Stock acquired under Awards will be subject to forfeiture and disgorgement to the Company, with interest and other related earnings, if the Participant to whom the Award was granted violates (i) a non-competition, non-solicitation, no-hire, non-disparagement, confidentiality, invention assignment or other restrictive covenant by which he or she is bound, or (ii) any Company policy applicable to the Participant that provides for forfeiture or disgorgement with respect to incentive compensation that includes Awards under the Plan. In addition, the Administrator may require forfeiture and disgorgement to the Company of outstanding Awards and the proceeds from the exercise or disposition of Awards or Stock acquired under Awards, with interest and other related earnings, to the extent required by law or applicable stock exchange listing standards, including, without limitation, Section 10D of the Exchange Act, or any related Company policy. Each Participant, by accepting or being deemed to have accepted an Award under the Plan, agrees or will be deemed to have agreed to cooperate fully with the Administrator, and to cause any and all permitted transferees of the Participant to cooperate fully with the Administrator, to effectuate any forfeiture or disgorgement required hereunder. Neither the Administrator nor the Company nor any other person, other than the Participant and his or her permitted transferees, if any, will be responsible for any adverse tax or other consequences to a Participant or his or her permitted transferees, if any, that may arise in connection with this Section 6(a)(5).
(6) Taxes. The delivery, vesting and retention of Stock, cash or other property under an Award are conditioned upon full satisfaction by the Participant of all tax withholding requirements with respect to the Award. The Administrator shall prescribe such rules for the withholding of taxes with respect to any Award as it deems necessary, including, but not limited to, (a) providing that the Administrator may hold back shares of Stock from an Award, (b) permitting a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements, or (c) permitting an authorized broker-dealer to sell shares of Stock subject to an Award and remit the cash proceeds of such sale to the Company to satisfy any tax withholding requirements related to such Award (provided that such arrangements will not result in withholding in excess of the maximum withholding amount consistent with the award being subject to equity accounting treatment under the Accounting Rules). (7) Dividends and Dividend Equivalents. The Administrator may provide for the payment of amounts (on terms and subject to conditions established by the Administrator) in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award; provided, however, that (a) dividends or dividend equivalents relating to an Award that, at the dividend payment date, remains subject to a risk of forfeiture (whether service-based or performance-based) shall be subject to the same risk of forfeiture as applies to the underlying Award and (b) no dividends or dividend equivalents shall be payable with respect to Options or SARs. Any entitlement to dividend equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the requirements of Section 409A. Dividends or dividend equivalent amounts payable in respect of Awards that are subject to restrictions may be subject to such limits or restrictions as the Administrator may impose. (8) Rights Limited. Nothing in the Plan may be construed as giving any person the right to be granted an Award or to continued employment or service with the Company or any of its subsidiaries, or any rights as a stockholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Employment for any reason, even if the termination is in violation of an obligation of the Company or any of its subsidiaries to the Participant. (9) Coordination with Other Plans. Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or any of its subsidiaries. For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or any of its subsidiaries may be settled in Stock (including, without limitation, Unrestricted Stock) under the Plan if the Administrator so determines, in which case the shares delivered will be treated as awarded under the Plan (and will reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 4). (10) Section 409A. (A) Without limiting the generality of Section 11(b) hereof, each Award will contain such terms as the Administrator determines and will be construed and administered, such that the Award either qualifies for an exemption from the requirements of Section 409A or satisfies such requirements. (B) Notwithstanding Section 9 of this Plan or any other provision of this Plan or any Award agreement to the contrary, the Administrator may unilaterally amend, modify or terminate the Plan or any outstanding Award, including but not limited to changing the form of the Award, if the Administrator determines that such amendment, modification or termination is necessary or advisable to avoid the imposition of an additional tax, interest or penalty under Section 409A. (C) If a Participant is deemed on the date of the Participant’s termination of Employment to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then, with regard to any payment that is considered nonqualified deferred compensation under Section 409A, to the extent applicable, payable on account of a “separation from service”, such payment will be made or provided on the date that is the earlier of (i) the expiration of the six-month period measured from the date of such “separation from service” and (ii) the date of the Participant’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 6(a)(10)(C) (whether they would have otherwise been payable in
a single lump sum or in installments in the absence of such delay) will be paid on the first business day following the expiration of the Delay Period in a lump sum and any remaining payments due under the Award will be paid in accordance with the normal payment dates specified for them in the applicable Award agreement. (D) For purposes of Section 409A, each payment made under this Plan will be treated as a separate payment. (E) With regard to any payment considered to be nonqualified deferred compensation under Section 409A, to the extent applicable, that is payable upon a change in control of the Company or other similar event, to avoid the imposition of an additional tax, interest or penalty under Section 409A, no amount will be payable unless such change in control constitutes a “change in control event” within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations. (b) Stock Options and SARs. (1) Time and Manner of Exercise. Unless the Administrator expressly provides otherwise, no Stock Option or SAR will be deemed to have been exercised until the Administrator receives notice of exercise in a form acceptable to the Administrator that is signed by the appropriate person and accompanied by any payment required under the Award. Any attempt to exercise a Stock Option or SAR by any person other than the Participant will not be given effect unless the Administrator has received such evidence as it may require that the person exercising the Award has the right to do so. No term of an Award shall provide for automatic “reload” grants of additional Awards upon the exercise of a Stock Option or SAR. (2) Exercise Price. The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise must be no less than 100% (in the case of an ISO granted to a 10-percent stockholder within the meaning of subsection (b)(6) of Section 422, 110%) of the Fair Market Value of the Stock subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant. (3) Payment of Exercise Price. Where the exercise of an Award is to be accompanied by payment, payment of the exercise price must be by cash or check acceptable to the Administrator or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of previously acquired unrestricted shares of Stock, or the withholding of unrestricted shares of Stock otherwise deliverable upon exercise, in either case that have a Fair Market Value equal to the exercise price, (ii) through a broker-assisted exercise program acceptable to the Administrator, (iii) by other means acceptable to the Administrator, or (iv) by any combination of the foregoing permissible forms of payment. The delivery of previously acquired shares in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe. (4) Maximum Term. The maximum term of Stock Options and SARs must not exceed 10 years from the date of grant (or five years from the date of grant in the case of an ISO granted to a 10-percent stockholder described in Section 6(b)(2) above). (5) No Repricing. Except in connection with a corporate transaction involving the Company (which term includes, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares) or as otherwise contemplated by Section 7 below, the Company may not, without obtaining stockholder approval, (A) amend the terms of outstanding Stock Options or SARs to reduce the exercise price or base value of such Stock Options or SARs, (B) cancel outstanding Stock Options or SARs in exchange for Stock Options or SARs with an exercise price or base value that is less than the exercise price or base value of the original Stock Options or SARs, or (C) cancel outstanding Stock Options or SARs that have an exercise price or base value greater than the Fair Market Value of a share of Stock on the date of such cancellation in exchange for cash or other consideration.
7.
EFFECT OF CERTAIN TRANSACTIONS (a) Covered Transactions. Except as otherwise expressly provided in an Award agreement, another agreement between the Company and a Participant, or the Company’s Change of Control Severance Plan or otherwise by the Administrator, the following provisions will apply in the event of a Covered Transaction: (1) Assumption or Substitution. If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may provide for (A) the assumption or continuation of some or all outstanding Awards or any portion thereof or (B) the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor. (2) Cash-Out of Awards. Subject to Section 7(a)(5) below, the Administrator may provide for payment (a “cash-out”), with respect to some or all Awards or any portion thereof, equal in the case of each affected Award or portion thereof to the excess, if any, of (A) the Fair Market Value of one share of Stock times the number of shares of Stock subject to the Award or such portion, over (B) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of a SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Administrator determines; provided, however, for the avoidance of doubt, that if the exercise or purchase price (or base value) of an Award is equal to or greater than the Fair Market Value of one share of Stock, the Award may be cancelled with no payment due hereunder or otherwise in respect of such Award. (3) Acceleration of Certain Awards. Subject to Section 7(a)(5) below, the Administrator may provide that any Award requiring exercise will become exercisable, in full or in part, and/or that the delivery of any shares of Stock remaining deliverable under any outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated, in full or in part, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the shares, as the case may be, to participate as a stockholder in the Covered Transaction. (4) Termination of Awards upon Consummation of a Covered Transaction. Except as the Administrator may otherwise determine in any case, each Award will automatically terminate (and in the case of outstanding shares of Restricted Stock, will automatically be forfeited) immediately upon consummation of the Covered Transaction, other than any Award that is assumed or substituted pursuant to Section 7(a)(1) above. (5) Additional Limitations. Any share of Stock and any cash or other property or other award delivered pursuant to Section 7(a)(1), Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction. For purposes of the immediately preceding sentence, a cash-out under Section 7(a)(2) above or an acceleration under Section 7(a)(3) above will not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition. In the case of Restricted Stock that does not vest and is not forfeited in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan. (b) Changes in and Distributions with Respect to Stock. (1) Basic Adjustment Provisions. In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of the Accounting Rules, the Administrator shall make appropriate adjustments to the maximum number of shares of Stock specified in Section 4(a) that may be issued under the Plan and to the maximum share limits described in Section 4(d), and shall make appropriate adjustments to the
number and kind of shares of stock or securities underlying Awards then outstanding or subsequently granted, any exercise or purchase prices (or base values) relating to Awards and any other provision of Awards affected by such change. (2) Certain Other Adjustments. The Administrator may also make adjustments of the type described in Section 7(b)(1) above to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan, having due regard for the qualification of ISOs under Section 422 and the requirements of Section 409A, to the extent applicable. (3) Continuing Application of Plan Terms. References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7. 8.
LEGAL CONDITIONS ON DELIVERY OF STOCK The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been registered with the U.S. Securities and Exchange Commission and listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived. The Company may require, as a condition to the exercise of an Award or the delivery of shares of Stock under an Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of the Securities Act of 1933, as amended, or any applicable state or non-U.S. securities law. Any Stock required to be issued to Participants under the Plan will be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration or delivery of stock certificates. In the event that the Administrator determines that stock certificates will be issued to Participants under the Plan or the Shares will be evidenced by book-entry, the Administrator may require that any certificates evidencing Stock issued under the Plan or the book-entry reflecting the issuance of Stock under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold any such certificates pending lapse of the applicable restrictions. 9.
AMENDMENT AND TERMINATION The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided, however, that except as otherwise expressly provided in the Plan the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time the Award was granted. Any amendments to the Plan will be conditioned upon stockholder approval only to the extent, if any, such approval is required by law (including the Code) or applicable stock exchange requirements, as determined by the Administrator. 10.
OTHER COMPENSATION ARRANGEMENTS The existence of the Plan or the grant of any Award will not affect the Company’s right to award a person bonuses or other compensation in addition to Awards under the Plan. 11.
MISCELLANEOUS (a) Waiver of Jury Trial. By accepting or being deemed to have accepted an Award under the Plan, each Participant waives (or will be deemed to have waived), to the maximum extent permitted under applicable law, any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim will be tried before a court and not before a jury. By accepting or being deemed to have accepted an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the
Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers. Notwithstanding anything to the contrary in the Plan, nothing herein is to be construed as limiting the ability of the Company and a Participant to agree to submit disputes arising under the terms of the Plan or any Award made hereunder to binding arbitration or as limiting the ability of the Company to require any eligible individual to agree to submit such disputes to binding arbitration as a condition of receiving an Award hereunder. (b) Limitation of Liability. Notwithstanding anything to the contrary in the Plan, neither the Company, nor any of its subsidiaries, nor the Administrator, nor any person acting on behalf of the Company, any of its subsidiaries, or the Administrator, will be liable to any Participant, to any permitted transferee, to the estate or beneficiary of any Participant or any permitted transferee, or to any other holder of an Award by reason of any acceleration of income, or any additional tax (including any interest or penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to an Award. 12.
ESTABLISHMENT OF SUB-PLANS The Administrator may at any time and from time to time establish one or more sub-plans under the Plan (for local-law compliance purposes or other administrative reasons determined by the Administrator) by adopting supplements to the Plan containing, in each case, such limitations on the Administrator’s discretion under the Plan, and such additional terms and conditions, as the Administrator deems necessary or desirable. Each supplement so established will be deemed to be part of the Plan but will apply only to Participants within the group to which the supplement applies (as determined by the Administrator). 13.
GOVERNING LAW (a) Certain Requirements of Corporate Law. Awards will be granted and administered consistent with the requirements of applicable Delaware law relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case as determined by the Administrator. (b) Other Matters. Except as otherwise provided by the express terms of an Award agreement, under a sub-plan described in Section 12 or as provided in Section 13(a) above, the domestic substantive laws of the State of Delaware govern the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of or based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction. (c) Jurisdiction. By accepting (or being deemed to have accepted) an Award, each Participant will be deemed to (a) have submitted irrevocably and unconditionally to the jurisdiction of the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon the Plan or any Award; (b) agree not to commence any suit, action or other proceeding arising out of or based upon the Plan or an Award, except in the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware; and (c) waive, and agree not to assert, by way of motion as a defense or otherwise, in any such suit, action or proceeding, any claim that he or she is not subject personally to the jurisdiction of the above-named courts that his or her property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that the Plan or an Award or the subject matter thereof may not be enforced in or by such court.
EXHIBIT A Definition of Terms The following terms, when used in the Plan, have the meanings and are subject to the provisions set forth below: “Accounting Rules”: Financial Accounting Standards Board Accounting Standards Codification Topics 505 and 718, as applicable, or any successor provision. “Administrator”: The Compensation Committee, except that the Compensation Committee may delegate (i) to one or more of its members (or one or more other members of the Board, including the full Board) such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the power to grant Awards to the extent permitted by Section 152 or 157(c) of the Delaware General Corporation Law; and (iii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, the term “Administrator” will include the person or persons so delegated to the extent of such delegation. Notwithstanding the foregoing, only the Board or the Compensation Committee shall be authorized to grant an Award to any director of the Company or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act). “Award”: Any or a combination of the following: (i) Stock Options. (ii) SARs. (iii) Restricted Stock. (iv) Unrestricted Stock. (v) Stock Units, including Restricted Stock Units. (vi) Performance Awards. (vii) Awards (other than Awards described in (i) through (vi) above) that are convertible into or otherwise based on Stock. “Board”: The Board of Directors of the Company. “Cause”: With respect to a Participant, (i) dishonesty with respect to the Company or any affiliate of the Company, (ii) insubordination, substantial malfeasance or non-feasance of duty, (iii) unauthorized disclosure of confidential information, (iv) breach by a Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company or any affiliate of the Company, and (v) conduct substantially prejudicial to the business of the Company or any affiliate of the Company; provided, however, that this definition of “Cause” shall be superseded by (a) the definition of “Cause” contained in an agreement between a Participant and the Company or any affiliate of the Company that is in effect at the time of such termination, with respect to that Participant and (b) the definition of “Cause” contained in the Company’s Change of Control Severance Benefit Plan to the extent such plan is in effect at the time of such termination, the Participant is a participant in such plan and such termination occurs within the period during which the Participant is eligible for enhanced severance benefits under the Company’s Change of Control Severance Benefit Plan. The determination of the Administrator as to the existence of Cause will be conclusive on the Participant and the Company; provided, however, that if the determination is made within the period during which the Participant is eligible for enhanced severance benefits under the Company’s Change of Control Severance Benefit Plan, then the determination will be subject to de novo review. “Code”: The U.S. Internal Revenue Code of 1986, as from time to time amended and in effect, or any successor statute as from time to time in effect. “Compensation Committee”: The Compensation and HR Committee of the Board. “Company”: Ironwood Pharmaceuticals, Inc., a Delaware corporation.
“Covered Transaction”: Any of (i) a consolidation, merger or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company. Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer. “Date of Adoption”: The earlier of the date The Ironwood Pharmaceuticals, Inc. 2019 Equity Incentive Plan was first approved by the Company’s stockholders or adopted by the Board, as determined by the Committee. “Director”: A member of the Board who is not an Employee. “Disability”: A disability that would entitle a Participant to long-term disability benefits under the Company’s long-term disability plan in which the Participant participates. If a Participant does not participate a long-term disability plan of the Company, Disability means a permanent and total disability as defined in Section 22(e)(3) of the Code. “Effective Date”: The date on which the Plan is first approved by the Company’s stockholders. “Employee”: Any person who is employed by the Company or any of its subsidiaries. “Employment”: A Participant’s employment or other service relationship with the Company or any of its subsidiaries. Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to, the Company or any of its subsidiaries. If a Participant’s employment or other service relationship is with any subsidiary of the Company and that entity ceases to be a subsidiary of the Company, the Participant’s Employment will be deemed to have terminated when the entity ceases to be a subsidiary of the Company unless the Participant transfers Employment to the Company or any of its remaining subsidiaries. Notwithstanding the foregoing, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms will be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations. The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred. Any such written election will be deemed a part of the Plan. “Exchange Act”: The Securities Exchange Act of 1934, as amended. “Fair Market Value”: As of a particular date, (i) the closing price for a share of Stock reported on the Nasdaq Stock Market (or any other national securities exchange on which the Stock is then listed) for that date or, if no closing price is reported for that date, the closing price on the immediately preceding date on which a closing price was reported or (ii) in the event that the Stock is not traded on a national securities exchange, the fair market value of a share of Stock determined by the Administrator consistent with the rules of Section 422 and Section 409A to the extent applicable. “ISO”: A Stock Option intended to be an “incentive stock option” within the meaning of Section 422. Each Stock Option granted pursuant to the Plan will be treated as providing by its terms that it is to be an NSO unless, as of the date of grant, it is expressly designated as an ISO. “NSO”: A Stock Option that is not intended to be an “incentive stock option” within the meaning of Section 422. “Participant”: A person who is granted an Award under the Plan. “Performance Award”: An Award subject to Performance Criteria.
“Performance Criteria”: Specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. A Performance Criterion and any targets with respect thereto need not be based upon an increase, a positive or improved result or avoidance of loss and may be applied to the Participant individually, or to a business unit or division or the Company as a whole and may relate to any or any combination of the following (measured either absolutely or by reference to an index or indices or the performance of one or more companies and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, product or product candidate, project or geographical basis or in combinations thereof), among any other criteria determined by the Administrator: achievement of research, clinical trial or other drug development objectives; achievement of regulatory objectives; achievement of manufacturing and/or supply chain or other operational objectives; sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures, licenses, collaborations and strategic alliances; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; or any other objectives determined by the Administrator. The Administrator may provide that one or more of the Performance Criteria applicable to such Award will be adjusted to reflect events (including, but not limited to, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the applicable performance period that affect the applicable Performance Criterion or Criteria. “Plan”: The Ironwood Pharmaceuticals, Inc. Amended and Restated 2019 Equity Incentive Plan, as from time to time amended and in effect. “Restricted Stock”: Stock subject to restrictions requiring that it be forfeited, redelivered or offered for sale to the Company if specified service or performance-based conditions are not satisfied. “Restricted Stock Unit”: A Stock Unit that is, or as to which the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified performance or other vesting conditions. “SAR”: A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value at the discretion of the Administrator) equal to the excess of the Fair Market Value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured. “Section 409A”: Section 409A of the Code. “Section 422”: Section 422 of the Code. “Stock”: Class A common stock of the Company, par value $0.001 per share. “Stock Option”: An option entitling the holder to acquire shares of Stock upon payment of the exercise price. “Stock Unit”: An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future. “Substitute Awards”: Awards issued under the Plan in substitution for equity awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition. “Unrestricted Stock”: Stock not subject to any restrictions under the terms of the Award. 2023 Proxy Statement A-11
![[MISSING IMAGE: px_proxypg1ironwood-bw.jpg]](/files/DEF 14A/0001104659-23-051441/px_proxypg1ironwood-bw.jpg) SCAN TOVIEW MATERIALS & VOTE IRONWOOD PHARMACEUTICALS, INC. 100 SUMMER STREET, SUITE 2300BOSTON, MA 02110 VOTE BY INTERNETBefore The Meeting - Go to www.proxyvote.com or scan the QR Barcode aboveYou may use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date.on June 19, 2023. 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 Meeting - Go to www.virtualshareholdermeeting.com/IRWD2022YouIRWD2023You may also vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSIf 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.VOTEinstructions.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date.on June 19, 2023. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, 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. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D73392-P71060V12479-P91312 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY IRONWOOD PHARMACEUTICALS, INC. For Withhold For All To withhold authority to vote for any individual The Board of Directors recommends you vote FOR ALL the following: AllAll Except nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. 1.Election of Directors. To elect nine director nominees numbered 01 through 09 to serve for a one-year term extending until the 2024 annual meeting of stockholders and their successors are duly elected and qualified.Nominees: !!! 01)Mark Currie, Ph.D.02)Alexander Denner, Ph.D.03)Andrew Dreyfus04)Jon Duane05)Marla Kessler 06)Thomas McCourt07)Julie McHugh08)Catherine Moukheibir09)Jay Shepard The Board of Directors recommends you vote FOR the following proposal:For Against Abstain 2.Approval, by non-binding advisory vote, of the compensation paid to the named executive officers. !!! The Board of Directors recommends you vote 1 Year on the following proposal: 1 Year 2 Years 3 Years Abstain 3.To recommend, by non-binding advisory vote, the frequency of future advisory votes on the compensation paid to the named executive officers.! !!! The Board of Directors recommends you vote FOR the following proposals:For Against Abstain4.Approval of Ironwood Pharmaceuticals, Inc.'s Amended and Restated 2019 Equity Incentive Plan.!!!5.Ratification of the selection of Ernst & Young LLP as Ironwood Pharmaceuticals, Inc.'s independent registered public accounting firm for 2023.!!!NOTE: 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.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]DateSignature (Joint Owners)Date
![[MISSING IMAGE: tm223551d1-pxy_proxy2bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-048389/tm223551d1-pxy_proxy2bw.jpg) ![[MISSING IMAGE: px_proxypg2ironwood-bw.jpg]](/files/DEF 14A/0001104659-23-051441/px_proxypg2ironwood-bw.jpg) Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice, Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com.D73393-P71060IRONWOODwww.proxyvote.com.V12480-P91312IRONWOOD PHARMACEUTICALS, INC.Annual Meeting of Stockholders Wednesday,Tuesday, June 1, 202220, 2023 9:00 AM Eastern Time This proxy is solicited by the Board of DirectorsThe stockholder(s) hereby appoint(s) Thomas McCourt and Sravan Emany, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of IRONWOOD PHARMACEUTICALS, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 AM, Eastern Time on Wednesday,Tuesday, June 1, 202220, 2023 via live webcast at www.virtualshareholdermeeting.com/IRWD2022,IRWD2023, and any adjournment or postponement thereof. The stockholder(s) hereby revoke(s) any proxy previously given and acknowledge(s) receipt of the notice and proxy statement for the Annual Meeting of Stockholders.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 recommendations of the Board of Directors.Continued and to be signed on reverse side
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