| • | Diversity, Equity and Inclusion: PATIENT SUPPORT Patients are at the center of our mission. We operate a robust patient support program, partake in regular, compliant interaction with patient advocacy groups and invite patients to share their experiences in-person and virtually. Furthermore, we are committed to providing patients with access to our medicines and work with numerous stakeholders to enable this access as appropriate. Our Expanded Access Programs help address patient needs by making certain investigational medical products or unapproved products available to eligible patients, in accordance with applicable local laws. Finally, we continue to monitor product safety in our clinical development programs and for our marketed product via our pharmacovigilance program.
 DIVERSITY, EQUITY AND INCLUSION
We are committed to promoting diversity in our workforce and to taking steps to support equity and inclusion for all. | ● | Gender – Women represent 67% of our Class II director nominees to serve until the 2026 Annual Meeting of Shareholders. As of the Record Date, women represented 30%33% of the Board and comprised 50%37.5% of our Executive Committee. We expect to continue to enhanceAs of September 26, 2022 (the most recent measurement date and based on self-identified information), women comprised 51% of our overall workforce and 28% of our leadership (Vice President level and above). |
| ● | Racial and Ethnic – As of the Record Date (based on self-identified information), 67% of our Board identifies as non-minority, 22% identifies as minority, and 11% did not identify. As of September 26, 2022 (the most recent measurement date and based on self-identified information), 67% of our US workforce diversity, advanceidentifies as non-minority, 32% identifies as minority, and 1% did not identify. As of the developmentsame date, 83% of diverse talentour US leadership (Vice President level and ensure diverse succession plans both in our employee workforceabove) identifies as non-minority, and our Board. These initiatives include the establishment of a series of focus groups centered around diversity and inclusivity.17% identifies as minority. |
| • | Patient Support: Patients are at the center of our mission. As a result, we operate a robust patient support program, partake in regular, compliant interaction with patient advocacy groups and invite patients to our offices or virtually to share their experiences. Furthermore, we are committed to providing patients with access to our medicines and work with numerous stakeholders to enable this access as appropriate. |
We will continue to measure and share our diversity statistics in the future. We expect to continue to enhance our Board, leadership and workforce diversity, advance the development of diverse talent, and ensure diverse succession plans in our employee workforce, leadership and our Board. In 2022, our Employee Resource Groups (“ERGs”) met routinely with the aim of fostering a sense of community and cultural awareness among our employees. Our current ERGs include groups supporting female employees, working caregivers and Hispanic/Latinx colleagues. Most recently, in February 2023, we announced the creation of a new ERG, BEING (Black Employees of Insmed Networking Group).
| • | Employee Wellness: We are dedicated to investing in our employees and workplace culture. As part of this effort, we have put in place several financial wellness programs for the benefit of our workforce, including an Employee Stock Purchase Plan and 401(k) match program. We have also taken several actions to promote the physical and mental wellbeing of our employees, including enacting a dogs at work policy and providing fitness classes onsite and virtually. |
| • | COVID-19 Support: During the COVID-19 pandemic, our employees are provided the ability to work virtually in order to flexibly manage business and home responsibilities. We have enhanced our internal communications and touch points to ensure connectivity to our workforce. With the exception of our laboratory personnel, who returned to the laboratories during the summer as certain regions opened, our employees are able to use their own discretion to use our facilities. Returning to the office has not been required for the majority of our workforce. For those who do choose to work from the office, all of our facilities have been appropriately evaluated and are maintained for social distancing and sanitation on a daily basis in line with state and CDC guidelines. We will continue to manage this situation with a focus towards the safety of our employees. |
| • | Environmental Impact: We are cognizant of our responsibility to our broader environment and have supported several green measures in an effort to reduce our Company’s carbon footprint, including increasing recycling efforts, providing reuseable cups to employees, installing electric car chargers, and limiting waste in food service distribution. |
| • | Community Service: We are committed to giving back to our communites. We partake in several employee-led community service initiaties both in the US and abroad. |
30INSMED PROXY STATEMENT
In 2022, we established an Inclusion Council that acts as an advisor to the Chief People Strategy Officer and senior leadership on our general strategy related to diversity, equity, inclusion, and belonging. In addition, we are committed to equitable pay for all employees and use industry benchmarks and annual compensation reviews to ensure a fair and bias-free compensation system.
EMPLOYEE WELLNESS
After receiving the same honors in 2021, we were again ranked as the top company to work for in the biopharma industry in Science’s 2022 Top Employers Survey and certified in the US as a Great Place To Work. Additionally, in 2022, we were ranked number 2 in Fortune’s 25 Best Small and Medium Workplaces in Biotechnology and Pharmaceuticals. We are dedicated to investing in our employees and workplace culture. As part of this effort, we have put in place several financial wellness programs for the benefit of our workforce, including an Employee Stock Purchase Plan and 401(k) match program.
In 2022, we introduced Thriveful, an internal platform offering a diverse array of programs and resources designed to support employee health, financial wellness, professional development and social wellbeing. Examples include health screenings, reproductive care benefits, financial and equity education, skills training, and opportunities for connectedness and relationship building.
COVID-19 SUPPORT
Our employees (other than our laboratory personnel) have been provided the ability to work virtually in order to flexibly manage business and home responsibilities. We have enhanced our internal communications and touch points to ensure connectivity to our workforce. We will continue to manage this situation with a focus on the safety of our employees, ARIKAYCE physicians, caregivers and patients.
ENVIRONMENTAL IMPACT
We are cognizant of our responsibility to our broader environment and have supported several green measures at our headquarters in an effort to reduce our Company’s carbon footprint, including increasing recycling efforts, using energy-efficient rooftop HVAC units, installing electric car chargers, and limiting waste in food service distribution. In our research laboratories, hazardous and chemical waste are responsibly managed and tracked in line with regulatory requirements. We continue to explore ways to improve our sustainability efforts.
COMMUNITY SERVICE
We are committed to giving back to our communities, with a focus on three key areas: health, education, and human services. We partake in several employee-led community service initiatives both in the US and abroad.
In 2022, we held our inaugural Global Day of Good, a company-wide community service effort. More than 500 employees participated globally in service activities that focused on three key areas of impact: health, education and human services. Volunteer activities focused on bringing positive change to the communities where employees live and work while exemplifying our core values.
31INSMED PROXY STATEMENT AUDIT COMMITTEE REPORT AND INDEPENDENT AUDITOR FEES Report of the Audit Committee The Audit Committee approves the selection ofselects the Company’s independent registered public accounting firm and regularly meets with and holds discussions with management and the Company’s independent registered public accounting firm.
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 20202022 (the Annual Report)“Annual Report”) with management, including a discussion of the accounting principles, the reasonableness of significant judgments, and the quality and clarity of disclosures in the financial statements.
The Audit Committee reviewed with Ernst & Young, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgments as to the overall quality of financial reporting, the Company’s accounting principles, and such other matters as are required to be discussed with the Audit Committee by Public Company Accounting Oversight Board (PCAOB)(“PCAOB”) standards.
In addition, the Audit Committee discussed with Ernst & Young its independence from management and the Company, including the matters described in the written disclosures and letter required by PCAOB standards from Ernst & Young to the Audit Committee regarding the independent accountant’s communications with the Audit Committee concerning independence, and considered the compatibility of non-audit services with the independence of the independent registered public accounting firm.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in the Company’s Annual Report for filing with the SEC.
THE AUDIT COMMITTEEThe Audit Committee
David W.J. McGirr, Chair
Alfred F. Altomari Steinar J. Engelsen, M.D., C.E.F.A.
Carol A. Schafer Audit Committee Pre-Approval Policy
32INSMED PROXY STATEMENT AUDIT COMMITTEE PRE-APPROVAL POLICY The Audit Committee has adopted an Audit Committee Pre-Approval Policy for the pre-approval of audit services and permitted non-audit services by the Company’s independent registered public accounting firm in an effort to ensure that the provision of such services does not impair the independence of the independent registered public accounting firm from the Company and is consistent with the rules of the SEC. The policy requires pre-approval by the Audit Committee of the terms and fees of all audit, review and attestation engagements and related services. The policy also requires the Audit Committee to pre-approve the provision of any audit-related services or non-audit services and determine they would not impair the independence of our independent registered public accounting firm. The policy prohibits the Audit Committee from retaining our independent registered public accounting firm in connection with a transaction initially recommended by such firm, the purpose of which may be tax deferral or reduction. The policy delegates pre-approval authority to the Chair of the Audit Committee or, if the Chair is not available, to any of the Audit Committee’s members, but any pre-approval decision must be reported to the Audit Committee at its next scheduled meeting. All of the services performed by Ernst & Young in the year ended December 31, 20202022 were pre-approved in accordance with the pre-approval policy. Independent Registered Public Accounting Firm Fee DisclosureINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEE DISCLOSURE
The Audit Committee reviewed the aggregate fees billed by Ernst & Young for professional services rendered for the years ended December 31, 20202022 and 2019,2021, which were as follows: | | | 2020 | | 2019 | | | 2022 | 2021 | | Audit Fees | | | $1,136,876 | | | | $1,196,177 | | | $2,560,659 | $1,912,500 | | Audit-Related Fees | | | — | | | | — | | | 225,000 | — | | Tax Fees | | | — | | | | — | | | — | — | | All Other Fees | | | 1,995 | | | | 1,995 | | | 222,667 | — | | Total Fees | | | $1,138,871 | | | | $1,198,172 | | | $3,008,326 | $1,912,500 |
Audit fees in 20202022 and 20192021 include fees for services performed to comply with generally accepted auditing standards. These services include the integrated year-end audit of our consolidated financial statements, attestation services with respect to our internal control over financial reporting, quarterly reviews, accounting consultations on matters addressed during the audit or quarterly reviews, review of documents filed with the SEC, and $115,000$225,000 and $125,000$300,000 paid to Ernst & Young for consent and comfort letter procedures for registration statements filed in 20202022 and 2019,2021, respectively. Audit-related fees in 2022 include fees related to the implementation of the Company’s new global enterprise resource planning system. Amounts reflected in “All Other Fees” included fees related to an expanded/early access and compassionate use assessment and compliance program assessment in 2022. 33INSMED PROXY STATEMENT CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Review and Approval of Related Party Transactions Pursuant to our written related party policy, our Audit Committee must review and consider whether to approve or ratify all related party transactions, as defined in Item 404 of Regulation S-K. In determining whether to approve or ratify a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, the purpose and potential benefits to us of the transaction, the related party’s interest in the transaction, the approximate dollar value involved in the transaction, whether the transaction was undertaken in the ordinary course of business, whether the related party transaction is on terms no less favorable to us than terms generally available to us from an unaffiliated third-party under the same or similar circumstances, and whether, under all the circumstances, the transaction is not inconsistent with our best interests. Any transaction which is deemed to be a related party transaction requires the approval of a majority of the disinterested Audit Committee members. Related Party Transactions Since January 1, 2020,2022, there were no related party transactions, nor are there currently any proposed related party transactions, which in accordance with SEC rules, would require disclosure in this Proxy Statement. DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires that our directors, executive officers and holders of more than 10% of our Common Stock report to the SEC their ownership of our Common Stock and changes in that ownership. Directors, executive officers, and beneficial owners of more than 10% of our Common Stock are required by applicable regulations to furnish us with copies of all Section 16(a) forms they file. As a matter of practice, members of our staff assist our executive officers and directors in preparing initial ownership reports and reporting ownership changes and typically file these reports on their behalf. Based solely upon a review of the reports filed pursuant to Section 16(a) of the Exchange Act, we believe that during the year ended December 31, 2020,2022, our executive officers, directors, and beneficial owners of more than 10% of our Common Stock timely filed all reports required under Section 16, except for the following instance: On May 15, 2020, the Company withheld shares16. Security Ownership of common stock from certain executives to satisfy tax withholding obligations in connection with the vesting of restricted stock units (RSUs). The transactions were not reported due to a clerical error. The names of the executives, date of the corrective Form 4sCertain Beneficial Owners, Directors, and number of shares of common stock withheld, respectively, are: John Soriano, August 12, 2020, 994 shares; S. Nicole Schaeffer, August 13, 2020, 1,126 shares; Christine Pellizzari, November 5, 2020, 1,575 shares; William H. Lewis, November 6, 2020, 6,361 shares; and Roger Adsett, January 6, 2021, 1,690 shares.Management SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following tables set forth information about the beneficial ownership of our Common Stock as of the Record Date (except as otherwise noted), by:
| ● | each person, or group of persons, who beneficially owns more than five percent (5%) of our Common Stock, based on reports filed with the SEC pursuant to Section 13(d) of the Exchange Act; |
| ● | each of our directors and director nominees; |
| ● | all directors and executive officers as a group. |
34INSMED PROXY STATEMENT each person, or group of persons, who beneficially owns more than five percent (5%) of our Common Stock, based on reports filed with the SEC pursuant to Section 13(d) of the Exchange Act;
each of our directors and director nominees;
each of our named executive officers; and
all directors and executive officers as a group.
Beneficial ownership and percentage ownership are determined in accordance with Section 13 of the Exchange Act and related rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within 60 days of the Record Date and RSUsrestricted stock units (“RSUs”) that may vest within 60 days of the Record Date are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following tables or pursuant to applicable community property laws, to our knowledge each shareholder named in the tables has sole voting and investment power with respect to the shares set forth opposite such shareholder’s name. As of the Record Date, there were 103,270,236136,428,466 shares of Common Stock outstanding. | SHARES BENEFICIALLY OWNED1 | | NAME AND ADDRESS | NUMBER | PERCENTAGE | | Greater Than Five Percent (5%) Shareholders | | | The Vanguard Group2
100 Vanguard Blvd., Malvern, PA 19355 | 13,040,831 | 9.6% | BlackRock, Inc.3
55 East 52nd Street, New York, NY 10055 | 11,113,787 | 8.1% | T. Rowe Price Associates, Inc.4
100 E. Pratt Street, Baltimore, Maryland 21202 | 9,977,911 | 7.3% | T. Rowe Price Investment Management, Inc.5
100 E. Pratt Street, Baltimore, Maryland 21202 | 8,374,675 | 6.1% | State Street Corporation6
One Lincoln Street, Boston, MA 02111 | 6,886,687 | 5.0% |
| | | Shares Beneficially
Owned(1) | | Name and Address | | Number | | Percentage | | Greater Than Five Percent (5%) Shareholders | | | | | | | | FMR LLC(2) | | | 12,088,544 | | 11.7 | % | | 245 Summer Street | | | | | | | | Boston, Massachusetts 02210 | | | | | | | | T. Rowe Price Associates, Inc.(3) | | | 10,372,426 | | 10.0 | % | | 100 E. Pratt Street | | | | | | | | Baltimore, Maryland 21202 | | | | | | | | The Vanguard Group(4) | | | 9,363,127 | | 9.1 | % | | 100 Vanguard Blvd. | | | | | | | | Malvern, PA 19355 | | | | | | | | BlackRock, Inc.(5) | | | 8,241,967 | | 8.0 | % | | 55 East 52nd Street | | | | | | | | New York, NY 10055 | | | | | | | | The Palo Alto Investors(6) | | | 6,105,980 | | 5.9 | % | | 470 University Avenue | | | | | | | | Palo Alto, CA 94301 | | | | | | | | Janus Henderson Group plc(7) | | | 5,822,413 | | 5.6 | % | | 201 Bishopsgate EC2M 3AE | | | | | | | | United Kingdom | | | | | | |
| (1)1. | All information in this table, including the footnotes thereto, is derived from third-party filings made with the SEC, as described in the footnotes. We have not independently verified this information. |
| (2)2. | AsBased solely on a Schedule 13G/A filed with the SEC on February 9, 2023, as of December 31, 2020, FMR LLC (FMR)2022, The Vanguard Group reported an aggregate beneficial ownership of 12,088,54413,040,831 shares of our Common Stock, with shared voting power over 231,734 shares, sole dispositive power over 12,673,172 shares and shared dispositive power over 367,659 shares.
|
| 3. | Based solely on a Schedule 13G/A filed with the SEC on February 3, 2023, as of December 31, 2022, BlackRock, Inc. reported an aggregate beneficial ownership of 11,113,787 shares of our Common Stock, with sole voting power over 397,29710,963,344 shares and sole dispositive power over 12,088,544 shares.Members11,113,787 shares, including shares held by a number of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR, representing 49% of the voting power of FMR. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940 (Investment Company Act), to form a controlling group with respect to FMR.
Neither FMR nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act advised by Fidelity Management & Research Company, a wholly owned subsidiary of FMR, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees.
its subsidiaries. |
| (3)4. | AsBased solely on a Schedule 13G/A filed with the SEC on February 14, 2023, as of December 31, 2020,2022, T. Rowe Price Associates, Inc. (Price Associates) reported an aggregate beneficial ownership of 10,372,4269,977,911 shares of our Common Stock, with sole voting power over 2,151,339 of the1,950,951 shares and sole dispositive power over the 10,372,4269,977,911 shares. For the purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is the beneficial owner of such securities. |
| (4)5. | AsBased solely on a Schedule 13G filed with the SEC on February 14, 2023, as of December 31, 2020, The Vanguard Group and its affiliates named in the Schedule 13G/A2022, T. Rowe Price Investment Management, Inc. reported an aggregate beneficial ownership of 9,363,1278,374,675 shares of our Common Stock, with sole voting power over 02,598,627 shares shared voting power over 234,946 shares,and sole dispositive power over 9,046,541 shares and shared dispositive power over 316,5868,374,675 shares. The subsidiaries listed in Appendix A of the Schedule 13G/A filing each beneficially own 5% or greater of the outstanding shares reported therein. |
| (5)6. | AsBased solely on a Schedule 13G filed with the SEC on February 3, 2023, as of December 31, 2020, BlackRock, Inc.2022, State Street Corporation reported an aggregate beneficial ownership of 8,241,967 shares of our Common Stock with sole dispositive power over 8,241,967 shares and sole voting power over 8,103,929 shares, including shares held by a number of its subsidiaries. |
| (6) | As of December 31, 2020, Palo Alto Investors LP (Palo Alto), PAI LLC, Dr. Patrick Lee and Dr. Anthony Joonkyoo Yun (together, the Palo Alto Investors) reported an aggregate beneficial ownership of 6,105,9806,886,687 shares of our Common Stock, with shared voting power over 6,602,948 shares and shared dispositive power over 6,105,980 shares and shared voting power over 6,105,9806,886,687 shares. The Palo Alto Investors filed the Schedule 13G/A jointly, but not as members of a group, and each of them expressly disclaims membership in a group. Each filer disclaims beneficial ownership of our Common Stock except to the extent of that filer’s pecuniary interest therein. |
Palo Alto is a registered investment adviser and investment adviser35INSMED PROXY STATEMENT
| SHARES BENEFICIALLY OWNED | | NAME | NUMBER | PERCENTAGE | | Directors and Executive Officers | | | | Alfred F. Altomari1 | 43,141 | * | | Elizabeth M. Anderson1 | 42,317 | * | | David R. Brennan1 | 95,521 | * | | Clarissa Desjardins, M.D.2 | 35,595 | * | | Leo Lee1 | 98,265 | * | | David W.J. McGirr1 | 72,561 | * | | Carol A. Schafer3 | 31,905 | * | | Melvin Sharoky, M.D.4 | 309,266 | * | | William H. Lewis5 | 2,604,150 | 1.9% | | Roger Adsett6 | 916,156 | * | | Sara Bonstein7 | 257,498 | * | | Martina Flammer, M.D.8 | 333,112 | * | | Drayton Wise9 | 324,462 | * | All current directors and executive
officers as a group (15 persons) | 6,076,590 | 4.3% |
*Denotes ownership of investment limited partnerships, and isless than 1% of the investment adviser to other investment funds. PAI LLC is the general partner of investment limited partnerships. Palo Alto’s clients have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the saleoutstanding shares of our Common Stock. | (7)1. | As of December 31, 2020, Janus Henderson Group plc (Janus Henderson) reported an aggregate beneficial ownership of 5,822,413 shares of our Common Stock, with shared voting and dispositive power over 5,822,413 shares. Janus Henderson has an indirect 97% ownership stake in Intech Investment Management LLC and a 100% ownership stake in Janus Capital Management LLC (JCM), Perkins Investment Management LLC, Henderson Global Investors Limited and Janus Henderson Investors Australia Institutional Funds Management Limited (each an Asset Manager and collectively the Asset Managers). Due to the above ownership structure, holdings for the Asset Managers are aggregated for purposes of Schedule 13G filings. Each Asset Manager is an investment adviser registered or authorized in its relevant jurisdiction and each furnishing investment advice to various fund, individual and/or institutional clients (collectively referred to as Managed Portfolios).
As a result of its role as investment adviser or sub-adviser to the Managed Portfolios, JCM may be deemed to be the beneficial owner of 5,822,413 shares or 5.6% of the shares outstanding of our Common Stock held by such Managed Portfolios. However, JCM does not have the right to receive any dividends from, or the proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights.
|
| | | Shares Beneficially
Owned | | Name | | Number | | Percentage | | Directors and Executive Officers | | | | | | | | Alfred F. Altomari(1) | | | 20,938 | | * | | | Elizabeth M. Anderson(1) | | | 20,114 | | * | | | David R. Brennan(1) | | | 63,318 | | * | | | Clarissa Desjardins, M.D.(2) | | | 13,392 | | * | | | Steinar J. Engelsen, M.D.(1) | | | 299,009 | | * | | | Leo Lee(1) | | | 31,062 | | * | | | David W.J. McGirr(1) | | | 50,358 | | * | | | Carol Schafer(3) | | | 9,702 | | * | | | Melvin Sharoky, M.D.(4) | | | 242,932 | | * | | | William H. Lewis(5) | | | 2,436,403 | | 2.36% | | | Roger Adsett(6) | | | 557,199 | | * | | | Sara Bonstein(7) | | | 40,815 | | * | | | Martina Flammer, M.D.(8) | | | 72,474 | | * | | | Christine Pellizzari(9) | | | 559,091 | | * | | | S. Nicole Schaeffer(10) | | | 510,781 | | * | | | John Soriano(11) | | | 29,773 | | * | | | John Goll(12) | | | 58,814 | | * | | | All current directors and executive officers as a group (17 persons)(13) | | | 5,016,175 | | 4.86% | |
| * | Denotes ownership of less than 1% of the outstanding shares of our Common Stock. |
| (1) | Includes 8,09714,645 RSUs that will vest within 60 days of the Record Date. |
| (2)2. | Includes 8,09714,645 RSUs that will vest within 60 days of the Record Date and 5,29520,950 shares of our Common Stock that are held by 3669661 Canada Inc., a holding company wholly owned by Dr. Desjardins. |
| (3)3. | Includes 9,70214,645 RSUs that will vest within 60 days of the Record Date and that are held by the Carol A. Schafer Revocable Trust. |
| (4)4. | Includes (a) 8,09714,645 RSUs that will vest within 60 days of the Record Date, (b) 7,714 shares of our Common Stock held by the The Sharoky Family Foundation, Inc. and, (c) 5,90015,900 shares of our Common Stock held by the Baby Gator LLC.LLC, (d) 1,847 shares of our Common Stock held by Mr. Sharoky’s spouse, (e) 1,184 shares of our Common Stock held by Melvin Sharoky C/F Sophie C. Wink UTMA/FL and (f) 1,600 shares of our Common Stock held by Melvin Sharoky C/F Nolan M. Wink UTMA/FL. |
36INSMED PROXY STATEMENT | (5)5. | Includes (a) 1,222,0911,521,179 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 12,93518,985 RSUs that will vest within 60 days of the Record Date, (b) 497,830281,030 shares of our Common Stock that are subject to stock options held by the Will Lewis Family Legacy TrustARTICLE 4 TRUST UNDER WILLIAM LEWIS FAMILY LEGACY TRUST U/A 11/2/2020 and (c) 536,874 shares of our Common Stock that are subject to stock options held by the Katie Procter Dynasty Trust.ARTICLE 4 TRUST UNDER KATIE PROCTER DYNASTY TRUST. |
| (6)6. | Includes 458,647780,669 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 5,39010,408 RSUs that will vest within 60 days of the Record Date. |
| (7)7. | Includes 31,632 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date. |
| (8) | Includes 51,878 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date. |
| (9) | Includes 418,370191,467 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 6,4688,577 RSUs that will vest within 60 days of the Record Date. |
| (10)8. | Includes 467,631260,349 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 3,6659,035 RSUs that will vest within 60 days of the Record Date. |
| (11)9. | Includes 3,234 RSUs that will vest within 60 days of the Record Date. |
| (12) | Includes 45,715247,190 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 1,0781,927 RSUs that will vest within 60 days of the Record Date. |
| (13) | Includes 3,730,668 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 107,248 RSUs that will vest within 60 days of the Record Date. |
37INSMED PROXY STATEMENT PROPOSAL NO.Proposal No. 2 ADVISORY VOTE ON THE 20202022 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS Information Regarding the Advisory Vote on the 20202022 Compensation of our Named Executive Officers Pursuant to Section 14A of the Exchange Act, we are holding a shareholder advisory vote on the compensation of our named executive officers, as described in the “Compensation Discussion and Analysis” section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure set forth in this Proxy Statement. At the 2017 Annual Meeting, shareholders voted to hold advisory votes on an annual basis, and the Board subsequently adopted a resolution providing for such an annual vote. At the Annual Meeting, shareholders will be asked to approve the following resolution: RESOLVED, that the shareholders of Insmed Incorporated approve, on an advisory basis, the compensation of the Company’s named executive officers, disclosed pursuant to Item 402 of Regulation S-K in the Company’s Proxy Statement.Statement for the 2023 Annual Meeting. The Compensation Committee oversees and administers our executive compensation program, including the evaluation and approval of compensation plans, policies and programs offered to our named executive officers. Our executive compensation program is designed to meet the following objectives: align management interests with the interests of our shareholders; emphasize the use of “at-risk” and performance-based compensation to motivate executives to advance our interests; and provide executive compensation packages that are competitive in order to attract and retain executives whose skills are critical to the current and long-term success of the Company. Please read the “Compensation Discussion and Analysis” section starting on page 2839 of this Proxy Statement for a detailed discussion about our executive compensation programs, including information about the 20202022 compensation of our named executive officers. Vote Required for Approval of this Proposal The advisory vote on the compensation of our named executive officers will be approved by the affirmative vote of the majority of votes properly cast on this proposal at the Annual Meeting. Abstentions or broker non-votes will not have an effect on the outcome of this proposal. While this vote is being conducted on an advisory basis, and is therefore not binding on us, the vote will be carefully considered by the Compensation Committee and our Board. Both our Compensation Committee and our Board value the opinions of our shareholders and, to the extent there is any meaningful vote against the 20202022 compensation of our named executive officers, we will consider our shareholders’ concerns and evaluate what actions, if any, may be appropriate to address those concerns. The outcome of the vote, however, will not be construed as overruling any prior decision by the Company, the Compensation Committee or the Board. Recommendation THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE 20202022 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. 38INSMED PROXY STATEMENT COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis (the CD&A)“CD&A”) explains our compensation philosophy, policies and decisions for 20202022 for the following executives, whom we refer to in this CD&A and in the following tables as our named executive officers: | 1. | William H. Lewis,, President and Chief Executive Officer, responsible for developing, in participation with the Board, our corporate mission and objectives and providing direction and leadership to ensure the execution of our corporate strategy and achievement of our objectives. Mr. Lewis was appointed as our Chair in November 2018. |
| 2. | Sara Bonstein,, Chief Financial Officer, responsible for managing all financial activities, including internal and external reporting, financial planning and analysis, treasury, accounting, tax, global compliance and investor relations. |
| 3. | Roger Adsett,, Chief Operating Officer, responsible for oversight of overall business operations, including global marketing, sales and commercial activities, business development, program management, technical operations and supply chain activities. |
| 4. | Martina Flammer, M.D.,Chief Medical Officer, responsible for leading global clinical development, clinical operations, regulatory affairs, drug safety and pharmacovigilance, and medical affairs. |
| 5. | Christine PellizzariDrayton Wise, , Chief LegalCommercial Officer, responsible for oversight of all corporateglobal marketing, sales and litigation-related legal matters, government affairs and for providing ongoing legal support with respect to regulatory strategy, financing opportunities, business development initiatives, and intellectual property matters. |
| 6. | John Goll, Chief Accounting Officer, served as our principal financial officer from July 2019 to January 2020.commercial activities. |
Executive Summary of Our 20202022 Business and Strategic Achievements We are a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. Our first commercial product, ARIKAYCE, is approved in the United StatesUS as ARIKAYCEARIKAYCE® (amikacin liposome inhalation suspension) and, in Europe as ARIKAYCE®ARIKAYCE Liposomal 590 mg Nebuliser Dispersion.Dispersion, and in Japan as ARIKAYCE inhalation 590mg (amikacin sulfate inhalation drug product). ARIKAYCE received accelerated approval in the US in September 2018 for the treatment of Mycobacterium avium complex (MAC)(“MAC”) lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options in a refractory setting. In October 2020, the European Commission (EC)(“EC”) approved ARIKAYCE for the treatment of nontuberculous mycobacterial (NTM)(“NTM”) lung infections caused by MAC in adults with limited treatment options who do not have cystic fibrosis.fibrosis (“CF”). In March 2021, Japan'sJapan’s Ministry of Health, Labour and Welfare (MHLW)(“MHLW”) approved ARIKAYCE (amikacin liposome inhalation suspension) for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrug regimen. NTM lung disease caused by MAC (which we refer to as MAC lung disease) is a rare and often chronic infection that can cause irreversible lung damage and can be fatal. Our clinical-stage pipeline includes brensocatib and treprostinil palmitil inhalation powder (TPIP). Brensocatib is a novel oral, reversible inhibitor of dipeptidyl peptidase 1, which we are developing for the treatment of patients with bronchiectasis and other neutrophil-mediated diseases. TPIP is an inhaled formulation of the treprostinil prodrug treprostinil palmitil which may offer a differentiated product profile for pulmonary arterial hypertension (PAH) and other rare pulmonary disorders.
In 2020,2022, our named executive officers played critical roles in the furtherance of our mission. We continued to focus on the execution and successful US commercialization of ARIKAYCE and potential label expansion.subsequently have observed strong growth in US sales as compared to 2021. The Company also continued its efforts to advance ARIKAYCE globally and has achieved a 30% year over year increase from 2021 in global ARIKAYCE revenues. In October 2020,Europe, the US Food and Drug Administration (FDA) approvedCompany recently secured a supplemental new drug applicationfavorable reimbursement approval for ARIKAYCE adding important efficacy data regardingin England. ARIKAYCE is now commercially available in Germany, France, the durabilityNetherlands, the United Kingdom, Italy, and sustainability of culture conversionBelgium. In 2022, we also continued to advance the ARIKAYCE label. In December 2020, we commenced the post-approvalpost-marketing confirmatory front-linefrontline clinical trial program forof ARIKAYCE in patients with MACNTM lung disease.disease caused by MAC. The front-line clinical trial program consists of the ARISE trial, an interventional study of ARIKAYCE designed to validate cross-sectional and longitudinal characteristics ofa patient-reported outcome (PRO)(“PRO”) tool in MAC lung disease, and thefully enrolled in 2022. The ENCORE trial is designed to establish the clinical benefits and evaluate the safety of ARIKAYCE in patients with newly diagnosed MAC lung disease using the PRO toolstool validated in the ARISE trial. The ENCORE study is currently enrolling patients and is expected to complete enrollment by the end of 2023. 39INSMED PROXY STATEMENT In 2020, the Company also continued its efforts to advance ARIKAYCE globally. In March 2020, we submitted a new drug application (JNDA) to Japan's Ministry of Health, Labour and Welfare (MHLW) for the treatment of patients with MAC lung disease who did not sufficiently respond to prior treatment. In June 2020, a Japanese Medical Device Notification (JMDN) was submitted to the MHLW for Lamira, the designated device for administration of ARIKAYCE. The JMDN was accepted and Lamira is authorized for use in Japan. In addition, in October 2020, the EC approved ARIKAYCE for the treatment of NTM lung infections caused by MAC in adults with limited treatment options who do not have cystic fibrosis. In the fourth quarter of 2020, we launched ARIKAYCE in Germany. In February 2021, we launched ARIKAYCE in the Netherlands.
We also have a robust pipeline which includes the following clinical-stage product candidates: Pipeline StagePIPELINE STAGE | PRODUCT CANDIDATE | Product Candidate | | Potential Rare Disease Area(s)POTENTIAL DISEASE AREA(S) | Clinical Stage
(Phase 3) | brensocatib | Brensocatib | | Therapeutic potential in bronchiectasis and other neutrophil-mediated diseases | Clinical Stage
(Phase 2) | TPIP | TPIP | | Formulation that may offer a differentiated product profile for patients with PAHpulmonary arterial hypertension (“PAH”) and other rare pulmonary disordershypertension associated with interstitial lung disease (“PH-ILD”) | Early Stage
(Preclinical) | Various
preclinical
compounds | Various pre-clinical compounds | | Opportunities related to multiple rare diseases of unmet medical needincluding NTM lung disease |
In June 2020,
Throughout 2022, we announced full results from ourcontinued to advance the Phase 2 WILLOW3 ASPEN study, evaluatinga global, randomized, double-blind, placebo-controlled trial to assess the efficacy, safety, and pharmacokineticstolerability of brensocatib administered once daily in adultspatients with non-cystic fibrosis bronchiectasis (NCFBE). Finalbronchiectasis. The ASPEN study completed enrollment in adult patients as of March 31, 2023 and enrolled over 1,700 patients (over 560 in each arm) at approximately 460 sites in 40 countries. We received the Phase 2 results from the WILLOWCompany’s Phase 2 pharmacokinetics/pharmacodynamics multiple-dose study were published online in the New England Journal of MedicineCF in September 2020. In June 2020, the FDA granted breakthrough therapy designation for brensocatib for the treatment of adult2022 and shared those results in early 2023. We currently have two parallel Phase 2 studies ongoing: a Phase 2 study in patients with bronchiectasis for reducing exacerbations. In December 2020, we commencedPH-ILD over a 16-week treatment period to assess safety and tolerability and a Phase 3 trial (the ASPEN trial) through which2b study in PAH patients over a 16-week treatment period to evaluate the effect of TPIP on pulmonary vascular resistance and six-minute walk distance. In 2022, we will seekcontinued to confirmadvance the positive results seenPhase 2 development work in the WILLOW study.both PH-ILD and PAH. In September 2020, we initiated dosing of the first subjects in a Phase 1 healthy volunteer trial of TPIP in the US to assess the pharmacokinetics and tolerability profile of TPIP. In February 2021, we announced topline results from the Phase 1 study of TPIP in healthy volunteers. Data from the study demonstrated that TPIP was generally well tolerated, with a pharmacokinetic profile that supports continued development with once-daily dosing.
These strategic advancements were made despite the operational challenges presented by COVID-19. Our named executive officers moved swiftly to implement business continuity plans that prioritized the health and safetyearly-stage research efforts are comprised of our employees while ensuring we could continue to progress our work and support our customers and patients. Where possible, employees were provided the ability to work virtually. Our workplaces and laboratory facilities were evaluated and maintained for social distancing and sanitation on a daily basis in line with state and the guidelines of the Centers for Disease Control and Prevention.
To complement ourpreclinical programs, advanced through internal research and development and augmented through business development activities. In March 2021, we actively evaluateacquired a proprietary protein deimmunization platform, called Deimmunized by Design, focused on the reengineering of therapeutic proteins to evade immune recognition and reaction. In August 2021, we acquired Motus Biosciences, Inc. and AlgaeneX, Inc. preclinical stage companies engaged in licensingthe research, development and acquisition opportunitiesmanufacturing of gene therapies for rare genetic disorders. In January 2023, we acquired Vertuis Bio, Inc., a broad rangeprivately held, preclinical stage company engaged in the research and development of gene therapies for rare genetic disorders. We believe that animal studies may demonstrate the viability of these potential medicines to address serious unmet medical needs in various therapeutic areas. Our initial therapeutic areas of focus include musculoskeletal, CNS, ocular, and rheumatologic diseases. We anticipate submitting our first IND filing in the first half of 2023. Preclinical data in musculoskeletal and CNS indications are also expected in the first half of 2023 and clinical data from the first trial in a musculoskeletal disease are anticipated in the first half of 2024.
More broadly from a strategic and operational standpoint, in 20202022 we expanded our leadership team with talented executives in key financial, medical, commercial, sales, and clinical roles. 40INSMED PROXY STATEMENT Compensation Philosophy and Principles We operate in a competitive, rapidly changing, and heavily-regulatedheavily regulated industry. The long-term success of our business requires us to be resourceful, adaptable, and innovative, and the skills, talent, and dedication of our executive officers are critical components to this success. Therefore, our compensation program for our executive officers, including our named executive officers, is designed to attract, retain, and incentivize the best possible talent. The Company’s compensation program for named executive officers is structured to implement the following guiding principles: AlignmentAlign Executives’ Interests with Shareholder Interests.those of our Shareholders.
A significant portion of our named executive officers’ compensation is in the form of equity awards based on our belief that equity awards align management’s interests with the creation of futuresustainable long-term shareholder value. Executive officers are also subject to share ownership guidelines which require them to maintain a minimum interest in Insmed stock.
Use of “At-Risk” Compensation to Incentivize Executives. A substantial portion of our named executive officers’ compensation is based on “at risk,” or variable, compensation, such as annual cash incentives and stock options. We believe this mix of compensation best aligns the interests of our named executive officers with those of our shareholders over time and contributes to the achievement of short-term goals and the advancement of our long-term strategy through long-term goals. In 2020,2022, approximately 89%90% of our CEO’s annual target direct compensation was “at risk,” and 82%86% of our other named executive officers’ annual target direct compensation was “at risk”.risk.” Annual target direct compensation as shown below consists of base salary, the target annual incentive award and the grant date fair value of RSUs and stock options granted in 2022. The charts below reflecting compensation to our non-CEO named executive officerspay mix excludes PSUs granted in 2022 (discussed further in this CD&A) given they do not include compensation paid to Mr. Goll, who served as our principal financial officer until January 31, 2020.form part of the annual equity award mix. CEO TARGET DIRECT COMPENSATION 2020 CEO Compensation | Variable Performance-Based vs.
Guaranteed CEO Compensation for 202090% at-risk pay | | | | | |  10% Salary & Other Comp. |  7% AI | 83% Equity | | | | | | | | 100% Cash | 75% Stock Options | 25% RSUs | Annual incentive (AI) based on achievement of corporate performance | Options and RSUs vest over a four-year period | |
41INSMED PROXY STATEMENT OTHER NEO TARGET DIRECT COMPENSATION (AVERAGE) | 86% at-risk pay | | | | | | 14% Salary & Other Comp. | 5% AI | 81% Equity | | | | | | | | 100% Cash | 75% Stock Options | 25% RSUs | Annual incentive (AI) based on achievement of corporate and individual
performance | Options and RSUs vest over a four-year period | |
2020 Other NEO Compensation | Variable Performance-Based vs.
Guaranteed
Other NEO Compensation for 2020 | | |  |  |
Pay for Performance. We reward the named executive officers for attaining established Company and individual goals. The attainment of these goals requires the named executive officer to dedicate his or her time, effort, skills and business experience to the long-term success of the Company and the maximization of shareholder value. A significant portion of the named executive officers’ compensation is based both on Company and individual performance, and theour executive compensation program is designed to reward both short-term and long-term performance. Short-term performance of our named executive officers is principally rewarded through annual cash incentives that reflect the achievement of corporate goals and, with respect to named executive officers other than our President and CEO, individual goals. Long-term performance of our named executive officers is largely rewarded through stock option and RSU awards that are eligible to vest based on continued service and have a value tied to share price appreciation. In 2022, to align a select group of senior leaders, that includes our NEOs, and retain them through a critical period for the company in relation to the brensocatib clinical trials, an incremental award of PSUs was also made. The vesting of these awards is subject to robust goals based on the achievement of key milestones within a defined window, and a total shareholder return (“TSR”) assessment relative to the Nasdaq Biotechnology Index (the “Nasdaq Biotech Index”). If the milestone conditions are not achieved, if TSR is negative or below the 25th percentile relative to the Nasdaq Biotech Index constituents, or if an executive does not remain in continuous employment for a defined period, no PSUs will vest. This further aligns the compensation of our executives with the performance of Insmed, and our success in unlocking long-term value for our shareholders in a timely manner. If the milestones are not achieved, none of the PSUs will vest. Further details on the PSUs can be found in “2022 Performance-Based Restricted Stock Units”. Pay competitivelyCompetitively to attractAttract and retain skilledRetain Skilled Executive Officers. Our executive officers. The compensation program is designed to allow the Company to attract and retain individuals whose skills are critical to the current and long-term success of the Company. Because competition for top talent is intense in our industry, institutional knowledge is of material value, and loss of critical talent can be highly disruptive, retention is a key objective of theour executive compensation program. The compensation program is designed to appropriately compensate our executive officers for the success of the Company from a competitive standpoint, so that they remain with the Company and continue to contribute to the Company’s long-term success. We seek to achieve this objective by setting target compensation levels appropriately relative to market, granting equity in a combination of stock options and RSU awards that vestvests based on continued service.service, and, in respect of the PSU awards, the additional achievement of performance milestones. Stock options further enhance retention given their alignment with long-term stock price performance, and provisions that reduce exercise periods to no longer than three months on separation. 42INSMED PROXY STATEMENT Say on Pay. At our 20202022 Annual Meeting, of Shareholders, we held an advisory vote on the compensation of our named executive officers. Over 97%Approximately 95% of the shares voted were voted in favor of our say-on-pay proposal. Additionally, the Company has discussed executive compensation matters with certain of our investors. The Compensation Committee considered these voting results and discussions and believes they affirm the Company’s compensation philosophy and the principles discussed above. Corporate Governance Perspectives on our Executive Compensation Program We believe the following aspects of our executive compensation program reflect our commitment to strong corporate governance: Our Compensation Committee has overall responsibility for executive compensation plans, policies, and programs, although our independent Board members approve recommendations made by our Compensation Committee regarding the compensation of our President and CEO; Performance metrics that govern incentive compensation are established by our Compensation Committee at the start of each fiscal year and are reviewed by our Compensation Committee at the end of the year; Our executive compensation program, in the aggregate, rewards performance and aims to drive the Company’s strategic objectives; Payouts made pursuant to individual and corporate multiplier ranges are capped at a predetermined maximum amount, irrespective of performance that exceeds objectives; Our Compensation Committee has the ability to exercise its discretion to reduce or eliminate incentive compensation payouts; We have several risk mitigation policies, detailed below, including an annual compensation risk review that includes sales plans below the executive level, share ownership guidelines, in place for our Presidenta compensation recoupment policy, and CEO, pursuant to which he must hold shares of Common Stock, vested in-the-money stock optionsan insider trading policy with anti- hedging and unvested RSUs having an aggregate value equal to at least three times his base salary within five years of the adoption of the guidelines or date of hire, whichever is later. As of the Record Date, Mr. Lewis satisfied these guidelines; We also have share ownership guidelines in place for certain of our other senior executives, pursuant to which they must hold shares of Common Stock, vested in-the-money stock options and unvested RSUs having an aggregate value equal to his or her base salary within five years of the adoption of the guidelines or date of hire, whichever is later. As of the Record Date, Mr. Adsett, Ms. Pellizzari and Dr. Flammer satisfied these guidelines. Mr. Goll is not subject to our share ownership guidelines;-pledging provisions;
Our Compensation Committee regularly meets in executive sessionsessions without members of management present; Our independent compensation consultant reports directly to the Compensation Committee and meets regularly with the Compensation Committee without members of management present; The employment agreements for our named executive officers do not provide for tax “gross-ups” or severance payments on a change in control absent termination of the named executive officer’s employment; and Our executive compensation program seeks to balance short-term pay opportunities through annual cash incentives with long-term incentive opportunities through equity awards and employs both fixed compensation components (base salary) and variable compensation components (annual cash incentives and equity awards); and. 43INSMED PROXY STATEMENT Risk Mitigation Policies and Practices Insmed recognizes the importance of a robust risk management environment, and our compensation programs are an important part of this. Annual Compensation Risk Review. Each year the Compensation Committee receives an update on the global incentive compensation programs and executive compensation program to identify potential areas of risk and actions taken to mitigate that risk. These reviews seek to determine whether each risk is appropriate, and that sufficient controls are in place from a governance standpoint. The 2022 update confirmed that no inappropriate risks were identified. The Compensation Committee does not believe that our executive compensation program is reasonably likely to have a material adverse effect on the Company based on our compensation philosophy and principles and the governance principles described above. Stock Ownership Guidelines. Senior executives, including all of our named executive officers, are subject to stock ownership guidelines which require them to maintain a minimum interest in Insmed Common Stock. These guidelines further align the interests of our executives with those of our shareholders, encourage them to think like long-term owners and stewards of the company, and discourage decisions focused only on the short-term. | Minimum ownership requirement | • President & CEO: 300% of base salary • Other named executive officers: 100% of base salary | | Equity interests considering in assessing compliance | • Common Stock held by the executive (directly or indirectly) • Stock options that are fully vested and in-the-money • Restricted stock units that are unvested | | Time horizon for compliance | • Five years from date of appointment as a named executive officer |
Compliance with the guidelines is assessed annually, and to the extent an executive is not meeting their requirement or showing sufficient progress within the defined window, the Compensation Committee may take action. As of the Record Date, all named executive officers had satisfied their respective requirements. Compensation Recoupment Policy. Our recoupment policy allows our Board to recover cash incentive or equity-based compensation paid to an executive officer, including pursuant to the Insmed Incorporated 2019 Incentive Plan (the “2019 Incentive Plan”), in the three-year period preceding any year in which we are required to restate our financial results filed with the SEC as a result of the executive officer’s intentional misconduct. Insider Trading Policy. Our insider trading policy prohibits our employees, including officers and directors, from (i) engaging in hedging transactions (whether through the use of financial instruments such as prepaid variable forwards, equity swaps, collars, exchange funds, or otherwise) involving the Company’s securities and (ii) pledging the Company’s securities as collateral for loans of any type without the prior approval of the Chief Financial Officer or General Counsel. Executive officers seeking to pledge the Company’s securities as collateral must receive approval from the Compensation Committee. No such pledges were approved during 2020. In addition, the Compensation Committee annually reviews a compensation risk assessment conducted by management. The Compensation Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on the Company based on our compensation philosophy and principles and the governance principles described above.44INSMED PROXY STATEMENT
Executive Compensation Determination Process Role of the Compensation Committee and the Board in Making Compensation Decisions. Our Compensation Committee has been delegated the authority to make determinations regarding all elements of compensation for our executive officers, except for Mr. Lewis, our President and CEO. Our Compensation Committee recommends to our independent Board members the individual elements of total compensation for Mr. Lewis for approval. The independent Board members review this recommendation and determine the compensation for Mr. Lewis. As discussed in further detail below, in assessing executive compensation, our Compensation Committee engages an outside independent compensation consultant to assess the competitiveness of our programs and periodically conducts a peer group review. Role of Management. The Compensation Committee, in making executive compensation decisions, may solicit input from management as appropriate with respect to individual and Company performance and results. The Compensation Committee receives recommendations and evaluations from the President and CEO with respect to the compensation and performance of our named executive officers (aside from his own compensation and performance) and Company performance. The Compensation Committee considered the President and CEO’s assessment along with the input of its independent compensation consultant when making 20202022 compensation decisions for our named executive officers.officers (other than our President and CEO). Role of the Compensation Consultant. The Compensation Committee is authorized to select and retain its own independent compensation consultant and has routinely sought the advice of an independent compensation consultant regarding our executive compensation practices. During 2020, Willis Towers Watson2022, WTW, in addition to attending meetings, provided a comprehensive review of long termsupport on matters including long-term incentive guidelines for all employee levels, an unvested equity analysis to assess the retention power of our compensation program for senior executives, and data and recommendations ondesign, executive officer compensation.and director compensation, investor engagement, and regulatory updates. The Compensation Committee evaluates the independence of its compensation consultant on an annual basis and has concluded that Willis Towers WatsonWTW was independent during its tenure in 2020.2022. Shareholder Feedback. At our 2022 Annual Meeting, we held an advisory vote on the compensation of our named executive officers. Of the shares voted, approximately 95% were voted in favor of our say-on-pay proposal which indicates continued strong support for the design and operation of our executive compensation program. Additionally, as part of ongoing engagement between the Company and investors, we provide a forum for direct feedback on executive compensation matters. The Compensation Committee considers the say-on-pay outcome, proxy advisor views, and any feedback received from investors annually when reviewing the compensation program. Taking into account the sustained high voting outcome and feedback received, the Compensation Committee believes this reaffirms the Company’s compensation philosophy, design, and operation as disclosed in this Compensation Discussion and Analysis. 45INSMED PROXY STATEMENT Compensation Evaluation Processes and Criteria. Given the high demand for the experienced and well-qualified executives we seek to employ, the Compensation Committee reviews data and information from a variety of sources such as outside surveys of compensation and benefits for executive officers in the biotechnology industry, as well as public information regarding executive compensation at peer biotechnology companies. The Compensation Committee also draws upon the personal knowledge of its members with respect to executive compensation at comparable companies. In determining the amount and composition of compensation elements (cash and non-cash elements and short- and long-term elements) for our non-CEOeach named executive officers,officer other than the President and CEO, our Compensation Committee reviews the performance of each executive officer holistically. In setting compensation levels for our executivesuch officers for 2020,2022, our Compensation Committee considered many factors, including, but not limited to, the following factors: our achievement of certain product development, financial, strategic planning, and other goals; for each non-CEO named executive officer other than the President and CEO, such officer’s individual performance against pre-established goals, as discussed in more detail below; the scope and strategic impact of each executive officer’s responsibilities; our past business performance; our long-term goals and strategies; the experience of each executive officer; past compensation levels of each executive officer and of the executives as a group; internal equity and the relative levels of pay among executive officers; the amount of each element of compensation in the context of the executive officer’s total compensation and other benefits; for each executive officer other than the President and CEO, the evaluations and recommendations of our President and CEO; and the competitiveness of our compensation relative to selected peer group companies and other survey data, which are described below. Consideration of these factors is subjective. No relative weights or rankings are assigned to them except as otherwise discussed in this CD&A. For the President and CEO’s compensation, the Compensation Committee reviews and evaluates the performance of the President and CEO and recommends to the independent Board members the individual elements of his total compensation, considering,compensation. This takes into consideration, among other things, individual performance, experience, prior compensation levels, alignment of compensation outcomes and potential compensation with Company performance, retention concerns, our general performance objectives, as well asand the compensation practices of peer companies and the markets in which we compete for executive talent. The Board then must approve the President and CEO’s compensation. The President and CEO may not be present during voting or deliberations on his compensation. 46INSMED PROXY STATEMENT Selection of Peer Companies and Benchmarking. The Compensation Committee, with the support of its independent compensation consultant, conducts an annual review of the peer group used for benchmarking compensation levels. The peer group used to inform 2022 compensation was approved by the Compensation Committee in August 2021. In assessing potential peers, consideration is given to publicly traded biopharmaceutical companies that are similar to the Company in terms of the number of employees, market capitalization, revenue, research and stage of product development.development expense, pipeline profile, and headcount. There is a focus on maintaining stability in peers over time, while ensuring the group remains sufficiently robust and relevant. The only change to the2022 peer group for 2020 wasreflects the following changes from our 2021 peer group: (i) the removal of Loxo Oncology,Immunomedics, Inc. following itsthe completion of Gilead’s acquisition in 2020, and (ii) the addition of the companies that are marked by Eli Lilly.an asterisk below. The table below depicts our 2022 peer group: | Acadia Pharmaceuticals Inc. | Corcept Therapeutics Incorporated | Omeros Corporation | | Acceleron Pharma Inc. | Editas Medicine, Inc.* | PTC Therapeutics, Inc. | | Agios Pharmaceuticals, Inc. | Halozyme Therapeutics, Inc. | Sangamo Therapeutics, Inc. | | Amicus Therapeutics, Inc. | Heron Therapeutics, Inc. | Sarepta Therapeutics, Inc. | | bluebird bio, Inc.* | Intercept Pharmaceuticals, Inc. | Ultragenyx Pharmaceutical Inc. | | Clovis Oncology, Inc. | Nektar Therapeutics | |
The number of employees at the companies in our 20202022 peer group ranged from 136 to 893,1,201, with a median of 367483 employees, and these companies had market capitalizations that ranged from approximately $219$578 million to $7.04$9.8 billion, with a median of approximately $2.10$3.2 billion. Employee numbers were as of the most recently reported fiscal year-end prior to October 2019August 2021 and market capitalizations were the trailing twelve-month average as of OctoberJune 1, 2019, other than for Array BioPharma, Inc. which had been acquired by that point but retained in our peer group given its most recently filed Proxy Statement was still available.2021. The peer group was identified assuming an estimated 373521 Company employees, and an estimated market capitalization for the Company of approximately $1.53 billion. The table below depicts our 2020 peer group:$2.9 billion to $3.4 billion (reflecting spot and trailing twelve-month average references, respectively, as of June 1, 2021). Insmed was positioned at the 53rdpercentile on trailing twelve-month market capitalization and the 58thpercentile on headcount. Acadia Pharmaceuticals Inc. | Clovis Oncology, Inc. | Puma Biotechnology, Inc. | Acceleron Pharma Inc. | Corcept Therapeutics Incorporated | Sage Therapeutics, Inc. | Aerie Pharmaceuticals, Inc. | Halozyme Therapeutics, Inc. | Sangamo Therapeutics, Inc. | Agios Pharmaceuticals, Inc. | Heron Therapeutics, Inc. | Sarepta Therapeutics, Inc. | Amicus Therapeutics, Inc. | Immunomedics, Inc. | Spark Therapeutics, Inc. | Array BioPharma Inc. | Intercept Pharmaceuticals, Inc. | Ultragenyx Pharmaceutical Inc. |
The Compensation Committee concluded that this adjustment to the peer group was appropriate given the number of employees, market capitalization, stage of development, and merger-and-acquisition activity of the Company and historical and potential peer companies. Willis Towers WatsonWTW provided comparative data regarding base salaries, short-term cash compensation,incentives, and long-term equity incentives and short-term incentives tofor relevant executive officersofficer roles at companies in the 20202022 peer group. Using this compensation data and relevant survey data, the Compensation Committee established benchmarks for the purpose of evaluating compensation ranges for base salary, annual cash incentive targets, and long-term equity incentives for each of our named executive officers.
47INSMED PROXY STATEMENT Components of Compensation In summary, the compensation paid to our executive officers in 20202022 included the following components: ComponentCOMPONENT | Purpose of ComponentPURPOSE OF COMPONENT | | Base Salary | Provide our executive officers with a level of stability and certainty each year.year based on role, evolving responsibilities, experience, and competitive market positioning. | | Annual Cash Incentives | Motivate and reward executive officers for short termshort-term corporate performance and, other than our President and CEO, individual performance. | | Long-term Equity Incentives | Motivate and reward executive officers for long-term corporate performance. | |
Align the interests of management and shareholders, thereby enhancing shareholder value. | |
Attract, motivate, and retain talented employees. | | Health, Welfare, and Retirement Programs | Provide market competitive benefits to protect employees’ and their covered dependents’ health and welfare. Provide a program to foster retirement savings. | | Severance and Change in Control Benefits | Discourage turnover and mitigate the influence of a potential change in control on an executive officer’s decision-making due to concerns regarding job security. |
48INSMED PROXY STATEMENT The components of our compensation program and compensation decisions for 20202022 for each named executive officer are described in more detail below: Base SalarySalary. The Compensation Committee reviews and sets base salaries for executives, other than the President and CEO, on an annual basis during the first quarter of each year. The Board annually determines the base salary for our President and CEO based on the recommendation of our Compensation Committee. Our Board and Compensation Committee seek to establish and maintain base salaries for each position and level of responsibility that (i) are competitive with those of executive officers in our peer group and (ii) reflect individual performance contributions. Our Compensation Committee reviews variances between the salary levels for each of our executive officers and the executive officers of the companies included in our peer group and determines, in its discretion, individual salary adjustments after considering the factors described above, although no relative weights or rankings are assigned to these factors. In setting the base salary for our named executive officers other than our President and CEO, the Compensation Committee also considers the recommendations of our President and CEO. Our named executive officers received merit-based increases to their base salaries in January 2020,2022, as shown in the table below. | | | Base Salaries | | Name | | Annual Rate Approved
in 2019 | | Annual Rate Approved
in 2020 | | % Increase | | William H. Lewis | | $640,500 | | $659,720 | | 3.0% | | Sara Bonstein | | N/A | | $420,000 | | N/A | | Roger Adsett | | $500,000 | | $514,300 | | 3.0% | | Martina Flammer, M.D. | | $500,000 | | $500,000 | | 0.0% | | Christine Pellizzari | | $449,200 | | $476,150 | | 6.0% | | John Goll | | $335,000 | | $345,050 | | 3.0% |
| | BASE SALARIES | | | ANNUAL RATE | ANNUAL RATE | | | NAME | APPROVED | APPROVED | % INCREASE | | | IN 2021 | IN 2022 | | | William H. Lewis | $710,000 | $734,850 | 3.50% | | Sara Bonstein1 | $460,320 | $477,580 | 3.75% | | Roger Adsett2 | $529,730 | $560,190 | 5.75% | | Martina Flammer, M.D. | $517,500 | $534,320 | 3.25% | | Drayton Wise3 | $430,550 | $500,000 | 16.13% |
| 1. | The Compensation Committee approved a 0.5% increase as a market adjustment for Ms. Bonstein in 2022 to position her compensation closer to the market median, in addition to the 3.25% merit increase on her base salary. |
| 2. | The Compensation Committee approved a 2.5% increase as a market adjustment for Mr. Adsett in 2022 to position his compensation closer to the market median, in addition to the 3.25% merit increase on his base salary. |
The base salaries of Mr. Adsett and Mr. Goll approved in 2019 reflect adjustments made in connection with their respective promotions. Mr. Adsett’s initial base salary of $472,030 was increased
| 3 | Mr. Wise received a 3.5% merit increase to his base salary, effective in January 2022. In May 2022, the Compensation Committee approved an increase to Mr. Wise’s base salary from $445,620 to $500,000 effective in November 2019, in connection with his promotion from SVP, Head of US and General Manager, ARIKAYCE to Chief Commercial Officer to Chief Operating Officer. Mr. Goll’s initial base salary of $316,480 was increased to $335,000, effective in March 2019, in connection with his promotion from Vice President, Corporate Controller to Senior Vice President, Chief Accounting Officer. |
Dr. Flammer joined the Company in December 2019 and was not eligible for a merit-based increase to her base salary in January 2020.49INSMED PROXY STATEMENT
Annual Cash IncentivesIncentives. We maintain an annual cash incentive program for all of our employees to motivate and reward the attainment of annual corporate goals and individual goals. In establishing targets for the cash incentive awards for our executive officers, the Compensation Committee (and the Board, in the case of our President and CEO) considers target annual cash incentive opportunities extended to executive officers in similar positions at companies included in our peer group. For 2020, there were no changes to targetTarget cash incentive award percentages thatin 2022 were set in 2019.unchanged for all named executive officers except Mr. Wise, whose target increased to reflect his promotion to Chief Commercial Officer.
| | Target Cash
Incentive Award
Opportunity as a
Percentage of Base
Salary | | Name | 2019 | | 2020 | | William H. Lewis | 60% | | 60% | | Sara Bonstein | — | | 40% | | Roger Adsett | 40% | | 40% | | Martina Flammer | — | | 40% | | Christine Pellizzari | 40% | | 40% | | John Goll | 35% | | 35% |
| | TARGET CASH INCENTIVE | | | AWARD OPPORTUNITY AS A | | | PERCENTAGE OF BASE SALARY | | NAME | 2021 | 2022 | | William H. Lewis | 70% | 70% | | Sara Bonstein | 40% | 40% | | Roger Adsett | 50% | 50% | | Martina Flammer, M.D. | 40% | 40% | | Drayton Wise | 35% | 40% |
For 2020, the Compensation Committee determined that theThe cash incentive award for our named executive officers other than Mr. Lewis would beis determined by reference to both corporate and individual goals, with 75% tied to corporate goals and 25% tied to individual goals. The Compensation Committee believedbelieves that including the achievement ofa component linked to individual goals as a component of our 2020 cash incentive award payouts wasis important to incentivize our non CEO named executive officers, andappropriately reflect their actual individual performance.achievements in areas of focused accountability relative to goals established in the first quarter of the year. Given Mr. Lewis’s substantial influence on and accountability for the overall performance of the Company, the Compensation Committee believedand Board believe it wasis appropriate and in the best interests of our shareholders to continue to have Mr. Lewis’s cash incentive award be based solely upon the achievement of corporate objectives, and the Board concurred in this view.objectives.
Payouts for corporate goals were based upon the product of each named executive officer’s respective target award and an overall corporate multiplier (ranging between 0% and 200%), which was determined based on Company performance during 2020.2022. For our non-CEOeach named executive officers,officer other than the CEO, payouts for individual objectives were based on the product of each named executive officer’s respective target award times an individual multiplier (ranging between 25%0% and 150%175%), which was determined based on achievement of individual goals for 2020.2022. 50INSMED PROXY STATEMENT Corporate GoalsGoals. At the beginning of each year, management recommends annual corporate objectives to the Compensation Committee for approval. These objectives serve as the basis for determining our performance against key strategic and operating parameters for the year. The Compensation Committee (and the Board, with respect to our President and CEO) approved the following corporate objectives and weightings for 2020:2022. While each area had specific goals, the goals themselves are not disclosed below due to commercial sensitivity. Corporate ObjectivesCORPORATE OBJECTIVES | | WeightingWEIGHTING (% of
Corporate
Objectives)OF
CORPORATE OBJECTIVES) | | Advance commercial operations | 50% | 45% | | Advance pipeline | 40% | 45% | ImproveEnhance corporate operations | | 10% | | Total | | 100% |
Each objective had at least two goals associated with it, such as net revenue, program advancement or pipeline milestones. When it set them, the Compensation Committee believed that the goals associated with these corporate objectives were challenging but attainable, and that attainment was uncertain.51INSMED PROXY STATEMENT
While the specific goals are not disclosed for each objective given their potential commercial sensitivity, theThe following achievements in 2020 were factors taken into consideration when assessing Company performance:performance relative to the pre-set performance goals for 2022:
Corporate ObjectiveCORPORATE
OBJECTIVE | Key AchievementsKEY ACHIEVEMENTS | | Advance Commercial Operations | Achieved top end of the target net revenue goal | | | | Achieved target of receiving EC approval of ARIKAYCE for the treatment of NTM lung infections caused by MAC in adults with limited treatment options who do not have cystic fibrosis in October 2020 | | | | Submitted a JNDA to Japan’s MHLW for the treatment of patients with MAC lung disease who did not sufficiently respond to prior treatment in March 2020 as scheduled
| Advance Pipeline | Advanced the post-approval confirmatory clinical trialAchieved 30% global revenue growth for ARIKAYCE in a front-line setting2022 compared with 2021
Exceeded US revenue expectations
ARIKAYCE commercially launched in all parts of patients with MAC lung disease (the ENCORE trial)the UK, as well as in Germany, the development of an appropriate PRO tool that will enable the assessment of ARIKAYCE for the treatment of NTM lung disease (the ARISE trial)Netherlands, Italy, and Belgium | | Advance Pipeline | | | Announced positive results from our Continued to advance the post-marketing confirmatory, frontline clinical trial program for ARIAKYCE, consisting of the ARISE trial and the ENCORE trial. Completed enrollment in the ARISE trial and randomized 90% of ENCORE patients in 2022
Advanced the Phase 3 ASPEN trial, a global, randomized, double-blind, placebo-controlled Phase 2 WILLOW3 study evaluatingto assess the efficacy, safety, and pharmacokineticstolerability of brensocatib administered once daily in adultspatients with NCFBE. Initiatedbronchiectasis
Received topline data from the Phase 3 trial (the ASPEN trial)2 pharmacokinetic/pharmacodynamic study of brensocatib in patients with CF and observed a clear dose-dependent and exposure-dependent inhibition of blood neutrophil serine proteases in patients treated with brensocatib across all doses in the fourth quarter of 2020 as plannedstudy | | | | Initiated dosing of the first subjects in the Phase 1 healthy volunteer trial of TPIP in the US | | Improve Corporate Operations | Completed three strategic financings resulting in aggregate gross proceeds of $775 million
Stayed within operating expense budget
| | Enhanced leadership team
Ensured adequate clinical trial supplies for all programs
Implemented a new global enterprise resource planning (“ERP”) system, which went live in the third quarter of 2022, to facilitate better transactional processing, enhanced reporting and onboarding program Enhanced corporate communications prior tooversight, and in response to the COVID-19 pandemic, with increased employee outreach and improved engagement, confirmed by the resultsfunction as an important component of our employee-wide engagement surveytransactional and reporting controls and procedures
Ranked as the top company to work for in the biopharma industry in Science’s 2022 Top Employers Survey for second year in a row and certified again in the United States by Great Place To Work |
52INSMED PROXY STATEMENT The following table provides a breakdown of how the Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, determined that we performed against each of these corporate objectives during 2020:2022: | Corporate Objectives | | Weighting
(% of
Corporate
Objectives) | | Actual
Performance | | Actual % of
Corporate
Objectives
Earned | | CORPORATE
OBJECTIVES | | WEIGHTING
(% OF
CORPORATE
OBJECTIVES) | ACTUAL
PERFORMANCE
| ACTUAL % OF
CORPORATE
OBJECTIVES
EARNED | | Advance commercial operations | | 50% | | 115% | | 57.5% | 45% | 95% | 42% | | Advance pipeline | | 40% | | 150% | | 60% | 45% | 105% | 47% | | Improve corporate operations | | 10% | | 125% | | 12.5% | 10% | 110% | 11% | | Total | | 100% | | | | 130% | 100% | | 100% |
53INSMED PROXY STATEMENT Individual Goals In consultation with our named executive officers, Mr. Lewis established individual goals for each of our other named executive officers at the beginning of 20202022 that (i) were specific to each named executive officer’s area of responsibility and (ii) were intended to support our corporate objectives for 2020.2022. These individual goals were then recommended to and approved by our Compensation Committee. At the time these goals were established, the Compensation Committee believed they were challenging but attainable, and attainment was uncertain. The individual goals for each named executive officer, other than Mr. Lewis, for 2020 included the following: Named Executive Officer | NAMED
EXECUTIVE
OFFICER | Individual GoalsINDIVIDUAL GOALS | Sara Bonstein | | Optimize finance team | | | Engage at Executive Committee meetingsEnsure accurate and provide inputtimely production of financial statements and feedback to other senior leaders | | | Leverage professional strengths,reporting thresholds are met
Lead key Company functions and programs, including using process/six sigma experience to advance the Company’s procurement functionprocess, implementation of the new global ERP system, and ESG initiatives
Oversee the Company’s compliance program to ensure the Company is meeting high standards of integrity and ethics while conducting business
Access capital as needed and evaluate continuously the optimal balance sheet and cash reserves to support the Company’s programs
Promote a culture of inquiry within our finance team that pushes us to question assumptions about acceptable levels of expenditures and enhances our financial decision-making | Roger Adsett | | LeadGuide each program’s General Manager to become more effective and to likewise empower and increase the accountability of each program’s global project team
Continue to direct reports by examplethe cross functional cooperation between the technical operations and ensureresearch teams with specific attention to the San Diego organization
Advance program management efforts around enrollment patterns with the aim of successful achievement of timelines
Advise senior leaders on the effective management of their progressteams and functional responsibilities | Roger Adsett | | Further expansion and approval of ARIKAYCE in United States, Europe and Japan | | | Ensure sufficient global production of ARIKAYCE and candidate products | | | Create a complete process system to support meeting objectives and key results across all programs worldwide | | | Increase corporate presence and interaction with employee workforce | Martina Flammer, M.D. | | Complete optimization and build out of clinical, clinical operations, medical affairs, regulatory and pharmacovigilance functions | | | Ensure clinical trials enroll and advance with quality in a timely fashion | | |
Prioritize management of leadership as Company initiates additional clinical trials
Ensure a more robust medical affairs plan is developedMedical Affairs support for ARIKAYCE launch in Japan and executedpotential frontline launch in 2020the US
Ensure pharmacovigilance and drug safety functions are operating effectively
Scale clinical development function within the organization to support ARIKAYCE | | | Engage at Executive Committee meetings and provide input and feedback to other senior leaders | | | Work to ensure balance between medical affairs and clinical development functions | Christine Pellizzari | | Advance Company through execution and support of legal, business development and regulatory activities | | | Provide mentoring and support to incoming Chief Financial Officer | | | Continue to engage at Executive Committee meetings and provide input and feedback to other senior leaders | | | Continue to increase corporate presence and visibility across the Company | | | Continue to help build out the Board through the Nominations and Governance Committee | John Goll | | Ensure timely and accurate quarterly and annual SEC filings in compliance with the Sarbanes-Oxley Act of 2002
Support global expansion efforts for seamless launch readiness in Europe and Japan Continue to engage with leadership across the Company
additional program capacity |
54INSMED PROXY STATEMENT NAMED
EXECUTIVE
OFFICER | 37INDIVIDUAL GOALS | Drayton Wise | Drive ARIKAYCE revenue growth globally and by region with the highest standards of ethics, integrity, and compliance
Transform the organization to ensure the successful launches of ARIKAYCE in front-line MAC and brensocatib in bronchiectasis
Ensure appropriate pricing and market access for ARIKAYCE in each region
Elevate the Company’s presence and reputation in NTM and bronchiectasis |
With input from Mr. Lewis, the Compensation Committee made a qualitative determination following the end of the year as to the level of achievement by each of ourthese named executive officers other than our President and CEO with regard to his or her respective individual performance objectives. Based upon our achievement of the corporate goals summarized above, as well as the achievement of individual goals set by the Compensation Committee, our named executive officers earned the following cash incentive awards for 2020:2022: | | | | | | | Allocation of Bonus | | Actual Bonus Achievement | | | | | ALLOCATION OF BONUS | | ACTUAL BONUS ACHIEVEMENT | | | | Name | | Base
Salary | | Target
Bonus % | | Corporate
Goals | | Individual
Goals | | Corporate
Goals | | Individual
Goals | | 2020 Cash
Bonus | | | NAME | | | BASE
SALARY | | TARGET
BONUS % | | CORPORATE
GOALS | | INDIVIDUAL
GOALS | | CORPORATE
GOALS | | INDIVIDUAL
GOALS | | 2022 CASH
BONUS | | | William H. Lewis | | $659,720 | | 60% | | 100% | | N/A | | 130% | | N/A | | $514,600 | | $734,850 | | 70% | | 100% | | — | | 100% | | — | | $514,400 | | | Sara Bonstein | | $420,000 | | 40% | | 75% | | 25% | | 130% | | 145% | | $224,700 | | $477,580 | | 40% | | 75% | | 25% | | 100% | | 100% | | $191,100 | | | Roger Adsett | | $514,300 | | 40% | | 75% | | 25% | | 130% | | 125% | | $264,900 | | $560,190 | | 50% | | 75% | | 25% | | 100% | | 75% | | $262,600 | | | Martina Flammer, M.D. | | $500,000 | | 40% | | 75% | | 25% | | 130% | | 145% | | $267,600 | | $534,320 | | 40% | | 75% | | 25% | | 100% | | 100% | | $213,800 | | | Christine Pellizzari | | $476,150 | | 40% | | 75% | | 25% | | 130% | | 125% | | $245,300 | | | John Goll | | $345,050 | | 35% | | 75% | | 25% | | 130% | | 110% | | $151,000 | | | Drayton Wise | | | $500,000 | | 40% | | 75% | | 25% | | 100% | | 100% | | $200,000 | |
55INSMED PROXY STATEMENT Annual Long-term Equity IncentivesIncentives. One of the guiding principles of our executive compensation program is pay for performance, and we believe that a significant portion of our executives’ compensation should be performance-based to create appropriate incentives and rewards for achieving strategic goals that are critical drivers of shareholder value. We also believe that stock ownership by management aligns our executives’ interests with those of our shareholders, and equity incentive compensation rewards our executives for their contributions toIn addition, the long-term success of the Company. The Compensation Committee believes that equity-based compensation is a vital part of our compensation program as it creates an ownership culture that rewards our executives for maximizing shareholder value over time and alignsconsiders the interests of our named executive officersfollowing in approving equity plan design and other key employees with those of our shareholders.award values: | ● | Equity-based compensation creates an ownership culture that rewards our executives for maximizing shareholder value sustainably over time, and, in combination with stock ownership, aligns our executives’ interests with those of our shareholders |
The Compensation Committee believes that the combination of stock option and RSU awards to our named executive officers and other employees encourages retention and aligns the interests of employees and our shareholders.
| ● | Equity incentives reward our executives for their contributions to the long-term success of the Company |
| ● | The combination of stock options and RSUs drives performance and a long-term mindset while encouraging retention |
| ● | We believe stock options are a form of performance-based incentive compensation because they require stock price appreciation to deliver value to the holder, thereby aligning compensation earned with value shareholders receive over the same period of time |
In determining the equity compensation awards to grant to our named executive officers in 2020,2022, the Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, considered each named executive officer’s role, the advice of our independent compensation consultant, and information regarding comparative equity compensation awards received by the executives in our peer group.group in the context of total compensation. Individual performance prior to the grant date was also considered. Generally, 75% of the award value is made in the form of stock options and 25% of the award value is made in the form of RSUs. The Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, may also grant equity awards from time to time in recognition of a named executive officer’s expanded duties and responsibilities or continuing contributions to the Company’s performance. In connection with Mr. Drayton’s promotion to Chief Commercial Officer, an additional award of stock options and RSUs was made to reflect his expanded role and to better align total compensation for his new role relative to market. Based on these considerations, our named executive officers received the following annual equity incentive awards in 2020.2022. 56INSMED PROXY STATEMENT NameOPTIONS
GRANTED1,2 | | Date of Grant | | Number of Options
Granted(1)RSUs
GRANTED3 | | Number of RSUs Granted(2) | | William H. Lewis | 1/6/2022
5/11/2022 | 1/3/2020148,540
224,450 | | 282,590 | | —30,741
47,598 | | Sara Bonstein | 1/6/2022
5/11/2022 | 1/3/202062,840
94,960 | | — | | 52,63113,006
20,137 | Sara Bonstein(3)Roger Adsett | 1/6/2022
5/11/2022 | 2/3/202085,690
129,490 | | 91,640 | | —17,735
27,460 | | | 5/12/2020 | | 34,890 | | — | Roger Adsett | | 1/3/2020 | | 141,300 | | — | | | 1/3/2020 | | — | | 26,315 | Martina Flammer, M.D.(4) | 1/6/2022
5/11/2022 | 1/2/202068,560
103,590 | | 150,990 | | —14,188
21,968 | | Drayton Wise4 | 1/6/2022
5/11/2022
5/23/2022 | 1/3/202014,850
22,440
164,580 | | 56,520 | | — | | | 1/3/2020 | | — | | 10,526 | Christine Pellizzari | | 1/3/2020 | | 141,300 | | — | | | 1/3/2020 | | — | | 26,315 | John Goll | | 1/3/2020 | | 28,260 | | — | | | 1/3/2020 | | — | | 5,2633,074
4,759
26,236 |
| (1)1. | Options granted on January 3, 2020 had6, 2022 and May 11, 2022 have an exercise price of $23.75,$26.43 and $17.07, respectively, the per-share closing price of our Common Stock on that date. |
| 2. | Shares of our Common Stock underlying these options vest over a four-year period, with 25% of the shares vesting on the first anniversary of the date of grant and 12.5% of the shares vesting every six months thereafter until the fourth anniversary of the date of grant. |
| (2)3. | The RSUs vest as follows: 25% on each anniversary of the date of grant through the fourth anniversary of the date of the grant. |
| (3)4. | On February 3, 2020, Ms. BonsteinMay 23, 2022, Mr. Wise received an award of options and RSUs in connection with her appointment ashis promotion to Chief FinancialCommercial Officer. Options granted on February 3, 2020 hadMay 23, 2022 have an exercise price of $28.88,$20.01, the per-share closing price of our Common Stock on that date.
|
2022 Performance-Based Restricted Stock Units. In January 2022, select senior leaders, including our named executive officers, also received an award of PSUs. These awards reflected a combination of objectives to complement the existing annual awards of stock options and RSUs, which included retaining senior leaders through a critical period related to brensocatib and aligning senior leaders with unlocking value for our shareholders on an appropriately aggressive timeline. The PSUs can vest upon the achievement of performance conditions based on brensocatib milestones, our TSR relative to the Nasdaq Biotech Index constituents, and service, as summarized below. The Compensation Committee and Board believe these goals to be appropriately challenging with strong alignment to shareholder interests as it relates to the time horizon, total shareholder return modifier and final vesting being tied to the FDA accepting a new drug application (“NDA”) from Insmed for brensocatib. If the milestone conditions are not achieved, if Insmed’s TSR is negative or below the 25th percentile relative to the Nasdaq Biotech Index constituents, if an executive does not remain in continuous employment as explained below, or if the FDA does not accept the NDA, no PSUs will vest. 57INSMED PROXY STATEMENT | Milestone Conditions | The issuance of a press release announcing certain top-line results from the ASPEN trial within a defined time horizon and the acceptance of an NDA by the FDA for brensocatib.
If the milestone conditions are achieved, the PSUs would vest subject to the two further requirements summarized below. | | Relative TSR Modifier | On May 12, 2020, Ms. Bonstein received an awardTo ensure any results related to brensocatib align with the creation of optionsvalue for our long-term shareholders, a relative TSR modifier will be applied to any PSUs that vest as a market adjustmentresult of her initial sign-on grant. Options granted on May 12, 2020 had an exercise priceachieving the milestone conditions. TSR will be assessed through the 30-days following a press release filing, with comparisons made to the Nasdaq Biotech Index constituents as follows:
● If Insmed’s TSR is negative, or if Insmed’s TSR ranks below the 25th percentile, no PSUs will vest regardless of $24.70,milestone and service achievements
● If Insmed’s TSR is at or above the per-share closing price25th percentile and less than the 50th percentile, a 0.5x modifier will apply, reducing the number of PSUs that vest by 50%
● If Insmed’s TSR is at or above the 50th percentile and less than the 75th percentile, a 1.0x modifier will apply
● If Insmed’s TSR is at or above the 75th percentile, and less than the 90th percentile, a 2.0x modifier will apply
● If Insmed’s TSR is at or above the 90th percentile, indicating significant value has been created for our Common Stock on that date.shareholders relative to peers, a 2.5x modifier will apply | | Service Conditions | Shares● To ensure PSUs meet the objective of our Common Stock underlying these options vest overretaining senior leaders during this period, a four-year period,recipient must remain in continuous employment with 25%the Company through the later of the shares vesting on the firstthird anniversary of the grant date of grant and 12.5% of the shares vesting every six months thereafter until the fourth anniversary of the date of grant.an NDA for brensocatib is accepted by the FDA.
● If Insmed does not file an NDA due to the clinical trial results, or the FDA does not accept an NDA, for brensocatib, PSUs will not vest. |
58INSMED PROXY STATEMENT In determining the value of these incremental awards, the Compensation Committee considered the objectives of the award, the challenging nature of the performance goals and the target values for the annual equity grants. Based on these considerations, our named executive officers received the following PSU awards in 2022. | NAME | (4)DATE OF
GRANT | On January 2, 2020, Dr.NUMBER OF
PSUs GRANTED | | William H. Lewis | 1/6/2022 | 61,484 | | Sara Bonstein | 1/6/2022 | 26,013 | | Roger Adsett | 1/6/2022 | 35,472 | Martina Flammer, received an award of options in connection with her appointment as Chief Medical Officer. Options granted on January 2, 2020 had an exercise price of $23.66, the per-share closing price of our Common Stock on that date. Shares of our Common Stock underlying these options vest over a four-year period, with 25% of the shares vesting on the first anniversary of the date of grant and 12.5% of the shares vesting every six months thereafter until the fourth anniversary of the date of grant.M.D. | 1/6/2022 | 28,377 | | Drayton Wise | 1/6/2022 | 6,149 |
On the date the PSUs were granted, the performance conditions necessary for vesting were not deemed probable given the nature of the milestone goals. Accordingly, and reflecting the required accounting treatment for the PSUs, no value is attributed to them in the Summary Compensation Table at this time. In approving the awards, the Compensation Committee considered the potential value of the awards under various scenarios and determined that an appropriate “target” value would be 25% of a named executive officer’s annual equity grant value if both the milestone goals and a 1.0 relative TSR modifier were achieved. Other BenefitsBenefits. We maintain several other benefit programs that are offered to all employees including executives on an equivalent basis, which include coverage for health insurance, dental insurance, life and disability insurance, and a 401(k) plan. With respect to our 401(k) plan, the Company will deposit a matching contribution of 100% of deferrals up to 4% of an employee’s eligible compensation (subject to any maximum applicable limits under the Internal Revenue Service regulations). We also maintain an Employee Stock Purchase Plan whereby eligible employees, including executives, are given the opportunity to purchase Common Stock at a discounted price through payroll deductions. We do not have any defined benefit plans or non-qualified deferred compensation plans. From time to time, we may also provide employees with certain other limited perquisites. Severance and Change in Control BenefitsBenefits. As discussed in further detail in “Potential Payments Upon Termination,"” we have entered into employment agreements with each of our named executive officers that, in addition to other items, provide for certain severance and change in control payments. We believe that the existence of these potential benefits will discourage turnover and mitigate the influence of a potential change in control on an executive officer’s decision-making due to concerns regarding job security. The employment agreements with our named executive officers do not provide for single-trigger vesting on a change in control or tax gross-up payments. See “Potential Payments Upon Termination” for additional information. 59INSMED PROXY STATEMENT COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management and based on the review and discussions with management of the CD&A, the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report. THE COMPENSATION COMMITTEEThe Compensation Committee
David R. Brennan, Chair Alfred F. Altomari Chair David R. Brennan
Leo Lee Summary Compensation TableTable. The following table sets forth information regarding compensation earned by the named executive officers in 2020, 20192022, 2021 and 2018.2020. To improve readability, the following columns have been removed from the table as there is no reportable information with respect to these items: “Change in Pension Value” and “Nonqualified Deferred Compensation Earnings.” | Name and Principal Position | | Year | | Salary
($) | | Bonus
($)(1) | | Stock
Awards
($)(2) | | Option
Awards
($)(3) | | Non-Equity
Incentive Plan
Compensation
($)(4) | | All Other
Compensation
($)(5) | | Total
($) | | William H. Lewis | | 2020 | | $659,720 | | — | | $1,249,986 | | $3,749,998 | | $514,600 | | $11,400 | | $6,185,704 | | President and CEO | | 2019 | | $640,500 | | — | | $1,499,972 | | $4,499,965 | | $472,700 | | $61,957 | | $7,175,094 | | | | 2018 | | $610,000 | | — | | $1,174,995 | | $3,524,964 | | $622,200 | | $11,000 | | $5,943,159 | | Sara Bonstein | | 2020 | | $386,615 | | $75,000 | | — | | $2,024,075 | | $224,700 | | $11,400 | | $2,721,790 | | Chief Financial Officer | | 2019 | | — | | — | | — | | — | | — | | — | | — | | | | 2018 | | — | | — | | — | | — | | — | | — | | — | | Roger Adsett | | 2020 | | $514,300 | | — | | $624,981 | | $1,875,065 | | $264,900 | | $14,700 | | $3,293,946 | | Chief Operating Officer | | 2019 | | $475,741 | | — | | $1,124,990 | | $1,874,999 | | $237,900 | | $14,773 | | $3,728,403 | | | | 2018 | | $458,280 | | — | | $474,993 | | $1,425,015 | | $300,200 | | $14,662 | | $2,673,150 | | Martina Flammer, M.D. | | 2020 | | $500,000 | | $150,000 | | $249,993 | | $2,749,964 | | $267,600 | | $16,813 | | $3,934,370 | | Chief Medical Officer | | 2019 | | $20,833 | | — | | — | | — | | — | | $59,352 | | $80,185 | | | | 2018 | | — | | — | | — | | — | | — | | — | | — | | Christine Pellizzari | | 2020 | | $476,150 | | — | | $624,981 | | $1,875,065 | | $245,300 | | $11,400 | | $3,232,896 | | Chief Legal Officer | | 2019 | | $449,200 | | — | | $749,971 | | $1,274,993 | | $224,200 | | $11,200 | | $2,709,564 | | | | 2018 | | $436,110 | | — | | $324,978 | | $975,001 | | $283,500 | | $11,000 | | $2,030,589 | | John Goll | | 2020 | | $345,050 | | — | | $124,996 | | $375,013 | | $151,000 | | $17,318 | | $1,013,377 | | Interim Principal Financial Officer (2019-2020) | | 2019 | | $330,584 | | — | | $124,976 | | $225,023 | | $140,500 | | $11,200 | | $832,283 | | | | 2018 | | $306,520 | | — | | $68,748 | | $206,264 | | $171,100 | | $11,000 | | $763,632 |
| | (1) | Represents sign-on bonus compensation paid to each of Ms. Bonstein and Dr. Flammer upon commencement of their employment in 2020. |
NAME AND
PRINCIPAL
POSITION | YEAR | SALARY
($) | BONUS
($) | STOCK
AWARDS
($)1 | OPTION
AWARDS
($)2 | NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)3 | ALL OTHER
COMPENSATION
($)4 | TOTAL
($) | | William H. Lewis | 2022 | $734,850 | — | $1,624,982 | $4,872,967 | $514,400 | $42,699 | $7,789,898 | | President and | 2021 | $710,000 | — | $1,499,969 | $4,499,673 | $601,400 | $11,600 | $7,322,642 | | CEO | 2020 | $659,720 | — | $1,249,986 | $3,749,998 | $514,600 | $11,400 | $6,185,704 | | Sara Bonstein | 2022 | $477,580 | — | $687,487 | $2,061,581 | $191,100 | $15,500 | $3,433,248 | | Chief Financial | 2021 | $460,320 | — | $687,489 | $2,062,368 | $227,000 | $14,900 | $3,452,077 | | Officer | 2020 | $386,615 | $75,000 | — | $2,024,075 | $224,700 | $11,400 | $2,721,791 | | Roger Adsett | 2022 | $560,190 | — | $937,478 | $2,811,222 | $262,600 | $71,905 | $4,643,395 | | Chief Operating | 2021 | $529,730 | — | $749,968 | $2,249,837 | $326,500 | $14,900 | $3,870,935 | | Officer | 2020 | $514,300 | — | $624,981 | $1,875,065 | $264,900 | $14,700 | $3,293,946 | Martina Flammer,
M.D.
Chief Medical
Officer | 2022
2021
2020 | $534,320
$517,500
$500,000 | —
—
$150,000 | $749,983
$749,968
$249,993 | $2,249,087
$2,249,837
$2,749,964 | $213,800
$255,200
$267,600 | $15,500
$14,900
$16,813 | $3,762,690
$3,787,405
$3,934,370 | Drayton Wise
Chief Commercial
Officer | 2022 | $478,563 | — | $687,464 | $2,580,651 | $200,000 | $71,436 | $4,018,114 |
60INSMED PROXY STATEMENT
(2) | 1 | Amounts in this column reflect grant date fair values of RSUs granted each year, calculated in accordance with FASB ASC Topic 718, except the assumption of forfeitures is not made.718. Amounts are based on the closing price of our common stockCommon Stock on the Nasdaq Global Select Market on the date of grant. On January 6, 2022, PSUs were granted to each of our named executive officers, the vesting of which are subject to performance conditions. On the grant date, the performance conditions were deemed not probable and, therefore, no value is included in the Stock Awards or Total columns for the PSUs. Assuming the highest level of performance conditions will be achieved, the grant date fair values of the PSUs granted on January 6, 2022, calculated in accordance with FASB ASC Topic 718, are as follows: Mr. Lewis, $6,013,135; Ms. Bonstein, $2,544,091; Mr. Adsett, $3,469,162; Dr. Flammer, $2,775,290; and Mr. Wise, $601,392. |
(3) | 2. | Amounts in this column reflect grant date fair values of stock option awards granted each year, calculated in accordance with FASB ASC Topic 718, except the assumption of forfeitures is not made.718. The stock options expire 10 years from the date of grant, and the exercise price equals the closing price of our Common Stock on the date of grant. See Note 10, “Stock-Based Compensation” of the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020,2022, regarding assumptions underlying valuation of all equity awards. |
(4) | 3. | Amounts in this column represent annual cash incentive awards paid to each executive officer under our annual cash incentive program. For further information, see “Components of Compensation—Annual Cash Incentives.” |
| (5)4. | The amounts in the “All Other Compensation” column consist of the following amounts: |
| • | In 2020, 2021, and 2022, Mr. Lewis received $11,400, $11,600 and $12,200, respectively, pursuant to our 401(k) plan. In 2022, we also paid $30,499 in travel expenses on Mr. Lewis’ behalf. |
In 2018, 2019 and 2020, Mr. Lewis received $11,000, $11,200 and $11,400, respectively, pursuant to our 401(k) plan. In 2019, we also paid $50,462 in legal fees on Mr. Lewis’ behalf, including in connection with his sale of shares of our Common Stock in a registered offering.
| • | In 2020, 2021, and 2022, Ms. Bonstein received $11,400, $11,600 and $12,200, respectively, pursuant to our 401(k) plan. In 2021, and 2022, Ms. Bonstein also received an additional $3,300 per year in health savings account (“HSA”) contributions pursuant to her participation in a tax qualified HSA. |
In 2020, Ms. Bonstein received $11,400 pursuant to our 401(k) plan.
| • | In 2020, 2021, and 2022, Mr. Adsett received $11,400, $11,600, and $12,200, respectively, pursuant to our 401(k) plan. In 2020, 2021, and 2022, Mr. Adsett also received an additional $3,300 per year in HSA contributions pursuant to his participation in a tax qualified HSA. In 2022, we also paid $56,405 in travel expenses on Mr. Adsett’s behalf. |
In 2018, 2019 and 2020, Mr. Adsett received $11,000, $11,200 and $11,400, respectively, pursuant to our 401(k) plan. In 2018, 2019 and 2020, Mr. Adsett also received an additional $3,300 per year in health savings account (HSA) contributions pursuant to his participation in a tax qualified HSA.
| • | In 2020, 2021, and 2022, Dr. Flammer received $11,400, $11,600, and $12,200, respectively, pursuant to our 401(k) plan. In 2020, 2021, and 2022, Dr. Flammer also received an additional $3,300 in HSA contributions pursuant to her participation in a tax qualified HSA. In 2020, Dr. Flammer was reimbursed $2,113 in relocation expenses. |
| • | In 2022, Mr. Wise received $12,200, pursuant to our 401(k) plan. In 2022, we also paid $59,236 in travel expenses on Mr. Wise’s behalf. |
61INSMED PROXY STATEMENT In 2020, Dr. Flammer received $11,400 pursuant to our 401(k) plan. In 2020, Dr. Flammer also received an additional $3,300 in HSA contributions pursuant to her participation in a tax qualified has, and reimbursement of $2,113 in relocation expenses. In 2019, Dr. Flammer was reimbursed $54,351 in relocation expenses and $5,000 in legal fees in connection with the entry into her employment agreement.
In 2018, 2019 and 2020, Ms. Pellizzari received $11,000, $11,200 and $11,400, respectively, pursuant to our 401(k) plan.
In 2018, 2019 and 2020, Mr. Goll received $11,000, $11,200 and $11,400, respectively, pursuant to our 401(k) plan.
20202022 Grants of Plan-Based Awards
The following table sets forth certain information regarding the annual cash incentive awards and equity grants made to our named executive officers during the year ended December 31, 2020.2022. No other plan-based awards were granted to any of our named executive officers during 2020.2022. | | | | | Estimated Possible Payouts Under
Non-Equity
Incentive Plan Awards(1) | | All Other
Stock
Awards:
Number of
Shares of
Restricted
Stock
Units | | All Other
Option
Awards:
Number of
securities
Underlying | | Exercise or
Base
Price of
Option | | Grant Date
Fair Value
of Stock
and Option | | Name | | Grant Date | | Threshold
($) | | Target
($) | | Maximum
($) | | (RSUs)
(#)(2) | | Options
(#)(3) | | Awards
($/Sh) | | Awards
($)(4) | | William H. Lewis | | — | | — | | 395,832 | | 791,664 | | — | | — | | — | | — | | | | 1/3/2020 | | | | | | | | | | 282,590 | | $23.75 | | 3,749,998 | | | | 1/3/2020 | | | | | | | | 52,631 | | | | — | | 1,249,986 | | Sara Bosnstein | | — | | 10,500 | | 168,000 | | 315,000 | | — | | — | | — | | — | | | | 2/3/2020 | | | | | | | | | | 91,640 | | $28.88 | | 1,500,028 | | | | 5/12/2020 | | | | | | | | | | 34,890 | | $24.70 | | 524,048 | | Roger Adsett | | — | | 12,858 | | 205,720 | | 385,725 | | — | | — | | — | | — | | | | 1/3/2020 | | | | | | | | | | 141,300 | | $23.75 | | 1,875,065 | | | | 1/3/2020 | | | | | | | | 26,315 | | | | — | | 624,981 | | Martina Flammer, M.D. | | — | | 12,500 | | 200,000 | | 375,000 | | — | | — | | — | | — | | | | 1/2/2020 | | | | | | | | | | 150,990 | | $23.66 | | 1,999,938 | | | | 1/3/2020 | | | | | | | | | | 56,520 | | $23.75 | | 750,026 | | | | 1/3/2020 | | | | | | | | 10,526 | | | | — | | 249,993 | | Christine Pellizzari. | | — | | 11,904 | | 190,460 | | 357,113 | | — | | — | | — | | — | | | | 1/3/2020 | | | | | | | | | | 141,300 | | $23.75 | | 1,875,065 | | | | 1/3/2020 | | | | | | | | 26,315 | | | | — | | 624,981 | | John Goll | | — | | 7,548 | | 120,768 | | 226,439 | | — | | — | | — | | — | | | | 1/3/2020 | | | | | | | | | | 28,260 | | $23.75 | | 375,013 | | | | 1/3/2020 | | | | | | | | 5,263 | | | | — | | 124,996 |
| | | ESTIMATED POSSIBLE
PAYOUTS UNDER
NON-EQUITY
INCENTIVE PLAN
AWARDS1 | ESTIMATED POSSIBLE
PAYOUTS UNDER
EQUITY
INCENTIVE PLAN
AWARDS2 | | | | | | NAME | GRANT DATE | THRESHOLD
($) | TARGET
($) | MAXIMUM
($) | THRESHOLD
(#) | TARGET
(#) | MAXIMUM
(#) | ALL OTHER
STOCK
AWARDS:
NUMBER OF
SHARES OF
RESTRICTED
STOCK
UNITS
(RSUS) (#)3 | ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS
(#)4 | EXERCISE
OR BASE
PRICE OF
OPTION
AWARDS
($/SH) | GRANT
DATE
FAIR VALUE
OF STOCK
AND
OPTION
AWARDS
($)5 | | | — | — | 514,395 | 1,028,790 | — | — | — | — | — | — | — | | | 1/6/2022 (options) | — | — | — | — | — | — | — | 148,540 | 26.43 | 2,437,437 | | William | 1/6/2022 (RSUs) | — | — | — | — | — | — | 30,741 | — | — | 812,485 | | H. Lewis | 1/6/2022 (PSUs) | — | — | — | — | 61,484 | 153,710 | — | — | — | — | | | 5/11/2022 (options) | — | — | — | — | — | — | — | 224,450 | 17.07 | 2,435,529 | | | 5/11/2022 (RSUs) | — | — | — | — | — | — | 47,598 | — | — | 812,498 | | | — | — | 191,032 | 417,883 | — | — | — | — | — | — | — | | | 1/6/2022 (options) | — | — | — | — | — | — | — | 62,840 | 26.43 | 1,031,160 | | Sara | 1/6/2022 (RSUs) | — | — | — | — | — | — | 13,006 | — | — | 343,749 | | Bonstein | 1/6/2022 (PSUs) | — | — | — | — | 26,013 | 65,033 | — | — | — | — | | | 5/11/2022 (options) | — | — | — | — | — | — | — | 94,960 | 17.07 | 1,030,420 | | | 5/11/2022 (RSUs) | — | — | — | — | — | — | 20,137 | — | — | 343,739 | | | — | — | 280,095 | 612,708 | — | — | — | — | — | — | — | | | 1/6/2022 (options) | — | — | — | — | — | — | — | 85,690 | 26.43 | 1,406,113 | | Roger | 1/6/2022 (RSUs) | — | — | — | — | — | — | 17,735 | — | — | 468,736 | | Adsett | 1/6/2022 (PSUs) | — | — | — | — | 35,472 | 88,680 | — | — | — | — | | | 5/11/2022 (options) | — | — | — | — | — | — | — | 129,490 | 17.07 | 1,405,109 | | | 5/11/2022 (RSUs) | — | — | — | — | — | — | 27,460 | — | — | 468,742 | Martina
Flammer,
M.D. | —
1/6/2022 (options)
1/6/2022 (RSUs)
1/6/2022 (PSUs)
5/11/2022 (options)
5/11/2022 (RSUs) | —
—
—
—
—
— | 213,728
—
—
—
—
— | 467,530
—
—
—
—
— | —
—
—
—
—
— | —
—
—
28,377
—
— | —
—
—
70,943
—
— | —
—
14,188
—
—
21,968 | —
68,560
—
—
103,590
— | —
26.43
—
—
17.07
— | —
1,125,022
374,989
—
1,124,065
374,994 | | | — | — | 200,000 | 437,500 | — | — | — | — | — | — | — | | | 1/6/2022 (options) | — | — | — | — | — | — | — | 14,850 | 26.43 | 243,678 | | | 1/6/2022 (RSUs) | — | — | — | — | — | — | 3,074 | — | — | 81,246 | | Drayton | 1/6/2022 (PSUs) | — | — | — | — | 6,149 | 15,373 | — | — | — | — | | Wise | 5/11/2022 (options) | — | — | — | — | — | — | — | 22,440 | 17.07 | 243,499 | | | 5/11/2022 (RSUs) | — | — | — | — | — | — | 4,759 | — | — | 81,236 | | | 5/23/2022 (options) | — | — | — | — | — | — | — | 164,580 | 20.01 | 2,093,474 | | | 5/23/2022 (RSUs) | — | — | — | — | — | — | 26,236 | — | — | 524,982 |
62INSMED PROXY STATEMENT | (1)1 | Constitutes threshold, target, and maximum award opportunities for our named executive officers under our annual cash incentive program. See “Components of Compensation—Annual Cash Incentives” for information regarding the criteria applied in determining the amounts payable under the awards. The actual amounts paid with respect to these awards are included in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table. |
| (2)2. | PSUs were granted to our named executive officers on January 6, 2022 pursuant to the 2019 Incentive Plan. The PSUs vest upon the achievement of two performance conditions, a service condition, and a market condition. The performance conditions are the issuance of a press release announcing certain top-line results from the ASPEN trial within a defined time horizon and the acceptance of an NDA by the FDA for brensocatib. The service condition is continuous employment with the Company through the later of (i) the third anniversary of the grant date of the PSU award and (ii) the date an NDA for brensocatib is accepted by the FDA. The potential payout of the awards ranges from 0% to 250% of the target, dependent on a market condition that is based on the Company’s TSR compared to Nasdaq Biotech Index constituents. |
| 3. | The amounts shown in this column reflect RSUs granted to our named executive offiversofficers pursuant to our equity incentive plans. The vesting schedule for these grants is as follows: 25% on each anniversary of the date of grant through the fourth anniversary of the date of the grant. |
| (3)4. | The amounts shown in this column reflect stock options granted to our named executive officers pursuant to our 2019 Incentive Plan. The vesting schedule for these grants is as follows: 25% on the first anniversary of the date of grant and 12.5% of the shares vesting on each six-month anniversary thereafter until the fourth anniversary of the date of grant. |
| (4)5. | Reflects grant date fair values of option, RSU and PSU and option awards granted during the applicable year, calculated in accordance with FASB ASC Topic 718, except the assumption of forfeitures is not made.718. See Note 10, “Stock-Based Compensation” of the consolidated financial statements in the Company’s Annual Report on Form 10-K for year ended December 31, 20202022, regarding assumptions underlying valuation of all equity awards. |
Narrative Disclosure to Summary Compensation Table and 20202022 Grants of Plan-Based Awards Table The employment agreements for our named executive officers generally provide for no fixed termination or other expiration dates. See “Potential Payments Upon Termination” for information regarding the terms of these agreements that would be relevant in the event of the executive’s termination or upon a change in control. 63INSMED PROXY STATEMENT Outstanding Equity Awards at 20202022 Fiscal Year-EndYear End The following table sets forth certain information regarding the equity awards held by each of our named executive officers as of December 31, 2020.2022. | | | Option Awards | | Stock Awards | | Name | | Number of
Securities
Underlying
Unexercised Options (#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) | | Option
Exercise
Price ($) | | Option
Expiration
Date(1) | | Number of
Shares or
Units of
Stock
That Have
Not Vested
(#)(2) | | Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
(#)(3) | | Equity
Incentive Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#) | | Equity
Incentive Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#) | | William H. Lewis | | 150,000 | | — | | — | | $3.40 | | 09/10/2022 | | — | | — | | — | | — | | | | 123,456 | | — | | — | | $14.24 | | 10/31/2023 | | — | | — | | — | | — | | | | 45,120 | | — | | — | | $20.49 | | 01/10/2024 | | — | | — | | — | | — | | | | 150,000 | | — | | — | | $22.76 | | 05/21/2025 | | — | | — | | — | | — | | | | 163,000 | | — | | — | | $16.16 | | 01/07/2026 | | — | | — | | — | | — | | | | 124,320 | | 17,760 | | — | | $17.16 | | 05/17/2027 | | — | | — | | — | | — | | | | 125,181 | | 75,109 | | — | | $30.46 | | 01/04/2028 | | — | | — | | — | | — | | | | 208,177 | | 346,963 | | — | | $13.91 | | 01/03/2029 | | | | | | | | | | | | — | | 282,590 | | | | $23.75 | | 01/03/2030 | | | | | | | | | | | | — | | — | | — | | — | | — | | 110,723 | | $3,685,969 | | — | | — | | | | | | | | | | | | | | | | | | | | | | Sara Bonstein | | — | | 91,640 | | — | | $28.88 | | 2/3/2030 | | — | | — | | — | | — | | | | — | | 34,890 | | — | | $24.70 | | 5/12/2030 | | — | | — | | — | | — | | | | | | | | | | | | | | | | | | | | | | Roger Adsett | | 88,060 | | — | | — | | $14.56 | | 10/03/2026 | | — | | — | | — | | — | | | | 71,995 | | 10,285 | | — | | $13.67 | | 01/05/2027 | | — | | — | | — | | — | | | | 67,025 | | 9,575 | | — | | $17.16 | | 05/17/2027 | | — | | — | | — | | — | | | | 50,606 | | 30,364 | | — | | $30.46 | | 01/04/2028 | | — | | — | | — | | — | | | | 86,741 | | 144,569 | | — | | $13.91 | | 01/03/2029 | | — | | — | | — | | — | | | | — | | 141,300 | | — | | $23.75 | | 01/03/2030 | | — | | — | | — | | — | | | | — | | — | | — | | — | | — | | 75,143 | | $2,501,510 | | — | | — | | | | | | | | | | | | | | | | | | | | | | Martina Flammer, M.D. | | — | | 150,990 | | — | | $23.66 | | 01/02/2030 | | — | | — | | — | | — | | | | — | | 56,520 | | — | | $23.75 | | 01/03/2030 | | — | | — | | — | | — | | | | | | | | | | | | | | 10,526 | | $350,410 | | | | | | | | | | | | | | | | | | | | | | | | | | Christine Pellizzari | | 26,250 | | — | | — | | $20.49 | | 01/10/2024 | | — | | — | | — | | — | | | | 15,000 | | — | | — | | $16.07 | | 01/08/2025 | | — | | — | | — | | — | | | | 45,000 | | — | | — | | $22.76 | | 05/21/2025 | | — | | — | | — | | — | | | | 50,000 | | — | | — | | $16.16 | | 01/07/2026 | | — | | — | | — | | — | | | | 75,150 | | — | | — | | $10.85 | | 05/19/2026 | | — | | — | | — | | — | | | | 57,592 | | 8,228 | | — | | $13.67 | | 01/05/2027 | | — | | — | | — | | — | | | | 53,182 | | 7,598 | | — | | $17.16 | | 05/17/2027 | | — | | — | | — | | — | | | | 34,625 | | 20,775 | | — | | $30.46 | | 01/04/2028 | | — | | — | | — | | — | | | | 58,984 | | 98,306 | | — | | $13.91 | | 01/03/2029 | | — | | — | | — | | — | | | | — | | 141,300 | | — | | $23.75 | | 01/03/2030 | | | | | | | | | | | | — | | — | | — | | — | | — | | 51,051 | | $1,699,488 | | — | | — | | John Goll | | 1,885 | | 1,885 | | — | | $13.67 | | 01/05/2027 | | — | | — | | — | | — | | | | 10,683 | | 1,527 | | — | | $17.16 | | 05/17/2027 | | — | | — | | — | | — | | | | 7,325 | | 4,395 | | — | | $30.46 | | 01/04/2028 | | — | | — | | — | | — | | | | 10,410 | | 17,350 | | — | | $13.91 | | 01/03/2029 | | — | | — | | — | | — | | | | — | | 28,260 | | — | | $23.75 | | 01/03/2030 | | — | | — | | — | | — | | | | | | | | — | | | | | | 9,624 | | $320,383 | | — | | — |
| | OPTION AWARDS | STOCK AWARDS | | NAME | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE | EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
UNEARNED
OPTIONS (#) | OPTION
EXERCISE
PRICE ($) | OPTION
EXPIRATION
DATE1 | NUMBER
OF
SHARES
OR
UNITS OF
STOCK
THAT
HAVE NOT
VESTED
(#) | MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT VESTED
(#)2 | EQUITY
INCENTIVE
PLAN AWARDS:
NUMBER OF
UNEARNED
SHARES, UNITS
OR OTHER
RIGHTS THAT
HAVE NOT
VESTED (#) | EQUITY
INCENTIVE
PLAN AWARDS:
MARKET OR
PAYOUT VALUE
OF UNEARNED
SHARES, UNITS
OR OTHER
RIGHTS THAT
HAVE NOT
VESTED (#) | | William H. Lewis | 45,120 | — | — | $20.49 | 01/10/2024 | — | — | — | — | | | 150,000 | — | — | $22.76 | 05/21/2025 | — | — | — | — | | | 142,080 | — | — | $17.16 | 05/17/2027 | — | — | — | — | | | 200,290 | — | — | $30.46 | 01/04/2028 | — | — | — | — | | | 485,747 | 69,393 | — | $13.91 | 01/03/2029 | — | — | — | — | | | 176,619 | 105,971 | — | $23.75 | 01/03/2030 | — | — | — | — | | | 41,040 | 68,400 | — | $34.03 | 01/07/2031 | — | — | — | — | | | 51,480 | 85,800 | — | $26.46 | 05/12/2031 | — | — | — | — | | | — | 148,540 | — | $26.43 | 01/06/2032 | — | — | — | — | | | — | 224,450 | — | $17.07 | 05/11/2032 | — | — | — | — | | | — | — | — | — | — | 155,3773 | $3,104,432 | — | — | | | — | — | — | — | — | 61,4844 | $1,228,450 | — | — | | | | | | | | | | | | 55,500(5) | — | — | $14.24 | 10/31/2023 | — | — | — | — | | 50,000(5) | — | — | $12.58 | 6/2/2024 | — | — | — | — | | 175,530(5) | — | — | $13.67 | 1/5/2027 | — | — | — | — | | | | | | | | | | | | 67,257(6) | — | — | $12.44 | 5/23/2023 | — | — | — | — | | 83,334(6) | — | — | $12.44 | 5/23/2023 | — | —
| — | — | | 83,333(6) | — | — | $12.44 | 5/23/2023 | — | — | — | — | | 57,000(6) | — | — | $14.24 | 10/31/2023 | — | — | — | — | | 245,950(6) | — | — | $10.85 | 5/19/2026 | — | — | — | — | | | 57,275 | 34,365 | — | $28.88 | 02/03/2030 | — | — | — | — | | | 21,806 | 13,084 | — | $24.70 | 05/12/2030 | — | — | — | — | | | 17,100 | 28,500 | — | $34.03 | 01/07/2031 | — | — | — | — | | Sara Bonstein | 25,740 | 42,900 | — | $26.46 | 05/12/2031 | — | — | — | — | | | — | 62,840 | — | $26.43 | 01/06/2032 | — | — | — | — | | | — | 94,960 | — | $17.07 | 05/11/2032 | — | — | — | — | | | — | — | — | — | — | 50,6603 | $1,012,187 | — | — | | | — | — | — | — | — | 26,0134 | $519,740 | — | — | | | 88,060 | — | — | $14.56 | 10/03/2026 | — | — | — | — | | | 82,280 | — | — | $13.67 | 01/05/2027 | — | — | — | — | | | 76,600 | — | — | $17.16 | 05/17/2027 | — | — | — | — | | | 80,970 | — | — | $30.46 | 01/04/2028 | — | — | — | — | | | 202,396 | 28,914 | — | $13.91 | 01/03/2029 | — | — | — | — | | Roger Adsett | 88,312 | 52,988 | — | $23.75 | 01/03/2030 | — | — | — | — | | | 20,520 | 34,200 | — | $34.03 | 01/07/2031 | — | — | — | — | | | 25,740 | 42,900 | — | $26.46 | 05/12/2031 | — | — | — | — | | | — | 85,690 | — | $26.43 | 01/06/2032 | — | — | — | — | | | — | 129,490 | — | $17.07 | 05/11/2032 | — | — | — | — | | | — | — | — | — | — | 82,6353 | $1,651,047 | — | — | | | — | — | — | — | — | 35,4724 | $708,731 | — | — |
64INSMED PROXY STATEMENT | | OPTION AWARDS | STOCK AWARDS | | NAME | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE | EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
UNEARNED
OPTIONS (#) | OPTION
EXERCISE
PRICE ($) | OPTION
EXPIRATION
DATE1 | NUMBER
OF
SHARES
OR
UNITS OF
STOCK
THAT
HAVE NOT
VESTED
(#) | MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT VESTED
(#)2 | 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 (#) | | | 94,369 | 56,621 | — | $23.66 | 01/02/2030 | — | — | — | — | | | 35,325 | 21,195 | — | $23.75 | 01/03/2030 | — | — | — | — | | | 20,520 | 34,200 | — | $34.03 | 01/07/2031 | — | — | — | — | Martina Flammer
| 25,740 | 42,900 | — | $26.46 | 05/12/2031 | — | — | — | — | | | — | 68,560 | — | $26.43 | 01/06/2032 | — | — | — | — | | | — | 103,590 | — | $17.07 | 05/11/2032 | — | — | — | — | | | — | — | — | — | — | 60,3123 | $1,205,034 | — | — | | | — | — | — | — | — | 28,3774 | $566,972 | — | — | | | 20,071 | — | — | $19.11 | 02/10/2024 | — | — | — | — | | | 6,250 | — | — | $12.58 | 06/02/2024 | — | — | — | — | | | 10,000 | — | — | $16.07 | 01/08/2025 | — | — | — | — | | | 7,000 | — | — | $22.76 | 05/21/2025 | — | — | — | — | | | 20,000 | — | — | $19.25 | 10/27/2025 | — | — | — | — | | | 11,500 | — | — | $16.16 | 01/07/2026 | — | — | — | — | | | 20,500 | — | — | $10.85 | 05/19/2026 | — | — | — | — | | | 17,000 | — | — | $13.67 | 01/05/2027 | — | — | — | — | | | 19,040 | — | — | $17.16 | 05/17/2027 | — | — | — | — | | Drayton Wise | 18,110 | — | — | $30.46 | 01/04/2028 | — | — | — | — | | | 36,435 | 5,205 | — | $13.91 | 01/03/2029 | — | — | — | — | | | 28,256 | 16,954 | — | $23.75 | 01/03/2030 | — | — | — | — | | | 4,275 | 7,125 | — | $34.03 | 01/07/2031 | — | — | — | — | | | 5,362 | 8,938 | — | $26.46 | 05/12/2031 | — | — | — | — | | | — | 14,850 | — | $26.43 | 01/06/2032 | — | — | — | — | | | — | 22,440 | — | $17.07 | 05/11/2032 | — | — | — | — | | | — | 164,580 | — | $20.01 | 05/23/2032 | — | — | — | — | | | — | — | — | — | — | 45,7723 | $914,525 | — | — | | | —
| —
| —
| —
| —
| 6,1494 | $122,857 | — | — |
| (1)1. | These stock options have a vesting schedule of 25% on the first anniversary of the date of grant and 12.5% on each six-month anniversary thereafter until the fourth anniversary of the date of grant. |
| (2)2. | The Reflects the closing price of $19.98 per share of the Company’s Common Stock on the Nasdaq Global Select Market on December 30, 2022. |
| 3. | RSUs have a vesting schedule of 25% on each anniversary of the date of grant through the fourth anniversary of the date of grant. |
| 4. | PSUs vest upon the achievement of two performance conditions, a service condition, and a market condition. The performance conditions are the issuance of a press release announcing certain top-line results from the ASPEN trial within a defined time horizon and the acceptance of an NDA by the FDA for brensocatib. The service condition is continuous employment with the Company through the later of (i) the third anniversary of the grant date of the grant.PSU award and (ii) the date an NDA for brensocatib is accepted by the FDA. The potential payout of the awards ranges from 0% to 250% of the target, dependent on a market condition that is based on the Company’s TSR compared to Nasdaq Biotech Index constituents. |
| (3)5 | Reflects the closing price of $33.29 per share of our Common Stock on the Nasdaq Global Market on December 31, Awards are held indirectly by William H. Lewis through Article 4 Trust under William Lewis Family Legacy Trust U/A 11/2/2020. |
| 6 | Awards are held indirectly by William H. Lewis through Article 4 Trust under Katie Procter Dynasty Trust. |
65INSMED PROXY STATEMENT Option Exercises and Stock Vested During 20202022 The following table sets forth information with respect to stock options exercised and stock vested during the year ended December 31, 2020.2022. | | | Option Awards | | Stock Awards | | Name | | Number of
Shares
Acquired on
Exercise (#) | | Value
Realized on
Exercise
($) | | Number of
Shares
Acquired on
Vesting (#) | | Value
Realized on
Vesting
($) | | William H. Lewis | | 285,000 | | 8,487,092 | | 22,580 | | 558,396 | | Sara Bonstein | | — | | — | | — | | — | | Roger Adsett | | — | | — | | 9,289 | | 229,831 | | Martina Flammer, M.D. | | — | | — | | — | | — | | Christine Pellizzari | | 183,750 | | 3,956,220 | | 9,135 | | 228,017 | | John Goll | | 89,890 | | 831,681 | | 1,642 | | 40,841 |
| | OPTION AWARDS | STOCK AWARDS | | NAME | NUMBER OF
SHARES
ACQUIRED
ON
EXERCISE (#) | VALUE
REALIZED ON
EXERCISE
($) | NUMBER OF
SHARES
ACQUIRED
ON
VESTING (#) | VALUE
REALIZED ON
VESTING
($) | | William H. Lewis | 410,028 | 6,480,258 | 48,331 | 1,138,609 | | Sara Bonstein | — | — | 5,838 | 120,000 | | Roger Adsett | — | — | 47,027 | 1,008,709 | | Martina Flammer | — | — | 8,929 | 205,858 | | Drayton Wise | — | — | 22,082 | 458,108 |
Potential Payments Upon Termination Our named executive officers are entitled to payments and other benefits under their employment agreements in connection with their termination under certain circumstances. We believe that the existence of these potential benefits will discourage turnover and mitigate the influence of a potential change in control on an executive officer’s decision-making due to concerns regarding job security. If Mr. Lewis’s employment is terminated by us without cause or by Mr. Lewis for good reason within two years after a change in control of the Company, Mr. Lewis will receive payment of accrued obligations (including any unpaid bonus for any completed fiscal year ending on or prior to his termination date and any accrued but unused vacation pay), a lump sum severance payment equal to two times the sum of his then applicable annual base salary plus two times his annual target bonus plus a pro-rata portion of his annual target bonus (calculated as the target bonus for the year of termination multiplied by the following fraction: (i) the number of days that the ExecutiveMr. Lewis was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all equity awards (other than any PSUs, which will vest in accordance with the applicable award agreement), and continuation for up to 18 months of health benefits provided he elects continued coverage under COBRA. Should Mr. Lewis’s employment be terminated by us without cause or by Mr. Lewis for good reason prior to the date of a change in control or more than two years after a change in control, he would be entitled to receive all of the foregoing benefits provided that his severance payment would instead be limited to one and one-half times his then applicable annual base salary and one times his target bonus for the year of termination (payable over an 18-month period) for the year of termination,, his pro-rata bonus would be based on actual performance for the year of termination, and his accelerated vesting would be limited to full vesting of all time-based equity awards granted at least one year prior to his termination date. Should Mr. Lewis’s employment be terminated due to his death or disability, Mr. Lewis or his estate would receive payment of accrued obligations, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he and his beneficiaries were entitled as a result of his death or disability. 66INSMED PROXY STATEMENT If Ms. Bonstein’s, Mr. Adsett’s, Dr. Flammer’s, or Ms. Pellizzari’sMr. Wise’s employment is terminated by us without cause or by the departing executive for good reason within two years after a change in control of the Company, the departing executive will receive payment of accrued obligations, any earned but unpaid bonus for any completed fiscal year ending on or prior to his or her termination date, a lump sum severance payment equal to one and one-half times his or her then applicable annual base salary plus one and one-half times his or her annual target bonus plus a pro-rata portion of his or her annual target bonus (calculated as the target bonus for the year of termination multiplied by the following fraction: (i) the number of days that the Executive was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all equity awards (other than any PSUs, which will vest in accordance with the applicable award agreement), and a continuation of up to 18 months of health benefits provided herhe or she elects continued coverage under COBRA. Should Ms. Bonstein’s, Mr. Adsett’s, Dr. Flammer’s, or Ms. Pellizzari’sMr. Wise’s employment be terminated by us without cause or by the departing executive for good reason prior to the date of a change in control or more than two years after a change in control, the departing executive would be entitled to receive all of the foregoing benefits provided that his or her severance payment would be limited to his or her then applicable annual base salary and instead be payable over a 12-month period, his or her pro-rata bonus would be based on actual performance for the year of termination, and his or her equity award vesting would be limited to accelerated vesting of all time-based equity awards that would otherwise have vested within 12 months following his or her termination date.date, and his or her continuation of health benefits under COBRA would be limited to up to 12 months. Should the departing executive’s employment be terminated due to his or her death or disability, the executive or his or her estate would receive payment of accrued obligations, a pro-rata portion of his or her annual target bonus based on actual performance for the year of termination, any earned but unpaid bonus for any completed fiscal year ending on or prior to his or her termination date, and any insurance benefits to which he or she and his or her beneficiaries were entitled as a result of his or her death or disabilitydisability. If Mr. Goll’s employment is terminated by us without cause or by Mr. Goll for good reason within one year after a change in control of the Company, Mr. Goll will receive payment of accrued obligations, a lump sum severance payment equal to his then applicable annual base salary plus a pro-rata portion of his annual target bonus (calculated as the target bonus for the year of termination multiplied by the following fraction: (i) the number of days that the Executive was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all equity awards, and a continuation of up to 12 months of health benefits provided he elects continued coverage under COBRA. Should Mr. Goll’s employment be terminated by us without cause or by Mr. Goll for good reason prior to the date of a change in control or more than one year after a change in control, Mr. Goll would be entitled to receive all of the foregoing benefits provided that his severance payment would be limited to one-half of his then applicable annual base salary and instead be payable over a six-month period, his pro-rata bonus would be based on actual performance for the year of termination, his equity award vesting would be limited to accelerated vesting of all time based equity awards that would otherwise have vested within six months following his termination date, and he would be entitled to receive a continuation of up to six months of health benefits provided he elects continued coverage under COBRA. Should Mr. Goll’s employment be terminated due to his death or disability, Mr. Goll or his estate would receive payment of accrued obligations, a pro rata portion of his annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he and his beneficiaries were entitled as a result of his death or disability.
67INSMED PROXY STATEMENT For purposes of the employment agreements, the term “cause” generally includes:
| (a)a. | a conviction of the executive, or a plea of nolo contendere, to a felony involving moral turpitude; |
| (b)b. | willful misconduct or gross negligence by the executive resulting, in either case, in material economic harm to the Company or any related entities; |
| (c)c. | a willful failure by the executive to carry out the reasonable and lawful directions of the Board and failure by the executive to remedy such willful failure within 30 days after receipt of written notice of same, byfrom the Board; |
| (d)d. | fraud, embezzlement, theft or dishonesty of a material nature by the executive against the Company or any related entity, or a willful material violation by the executive of a policy or procedure of the Company or any related entity, resulting, in any case, in material economic harm to the Company or any related entity; or |
| (e)e. | a willful material breach by the executive of his or her employment agreement and failure by the executive to remedy the material breach within 30 days after receipt of written notice thereof from the Board. |
For purposes of the employment agreements, the term “good reason” generally includes: | (a)a. | a material diminution in the executive’s base compensation; |
| (b)b. | a material diminution in the executive’s authority, duties, or responsibilities; |
| (c)c. | a material diminution in the authority, duties, or responsibilities of the supervisor to whom the executive is required to report;report (including, for Mr. Lewis, a requirement that Mr. Lewis report to a corporate officer or executive instead of reporting directly to the Board); |
| (d)d. | the Company’s or related entity’s requiring the executive to be based at any office or location outside of 50 miles from the location of employment or service as of the effective date of his or her employment agreement, except for travel reasonably required in the performance of the executive’s responsibilities; or |
| (e)e. | any other action or inaction that constitutes a material breach by the Company of the executive’s employment agreement. |
For purposes of the employment agreements, the term “change in control” generally includes: | (a)a. | the acquisition by another person of beneficial ownership of 40% or more of our Common Stock; |
| (b)b. | a proxy contest that results in the replacement of a majority of the members of our Board; |
| (c)c. | a reorganization, merger, statutory share exchange, or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries, after which our shareholders own lesschange in proportion by more than 60%40%, or after which half or more of the surviving corporation’s stock;our Board has changed; or |
| (d)d. | approval by our shareholders of a complete liquidation or dissolution of our Company. |
To protect our business and goodwill, during the employment term and for a period of 12 months after the termination of an executive’s employment with us, each executive has agreed that he or she will not: | 1. | engage in any activity in material competition with the business in which we engaged while the executive was employed by us; |
| 2. | directly or indirectly recruit or solicit any person who is then our employee or was our employee at any time within six months prior to such solicitation; or |
| 3. | solicit, divert or take away, or attempt to divert or to take away, the business or patronage of any of our clients or customers, or prospective clients or customers. |
68INSMED PROXY STATEMENT The severance benefits that executives may be entitled to receive under these agreements and other benefits that the executives are entitled to receive under other plans may constitute parachute payments that are subject to the “golden parachute” rules of Section 280G of the Code and the excise tax of Code Section 4999.4999 of the Code. If these payments are determined to be parachute payments, as calculated by our independent registered public accounting firm, the parachute payments will be reduced if, and only to the extent that, a reduction will allownecessary to avoid any payments becoming nondeductible under Section 280G of the executivesCode or subject to receive a greater net afterthe excise tax amount thanunder Section 4999 of the executives would receive absent a reduction.Code. All severance benefits (other than accrued obligations and certain insurance benefits to which the executive may be entitled upon death or disability) are also subject to the execution and non-revocation of a general release of claims against the Company. The table below summarizes the hypothetical payments that could have been made by us with respect to each of the named executive officers below, assuming that a qualified termination under the applicable agreement had occurred on December 31, 20202022 as a result of termination without cause or for good reason during the two-year period immediately following a change in control. | | | Cash
Severance(1) | | Pro-Rata
Bonus(2) | | Benefits | | Value of
Accelerated
Equity(3) | | Total | | William H. Lewis | | $2,111,105 | | $395,832 | | $45,220 | | $13,749,081 | | $16,301,238 | | Sara Bonstein | | $882,000 | | $168,000 | | $34,456 | | $703,838 | | $1,788,294 | | Roger Adsett | | $1,080,030 | | $205,720 | | $34,456 | | $7,093,426 | | $8,413,632 | | Martina Flammer, M.D. | | $1,050,000 | | $200,000 | | $22,715 | | $2,343,645 | | $3,616,360 | | Christine Pellizzari | | $999,915 | | $190,460 | | $45,220 | | $5,295,442 | | $6,531,037 | | John Goll | | $345,050 | | $120,768 | | $30,147 | | $1,000,278 | | $1,496,243 | | | | | | | | | | | | |
| | CASH
SEVERANCE1 | PRO-RATA
BONUS2 | VALUE OF
ACCELERATED
EQUITY3 | TOTAL | William
H. Lewis | $2,498,490 | $514,395 | $5,407,248 | $8,420,133 | | Sara Bonstein | $1,002,918 | $191,032 | $1,808,264 | $3,002,214 | | Roger Adsett | $1,260,428 | $280,095 | $2,912,102 | $4,452,625 | Martina
Flammer,
M.D. | $1,122,072 | $213,728 | $2,073,457 | $3,409,257 | Drayton
Wise | $1,050,000 | $200,000 | $1,134,280 | $2,384,280 |
| (1)1. | These payments would be payable to the executive upon a qualified termination under the applicable agreement. The cash severance figure for Mr. Lewis includes salary for two years plus two times the target bonus. The cash severance figures for Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Ms. PellizzariMr. Wise include one and one-half times their salary and one and one-half times their target bonus. The cash severance figure for Mr. Goll includes one year’s salary. |
| (2)2. | The value used in the table assumes the full target bonus for the year. |
| (3)3. | The value represents the acceleration of all applicable equity awards outstanding as of December 31, 2020.2022. The value realized upon the accelerated vesting of (i) stock options is calculated by multiplying the number of stock options subject to accelerated vesting by the difference between $33.29$19.98 the closing price of our Common Stock on December 31, 2020,30, 2022, and the exercise price of the options, and (ii) RSUs is calculated by multiplying the number of RSUs subject to accelerated vesting by $33.29.$19.98. |
69INSMED PROXY STATEMENT The following table summarizes the hypothetical payments that could have been made by us with respect to each of the named executive officers below assuming that a qualified termination under the applicable agreement had occurred on December 31, 20202022 as a result of termination without cause or for good reason prior to the date of a change in control or following the one- or two-year period as applicable, after a change in control. | | | Cash
Severance(1) | | Pro-Rata
Bonus(2) | | Benefits | | Value of
Accelerated
Equity(3) | | Total | | William H. Lewis | | $1,373,880 | | $395,832 | | $45,220 | | $9,587,555 | | $11,402,487 | | Sara Bonstein | | $420,000 | | $168,000 | | $22,971 | | $263,933 | | $874,904 | | Roger Adsett | | $514,300 | | $205,720 | | $22,971 | | $3,354,712 | | $4,097,703 | | Martina Flammer, M.D. | | $500,000 | | $200,000 | | $15,143 | | $1,097,871 | | $1,813,014 | | Christine Pellizzari | | $476,150 | | $190,460 | | $30,147 | | $2,859,656 | | $3,556,413 | | John Goll | | $172,525 | | $120,768 | | $15,074 | | $320,383 | | $628,750 | | | | | | | | | | | | |
| | CASH
SEVERANCE1 | PRO-RATA
BONUS2 | VALUE OF
ACCELERATED
EQUITY3 | TOTAL | William
H. Lewis | $1,616,670 | $514,395 | $1,960,435 | $4,091,500 | Sara
Bonstein | $477,580 | $191,032 | $385,823 | $1,054,435 | Roger
Adsett | $560,190 | $280,095 | $907,500 | $1,747,785 | Martina
Flammer,
M.D. | $534,320 | $213,728 | $472,043 | $1,220,091 | Drayton
Wise | $500,000 | $200,000 | $365,572 | $1,065,572 |
| (1)1. | These payments and other benefits would be payable to the executive upon a qualified termination under the applicable agreement. The cash severance figure for Mr. Lewis consists of one and one-half times his base salary plus target bonus for one year, while the figures for Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Ms. PellizzariMr. Wise consist of their respective base salaries for one year. The cash severance figure for Mr. Goll consists of six months of his base salary. |
| (2)2. | The value used in the table assumes the full target bonus for the year. |
| (3)3. | For Mr. Lewis, the value represents the acceleration of all time-based vesting equity outstanding as of December 31, 20202022 granted at least one year prior to the termination date. For Ms. Bonstein, Mr. Adsett, Dr. Flammer, Ms. Pellizzari and Mr. Goll,Wise, the value represents accelerated vesting of all time-based equity that would have otherwise vested within 12 months following the termination date. The value realized upon the accelerated vesting of (i) stock options is calculated by multiplying the number of stock options subject to accelerated vesting by the difference between $33.29,$19.98, the closing price of our Common Stock on December 31, 2020,30, 2022, and the exercise price of the options, and (ii) RSUs is calculated by multiplying the number of RSUs subject to accelerated vesting by $33.29.$19.98. |
70INSMED PROXY STATEMENT COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee is comprised entirely of independent directors, and none of our executive officers served on the Compensation Committee or on the board of any company that employed any member of our Compensation Committee or our Board during the year ended December 31, 2020.2022. DODD-FRANK MANDATED CEO PAY RATIO
Dodd-Frank Mandated Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median annual total compensation of our employees and the annual total compensation of Mr. Lewis, our President and CEO. Registrants may identify the median employee once every three years unless there has been a change in their employee population or employee compensation arrangements that the registrant reasonably believes would result in a significant change in pay ratio disclosure. The pay ratio included in this section is calculated in a manner consistent with Item 402(u) of Regulation S-K. In 2020, we determined the median of the annual total compensation of all employees of our company (other than Mr. Lewis) for 2020 was $299,008.
| ● | In 2022, we determined the median of the annual total compensation of all employees of our company (other than Mr. Lewis) for 2022 was $256,516. |
For 2020, the annual total compensation of Mr. Lewis, as reported in the Summary Compensation Table, is $6,185,704.
| ● | For 2022, the annual total compensation of Mr. Lewis, as reported in the Summary Compensation Table, is $7,789,898. |
Based on this information, the ratio of the median of the annual total compensation of all employees (other than Mr. Lewis) to the annual total compensation of Mr. Lewis was 1 to 20.69.30.37. To identify the median of the annual total compensation of all of our employees (other than Mr. Lewis), as well as to determine the annual total compensation of our median employee, we took the following steps: | 1. | We determined that, as of December 31, 2020,2022, our employee population, excluding Mr. Lewis, consisted of approximately 523735 individuals working either at Insmed Incorporated or one of our consolidated subsidiaries. This population consisted of our full-time, part-time, and temporary employees and, as permitted by SEC rules, excluded independent contractors or similar non-employee workers during 2020.2022. We did not exclude any non-US employees from these calculations. |
| 2. | To identify the “median employee” from our employee population, we compared the sum of each employee’s wages, aggregate fair value of equity awards, and target cash bonus for 2020.2022. In doing so, we annualized the salary of all permanent employees who were hired in 20202022 but did not work for us the entire fiscal year. The fair value of option awards granted during 20202022 was calculated using the Black-Scholes valuation model pursuant to the assumptions described in Note 10, “Stock-Based Compensation” of the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.2022. We did not make any cost-of-living adjustments in identifying the median employee. |
| 3. | After identifying the median employee, we calculated annual total compensation for the employee using the same methodology we use for our named executive officers, as set forth in the Summary Compensation Table. This process resulted in a median employee with annual total compensation of $299,008$256,516 for 2020.2022. |
The SEC’s rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratios reported by other companies may not be comparable to our pay ratio, reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. 71INSMED PROXY STATEMENT
DODD-FRANK MANDATED PAY VERSUS PERFORMANCE DISCLOSURE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, the Company must annually disclose in its proxy statement the relationship between Company performance and the “compensation actually paid” (CAP) to the Principal Executive Officer and other NEOs. The following tables and related disclosures contain information regarding “compensation actually paid” to our Principal Executive Officer (“PEO”) and the average “compensation actually paid” to our NEOs for each of 2020, 2021 and 2022. The table also provides information regarding company performance over the same periods as well as the relationship of “compensation actually paid” to our PEO and NEOs to company performance. For information about how the Compensation Committee seeks to align pay with performance when making compensation decisions, see “Compensation Discussion and Analysis”. Pay Versus Performance Table | | | | | | VALUE OF INITIAL
FIXED $100 INVESTMENT
BASED ON: | | | YEAR | SUMMARY
COMPENSATION
TABLE TOTAL
FOR PEO1 | COMPENSATION
ACTUALLY PAID
TO PEO2,3 | AVERAGE
SUMMARY
COMPENSATION
TABLE TOTAL
FOR NON-PEO
NAMED EXECUTIVE
OFFICERS4 | AVERAGE
COMPENSATION
ACTUALLY
PAID TO NON-
PEO NAMED
EXECUTIVE
OFFICERS3,4,5 | TOTAL
SHAREHOLDER
RETURN6 | PEER GROUP
TOTAL
SHAREHOLDER
RETURN7 | NET INCOME
(IN THOUSANDS) | | 2022 | $7,789,898 | $4,334,915 | $3,964,362 | $2,740,466 | $84 | $111 | $(481,534) | | 2021 | $7,322,642 | $2,807,467 | $3,323,439 | $1,870,969 | $114 | $125 | $(434,654) | | 2020 | $6,185,704 | $12,656,157 | $2,839,276 | $4,418,181 | $139 | $126 | $(294,090) |
| 1. | Reflects compensation (as reported in the Summary Compensation Table (“SCT”)) for our Chairman and Chief Executive Officer, Mr. Lewis, who served as our PEO in 2020, 2021, and 2022. |
| 2. | Calculated in accordance with Item 402(v)(2) of Regulation S-K. The following adjustments were made to Mr. Lewis’ total compensation as reported in the SCT for each year to determine “compensation actually paid”. |
DIRECTOR COMPENSATION72INSMED PROXY STATEMENT
| YEAR | SUMMARY
COMPENSATION
TABLE TOTAL | DEDUCTIONS FOR
REPORTED GRANT DATE
FAIR VALUE OF STOCK
AWARDSA | DEDUCTIONS FOR
REPORTED GRANT DATE
FAIR VALUE OF OPTION
AWARDSA | ADDITIONS FOR PAY
VERSUS PERFORMANCE
EQUITY ADJUSTMENTSB | COMPENSATION
ACTUALLY PAID | | 2022 | $7,789,898 | $(1,624,982) | $(4,872,967) | $3,042,966 | $4,334,915 | | 2021 | $7,322,642 | $(1,499,969) | $(4,499,673) | $1,484,467 | $2,807,467 | | 2020 | $6,185,704 | $(1,249,986) | $(3,749,998) | $11,470,437 | $12,656,157 |
| A. | Reflects the amounts reported in the Stock Awards and Option Awards columns of the SCT in the relevant years. |
| B. | The pay versus performance equity adjustments reflect the aggregated sum of the following values for the respective years. |
| YEAR | YEAR-END FAIR VALUE OF
OUTSTANDING AND UNVESTED
EQUITY AWARDS GRANTED IN
THE COVERED YEAR | YEAR OVER YEAR CHANGE IN
FAIR VALUE OF OUTSTANDING
AND UNVESTED EQUITY
AWARDS GRANTED IN PRIOR
YEARS | YEAR OVER YEAR CHANGE
IN FAIR VALUE OF EQUITY
AWARDS GRANTED IN PRIOR
YEARS THAT VESTED IN THE
COVERED YEAR | TOTAL PAY VERSUS
PERFORMANCE EQUITY
ADJUSTMENTS | | 2022 | $6,205,073 | $(2,171,008) | $(991,099) | $3,042,966 | | 2021 | $5,178,718 | $(2,774,420) | $(919,831) | $1,484,467 | | 2020 | $7,254,113 | $3,693,320 | $(523,003) | $11,470,437 |
| 3. | Measurement date equity fair values are calculated with assumptions derived on a basis consistent with those used for grant date fair value purposes. RSUs are valued based on the closing stock price on the relevant measurement date. PSUs are valued with an assumed payout factor of 0%, consistent with the assumption for ASC 718 purposes. Stock options are valued using a Black-Scholes model as at the relevant measurement dates. |
| 4. | Reflects compensation for the following non-PEO NEOs:
2022: Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Mr. Wise |
2021: Ms. Bonstein, Mr. Adsett, Dr. Flammer, Ms. Schaeffer, and Ms. Pellizzari
2020: Ms. Bonstein, Mr. Adsett, Dr. Flammer, Ms. Pellizzari, and Mr. Goll | 5. | Average “compensation actually paid” for the non-PEO NEOs has been calculated in accordance with Item 402(v)(2) of Regulation S-K. The following adjustments were made to average SCT total compensation for each year to determine average “compensation actually paid.” |
73INSMED PROXY STATEMENT | YEAR | AVERAGE SUMMARY
COMPENSATION
TABLE TOTAL | DEDUCTIONS FOR
AVERAGE REPORTED
GRANT DATE FAIR VALUE
OF STOCK AWARDSA | DEDUCTIONS FOR
AVERAGE REPORTED
GRANT DATE FAIR VALUE
OF OPTION AWARDSA | ADDITIONS FOR
AVERAGE PAY VERSUS
PERFORMANCE EQUITY
ADJUSTMENTSB | AVERAGE
COMPENSATION
ACTUALLY PAID | | 2022 | $3,964,362 | $(765,603) | $(2,425,635) | $1,967,342 | $2,740,466 | | 2021 | $3,323,439 | $(662,479) | $(1,987,359) | $1,197,368 | $1,870,969 | | 2020 | $2,839,276 | $(324,990) | $(1,779,836) | $3,683,731 | $4,418,181 |
| A. | Reflects the average amounts reported in the Stock Awards and Option Awards columns of the SCT in the relevant years. |
| B. | The pay versus performance equity adjustments reflect the aggregated sum of the following values for the respective years. |
| YEAR | AVERAGE YEAR-END FAIR
VALUE OF OUTSTANDING
AND UNVESTED EQUITY
AWARDS GRANTED IN
THE COVERED YEAR | AVERAGE YEAR OVER YEAR
CHANGE IN FAIR VALUE
OF OUTSTANDING AND
UNVESTED EQUITY AWARDS
GRANTED IN PRIOR YEARS | AVERAGE YEAR OVER YEAR
CHANGE IN FAIR VALUE OF
EQUITY AWARDS GRANTED IN
PRIOR YEARS THAT VESTED
IN THE COVERED YEAR | TOTAL PAY VERSUS
PERFORMANCE
EQUITY
ADJUSTMENTS | | 2022 | $3,073,419 | $(725,458) | $(380,619) | $1,967,342 | | 2021 | $2,293,306 | $(852,103) | $(243,835) | $1,197,368 | | 2020 | $2,962,880 | $630,498 | $90,353 | $3,683,731 |
| 6. | Total shareholder return is the only financial performance measure that is currently, and was through the years presented in the table, used by the Company to link “compensation actually paid” to our NEOs to Company performance. |
| 7. | The Nasdaq Biotechnology Index is the selected Peer Group for TSR comparisons. |
74INSMED PROXY STATEMENT Compensation Actually Paid Versus Company Performance
The following graph visually describes the relationship between “compensation actually paid” to our PEO and the average “compensation actually paid” to our non-PEO NEOs, to the cumulative total shareholder return of Insmed. In addition, it compares the cumulative total shareholder return of Insmed to our selected peer group, the Nasdaq Biotechnology Index.
75INSMED PROXY STATEMENT The following graph visually describes the relationship between “compensation actually paid” to our PEO and the average “compensation actually paid” to our non-PEO NEOs, to net income (loss). Insmed does not consider net income (loss) as a relevant measure for determining our executive compensation given the lifecycle stage of our company. The movement in “compensation actually paid” across the three-year time horizon does not move meaningfully or deliberately in relation to the reported net income (loss).
76INSMED PROXY STATEMENT Tabular List of Company Performance Measures
As further described in our CD&A, we believe that the compensation opportunities for our NEOs should be predominantly variable with a significant portion in the form of short-term and long-term incentives. Given the current life-cycle stage of Insmed, financial measures do not feature meaningfully in our incentive plan design, which instead focuses on pipeline progress across our four pillars and stock price performance. For the fiscal year ending December 31, 2022, the only financial performance measure used to link “compensation actually paid” to our NEOs to company performance was total shareholder return. Total shareholder return will be used on a relative basis to assess performance in respect of the 2022 PSU awards, which currently remain unvested and outstanding, at the conclusion of the performance period. As a result of total shareholder return already being included in the pay versus performance table, no company-selected measure is reported.
TABULAR LIST OF MOST IMPORTANT MEASURES (1) Total Shareholder Return
77INSMED PROXY STATEMENT Director Compensation
Our Board determines the compensation of our non-employee directors based in part on recommendations made by the Compensation Committee. TheBased on data and advice provided by their independent consultant WTW, the Compensation Committee evaluates the form and amount of compensation for non-employee directors at least annually and recommends changes to our Board when appropriate. Our Board is currently compensated through a combination of cash retainers and equity awards in the form of RSUs. Our approach to Board compensation is intended to align our non-employee director compensation practices with the interests of our shareholders. For example,This is achieved through setting compensation levels and practices informed by market median practices, using the same compensation peer group that is considered for our named executive officers. In addition, we have share ownership guidelines in place for our non-employee directors, with a target share ownership of three times the amount of each director’s annual retainer that should be achieved within five years after the adoption of the guidelines or first appointment to the Board, whichever is later. As of the Record Date, all of our non-employee directors who had been on the Board for at least five years exceeded the share ownership guidelines. Mr. Lewis is a director and an executive officer of the Company. He receives no additional compensation for serving on the Board. Our share ownership guidelines for Mr. Lewis are described under “Compensation Discussion and Analysis—Corporate Governance Perspectives on our Executive Compensation Program” above. No other director is an employee of the Company. Fees Earned or Paid in CashCash.
Our non-employee directors are paid quarterly retainer fees for their service on the Board. Our non-employee directors are not compensated for attending individual meetings of the Board on a per-meeting basis. During 2020,2022, each non-employee director was paid a retainer totaling $50,000 annually. Mr. Brennan, the Lead Independent Director, was paid an additional retainer totaling $25,000. The Chair of the Nominations and Governance Committee was paid an additional annual fee of $10,000; the Chair of the Compensation Committee was paid an additional annual fee of $15,000; the Chair of the Audit Committee was paid an additional annual fee of $20,000; and the Chair of the Science and Technology Committee was paid an additional annual fee of $15,000. Annual retainer fees for non-chair committee members were paid as follows: members of the Nominations and Governance Committee, $5,000; members of the Compensation Committee, $7,500; members of the Audit Committee, $10,000; and members of the Science and Technology Committee, $7,500. Ms. Schafer’s compensation was prorated to reflect her appointment as of April 1, 2020.
Grant of Restricted Stock UnitsUnits.
On May 14, 2020,11, 2022 each non-employee director, other than Dr. Engelsen, received an annual equity-based grant with a grant date fair value of approximately $200,000$250,000 in the form of RSUs. Dr. Engelsen did not stand for re-election at the 2022 Annual Meeting and did not receive an equity-based grant as a result. The RSUs vest on the first anniversary of the date of the award, provided that the director attends at least 75% of the meetings of the Board during the year in which the award is made.
In addition, on April 1, 2020, Ms. Schafer received an equity-based grant with a grant date fair value of $22,647. Ms. Schafer’s compensation was consistent with the annual equity award made to other non-employee directors of the Company, following proration to reflect her expected service during the calendar year of 2020.Other.
Other
We reimburse all of our directors for expenses incurred in connection with their attendance at Board or committee meetings. We also provide director and officer insurance for all directors.
The following table sets forth a summary of the compensation we paid to our non-employee directors in 2020.2022.
To improve readability, only the columns “Fees Earned or Paid in Cash,” “Stock Awards,” and “Total” have been included in the table. All other columns have been removed as there is no reportable information with respect to those compensation items.
78INSMED PROXY STATEMENT | | FEES EARNED | | | | | NAME | OR PAID | STOCK AWARDS | | | | | IN CASH ($) | ($)123 | TOTAL ($) | | | | | | | | | Alfred F. Altomari | $62,699 | $250,000 | $312,699 | | | Elizabeth M. Anderson | $60,000 | $250,000 | $310,000 | | | David R. Brennan | $92,301 | $250,000 | $342,301 | | Clarissa Desjardins, Ph.D. | $65,000 | $250,000 | $315,000 | | | Steinar J. Engelsen, M.D. | $24,478 | — | $24,478 | | | Leo Lee | $65,000 | $250,000 | $315,000 | | | David W.J. McGirr | $70,000 | $250,000 | $320,000 | | | Carol A. Schafer | $65,000 | $250,000 | $315,000 | | | Melvin Sharoky, M.D. | $62,500 | $250,000 | $312,500 | |
| Name | | Fees Earned
or Paid
in Cash ($) | | Stock Awards ($)(1)(2)(3) | | Total ($) | | Alfred F. Altomari | | $75,000 | | $200,000 | | $275,000 | | Elizabeth M. Anderson | | $60,000 | | $200,000 | | $260,000 | | David R. Brennan | | $82,500 | | $200,000 | | $282,500 | | Clarissa Desjardins, Ph.D. | | $52,650 | | $200,000 | | $252,650 | | Steinar J. Engelsen, M.D. | | $73,675 | | $200,000 | | $273,675 | | Leo Lee | | $65,000 | | $200,000 | | $265,000 | | David W.J. McGirr | | $70,000 | | $200,000 | | $270,000 | | Carol Schafer (4) | | $47,134 | | $222,647 | | $269,781 | | Melvin Sharoky, M.D. | | $62,500 | | $200,000 | | $262,500 |
| | (1)1. | Amounts in this column reflect grant date fair values of stock awards granted during 2020,2022, calculated in accordance with FASB ASC Topic 718, except the assumption of forfeitures is not made.718. |
(2) | 2. | Each of our non-employee directors, except for Dr. Engelsen, who did not stand for re-election at the 2022 Annual Meeting, received a grant of 8,09714,645 RSUs in May 2020.2022. As of December 31, 2020,2022, each of our non-employee directors held 8,097 RSUs, with the exception of Ms. Schafer, who held 9,70214,645 RSUs. |
(3) | 3. | No option awards were granted to our directors in 2020.2022. None of our other non-employee directors held options as of December 31, 2020.2022. |
(4) | Ms. Schafer’s compensation was prorated to reflect her appointment as of April 1, 2020. Ms. Schafer received a pro-rated non-employee director grant of 1,605 RSUs upon her appointment to the board. |
79INSMED PROXY STATEMENT Proposal No. 3
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
In Proposal 2, we are providing our shareholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers. In this Proposal 3, we are asking our shareholders to cast a non-binding advisory vote regarding the frequency of future advisory votes on the compensation of our named executive officers. Shareholders may vote for a frequency of every one, two, or three years, or may abstain from voting.
Our Board has determined that an annual vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers is the most appropriate option for the Company. Accordingly, our Board recommends that the advisory vote on the compensation of our named executive officers occurs every year. Our Board believes that an annual advisory vote on the compensation of our named executive officers will allow our shareholders to provide timely, direct input on our executive compensation philosophy, policies, and practices as disclosure in the proxy statement each year.
Vote Required for Approval of this Proposal
Shareholders have the choice of voting for advisory votes on named executive officer compensation to occur once every one, two, or three years, or abstaining from the vote. The choice receiving the highest number of votes will be given due regard by, but will not be binding on, the Board. Abstentions and broker non-votes will not have any effect on the outcome of this proposal. However, the Board will take into account the outcome of the vote when making future decisions about how often the Company conducts an advisory shareholder vote on the compensation of its named executive officers.
Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE, ON AN ADVISORY BASIS, FOR A SHAREHOLDER VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION TO TAKE PLACE EVERY YEAR.
80INSMED PROXY STATEMENT PROPOSAL NO. 3Proposal No. 4
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Information Relative to Ratification of the Appointment of Independent Registered Public Accounting Firm
The Audit Committee has appointed Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2021.2023. Shareholder ratification of the appointment of our independent registered public accounting firm is not required under Virginia law, our Articles of Incorporation or our Bylaws. However, the Board is submitting the appointment of Ernst & Young to our shareholders for ratification as a matter of good corporate governance. A representative of Ernst & Young is expected to attend the Annual Meeting and will have an opportunity to make a statement and respond to appropriate questions.
The principal function of Ernst & Young is to audit our consolidated financial statements and attest on the effectiveness of our internal control over financial reporting and, in connection with these audits, to review certain related filings submitted to the SEC and to conduct limited reviews of the consolidated financial statements included in each of our quarterly reports. The aggregate fees billed for each of the last two years for professional services rendered by Ernst & Young, as well as information relating to the Audit Committee’s pre-approval policies and procedures, are detailed under “Audit Committee Report and Independent Auditor Fees.”
Vote Required for Approval of this Proposal
Ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm for the year ending December 31, 20212023 requires the affirmative vote of a majority of the votes properly cast on this proposal at the Annual Meeting. Abstentions are not considered votes cast and, therefore, will have no effect on the voting outcome. If your shares are held in street name, your broker or agent has discretionary authority to vote shares held through it in the absence of your instruction regarding how your shares should be voted.
In the event that this proposal is not approved, the Audit Committee plans to consider the vote and the reasons therefore in future decisions on the selection of our independent registered public accounting firm. Even if the appointment is ratified, the Audit Committee may engage different independent auditors at any time during the year if it determines that such a change would be in our best interests and those of our shareholders.
Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2021.2023.
81INSMED PROXY STATEMENT Proposal No. 5 PROPOSAL NO. 4
AMENDMENT NO. 2 TOAPPROVAL OF THE INSMED INCORPORATED AMENDED AND RESTATED 2019 INCENTIVE PLAN
The 2019 Incentive Plan was approved by our shareholders at the 2019 Annual Meeting of Shareholders. Amendment No. 1, which provided for the issuance of 4,500,000 additional shares of Common Stock under the 2019 Incentive Plan, was approved by our shareholders at the 2020 Annual Meeting of Shareholders. The 2019 Incentive Plan was further amended by the Omnibus Amendment to Insmed Incorporated Incentive Plans, dated December 10, 2020, to permit the transfer of certain awards for estate-planning purposes. The Board of Directors adopted on March 30, 2021, subject to shareholder approval, Amendment No. 2, to the 2019 Incentive Plan (the Amendment) to providewhich provided for the issuance of 2,750,000 additional shares of Common Stock under the 2019 Incentive Plan.Plan, was approved by our shareholders at the 2021 Annual Meeting of Shareholders. Amendment No. 3, which provided for the issuance of 3,000,000 additional shares of Common Stock under the 2019 Incentive Plan, among other changes, was approved by our shareholders at the 2022 Annual Meeting. The Board of Directors adopted on March 29, 2023, subject to shareholder approval, the Amended and Restated 2019 Incentive Plan (the “Amended and Restated 2019 Incentive Plan”), which amends and restates the 2019 Incentive Plan to provide for the issuance of 10,500,000 additional shares of Common Stock thereunder. In addition, the Amended and Restated 2019 Incentive Plan also (i) provides that each share of Common Stock subject to a full value award will be counted as 1.45 shares for purposes of calculating the number of shares of Common Stock available for issuance thereunder, (ii) limits the exceptions to the minimum vesting requirement, (iii) clarifies the term of tandem SARs (as defined below), (iv) clarifies the payment timing of dividends and dividend equivalents, and (v) provides the administrator with discretion to cancel awards in exchange for cash and/or other consideration in connection with a change in control. No other changes to the 2019 Incentive Plan are proposed or recommended. The AmendmentAmended and Restated 2019 Incentive Plan is attached hereto as Appendix A. Background and Purpose
If the AmendmentAmended and Restated 2019 Incentive Plan is not approved, we will have remaining only 3,768,849186,657 shares available for future grant under the 2019 Incentive Plan (plus any shares that might be returned to the 2019 Incentive Plan as a result of future cancellations, terminations, expirations, forfeitures, and lapses), based on awards outstanding as of the Record Date, and thereafter we will have limited ability to grant additional equity incentives under the 2019 Incentive Plan. Among other activities, we continue to focus on the successful commercialization of ARIKAYCE in the US, Europe and EuropeJapan for appropriate patients, are seeking regulatory approvals for ARIKAYCE in Japan, continue to advance the post-approval confirmatory, frontline clinical trial program for ARIKAYCE, through the ARISE trial and the ENCORE trial, and continue to advance the ASPEN trial of brensocatib, to seek to confirm the positive results seen in the WILLOW trial and to support a new drug application. We expect these activities to result in continued increases in our employee headcount. To ensure that we have sufficient equity plan capacity to compensate and incentivize our employees as we undertake these activities, the Board adopted the AmendmentAmended and Restated 2019 Incentive Plan and strongly recommends that our shareholders approve the Amendment.Amended and Restated 2019 Incentive Plan.
Equity basedEquity-based compensation is a vital part of our compensation program for our employees, including our named executive officers, and our non employeenon-employee directors. We believe equity basedequity-based compensation creates an ownership culture that rewards our executives for maximizing shareholder value over time and aligns the interests of our employees and directors with those of our shareholders. We have traditionally granted stock options to new hires in connection with their commencement of employment and stock options, as well as other forms of equity basedequity-based compensation, to key employees as part of their ongoing compensation packages. In 2018, we began granting RSUs to our employees. In 2022, we began granting PSUs to our executive officers and other key employees. We believe that providing these equity awards incentivizes employees, including management, to create long term shareholder value and aids in retention efforts, as awards generally vest over a number of years. In addition, we grant RSUs to non employeenon-employee directors annually as part of their compensation for service on the Board.
82INSMED PROXY STATEMENT The Board currently intends that the 2,750,00010,500,000 shares requested under the Amendment,Amended and Restated 2019 Incentive Plan, in addition to the 3,768,849shares186,657 shares available for future grant under the Amended and Restated 2019 Incentive Plan (plus any shares that might be returned to the Amended and Restated 2019 Incentive Plan as a result of future cancellations, terminations, expirations, forfeitures and lapses), will be sufficient to fund the Company’s annual stock option and RSU grants to current employees, PSU grants to our executive officers and other current key employees, as well as equity grants to new hires for at least the next year,up to two years, which it believes appropriate taking into account the Company’s planned growth. Upon a review of the remaining shares available for grant under our 2019 Incentive Plan and the anticipated need for future equity award issuances, the Board approved the AmendmentAmended and Restated 2019 Incentive Plan and the share pool authorized for issuance thereunder to ensure that we have sufficient equity plan capacity to continue to provide our eligible employees and directors with appropriate equity-based incentives.
In addition, the Amended and Restated 2019 Incentive Plan also provides that (i) each share of Common Stock subject to a full value award granted thereunder will reduce the number of shares of Common Stock available for issuance by 1.45 shares, and that each share of Common Stock subject to a full value award that is added back to the Amended and Restated 2019 Incentive Plan in accordance with the terms thereof will count towards such number as 1.45 shares, (ii) awards granted under the Amended and Restated 2019 Incentive Plan are subject to a minimum vesting period of one year, except in the case of substitute awards issued in connection with acquisitions, awards that vest in connection with the participant’s death or disability, or awards granted pursuant to the 5% share pool exception described in further detail below, (iii) tandem SARs shall have the same term (including any extension thereof) as the stock option to which they relate, (iv) no dividends or dividend equivalents will be paid in either cash or shares (other than shares subject to the same restrictions as the associated restricted stock) prior to the vesting of the portion of the award to which such dividends or dividend equivalents relate. We believe that these changes reflect best compensation governance practices in furtherance of shareholder interests, and (v) in the event of a change in control, the administrator may in its discretion provide that outstanding awards will be cancelled in exchange for cash and/or other consideration based on the fair market value of a share of Common Stock on the date of such change in control.
Key Considerations for Requesting Additional Shares
In determining the number of shares to be authorized under the Amended and Restated 2019 Incentive Plan, as proposed to be amended, the Board considered the following principal factors:
| •● | Number of Shares Available for Grant under Existing Plan: Plan: As of the Record Date, 3,768,849186,657 shares remained available for issuance under the 2019 Incentive Plan. There were no shares available to grant under prior incentive plans. |
| •● | Number of Outstanding Awards Under All Plans: Plans: As of the Record Date, there were 13,039,38219,216,126 outstanding stock options, which had a weighted average exercise price of $20.41$21.75 and a weighted average remaining contractual life of 7.107.13 years, there were 2,062,463 RSU awards outstanding, and there were 917,937 RSU268,445 PSU awards outstanding.outstanding at the target level. |
| •● | Burn Rate: Rate: Burn rate measures our usage of shares for our stock plans as a percentage of our outstanding shares. For 2020, 20192022, 2021, and 2018,2020, our burn rate was 4.05%4.47%, 3.42%3.15%, and 1.95%4.05%, respectively, resulting in an average annual burn rate of 3.14%3.89% over a three-year period. The rates were calculated by dividing the number of shares subject to awards granted during the year net of forfeitures and cancellations by the weighted average number of shares outstanding during the year. |
83INSMED PROXY STATEMENT New Plan Benefits
Awards under the Amended and Restated 2019 Incentive Plan as proposed to be amended, are discretionary and the administrator has not yet determined to whom future awards will be made and the terms and conditions of such awards. As a result, no information is provided concerning the benefits to be delivered under the plan to any individual or group of individuals. Information about awards granted to our named executive officers and directors during 20202022 can be found under the heading “Compensation Discussion and Analysis—20202022 Grants of Plan-Based Awards” and “Director Compensation—Grant of Restricted Stock Units,” respectively. During 2020,2022, awards covering 1,183,3192,181,724 plan shares of Common Stock were granted to our executive officers, awards covering 93,098146,450 plan shares were granted to our non-employee directors and awards covering 2,416,3114,182,168 plan shares were granted to our other employees. Amended and Restated 2019 Incentive Plan Summary
The following is a description of the material features of the Amended and Restated 2019 Incentive Plan, as proposed to be amended.Plan. The following discussion is qualified in all respects by reference to the full text of (i) the planAmended and Amendment No. 1 thereto, attached as Exhibits 10.5 and 10.5.1, respectively, to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, (ii) the Omnibus Amendment to Insmed IncorporatedRestated 2019 Incentive Plans, attached as Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and (iii) the Amendment,Plan, attached hereto as Appendix A. The term “employees” in the following discussion is used to refer to officers and directors and other employees of the Company and its affiliates, where applicable.
Purpose and EligibilityEligibility.
The purpose of the Amended and Restated 2019 Incentive Plan is to advance the interests of the Company by aligning the individual interests of employees, officers, non-employee directors and other service providers, in each case who are selected to be participants, with the interests of Company shareholders, and by providing such individuals with an incentive to continue working toward and contributing to the success and progress of the Company. Employees of the Company and its affiliates, members of the Board, and other non-employee advisors or service providers are eligible to be considered for the grant of awards under the Amended and Restated 2019 Incentive Plan. As of the Record Date, approximately 9 nonemployeeeight non-employee directors, 7seven executive officers and 545773 other employees of the Company were so eligible.
Shares Subject to the Amended and Restated 2019 Incentive Plan and to AwardsAwards.
If the AmendmentAmended and Restated 2019 Incentive Plan is approved, the maximum number of shares of Common Stock authorized under the 2019 Incentive Planthereunder is 10,750,000,24,250,000, including the 2,750,00010,500,000 shares that would be added toby the Amended and Restated 2019 Incentive Plan, under the Amendment, plus any shares of Common Stock subject to outstanding awards under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan, as of theMay 16, 2019 (the effective date of the 2019 Incentive Plan,Plan), that, after such date, are canceled, terminate unearned, expire, are forfeited or lapse for any reason, or are settled in cash without the delivery of shares. Shares of Common Stock issued under the Amended and Restated 2019 Incentive Plan may either be authorized and unissued shares or previously issued shares acquired by the Company, including shares purchased in the open market. The number of shares of Common Stock available for issuance under the Amended and Restated 2019 Incentive Plan will be reduced by (i) one share for each share of Common Stock subject to a stock option or stock appreciation right (SAR)(“SAR”) with an exercise or strike price of at least 100% of the fair market value of the underlying Common Stock on the date of grant, and (ii) 1.251.45 shares for each share of Common Stock subject to a full value award (e.g.(e.g., restricted stock or RSUs)RSUs (including PSUs)).
85INSMED PROXY STATEMENT The number of shares of Common Stock available for issuance under the Amended and Restated 2019 Incentive Plan will be increased to the extent that an award under the Amended and Restated 2019 Incentive Plan (or any award under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan that is outstanding as of theMay 16, 2019 (the effective date of the 2019 Incentive Plan)) is canceled, terminates unearned, expires, is forfeited, or lapses for any reason, or such an award is settled in cash without the delivery of shares to a participant, such that any shares of Common Stock subject to any such award will again be available for the grant of an award pursuant to the Amended and Restated 2019 Incentive Plan. Shares will not again be available for issuance under the plan if they are tendered in payment of an option exercise price or delivered or withheld to satisfy any tax withholding obligation. Additionally, shares covered by a stock-settled SAR that are not issued upon full settlement will also not again be available for issuance under the plan. The payment of dividend equivalents in cash in conjunction with any outstanding awards under the Amended and Restated 2019 Incentive Plan will not be counted against the shares available for issuance under the Amended and Restated 2019 Incentive Plan. Any shares of Common Stock with respect to awards issued under the Amended and Restated 2019 Incentive Plan (or an award issued under the 2017 Incentive Plan, the 2015 Incentive Plan, or the 2013 Incentive Plan) that again become available for future grants will be added back to the share pool (i) as one share for each share of Common Stock subject to a stock option or SAR, and (ii) as 1.251.45 shares for each share of Common Stock subject to a full value award, provided, that awards issued under the 2017 Incentive Plan, the 2015 Incentive Plan, or the 2013 Incentive Plan will be considered full-value awards if they would have been full-value awards if issued under the Amended and Restated 2019 Incentive Plan and added back to the share pool as one share in all other cases.
If the AmendmentAmended and Restated 2019 Incentive Plan is approved, the aggregate number of shares of Common Stock that may be issued pursuant to the exercise of incentive stock options (ISOs)(“ISOs”) granted under the Amended and Restated 2019 Incentive Plan will not exceed 10,750,000,24,250,000, including the 2,750,00010,500,000 that are added toby the Amended and Restated 2019 Incentive Plan under the Amendment.Plan.
Awards granted or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or with which the Company combines will not reduce the shares authorized for issuance under the Amended and Restated 2019 Incentive Plan. In addition, in the event that a company acquired by the Company, or with which the Company combines, has shares available under a shareholder-approved, pre-existing equity compensation plan, not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to such pre-existing plan (as adjusted in connection with such acquisition or combination) may be used for awards under the Amended and Restated 2019 Incentive Plan and will not reduce the shares authorized for issuance under the Amended and Restated 2019 Incentive Plan, provided that the awards using such available shares will not be made after the last day awards could have been made under the terms of the pre-existing plan absent the acquisition or combination and will not be granted to individuals who were employed by the Company or its subsidiaries at the time the acquisition or combination was consummated.
AdministrationAdministration.
The Amended and Restated 2019 Incentive Plan is administered by the Compensation Committee, or, in the absence of the Compensation Committee, the Board itself. Any power of the administrator may also be exercised by the Board. To the extent that any permitted action taken by the Board conflicts with action taken by the administrator, the Board action will control. The Compensation Committee may by resolution authorize one or more officers of the Company to perform any or all things that the administrator is authorized and empowered to do or perform under the Amended and Restated 2019 Incentive Plan; provided, however, that such authorization must specify the total number of awards (if any) such officer or officers may award pursuant to such delegated authority, and provided further that in no event may an officer of the Company be delegated the authority to grant awards to, or amend awards held by, the individuals who are subject to Section 16 of the Exchange Act or report directly to such officer. Additionally, no such officer may grant any awards to himself or herself. The administrator may also delegate any or all aspects of the day-to-day administration of the Amended and Restated 2019 Incentive Plan to one or more officers or employees of the Company or any subsidiary, and/or to one or more agents.
85INSMED PROXY STATEMENT Subject to the provisions of the Amended and Restated 2019 Incentive Plan, the administrator has the authority to select the participants to receive awards and to grant such awards and to determine the terms and conditions of awards and the number of shares to be issued pursuant thereto, including conditioning the receipt or vesting of awards upon achievement of performance conditions.All decisions, determinations and interpretations by the administrator are final and binding on all participants and all other persons holding or claiming rights under the plan or any award granted thereunder.
AwardsAwards.
The Amended and Restated 2019 Incentive Plan authorizes the grant of awards of stock options, SARs, restricted stock, and RSUs. Any award may be subject to performance conditions as determined by the administrator. The terms of awards will be determined by the administrator and set forth in an award agreement. The terms of any awards may vary among participants. Subject to the provisions of the Amended and Restated 2019 Incentive Plan, the administrator will specify before, at or after the time of grant the provisions governing the effects upon an award of a separation from service or other termination of service. Unless otherwise provided in an award agreement or another agreement, including an employment agreement, unvested awards will be forfeited immediately if a participant terminates his or her employment with the Company for any reason. Participants will not have any rights as a shareholder with respect to shares covered by an award until the date the participant becomes the holder of record of such shares. Awards granted under the plan are subject to a minimum vesting period of one year, except in the case of substitute awards issued in connection with acquisitions or awards that vest in connection with certain acceleration events.the participant’s death or disability. Additionally, the administrator has the authority to grant awards covering up to 5% of the plan’s share pool that are not subject to this minimum vesting requirement. With respect to awards that entitle a participant to dividends or dividend equivalents, in no event may such dividends or dividend equivalents, if any, be paid to the participant prior to the vesting of the portion of the award to which such dividends or dividend equivalents relate. The administrator may not accelerate the vesting or exercisability of all or any portion of an award following the grant date of such award unless (i) explicitly provided under the terms of an award agreement (subject to the minimum vesting requirement), (ii) explicitly provided under the terms of an employment or service agreement, or (iii) in connection with a change in control or a grantee’s death or disability.
Stock Options.Stock options granted under the Amended and Restated 2019 Incentive Plan may be either non-qualified stock options or ISOs under Section 422 of the Code. The exercise price of any stock option granted, other than substitute awards, may not be less than 100% of the fair market value of a share of our Common Stock on the date of grant (provided that the exercise price of an ISO granted to a participant who owns stock possessing more than 10 percent of the combined voting power of all classes of the Company’s stock (a 10% Shareholder)“10% Shareholder”) will be at least 110% of the fair market value on such date). The option exercise price is payable in cash or such other method as determined by the administrator, including an irrevocable commitment by a broker to pay over such amount from a sale of the shares issuable under an option, the delivery of previously owned shares of Common Stock or withholding of shares of Common Stock deliverable upon exercise. Vesting may be based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. The term of a stock option will in no event be greater than ten years (or, for an ISO granted to a 10% Shareholder, five years), provided that the term of a non-qualified stock option will be automatically extended if, at the time of its scheduled expiration, the participant holding such option is prohibited by law or by the Company’s insider trading policy from exercising such option. Any such extension will expire on the 30th30th day following the date such prohibition no longer applies.
86INSMED PROXY STATEMENT
Other than in connection with a change in the Company’s capitalization, at any time when the exercise price of an option is above the fair market value of a share of Common Stock, the Company may not, without shareholder approval: (i) reduce the exercise price of such option, (ii) exchange such option for cash, another award, or a new option or SAR with a lower exercise price, or (iii) otherwise reprice such option. Options may not be granted under the Amended and Restated 2019 Incentive Plan in consideration for, and will not be conditioned upon the delivery of shares to the Company in payment of the exercise price and/or tax withholding obligation under, any other option. Holders of a stock option will have no voting rights or rights to receive dividends or dividend equivalents with respect to their stock option until they become the holder of record of the underlying shares. As of the Record Date, the fair market value of a share of our Common Stock, determined by the last reported sale price per share on that date as quoted on the Nasdaq Global Select Market, was $37.52.$18.32.
Restricted Stock and Restricted Stock Units.Units. The grant, issuance, retention, vesting, and/or settlement of any restricted stock or RSU award will occur at such time and be subject to such terms and conditions as determined by the administrator or under conditions established by the administrator, which may include conditions based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. Participants who receive restricted stock will be entitled to receive all dividends and other distributions paid with respect to those shares unless determined otherwise by the administrator.
The administrator will determine whether such dividends or distributions will be automatically reinvested in additional restricted stock and/or subject to the same restrictions as the underlying restricted stock, or whether such dividends or distributions will be paid in cash. Unless otherwise set forth in the award agreement, prior to the time shares are issued to a participant under an RSU, the Company will pay or accrue dividend equivalents on each date that dividends are paid, and such dividend equivalents will be paid at the time specified in the award agreement. As described above, no dividends or dividend equivalents may be paid in cash or shares (other than shares subject to the same restrictions as the associated restricted stock) with respect to an award of restricted stock or RSUs prior to the vesting of the portion of the award to which such dividends or dividend equivalents relate. Unless otherwise determined by the administrator, participants holding shares of restricted stock may exercise full voting rights with respect to those shares during the period of restriction. Participants holding RSUs will not have voting rights with respect to the underlying shares until they become the holder of record of the underlying shares.
Stock Appreciation Rights.Rights. A SAR entitles the participant, upon settlement, to receive a payment based on the excess of the aggregate market price of a specified number of shares of Common Stock at the time of the exercise over the exercise price of the right. SARs may be granted on a stand-alone basis or in tandem with a related stock option. The exercise price may not be less than the fair market value of a share of our Common Stock on the date of grant. A SAR granted in tandem with a stock option will have an exercise price equal to the exercise price of the stock option to which it relates, as well as the same term (including any extensions thereof) of the stock option to which it relates. The administrator will determine the vesting requirements and the payment and other terms of a SAR, including the effect of termination of service of a participant. Vesting may be based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. Other than in connection with a change in the Company’s capitalization, at any time when the exercise price of a SAR is above the fair market value of a share of Common Stock, the Company may not, without shareholder approval: (i) reduce the exercise price of such SAR, (ii) exchange such SAR for cash, another award, or a new option or SAR with a lower exercise price, or (iii) otherwise reprice such SAR. Holders of a SAR will have no voting rights or rights to receive dividends or dividend equivalents with respect to their SAR until they become the holder of record of the underlying shares.
87INSMED PROXY STATEMENT Adjustment and Change in ControlControl.
The number and kind of shares of Common Stock available for issuance (including under any awards then outstanding), and the number and kind of shares of Common Stock subject to the limits set forth in the Amended and Restated 2019 Incentive Plan, will be equitably adjusted by the administrator to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of shares of Common Stock outstanding. Such adjustment may be designed to comply with Section 424 of the Code or may be designed to treat the shares available under the Amended and Restated 2019 Incentive Plan and subject to awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such shares to reflect a deemed reinvestment in shares of the amount distributed to the Company’s security holders. The terms of any outstanding award will also be equitably adjusted by the administrator as to price, number or kind of shares subject to such award, vesting, and other terms to reflect the foregoing events, which adjustments need not be uniform as between different awards or different types of awards. No fractional shares of Common Stock will be issued pursuant to such an adjustment. In the event there is any other change in the number or kind of outstanding shares of Common Stock, or any stock or other securities into which such Common Stock will have been changed, or for which it will have been exchanged, by reason of a change in control, other merger, consolidation or otherwise, then the administrator will determine the appropriate and equitable adjustment to be effected, which adjustments need not be uniform between different awards or different types of awards. In addition, in the event of such change, the administrator may accelerate the time or times at which any award may be exercised, consistent with and as otherwise permitted under Section 409A of the Code, and may provide for cancellation of such accelerated awards that are not exercised within a time prescribed by the administrator in its sole discretion.
Unless otherwise expressly provided for in an award agreement or another agreement, including an employment agreement, in the event of a change in control, unless provision is made in connection with the change in control for (i) assumption of awards previously granted or (ii) substitution for such awards, or unless the administrator exercises the discretion to cancel outstanding awards in exchange for cash and/or other consideration as described further below, (A) the administrator will make an adjustment to any or all awards as the administrator deems appropriate to reflect such change in control or (B) (1) in the case of an option or SAR, the participant will have the ability to exercise such option or SAR, including any portion of the option or SAR not previously exercisable, and the unexercised portion of such option or SAR will be cancelled upon on the consummation of the change in control; (2) in the case of an award subject to performance conditions, the participant will have the right to receive a payment based on performance through a date determined by the administrator prior to the change in control (unless such performance cannot be determined, in which case the participant will have the right to receive a payment equal to the target amount payable); and (3) in the case of outstanding restricted stock and/or RSUs not subject to performance conditions, all conditions to the grant, issuance, retention, vesting, or transferability of, or any other restrictions applicable to, such award will immediately lapse. The administrator is not required to treat all participants, all awards, all awards held by a participant, all portions of a single award, or all awards of the same type identically. In the event of a change in control, the administrator may in its discretion provide that outstanding awards, whether vested or unvested, will be cancelled in exchange for cash and/or other consideration with a value equal to (i) for awards other than options or SARs, the fair market value of the shares of Common Stock underlying such award on the date of such change in control or (ii) for options or SARs, the excess, if any, of the fair market value of the shares of Common Stock underlying such award on the date of such change in control over the aggregate exercise price. However, if the fair market value of a share of Common Stock on such date does not exceed the per share exercise price of the option or SAR, the administrator may cancel the option or SAR for no consideration.
88INSMED PROXY STATEMENT Unless otherwise expressly provided for in an award agreement or another agreement, including an employment agreement, or under the terms of a transaction constituting a change in control, the following will occur upon a participant’s involuntary termination of employment or other service within 24 months following a change in control, provided that such termination does not result from disability, cause, or gross misconduct: (i) in the case of an option or SAR, the participant will have the ability to exercise such option or SAR, including any portion of the option or SAR not previously exercisable, and the option or SAR will remain exercisable for a period of three years following such termination (or until expiration, if earlier), (ii) in the case of an award subject to performance conditions, the participant will have the right to receive a payment based on performance through a date determined by the administrator prior to the change in control (unless such performance cannot be determined, in which case the participant will have the right to receive a payment equal to the target amount payable), and (iii) in the case of outstanding restricted stock and/or RSUs not subject to performance conditions, all conditions to the grant, issuance, retention, vesting, or transferability of, or any other restrictions applicable to, such award will immediately lapse. Transferability
Transferability.
No award may be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated by a participant other than by will or the laws of descent and distribution; provided, however, that a participant may, with the prior approval of the Company’s Chief Legal OfficerGeneral Counsel or Chief Financial Officer or one of their designees (provided that no such person may approve a transfer by such person), transfer an award, other than an ISO, for no consideration, to a family member (as defined in the General Instructions to Form S-8 under the Securities Act of 1933), in each case, with respect to whom such award or the exercise thereof (as applicable) is covered by an effective registration statement under the Securities Act of 1933 (collectively, the Permitted Transferees)“Permitted Transferees”). Any award transferred to a Permitted Transferee shall be further transferable only by will or the laws of descent and distribution or, for no consideration, to another Permitted Transferee of the participant. During the participant’s lifetime, each option or SAR shall be exercisable only by the participant or by his or her Permitted Transferee to whom such options or SARs have been transferred during the participant’s lifetime and, after the participant’s death, with respect to outstanding options, by beneficiaries of the participant, by any such Permitted Transferee or as permitted by the administrator.
Duration of the Amended and Restated 2019 Incentive PlanPlan.
Awards may not be granted under the Amended and Restated 2019 Incentive Plan after the tenth anniversary of the adoption by the Board of the 2019 Incentive Plan.Plan, which is April 3, 2029. Notwithstanding the foregoing, the Amended and Restated 2019 Incentive Plan may be terminated at such earlier time as the Board may determine. Termination of the Amended and Restated 2019 Incentive Plan will not affect the rights and obligations of the participants and the Company arising under awards granted prior to such termination.
Amendment and TerminationTermination.
Subject to limitations imposed by law, the Board may amend or terminate the Amended and Restated 2019 Incentive Plan at any time and the administrator may amend or alter any agreement or other document evidencing an award made under the Amended and Restated 2019 Incentive Plan. However, no such amendment may deprive the recipient of an award previously granted under the Amended and Restated 2019 Incentive Plan of any rights thereunder without his or her consent, unless the administrator determines that the amendment (i) is required or advisable to satisfy any law or regulation or avoid adverse financial accounting consequences, or (ii) is not reasonably likely to significantly diminish the benefits provided under the award, or that any diminishment has been adequately compensated. Notwithstanding the foregoing, no such amendment shall, without the approval of the shareholders of the Company:
| (a)a. | increase the maximum number of shares of Common Stock for which awards may be granted under the Amended and Restated 2019 Incentive Plan; |
89INSMED PROXY STATEMENT | (b)b. | reduce the price at which options may be granted below the price provided for in the Amended and Restated 2019 Incentive Plan; |
| (c)c. | reprice outstanding options or SARs; |
| (d)d. | extend the term of the Amended and Restated 2019 Incentive Plan; |
| (e)e. | change the class of persons eligible to be participants; or |
| (f)f. | otherwise amend the Amended and Restated 2019 Incentive Plan in any manner requiring shareholder approval by law or the rules of any stock exchange or market or quotation system on which the Common Stock is traded, listed, or quoted. |
Recoupment PolicyPolicy.
The administrator has the authority to cause a participant
Participants and/or an awardawards under the plan, to beincluding shares of Common Stock subject to the Company’san award, are subject to any applicable recovery, recoupment, clawback, and/or other forfeiture policies as maintained by the Company from time to time.time in accordance with the provisions of such policies. Federal Income Tax Treatment
90INSMED PROXY STATEMENT FEDERAL INCOME TAX TREATMENT
The following discussion summarizes the material U.S. federal income tax consequences to the Company and the participants in connection with the Amended and Restated 2019 Incentive Plan under existing applicable provisions of the Code and the accompanying regulations. The discussion is general in nature and does not address issues relating to the income tax circumstances of any individual participant. The discussion is based on federal income tax laws in effect on the date of this Proxy Statement and is, therefore, subject to possible future changes in the law. The discussion does not address the consequences of state, local, or foreign tax laws.
Nonqualified OptionsOptions.—
An employee will not recognize any income upon receipt of a nonqualified stock option, and the Company will not be entitled to a deduction for federal income tax purposes at the time of grant. Ordinary income will be realized by the holder at the time the nonqualified stock option is exercised and the shares are transferred to the employee. The amount of such taxable income, in the case of a nonqualified stock option, will be the excess, if any, of the fair market value of the shares on the date of exercise over the exercise price. The Company will generally be entitled to a tax deduction in an amount equal to the ordinary income that an employee recognizes upon exercise.
Incentive Stock Options.
An employee who receives an ISO will not recognize any income for federal income tax purposes upon receipt of the ISO, and the Company will not realize a deduction for federal income tax purposes. The holder generally will not be taxed upon exercise, but the excess, if any, of the fair market value of the stock on the date of exercise over the option exercise price may subject the holder to the alternative minimum tax. If the holder does not dispose of the ISO shares within two years from the date the option was granted or within one year after the shares were transferred to him on exercise of the option, then that portion of the gain on the sale of the shares that is equal to the difference between the sales price and the option exercise price will be treated as a long-term capital gain. The Company will not be entitled to a deduction either at the time the employee exercises the ISO or subsequently sells the ISO shares. However, if the employee sells the ISO shares within two years after the date the ISO is granted or within one year after the date the ISO is exercised, then the sale is considered a disqualifying sale, and the spread on exercise will be taxed as ordinary income. The balance of the gain will be treated as long- or short-term capital gain depending on the length of time the employee held the stock. If the shares decline in value after the date of exercise, the compensation income will be limited to the difference between the sale price and the amount paid for the shares. The tax will be imposed in the year the disqualifying sale is made. The Company will be entitled to a deduction equal to the ordinary income recognized by the employee.
With respect to both nonqualified stock options and ISOs, special rules apply if an employee uses shares already held by the employee to pay the exercise price or if the shares received upon exercise of the option are subject to a substantial risk of forfeiture by the employee.
Restricted Stock. . Employees receiving restricted stock will not recognize any income upon receipt of the restricted stock. Ordinary income will be realized by the holder at the time that the restrictions on transfer are removed or expire. The amount of ordinary income will be equal to the fair market value of the shares on the date that the restrictions on transfer are removed or expire. The Company will be entitled to a deduction at the same time and in the same amount as the ordinary income the employee is deemed to have realized. However, no later than 30 days after an employee receives the restricted stock, the employee may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the employee will not recognize any additional income. If the employee forfeits the shares to the Company, the employee may not claim a deduction with respect to the income recognized as a result of the election.
91INSMED PROXY STATEMENT Generally, when an employee disposes of shares acquired under the Amended and Restated 2019 Incentive Plan, the difference between the sales price and his or her basis in such shares will be treated as long- or short-term capital gain or loss depending upon the holding period for the shares.
Restricted Stock Units.
Employees who are granted RSUs do not recognize income at the time of the grant. When the award vests or is paid, participants recognize ordinary income in an amount equal to the fair market value of the units at such time, and the Company will receive a corresponding tax deduction.
Stock Appreciation Rights.
Upon exercise of a SAR, an employee will recognize taxable income in the amount of the cash received. An employee who receives unrestricted shares upon exercise of a SAR will recognize ordinary income in the year of exercise equal to the fair market value of the shares received. In either case, the Company will be entitled to an income tax deduction in the amount of such income recognized by the employee.
Potential Limitation on Deductions.
Section 162(m) of the Code places a limit of $1,000,000 on the amount the Company may deduct in any one year for compensation paid to each of the Company’s “covered employees.” The definition of “covered employee” includes anyone who was the Company’s CEO or CFO at any time during the year, as well as the Company’s three other most highly-compensated executive officers during the year, and any such individual who is or became a covered employee after December 31, 2016 will always be treated as a covered employee, even after termination of employment. For taxable years beginning after December 31, 2026, the definition of “covered employee” will also include the employees who are among the five highest compensated employees for the applicable taxable year other than the Company’s CEO, CFO, or three other most highly-compensated executive officers for such year. Accordingly, awards granted to the Company’s covered employees under the Amended and Restated 2019 Incentive Plan may not be fully deductible.
Federal Income Tax Consequences to the Company.
To the extent that a recipient recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code and is not disallowed by the $1,000,000 limitation on certain executive compensation under Section 162(m) of the Code.
Tax Withholding.
To the extent required by applicable federal, state, local or foreign law or practice, a participant will be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations that arise by reason of the award.
92INSMED PROXY STATEMENT Section 409A.
Section 409A of the Code applies to any awards under the Amended and Restated 2019 Incentive Plan that are deemed to be deferred compensation. If the requirements of Section 409A of the Code are not met, the recipient may be required to include deferred compensation in taxable income, and additional taxes and interest may be assessed on such amounts. If any awards are subject to Section 409A of the Code, we intend to have the awards comply with Section 409A of the Code.
Equity Compensation Plan Information
In 2022, we made stock-based awards from our 2019 Incentive Plan, and have outstanding grants under our 2017 Incentive Plan, 2015 Incentive Plan, 2013 Incentive Plan and 2000 Stock Incentive Plan (together with the 2019 Incentive Plan, 2017 Incentive Plan, 2015 Incentive Plan, and the 2013 Incentive Plan, the “Plans”).
The 2019 Incentive Plan was adopted by the Board and approved by our shareholders on May 16, 2019. Under the terms of the 2019 Incentive Plan, we are authorized to grant a variety of incentive awards based on our Common Stock, including stock options (both incentive stock options and non-qualified stock options), performance options/shares and other stock awards, such as RSUs.
The following table presents information as of December 31, 2022 with respect to the Plans and inducement grants of stock options we made in connection with the hiring of various employees.
| PLAN CATEGORY | | NUMBER OF
SECURITIES
TO BE ISSUED
UPON
EXERCISE OF
OUTSTANDING
OPTIONS AND
RIGHTS | | WEIGHTED
AVERAGE
EXERCISE
PRICE OF
OUTSTANDING
OPTIONS AND
RIGHTS1 | | NUMBER OF
SECURITIES
REMAINING
AVAILABLE
FOR FUTURE
ISSUANCE
UNDER EQUITY
COMPENSATION
PLANS | | | Equity Compensation Plans Approved by Shareholders: | | | | | | | | | | 2,465,477 | | | 2019 Incentive Plan2 | | | | 10,925,885 | | | $24.01 | | | | | | 2017 Incentive Plan3 | | | | 2,682,990 | | | $18.35 | | | — | | | 2015 Incentive Plan4 | | | | 2,138,586 | | | $15.84 | | | — | | | 2013 Stock Incentive Plan5 | | | | 812,428 | | | $15.25 | | | — | | | 2000 Stock Incentive Plan6 | | | | 23,900 | | | $6.90 | | | — | | Equity Compensation Plans Not
Approved by Shareholders: | | | | | | | | | | — | | Individual Compensation
Arrangements7 | | | | 3,132,519 | | | $25.09 | | | — | | | Total | | | 19,716,308 | | | | | | 2,465,477 | |
93INSMED PROXY STATEMENT | 1. | Does not include outstanding RSUs or PSUs, which do not require the payment of any exercise price upon their vesting. |
| 2. | Represents shares of Common Stock issuable upon the exercise of outstanding stock options and vesting of outstanding RSUs and PSUs granted under our 2019 Incentive Plan. |
| 3. | Represents shares of Common Stock issuable upon the exercise of outstanding stock options and vesting of outstanding RSUs granted under our 2017 Incentive Plan. To the extent that awards granted under the 2017 Incentive Plan terminate unearned, expire, or are canceled, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan. |
| 4. | Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under our 2015 Incentive Plan. To the extent that awards granted under the 2015 Incentive Plan terminate unearned, expire, or are canceled, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan. |
| 5. | Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under our 2013 Stock Incentive Plan. To the extent that awards granted under the 2013 Incentive Plan terminate unearned, expire, or are canceled or, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan. |
| 6. | Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under the 2000 Stock Incentive Plan. |
| 7. | Represents outstanding inducement grants of stock options we made in connection with the hiring of various employees. The vesting schedule for the shares of Common Stock subject to these options is 25% on the first anniversary of the date of grant and 12.5% of the shares vesting on each six-month anniversary thereafter until the fourth anniversary of the date of grant. |
Vote Required for Approval of this Proposal
Approval of the Amended and Restated 2019 Incentive Plan requires the affirmative vote of a majority of the votes cast on this proposal at the Annual Meeting. Abstentions and broker non-votes will not have an effect on the outcome of this proposal.
Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE AMENDED AND RESTATED 2019 INCENTIVE PLAN.
94INSMED PROXY STATEMENT Proposals for 2024 Annual Meeting
Shareholder proposals intended for inclusion in our proxy statement for the 2024 Annual Meeting of Shareholders must be received at our offices no later than the close of business on December 1, 2023. All such proposals must comply with Rule 14a-8 under the Exchange Act and must be submitted to the Corporate Secretary, Insmed Incorporated, 700 US Highway 202/206, Bridgewater, New Jersey 08807.
Under our Bylaws, any shareholder (as defined in our Bylaws) who wishes to present other business or nominate a director candidate at the 2024 Annual Meeting of Shareholders must give timely written notice of any such business or nomination to our Corporate Secretary in advance of the meeting. Such written notice must comply with the requirements in our Bylaws and must be given, either by personal delivery or by United States registered or certified mail, postage prepaid, to our Corporate Secretary at the address given above no later than 120 days nor more than 150 days before the anniversary of the immediately preceding year’s annual meeting. Accordingly, for the 2024 Annual Meeting of Shareholders, our Corporate Secretary must receive such written notice no earlier than December 13, 2023 and no later than January 12, 2024. If the date of the 2024 Annual Meeting of Shareholders is more than 30 days before or more than 60 days after May 11, 2024 (the anniversary of this year’s Annual Meeting), then the written notice must be received no later than the 120th day prior to such Annual Meeting or, if later, the 10th day following the day on which public disclosure of the date of such Annual Meeting was first made. If a shareholder fails to meet these requirements or fails to satisfy the requirements of Rule 14a-4 under the Exchange Act, the named proxies may exercise discretionary voting authority under proxies that we solicit to vote on any such business or nomination in accordance with their best judgment. In addition to satisfying all of the requirements under our Bylaws, any shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees at the 2024 Annual Meeting of Shareholders must also comply with all applicable requirements of Rule 14a-19 under the Exchange Act. The advance notice requirement under Rule 14a-19 does not override or supersede the longer advance notice requirement under our Bylaws. Our Bylaws are available on our website at www.insmed.com under the heading “Investors—Corporate Governance” or by submitting a written request to the Corporate Secretary, Insmed Incorporated, 700 US Highway 202/206, Bridgewater, New Jersey 08807.
95INSMED PROXY STATEMENT Annual Report on Form 10-K We will provide without charge to each person to whom this Proxy Statement has been made available on the written request of such person, a printed copy of our Annual Report on Form 10-K for the year ended December 31, 2022, including the financial statements and financial statement schedules. Requests should be directed to Mr. Michael A. Smith, Corporate Secretary, Insmed Incorporated, 700 US Highway 202/206, Bridgewater, New Jersey, 08807, (908) 977-9900. In connection with any such request, we will provide a list of exhibits to the Annual Report on Form 10-K for the year ended December 31, 2022, and will provide copies of any such exhibit upon the payment of a reasonable fee.
Separate Copies for Beneficial Holders
Institutions that hold shares in street name for two or more beneficial owners with the same address are permitted to deliver a single set of proxy materials to that address. Only one set of proxy materials will be delivered to such address unless they receive contrary directions from one or more of such beneficial owners. Any such beneficial owner can request a separate copy of these proxy materials by contacting our Corporate Secretary as described above, and we will promptly provide a separate copy. If you are the beneficial owner, but not the record holder, of the Company’s shares and wish to receive only one copy of our proxy materials in the future, you will need to contact your broker, bank or other agent to request that only a single copy of each document be mailed to all shareholders at the shared address in the future.
96INSMED PROXY STATEMENT General Information about the Annual Meeting and Voting DISTRIBUTION OF PROXY SOLICITATION AND OTHER REQUIRED ANNUAL MEETING MATERIALS The Board of Directors (the “Board”) of Insmed Incorporated is soliciting your proxy for the 2023 Annual Meeting of Shareholders (the “Annual Meeting”) on May 11, 2023, at 9:00 a.m. Eastern Time, and any adjournment or postponement thereof. The Annual Meeting will be held virtually via the Internet at www.virtualshareholdermeeting.com/INSM2023. We intend to make the Proxy Statement and related proxy materials available to our shareholders on or about March 31, 2023. Information about the Annual Meeting and Voting at or Prior to the Annual Meeting Why Did I Receive a One-page Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead of a Full Set of Proxy Materials? Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to mail to many of our shareholders a Notice of Internet Availability of the Proxy Materials (the “Notice”) instead of a paper copy of the proxy materials. All shareholders receiving the Notice will have the ability to access the proxy materials over the Internet and receive a paper copy of the proxy materials by mail on request. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. In addition, the Notice contains instructions on how you may request proxy materials in printed form by mail or electronically on an ongoing basis. This process has allowed us to expedite our shareholders’ receipt of proxy materials, lower the costs of distribution and reduce the environmental impact of our Annual Meeting. Who May Vote Shares in Connection with the Annual Meeting? Shareholders of record at the close of business on March 14, 2023 (the “Record Date”), will be entitled to notice of and to vote at the Annual Meeting. As of the Record Date, we had 136,428,466 outstanding shares of our common stock, $0.01 par value per share (the “Common Stock”). Each share of our Common Stock entitles the holder to one vote with respect to all matters submitted to shareholders at the Annual Meeting. Beneficial owners of shares of our Common Stock may direct the record holder of the shares on how to vote the shares held on their behalf. Who May Participate in the Annual Meeting? This year’s Annual Meeting will take place virtually through the Internet. We have designed the format of this year’s Annual Meeting to ensure that our shareholders who attend the Annual Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. You are entitled to attend and participate in the Annual Meeting only if you were a shareholder of record as of the close of business on the Record Date, or if you hold a valid proxy for the meeting, as described below. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/INSM2023, you must enter the 16-digit control number found on your Notice, proxy card, or other proxy materials. If you do not have a control number, please contact the brokerage firm, bank, dealer, or other similar organization that holds your account as soon as possible so that you can be provided with a control number. 97INSMED PROXY STATEMENT What is a Shareholder of Record and How Can I Vote if I am a Shareholder of Record? If, as of the close of business on the Record Date, shares of our Common Stock were registered directly in your name with our transfer agent, then you are a shareholder of record. As a shareholder of record, you may vote by proxy in advance or at the Annual Meeting. If you are a shareholder of record, you may vote or submit a proxy as follows: Before the Annual Meeting—You may authorize the voting of your shares by following the “Vote by Internet” instructions set forth on the Notice or proxy card through 11:59 p.m. Eastern Time on Wednesday, May 10, 2023. You must specify how you want your shares voted or your vote will not be completed and you will receive an error message. During the Annual Meeting—You may vote online during the Annual Meeting. You may cast your vote electronically during the Annual Meeting using the 16-digit control number found on your Notice or proxy card or other proxy materials and following the instructions at www.virtualshareholdermeeting.com/INSM2023. | 2. | By Telephone—Dial 1-800-690-6903 using any touch-tone phone to transmit your voting instructions through 11:59 p.m. Eastern Time on Wednesday, May 10, 2023. Have your Notice, proxy card, or other proxy materials in hand when you call and follow the voting instructions given to you over the phone. |
| 3. | By Mail—Complete and sign the proxy card and mail it in accordance with the instructions on the proxy card. Completed proxy cards must be received by 11:59 p.m. Eastern Time on Wednesday, May 10, 2023. |
In all cases, your shares will be voted according to your instructions. What is a Beneficial Owner of Shares and How Can I Vote if I am a Beneficial Owner? If, on the Record Date, your shares of our Common Stock were not held in your name with our transfer agent, but instead were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name,” and these proxy materials have been forwarded to you by that organization. The organization holding your account is considered to be the shareholder of record of shares of our Common Stock for purposes of voting at the Annual Meeting and is required to vote those shares in accordance with your instructions. If you do not give instructions to the organization holding your account, then the organization will have discretion to vote the shares with respect to “routine” matters but will not be permitted to vote the shares with respect to “non-routine” matters. See “What Matters at the Annual Meeting are ‘Routine’ and ‘Non-Routine’?” below. As a beneficial owner, you are invited to attend the Annual Meeting via the Internet at www.virtualshareholdermeeting.com/INSM2023. You may not vote your shares at the Annual Meeting unless you enter the 16-digit control number found on your Notice, proxy card, or other proxy materials. What if I Need Technical Assistance During the Annual Meeting? We encourage you to access the Annual Meeting before it begins. Online check-in will start shortly before the meeting on May 11, 2023. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual Annual Meeting log-in page. 98INSMED PROXY STATEMENT What is the Quorum Requirement? A quorum of shareholders is necessary to hold the Annual Meeting. Shares of our Common Stock representing a majority of the votes entitled to be cast on a matter at the Annual Meeting (or 136,428,466 shares as of the Record Date) will constitute a quorum for the transaction of business with respect to such matter, unless otherwise provided by law or in our Articles of Incorporation, as amended (the “Articles of Incorporation”). Votes withheld, abstentions and broker non-votes count as present for establishing a quorum. What Matters at the Annual Meeting are “Routine” and “Non-Routine”? Proposal 1, the election of Class II directors, Proposal 2, the advisory vote on the 2022 compensation of our named executive officers, Proposal 3, the advisory vote on the frequency of future advisory votes on the compensation of our named executive officers, and Proposal 5, the approval of the Insmed Incorporated Amended and Restated 2019 Incentive Plan (the “Amended and Restated 2019 Incentive Plan”), are non-routine matters. Proposal 4, the ratification of the appointment of our independent registered public accounting firm, is a routine matter. If you are a beneficial owner of shares of our Common Stock and do not instruct your broker or other agent how to vote, your shares will not be voted on “non-routine” matters and your shares will be “broker non-votes” with respect to those proposals. What are the Voting Requirements to Approve Each Proposal to be Submitted to Shareholders? The vote required to elect directors and approve each of the matters scheduled for a vote at the Annual Meeting is set forth below: | PROPOSAL | VOTE
REQUIRED | BOARD
RECOMMENDATION | | 1. | Election of three Class II directors | Plurality of votes cast | FOR | | 2. | Advisory vote to approve the 2022 compensation of our named executive officers | Majority of votes cast | FOR | | 3. | Advisory vote on the frequency of future shareholder advisory votes on the compensation of our named executive officers | Option receiving the highest number of votes | EVERY YEAR | | 4. | Ratification of appointment of Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the year ending December 31, 2023 | Majority of votes cast | FOR | | 5. | Approval of the Amended and Restated 2019 Incentive Plan | Majority of votes cast | FOR |
99INSMED PROXY STATEMENT Proposal 1, the election of Class II directors, requires a plurality of the votes cast. This means that the three nominees who receive the highest number of affirmative votes cast will be elected irrespective of how small the number of affirmative votes is in comparison to the total number of shares voted. Our Board, however, has adopted a director resignation policy, under which a director nominee in an uncontested election must submit his or her resignation for consideration by our Nominations and Governance Committee of the Board (the “Nominations and Governance Committee”) and our Board if the number of votes withheld with respect to such director’s election exceeds the number of votes “for” such director’s election. See “Corporate Governance—Corporate Governance Matters—Director Resignation Policy” for additional information. Proposals 2 and 3, the advisory votes on the 2022 compensation of our named executive officers and the frequency of future advisory votes on the same, are not binding on, nor do they overrule, any decisions of the Company, the Board or the Compensation Committee of the Board (the “Compensation Committee”). We value the input of our shareholders, and in the event that Proposal 2 is not approved by a majority of votes cast, and/ or more votes are cast on Proposal 3 for a different frequency than that recommended by the Board, the Board and the Compensation Committee will consider the votes in future decisions on the compensation of our named executive officers and the frequency of future advisory votes on the compensation of our named executive officers. Proposal 4, the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2023, does not require shareholder ratification under Virginia law, our Articles of Incorporation, or our Amended and Restated Bylaws (the “Bylaws”). However, the Board is submitting the appointment of Ernst & Young to the shareholders for ratification as a matter of good corporate governance. In the event that Proposal 4 is not approved by a majority of votes cast, the Audit Committee will consider the vote in future independent auditor selection decisions. Proposal 5, the approval of the Amended and Restated 2019 Incentive Plan, requires the affirmative vote of a majority of the votes cast. What Is the Effect of Votes Withheld, Abstentions and Broker Non-Votes On Each of the Proposals? Votes that are withheld or any abstentions from voting will not be counted in determining the number of votes cast with respect to any of the proposals. As explained above, because Proposals 1, 2, 3, and 5 are considered “non-routine,” if a beneficial owner does not instruct its broker or other agent how to vote such beneficial owner’s shares, broker non-votes will result. Broker non-votes will not be counted in determining the number of votes cast with respect to these proposals. Because Proposal 4 is considered “routine,” a beneficial owner’s broker or other agent will have discretion to vote any shares with respect to which such beneficial owner does not provide instructions, and no broker non-votes will occur with respect to this proposal. What if I Submit a Proxy But Do Not Specify How I Would Like to Vote? If we receive a signed and dated proxy card or receive your instructions by Internet or by telephone and your instructions do not specify how your shares are to be voted, your shares will be voted as follows: FOR the election of each of the three Class II nominees for director; FOR the approval of the 2022 compensation of our named executive officers; FOR an advisory vote EVERY YEAR on the compensation of our named executive officers; FOR the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2023; and FOR the approval of the Amended and Restated 2019 Incentive Plan. Unsigned proxy cards will not be voted. 100INSMED PROXY STATEMENT What If Other Matters Not Described Herein Are Brought Before the Annual Meeting for Action by the Shareholders? As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is not aware of any matters to be presented by other parties. If other matters are properly brought before the Annual Meeting, or any adjournment or postponement thereof, for action by the shareholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holders. How Can I Revoke a Proxy Once I Have Voted? Anyone giving a proxy may revoke it at any time before it is exercised by voting at the Annual Meeting or by delivering, including by phone or Internet, a later dated proxy or written notice of revocation to our Corporate Secretary. Attendance at the Annual Meeting will not itself revoke a proxy. A proxy, if executed, properly delivered and not revoked, will be voted at the Annual Meeting. What is the Expected Cost of Soliciting Proxies and Who Will Pay for this Cost? We will pay the cost of soliciting proxies. In addition to the use of mail and e-mail, proxies may be solicited in person or by telephone by our employees, with no additional remuneration. We have engaged Morrow Sodali LLC to assist in the solicitation of proxies and provide related advice and informational support, for a service fee, plus customary disbursements, which are not expected to exceed $10,000 in total. PRINCIPAL EXECUTIVE OFFICES OF INSMED The address of our principal executive offices is 700 US Highway 202/206, Bridgewater, New Jersey 08807. 101INSMED PROXY STATEMENT APPENDIX A Insmed Incorporated AMENDED AND RESTATED 2019 INCENTIVE PLAN 1. Purpose The purpose of the Plan is to advance the interests of the Company by aligning the individual interests of employees, officers, non-employee directors and other service providers, in each case who are selected to be participants, with the interests of Company shareholders and by providing such individuals with an incentive to continue working toward and contributing to the success and progress of the Company. The Plan provides for the grant of Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units, any of which may be performance-based, as determined by the Administrator. The Plan amends and restates the Insmed Incorporated 2019 Incentive Plan, which replaced the Insmed Incorporated 2017 Incentive Plan (the “2017 Plan”) with respect to future awards granted by the Company, and no future awards will made under the 2017 Plan after the Effective Date (as defined herein) of the Plan except as otherwise provided herein. 2. Definitions As used in the Plan, the following terms shall have the meanings set forth below: | a. | “Administrator” means the Administrator of the Plan in accordance with Section 6 of the Plan. |
| b. | “Affiliate” means any entity in which the Company has a substantial direct or indirect equity interest, as determined by the Committee from time to time. |
| c. | “Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto. |
| d. | “Approval Date” has the meaning set forth in Section 4 of the Plan. |
| e. | “Award” means an Option, Stock Appreciation Right, Restricted Stock, or Restricted Stock Unit granted to a Participant pursuant to the provisions of the Plan. |
| f. | “Award Agreement” means any written or electronic agreement or other instrument evidencing any Award, which may (but need not) require execution or acknowledgment by a Participant. |
| g. | “Board” means the Board of Directors of the Company. |
A-1 INSMED PROXY STATEMENT | h. | “Change in Control” means the occurrence of any one of the following: |
| 1. | any Person becomes the beneficial owner (as such term is defined in Rule 13d-3 under the Act) of at least 50% of (A) the value of the then outstanding shares of Common Stock (the “Outstanding Company Common Stock”) and/or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”) (the foregoing beneficial ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change in Control: (v) any acquisition directly from the Company; (w) any acquisition by the Company; (x) any acquisition by any Person that as of the Effective Date has beneficial ownership of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (3) below; or |
| 2. | during any period of two consecutive years (not including any period prior to the Effective Date) individuals who constitute the Board on the Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs after the Effective Date as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or |
| 3. | consummation of a reorganization, merger, statutory share exchange, or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the Persons who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Acquiring Corporation or any employee benefit plan (or related trust) of the Company or such Acquiring Corporation) beneficially owns, directly or indirectly, more than 50% of the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Board of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or |
A-2 INSMED PROXY STATEMENT | 4. | the complete liquidation or dissolution of the Company. |
Notwithstanding the foregoing, to the extent an Award provides for deferred compensation under Section 409A of the Code and payment is made upon a Change in Control, no event or transaction will constitute a Change in Control hereunder unless it also constitutes a “change in control event” under Section 409A of the Code. | i. | “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto, and the rulings and regulations issued thereunder. |
| j. | “Committee” means the Compensation Committee of the Board (or any successor committee). |
| k. | “Common Stock” means the common stock of the Company, par value $0.01 per share, or such other class or kind of shares or other securities as may be applicable under Section 14 of the Plan. |
| l. | “Company” means Insmed Incorporated, a Virginia corporation, and except as utilized in the definition of Change in Control, any successor corporation. |
| m. | “Dividend Equivalents” mean an amount payable in cash or Common Stock, as determined by the Administrator, with respect to a Restricted Stock Unit Award equal to what would have been received if the shares underlying the Award had been owned by the Participant. |
| n. | “Effective Date” has the meaning set forth in Section 4 of the Plan. |
| o. | “Fair Market Value” means as of any date, the value of the Common Stock determined as follows: (i) if the Common Stock is listed on any established stock exchange, system or market, the closing price for the Common Stock on such date (or if Common Stock was not traded on such exchange, system, or market on such date, then on the next preceding date on which shares of Common Stock were traded) as quoted on such exchange, system or market as reported in the Wall Street Journal or such other source as the Administrator deems reliable; and (ii) in the absence of an established market for the Common Stock, as determined in good faith by the Administrator by the reasonable application of a reasonable valuation method, taking into account factors consistent with Treas. Reg. § 409A-1(b)(5)(iv)(B) as the Administrator deems appropriate. |
| p. | “Freestanding SARs” has the meaning set forth in Section 9.a of the Plan. |
| q. | “Full-Value Award” means an Award that results in the Company transferring the full value of a share of Common Stock under the Award, whether or not an actual share of stock is issued. Full-Value Awards shall include Restricted Stock and Restricted Stock Units to the extent payable in Common Stock (including, but not limited to, Awards that are performance-based) for which the Company transfers the full value of a share of Common Stock under the Award, but shall not include Dividend Equivalents. |
| r. | “Incentive Stock Option” means a stock option that is designated as potentially eligible to qualify as an “incentive stock option” within the meaning of Section 422 of the Code. |
| s. | “Nonqualified Stock Option” means a stock option that is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code. |
| t. | “Option” means a stock option awarded under Section 8 of the Plan, which may be an Incentive Stock Option or a Nonqualified Stock Option. |
A-3 INSMED PROXY STATEMENT | u. | “Participant” means any individual described in Section 3 of the Plan to whom Awards have been granted or who has received a Substitute Award and any authorized transferee of such individual. |
| v. | “Person” shall have the meaning given in Section 3(a)(9) of the Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company. |
| w. | “Plan” means the Insmed Incorporated Amended and Restated 2019 Incentive Plan as set forth herein and as amended from time to time. |
| x. | “Prior Plan” means the Insmed Incorporated 2013 Incentive Plan, Insmed Incorporated 2015 Incentive Plan or the 2017 Plan. |
| y. | “Restricted Stock” means an Award or issuance of Common Stock the grant, issuance, retention, vesting and/ or transferability of which is subject during specified periods of time to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate. |
| z. | “Restricted Stock Unit” means an Award denominated in units of Common Stock under which the issuance of shares of Common Stock (or cash payment in lieu thereof) is subject to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate. |
| aa. | “Separation from Service” means the termination of Participant’s employment with the Company and all Subsidiaries that constitutes a “separation from service” within the meaning of Section 409A of the Code. |
| bb. | “Share Pool” has the meaning set forth in Section 5.a of the Plan. |
| cc. | “Stock Appreciation Right” means a right granted pursuant to Section 9 of the Plan that entitles the Participant to receive, in cash or Common Stock or a combination thereof, value equal to the excess of (i) the aggregate market price of a specified number of shares of Common Stock at the time of exercise over (ii) the exercise price of the right, as established by the Administrator on the date of grant. |
| dd. | “Subsidiary” means any entity in which the Company, directly or indirectly, possesses 50% or more of the total combined voting power of all classes of its equity interests or, for Incentive Stock Options, a “subsidiary corporation” (as defined in Section 424(f) of the Code). |
| ee. | “Substitute Awards” means Awards granted or Common Stock issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines. |
| ff. | “Tandem SARs” has the meaning set forth in Section 9.a of the Plan. |
| gg. | “2017 Plan” has the meaning set forth in Section 1 of the Plan. |
Any employee of the Company or an Affiliate (including an officer or director who is such an employee), member of the Board (whether or not such Board member is employed by the Company or an Affiliate), or other non-employee advisor or service provider of the Company or an Affiliate shall be eligible to receive an Award under the Plan. Notwithstanding the foregoing, a person who would otherwise be eligible to receive an Award under the Plan shall not be eligible in any jurisdiction where such person’s participation in the Plan would be unlawful. A-4 INSMED PROXY STATEMENT 4. Effective Date and Termination of Plan The Insmed Incorporated 2019 Incentive Plan was adopted by the Board on April 3, 2019 (the “Approval Date”), and it became effective when it was approved by the Company’s shareholders on May 16, 2019 (the “Effective Date”). The Plan was adopted by the Board on March 29, 2023 and it will become effective when it is approved by the Company’s shareholders. The Plan shall remain available for the grant of Awards until the tenth (10th) anniversary of the Approval Date. Notwithstanding the foregoing, the Plan may be terminated at such earlier time as the Board may determine. Termination of the Plan will not affect the rights and obligations of the Participants and the Company arising under Awards theretofore granted. 5. Shares Subject to the Plan and to Awards | a. | Aggregate Limits. The aggregate number of shares of Common Stock issuable under the Plan (the “Share Pool”) shall be equal to the sum of 24,250,000 shares of Common Stock plus any shares of Common Stock subject to outstanding awards under the Prior Plans as of the Effective Date that, after the Effective Date, are canceled, terminate unearned, expire, are forfeited, lapse for any reason, or are settled in cash without the delivery of shares. On the grant date of an Award, the Share Pool shall be reduced either by 1 share of Common Stock for each share subject to an Award other than a Full-Value Award or by 1.45 shares of Common Stock for each share subject to a Full-Value Award. The aggregate number of shares of Common Stock available for grant under the Plan and the number of shares of Common Stock subject to Awards outstanding shall be subject to adjustment as provided in Section 14 of the Plan. The shares of Common Stock issued pursuant to Awards granted under the Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market. |
| b. | Issuance of Shares. The Share Pool shall be increased when and to the extent that an Award (or an award under any Prior Plan that is outstanding as of the Effective Date) is canceled, terminates unearned, expires, is forfeited, or lapses for any reason, or an Award (or an award under any Prior Plan that is outstanding as of the Effective Date) is settled in cash without the delivery of shares to the Participant, such that any shares of Common Stock subject to such Award (or such award under any Prior Plan that is outstanding as of the Effective Date) shall again be available for the grant of an Award pursuant to the Plan. Notwithstanding anything to the contrary contained herein, shares subject to an Award (or an award under any Prior Plan that is outstanding as of the Effective Date) shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation, or (c) shares covered by a stock-settled Stock Appreciation Right that were not issued upon full settlement. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the shares available for issuance under the Plan. Any shares of Common Stock with respect to Awards issued under the Plan (or awards issued under a Prior Plan) that again become available for future grants pursuant to this Section 5 shall be added back to the Share Pool as 1 share for each share subject to an Award other than a Full-Value Award or as 1.45 shares for each share subject to a Full-Value Award, and, for purposes of this sentence, awards issued under a Prior Plan shall be (i) considered Full-Value Awards if they would have been Full-Value Awards if issued under this Plan and (ii) added back to the Share Pool as 1 share in all other cases. |
| c. | Tax Code Limit. The aggregate number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options granted under the Plan shall not exceed 24,250,000 (subject to adjustment pursuant to Section 14 of the Plan). |
A-5 INSMED PROXY STATEMENT | d. | Substitute Awards. Substitute Awards shall not reduce the shares of Common Stock authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has shares available under a pre-existing plan approved by such acquired company’s shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Common Stock authorized for issuance under the Plan; provided that Awards using such available shares shall not be made after the last day awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall not be granted to individuals who were employed by the Company or its Subsidiaries at the time the acquisition or combination was consummated. |
| 6. | Administration of the Plan |
| a. | Administrator of the Plan. The Plan shall be administered by the Administrator, which shall be the Committee, or, in the absence of the Committee, the Board itself. Any power of the Administrator may also be exercised by the Board. To the extent that any permitted action taken by the Board conflicts with action taken by the Administrator, the Board action shall control. |
| b. | Powers of Administrator. Subject to the express provisions of the Plan, the Administrator shall be authorized and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of the Plan, including, without limitation: |
| 1. | to prescribe, amend and rescind rules and regulations relating to the Plan and to define terms not otherwise defined herein; |
| 2. | to determine which persons are eligible to receive Awards under the Plan, to which of such persons, if any, Awards shall be granted hereunder, and the timing of any such Awards; |
| 3. | to prescribe and amend the terms of the Award Agreements, to grant Awards and determine the terms and conditions thereof; |
| 4. | to establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, retention, vesting, exercisability, or settlement of any Award; |
| 5. | to prescribe and amend the terms of or form of any document or notice required to be delivered to the Company by Participants under the Plan; |
| 6. | to determine the extent to which adjustments are required pursuant to Section 14 of the Plan; |
| 7. | to interpret and construe the Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions if the Administrator, in good faith, determines that it is appropriate to do so; |
| 8. | to approve corrections in the documentation or administration of any Award; and |
| 9. | to make all other determinations deemed necessary or advisable for the administration of the Plan. |
A-6 INSMED PROXY STATEMENT The Administrator may, in its sole and absolute discretion, without amendment to the Plan but subject to the limitations otherwise set forth in Section 18 of the Plan, waive or amend the operation of Plan provisions respecting exercise after termination of employment or service to the Company or an Affiliate. The Administrator may, in its sole and absolute discretion and, except as otherwise provided in Section 18 of the Plan, waive, settle or adjust any of the terms of any Award so as to avoid unanticipated consequences or address unanticipated events (including any temporary closure of an applicable stock exchange, disruption of communications, or natural catastrophe). | c. | Determinations by the Administrator. All decisions, determinations and interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and conditions of or operation of any Award granted hereunder, shall be final and binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan or any Award. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations, and interpretations including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants, and accountants as it may select. Members of the Board and members of the Committee acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross negligence or willful misconduct in the performance of their duties. |
| d. | Delegation of Authority. To the maximum extent permitted by applicable law, the Committee may by resolution delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to perform any or all things that the Administrator is authorized and empowered to do or perform under the Plan, and for all purposes under the Plan, such officer or officers shall be treated as the Administrator; provided, however, that the resolution so authorizing such officer or officers shall specify the total number of Awards (if any) such officer or officers may award pursuant to such delegated authority; and provided further that in no event shall an officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, individuals who are subject to Section 16 of the Act or who report directly to such officer. No such officer shall designate himself or herself as a recipient of any Awards granted under authority delegated to such officer. In addition, the Administrator may delegate any or all aspects of the day-to-day administration of the Plan to one or more officers or employees of the Company or any Subsidiary, and/or to one or more agents. |
| e. | Subsidiary Awards. In the case of a grant of an Award to any Participant employed by a Subsidiary, such grant may, if the Administrator so directs, be implemented by the Company issuing any subject shares of Common Stock to the Subsidiary, for such lawful consideration as the Administrator may determine, upon the condition or understanding that the Subsidiary will transfer the shares of Common Stock to the Participant in accordance with the terms of the Award specified by the Administrator pursuant to the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by and in the name of the Subsidiary and shall be deemed granted on such date as the Administrator shall determine. |
| a. | Terms Set Forth in Award Agreement. The terms and conditions of each Award shall be set forth in an Award Agreement in a form approved by the Administrator for such Award, which Award Agreement may contain such terms and conditions as specified from time to time by the Administrator, provided such terms and conditions do not conflict with the Plan. The Award Agreement for any Award, as applicable, shall include the time or times at or within which and the consideration, if any, for which any shares of Common Stock may be acquired from the Company. The terms of Awards may vary among Participants, and the Plan does not impose upon the Administrator any requirement to make Awards subject to uniform terms. Accordingly, the terms of individual Award Agreements may vary. |
A-7 INSMED PROXY STATEMENT | b. | Separation from Service. Subject to the express provisions of the Plan, the Administrator shall specify before, at, or after the time of grant of an Award the provisions governing the effect(s) upon an Award of a Participant’s Separation from Service or other termination of service. |
| c. | Rights of a Shareholder. A Participant shall have no rights as a shareholder with respect to shares of Common Stock covered by an Award until the date the Participant becomes the holder of record of such shares of Common Stock. No adjustment shall be made for dividends or other rights for which the record date is prior to such date, except as provided in Section 10.a or Section 14 of the Plan or as otherwise provided by the Administrator. |
| d. | Minimum Vesting. Notwithstanding anything in the Plan to the contrary, all Awards granted under the Plan shall be subject to a vesting period of not less than one year from the date of grant; provided, that up to 5% of the Share Pool may be issued pursuant to Awards that are not subject to the minimum vesting requirement set forth in this Section 7(d); provided, further, that the minimum vesting requirement set forth in this Section 7(d) shall not apply with respect to Substitute Awards or with respect to Awards that vest upon a Participant’s death or disability. For the avoidance of doubt, nothing in this Section 7(d) shall limit or restrict the Administrator’s authority to accelerate the vesting or exercisability of all or any portion of an Award following the grant date of such Award in accordance with the provisions of the Plan. |
| e. | No Payment of Dividends Prior to Vesting. Notwithstanding anything in the Plan to the contrary, to the extent a Participant is eligible to receive dividends or Dividend Equivalents with respect to an Award granted under the Plan, such dividends or Dividend Equivalents shall in no case be paid to the Participant before the vesting of the portion of the Award to which such dividends or Dividend Equivalents relate. |
| f. | Restriction on Acceleration Following Grant. Following the grant date of an Award, the Administrator shall not accelerate the vesting or exercisability of all or any portion of an Award, unless (i) explicitly provided under the terms of an Award Agreement (which shall be subject to the limitations in Section 7(d) above), (ii) explicitly provided under the terms of an employment or service agreement with a Participant, or (iii) in connection with a Change in Control or a Participant’s death or disability. |
| a. | Grant, Term and Price. The grant, issuance, retention, vesting, and/or settlement of any Option shall occur at such time and be subject to such terms and conditions as determined by the Administrator or under criteria established by the Administrator, which may include conditions based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. The term of an Option shall in no event be greater than ten years; provided, however, the term of an Option (other than an Incentive Stock Option) shall be automatically extended if, at the time of its scheduled expiration, the Participant holding such Option is prohibited by law or the Company’s insider trading policy from exercising the Option, which extension shall expire on the thirtieth (30th) day following the date such prohibition no longer applies. The Administrator will establish the price at which Common Stock may be purchased upon exercise of an Option, which, in no event will be less than the Fair Market Value of such shares on the date of grant; provided, however, that the exercise price per share of Common Stock with respect to an Option that is granted as a Substitute Award may be less than the Fair Market Value of the shares of Common Stock on the date such Option is granted if such exercise price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger or other acquisition that satisfies the requirements of Section 409A and/or Section 424 of the Code, as applicable. The exercise price of any Option may be paid in cash or such other method as determined by the Administrator, including an irrevocable commitment by a broker to pay over such amount from a sale of the Shares issuable under an Option, the delivery of previously owned shares of Common Stock or withholding of shares of Common Stock deliverable upon exercise. |
A-8 INSMED PROXY STATEMENT | b. | No Repricing without Shareholder Approval. Other than in connection with a change in the Company’s capitalization (as described in Section 14 of the Plan), at any time when the exercise price of an Option is above the Fair Market Value of a share of Common Stock, the Company shall not, without shareholder approval, (i) reduce the exercise price of such Option, (ii) exchange such Option for cash, another Award, or a new Option or Stock Appreciation Right with a lower exercise or base price, or (iii) otherwise reprice such Option. |
| c. | No Reload Grants. Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of shares of Common Stock to the Company in payment of the exercise price and/or tax withholding obligation under any other employee stock option. |
| d. | Incentive Stock Options—An employee who receives an ISO will not recognize any income for federal income tax purposes upon receipt. Notwithstanding anything to the contrary in this Section 8, in the case of the ISO,grant of an Option intended to qualify as an Incentive Stock Option, if the Participant owns stock possessing more than 10% of the combined voting power of all classes of stock of the Company, the exercise price of such Option must be at least 110% of the Fair Market Value of the shares of Common Stock on the date of grant and the Company willOption must expire within a period of not realize a deduction for federal income tax purposes. The holder generally willmore than five (5) years from the date of grant. Notwithstanding anything in this Section 8 to the contrary, options designated as Incentive Stock Options shall not be taxedeligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to the extent that either (a) the aggregate Fair Market Value of shares of Common Stock (determined as of the time of grant) with respect to which such Options become exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (b) such Options otherwise remain exercisable but are not exercised within three (3) months (or such other period of time provided in Section 422 of the Code) of separation of service (as determined in accordance with Section 3401(c) of the Code). |
| e. | No Shareholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Option or any shares of Common Stock subject to an Option until the Participant has become the holder of record of such shares. |
| 9. | Stock Appreciation Rights |
| a. | General Terms. The grant, issuance, retention, vesting, and/or settlement of any Stock Appreciation Right shall occur at such time and be subject to such terms and conditions as determined by the Administrator or under criteria established by the Administrator, which may include conditions based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. Stock Appreciation Rights may be granted to Participants from time to time either in tandem with or as a component of Options granted under the Plan (“tandem SARs”) or not in conjunction with other Awards (“freestanding SARs”). Upon exercise of a tandem SAR as to some or all of the shares covered by the grant, the related Option shall be canceled automatically to the extent of the number of shares covered by such exercise. Conversely, if the related Option is exercised as to some or all of the shares covered by the grant, the related tandem SAR, if any, shall be canceled automatically to the extent of the number of shares covered by the Option exercise. Any Stock Appreciation Right granted in tandem with an Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option, provided that the Fair Market Value of Common Stock on the date of the tandem SAR’s grant is not greater than the exercise price of the related Option. All freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in Section 8 of the Plan and all tandem SARs shall have the same exercise price and the same term (including any extensions thereof) as the Option to which they relate. Subject to the provisions of Section 8 of the Plan and the immediately preceding sentence, the Administrator may impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem appropriate. Stock Appreciation Rights may be settled in Common Stock, cash, or a combination thereof, as determined by the Administrator and set forth in the applicable Award Agreement. |
A-9 INSMED PROXY STATEMENT | b. | No Repricing without Shareholder Approval. Other than in connection with a change in the Company’s capitalization (as described in Section 14 of the Plan), at any time when the exercise price of a Stock Appreciation Right is above the Fair Market Value of a share of Common Stock, the Company shall not, without shareholder approval (i) reduce the exercise or base price of such Stock Appreciation Right, (ii) exchange such Stock Appreciation Right for cash, another Award or a new Option or Stock Appreciation Right with a lower exercise or base price, or (iii) otherwise reprice such Stock Appreciation Right. |
| c. | No Shareholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Award of Stock Appreciation Rights or any shares of Common Stock subject to an Award of Stock Appreciation Rights until the Participant has become the holder of record of such shares. |
10. Restricted Stock and Restricted Stock Units | a. | Vesting and Performance Conditions. The grant, issuance, retention, vesting, and/or settlement of any Restricted Stock or Restricted Stock Unit Award shall occur at such time and be subject to such terms and conditions as determined by the Administrator or under criteria established by the Administrator, which may include conditions based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. |
| b. | Dividends and Distributions. Participants in whose name Restricted Stock is granted shall be entitled to receive all dividends and other distributions paid with respect to those shares of Common Stock, unless determined otherwise by the Administrator. The Administrator will determine whether any such dividends or distributions will be automatically reinvested in additional Restricted Stock and/or subject to the same restrictions on transferability as the Restricted Stock with respect to which they were distributed or whether such dividends or distributions will be paid in cash. Unless otherwise provided in the Award Agreement, during the period prior to shares being issued in the name of a Participant under any Restricted Stock Unit, the Company shall pay or accrue Dividend Equivalents on each date dividends on Common Stock are paid, subject to such conditions as the Administrator may deem appropriate. The time and form of any such payment of Dividend Equivalents shall be specified in the Award Agreement. Notwithstanding anything herein to the contrary, in no event will dividends or Dividend Equivalents be paid in either cash or shares (other than shares subject to the same restrictions as the associated Restricted Stock) with respect to any Award of Restricted Stock or Restricted Stock Units prior to the time specified in Section 7(e). |
| c. | Voting Rights. Unless otherwise determined by the Administrator, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares during the period of restriction. Participants shall have no voting rights with respect to shares of Common Stock underlying Restricted Stock Units unless and until such shares are reflected as issued and outstanding shares on the Company’s stock ledger. |
11. Performance Awards | a. | General Terms. The Administrator may establish performance conditions and level of achievement versus such conditions that shall determine the number of Options, Stock Appreciation Rights or shares of Common Stock to be granted, retained, vested, issued or issuable under or in settlement of, or the cash amount payable pursuant to, an Award. |
A-10 INSMED PROXY STATEMENT | b. | Timing and Form of Payment. The Administrator shall determine the timing of payment of any award subject to performance conditions. Payment of the amount due under such an award may be made in cash or in Common Stock, as determined by the Administrator. |
| c. | Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the amount paid under an award subject to either financial performance and/or personal performance evaluations may be adjusted by the Administrator on the basis of such further considerations as the Administrator shall determine. |
12. Deferral of Payment and Section 409A The Administrator may, in an Award Agreement or otherwise, provide for the deferred delivery of shares of Common Stock upon settlement, vesting or other events with respect to Restricted Stock or Restricted Stock Units. Notwithstanding anything herein to the contrary, the Administrator may, in its sole and absolute discretion, deny any deferral of the delivery of shares of Common Stock or any other payment with respect to any Award if the Administrator determines, in its sole and absolute discretion, that the deferral would result in the imposition of the additional tax under Section 409A(a)(1)(B) of the Code. The Plan and each Award Agreement shall be interpreted such that each Award complies with, or is exempt from, Section 409A of the Code. However, the Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Administrator or the Board. 13. Conditions and Restrictions Upon Securities Subject to Awards The Administrator may provide that the Common Stock issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Administrator in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Common Stock issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Common Stock already owned by the Participant), or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued under an Award, including without limitation (i) restrictions under an insider trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and holders of other Company equity compensation arrangements, (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers, and (iv) provisions requiring Common Stock be sold on the open market or to the Company in order to satisfy tax withholding or other obligations. 14. Adjustment of and Changes in the Stock; Change in Control | a. | Adjustments Upon Certain Unusual or Nonrecurring Events. The number and kind of shares of Common Stock available for issuance under the Plan (including under any Awards then outstanding), and the number and kind of shares of Common Stock subject to the limits set forth in Section 5 of the Plan, shall be equitably adjusted by the Administrator to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of shares of Common Stock outstanding. Such adjustment may be designed to comply with Section 424 of the Code or may be designed to treat the shares of Common Stock available under the Plan and subject to Awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such shares of Common Stock to reflect a deemed reinvestment in shares of Common Stock of the amount distributed to the Company’s security holders. The terms of any outstanding Award shall also be equitably adjusted by the Administrator as to price, number or kind of shares of Common Stock subject to such Award, vesting, and other terms to reflect the foregoing events, which adjustments need not be uniform as between different Awards or different types of Awards. No fractional shares of Common Stock shall be issued pursuant to such an adjustment. |
A-11 INSMED PROXY STATEMENT | b. | Adjustments Upon Other Events. In the event there shall be any other change in the number or kind of outstanding shares of Common Stock, or any stock or other securities into which such Common Stock shall have been changed, or for which it shall have been exchanged, by reason of a Change in Control, other merger, consolidation or otherwise, then the Administrator shall determine the appropriate and equitable adjustment to be effected, which adjustments need not be uniform between different Awards or different types of Awards. In addition, in the event of such change described in this paragraph, the Administrator may accelerate the time or times at which any Award may be exercised, consistent with and as otherwise permitted under Section 409A of the Code, and may provide for cancellation of such accelerated Awards that are not exercised within a time prescribed by the Administrator in its sole and absolute discretion. |
| c. | Change in Control. Unless otherwise provided in the applicable Award Agreement, in the event of a Change in Control after the Effective Date, unless provision is made in connection with the Change in Control for (i) assumption of Awards previously granted or (ii) substitution for such Awards of new awards covering stock of a successor corporation or its “parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds of shares and the exercise prices, if applicable, or unless the Administrator exercises its discretion to provide for the treatment described in subparagraph (e) below, (A) the Administrator shall make an adjustment to any or all Awards as the Administrator deems appropriate to reflect such Change in Control or (B) (1) in the case of an Option or Stock Appreciation Right, the Participant shall have the ability to exercise such Option or Stock Appreciation Right, including any portion of the Option or Stock Appreciation Right not previously exercisable, and the unexercised portion of such Option or Stock Appreciation Right shall be cancelled upon exercise, butconsummation of the Change in Control; (2) in the case of an Award subject to performance conditions, the Participant shall have the right to receive a payment based on performance through a date determined by the Administrator prior to the Change in Control (unless such performance cannot be determined, in which case the Participant shall have the right to receive a payment equal to the target amount payable); and (3) in the case of outstanding Restricted Stock and/or Restricted Stock Units not subject to performance conditions, all conditions to the grant, issuance, retention, vesting, or transferability of or any other restrictions applicable to, such Award shall immediately lapse. The Administrator shall not be obligated to treat all Participants, all Awards, all Awards held by a Participant, all portions of a single Award, or all Awards of the same type identically. |
| d. | Termination Following a Change in Control. Unless otherwise expressly provided for in the Award Agreement or another contract, including an employment agreement, or under the terms of a transaction constituting a Change in Control, the following shall occur upon a Participant’s involuntary termination of employment within twenty-four (24) months following a Change in Control, provided that such termination does not result from the Participant’s termination for disability, cause or gross misconduct: (i) in the case of an Option or Stock Appreciation Right, each Option or Stock Appreciation Right shall immediately become exercisable and shall remain exercisable for three (3) years following such termination (or until the expiration of such Option or Stock Appreciation Right, if earlier); (ii) in the case of an Award subject to performance conditions, the Participant shall have the right to receive a payment based on performance through a date determined by the Administrator prior to the Change in Control (unless such performance cannot be determined, in which case the Participant shall have the right to receive a payment equal to the target amount payable); and (iii) in the case of outstanding Restricted Stock and/or Restricted Stock Units not subject to performance conditions, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse. |
| e. | In the event of a Change in Control, the Administrator may in its discretion provide that outstanding Awards, whether vested or unvested, shall be cancelled in exchange for cash and/or other consideration with a value equal to (i) for Restricted Stock, Restricted Stock Units, or other stock-based Awards (other than Options or Stock Appreciation Rights), the Fair Market Value of the shares of Common Stock underlying such Award on the date of such Change in Control or (ii) for Options or Stock Appreciation Rights, the excess, if any, of the fair market valueFair Market Value of the stockshares of Common Stock underlying such Award on the date of exercisesuch Change in Control over the optionaggregate exercise price; provided that, if the Fair Market Value of a share of Common Stock on such date does not exceed the per share exercise price, the Administrator may cancel such Option or Stock Appreciation Right for no consideration. |
| f. | The Company shall notify Participants holding Awards subject the holder to the alternative minimum tax. If the holder doesany adjustments pursuant to this Section 14 of such adjustment, but (whether or not disposenotice is given) such adjustment shall be effective and binding for all purposes of the ISO shares within two years from the date the option was granted or within one year after the shares were transferred to him on exercise of the option, then that portion of the gain on the sale of the shares that is equal to the difference between the sales price and the option exercise price will be treated as a long-term capital gain. The Company will not be entitled to a deduction either at the time the employee exercises the ISO or subsequently sells the ISO shares. However, if the employee sells the ISO shares within two years after the date the ISO is granted or within one year after the date the ISO is exercised, then the sale is considered a disqualifying sale, and the spread on exercise will be taxed as ordinary income. The balance of the gain will be treated as long- or short-term capital gain depending on the length of time the employee held the stock. If the shares decline in value after the date of exercise, the compensation income will be limited to the difference between the sale price and the amount paid for the shares. The tax will be imposed in the year the disqualifying sale is made. The Company will be entitled to a deduction equal to the ordinary income recognized by the employee.With respect to both nonqualified stock options and ISOs, special rules apply if an employee uses shares already held by the employee to pay the exercise price or if the shares received upon exercise of the option are subject to a substantial risk of forfeiture by the employee.
Restricted Stock—Employees receiving restricted stock will not recognize any income upon receipt of the restricted stock. Ordinary income will be realized by the holder at the time that the restrictions on transfer are removed or expire. The amount of ordinary income will be equal to the fair market value of the shares on the date that the restrictions on transfer are removed or expire. The Company will be entitled to a deduction at the same time and in the same amount as the ordinary income the employee is deemed to have realized. However, no later than 30 days after an employee receives the restricted stock, the employee may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the employee will not recognize any additional income. If the employee forfeits the shares to the Company, the employee may not claim a deduction with respect to the income recognized as a result of the election.
Generally, when an employee disposes of shares acquired under the 2019 Incentive Plan, the difference between the sales price and his or her basis in such shares will be treated as long- or short-term capital gain or loss depending upon the holding period for the shares.
Restricted Stock Units—Employees who are granted RSUs do not recognize income at the time of the grant. When the award vests or is paid, participants recognize ordinary income in an amount equal to the fair market value of the units at such time, and the Company will receive a corresponding tax deduction.
Stock Appreciation Rights—Upon exercise of a SAR, an employee will recognize taxable income in the amount of the cash received. An employee who receives unrestricted shares upon exercise of a SAR will recognize ordinary income in the year of exercise equal to the fair market value of the shares received. In either such case, the Company will be entitled to an income tax deduction in the amount of such income recognized by the employee.
Potential Limitation on Deductions—Section 162(m) of the Code places a limit of $1,000,000 on the amount the Company may deduct in any one year for compensation paid to each of the Company’s “covered employees.” The definition of “covered employee” includes anyone who was the Company’s CEO or CFO at any time during the year, as well as the Company’s three other most highly-compensated executive officers during the year. Any individual who is or became a covered employee after December 31, 2016 will always be treated as a covered employee, even after termination of employment. Accordingly, awards granted to the Company’s covered employees under the 2019 Incentive Plan may not be fully deductible.
Federal Income Tax Consequences to the Company—To the extent that a recipient recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code and is not disallowed by the $1,000,000 limitation on certain executive compensation under Section 162(m).
Tax Withholding—To the extent required by applicable federal, state, local or foreign law or practice, a participant will be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations that arise by reason of the award.
Section 409A—Section 409A of the Code applies to any awards under the 2019 Incentive Plan that are deemed to be deferred compensation. If the requirements of Section 409A of the Code are not met, the recipient may be required to include deferred compensation in taxable income, and additional taxes and interest may be assessed on such amounts. If any awards are subject to Section 409A of the Code, we intend to have the awards comply with Section 409A of the Code.
Equity Compensation Plan Information
In 2020, we made stock-based awards from our 2019 Incentive Plan, and have outstanding grants under our 2017 Incentive Plan, 2015 Incentive Plan, 2013 Incentive Plan and 2000 Stock Incentive Plan (together with the 2019 Incentive Plan, 2017 Incentive Plan, 2015 Incentive Plan and the 2013 Incentive Plan, the Plans).
The 2019 Incentive Plan was adopted by the Board and approved by our shareholders on May 16, 2019. Under the terms of the 2019 Incentive Plan, we are authorized to grant a variety of incentive awards based on our Common Stock, including stock options (both incentive stock options and non-qualified stock options), performance options/shares and other stock awards, such as RSUs.
The following table presents information as of December 31, 2020, with respect to the Plans.
| Plan Category | | Number of Securities
to be Issued
Upon Exercise
of Outstanding
Options and Rights | | Weighted Average
Exercise Price
of Outstanding
Options and Rights(1) | | Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans | | Equity Compensation Plans Approved by Shareholders: | | | | | | | | 2019 Incentive Plan(2) | | 3,412,889 | | $23.85 | | 5,200,879 | | 2017 Incentive Plan(3) | | 3,682,641 | | $18.13 | | — | | 2015 Incentive Plan(4) | | 2,948,915 | | $15.74 | | — | | 2013 Stock Incentive Plan(5) | | 1,082,468 | | $15.14 | | — | | 2000 Stock Incentive Plan(6) | | 403,800 | | $4.19 | | — | Equity Compensation Plans Not
Approved by Shareholders: | | | | | | — | Individual Compensation
Arrangements(7) | | 1,577,080 | | $20.42 | | — | | Total | | 13,107,793 | | | | 5,200,879 |
| | (1) | Does not include outstanding RSUs, which do not require the payment of any exercise price upon their vesting. |
(2) | Represents shares of Common Stock issuable upon the exercise of outstanding stock options and vesting of outstanding RSUs granted under our 2019 Incentive Plan. |
(3) | Represents shares of Common Stock issuable upon the exercise of outstanding stock options and vesting of outstanding RSUs granted under our 2017 Incentive Plan. To the extent that awards granted under the 2017 Incentive Plan terminate unearned, expire, or are canceled, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan. |
A-12 INSMED PROXY STATEMENT 15. Transferability (4) | Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under our 2015 Incentive Plan. To the extent that awards granted under the 2015 Incentive Plan terminate unearned, expire, or are canceled, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan. |
No Award may be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated by a Participant other than by will or the laws of descent and distribution; provided, however, that a Participant may, with the prior approval of the Company’s General Counsel or Chief Financial Officer or any designee of the Company’s General Counsel or Chief Financial Officer (provided that no such person may approve a transfer under this Section by such person) and subject to applicable laws, rules, and regulations and such terms and conditions as the Company’s General Counsel or Chief Financial Officer or such designee, as applicable, shall specify, transfer an Award, other than an Incentive Stock Option, for no consideration, to a family member (as defined in the General Instructions to Form S-8 under the Securities Act of 1933) of the Participant, in each case, with respect to whom such Award or the exercise thereof (as applicable) is covered by an effective registration statement under the Securities Act of 1933 (collectively, the “Permitted Transferees”). Any Award transferred to a Permitted Transferee shall be further transferable only by will or the laws of descent and distribution or, for no consideration, to another Permitted Transferee of the Participant. During the Participant’s lifetime, each Option or Stock Appreciation Right shall be exercisable only by the Participant or by his or her Permitted Transferee to whom such Option or Stock Appreciation Right has been transferred in accordance with this paragraph; provided, however, that outstanding Options may be exercised following the Participant’s death by the Participant’s beneficiaries, any such Permitted Transferee or as permitted by the Administrator. (5) | Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under our 2013 Stock Incentive Plan. To the extent that awards granted under the 2013 Incentive Plan terminate unearned, expire, or are canceled or, forfeited, lapse for any reason, or are settled in cash without the delivery of shares, the shares of Common Stock underlying such grants will again become available for purposes of the 2019 Incentive Plan. |
16. Compliance with Laws and Regulations (6) | Represents shares of Common Stock issuable upon the exercise of outstanding stock options granted under the 2000 Stock Incentive Plan. |
The Plan, the grant, issuance, vesting, exercise, and settlement of Awards hereunder, and the obligation of the Company to sell, issue or deliver shares of Common Stock under such Awards, shall be subject to all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant’s name or deliver Common Stock prior to the completion of any registration or qualification of such shares under any foreign, federal, state, or local law or any ruling or regulation of any government body which the Administrator shall determine to be necessary or advisable. To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares of Common Stock hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell such shares of Common Stock as to which such requisite authority shall not have been obtained. No Option shall be exercisable and no Common Stock shall be issued and/or transferable under any other Award unless a registration statement with respect to the Common Stock underlying such Option is effective and current or the Company has determined that such registration is unnecessary. (7) | Represents outstanding inducement grants of stock options we made in connection with the hiring of various employees. The vesting schedule for the shares of Common Stock subject to these options is as follows: 25% on the first anniversary of the date of grant and 12.5% of the shares vesting on each six-month anniversary thereafter until the fourth anniversary of the date of grant.In the event an Award is granted to or held by a Participant who is employed or providing services outside the United States, the Administrator may, in its sole and absolute discretion, modify the provisions of the Plan or of such Award as they pertain to such individual to comply with applicable foreign law or practice, to recognize differences in local law, currency or tax policy, or to foster and promote achievement of the purposes of the Plan locally. The Administrator may also amend the terms of Awards and impose conditions on the grant, issuance, exercise, vesting, settlement, or retention of Awards in order to comply with such foreign law or practice, to achieve such purposes, and/or to minimize the Company’s obligations with respect to tax equalization for Participants employed outside their home country. A-13 INSMED PROXY STATEMENT 17. Withholding To the extent required by applicable federal, state, local or foreign law, the Administrator may and/or a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any Award, or the issuance or sale of any shares of Common Stock. The Company shall not be required to recognize any Participant rights under an Award, to issue shares of Common Stock or to recognize the disposition of such shares of Common Stock until such obligations are satisfied. To the extent permitted or required by the Administrator, these obligations may or shall be satisfied by the Company withholding cash from any compensation otherwise payable to or for the benefit of a Participant, the Company withholding a portion of the shares of Common Stock that otherwise would be issued to a Participant under such Award or any other award held by the Participant or by the Participant tendering to the Company cash or, if allowed by the Administrator, shares of Common Stock. 18. Amendment of the Plan or Awards The Board may amend, alter, or discontinue the Plan and the Administrator may amend or alter any agreement or other document evidencing an Award made under the Plan but, except as provided pursuant to the provisions of Section 14 of the Plan, no such amendment shall, without the approval of the shareholders of the Company: | a. | increase the maximum number of shares of Common Stock for which Awards may be granted under the Plan; |
Vote Required
| b. | reduce the price at which Options may be granted below the price provided for Approval of this ProposalApprovalin Section 8.a of the Amendment requiresPlan;
|
| c. | reprice outstanding Options or Stock Appreciation Rights as described in 8.a and 9.a; |
| d. | extend the affirmative vote of a majorityterm of the votes cast atPlan; |
| e. | change the Annual Meeting. Abstentions and broker non-votes will not have an effect on the outcomeclass of this proposal.persons eligible to be Participants; or |
Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE 2019 INCENTIVE PLAN.
PROPOSALS FOR 2022 ANNUAL MEETING
Shareholder proposals intended for inclusion in our proxy statement for the 2022 Annual Meeting of Shareholders must be received at our offices no later than the close of business on December 1, 2021. All such proposals must comply with Rule 14a-8 under the Exchange Act and must be submitted to the Corporate Secretary, Insmed Incorporated, 700 US Highway 202/206, Bridgewater, New Jersey 08807.
Under our Bylaws, any shareholder (as defined in our Bylaws) who wishes to present other business or nominate a director candidate at the 2022 Annual Meeting of Shareholders must give timely written notice of any such business or nomination to our Corporate Secretary in advance of the meeting. Such written notice must comply with the requirements in our Bylaws and must be given, either by personal delivery or by United States registered or certified mail, postage prepaid, to our Corporate Secretary at the address given above no later than 120 days nor more than 150 days before the anniversary of the immediately preceding year’s annual meeting. Accordingly, for the 2022 Annual Meeting of Shareholders, our Corporate Secretary must receive such written notice no earlier than December 13, 2021 and no later than January 12, 2022. If the date of the 2021 Annual Meeting of Shareholders is more than 30 days before or more than 60 days after May 12, 2022 (the anniversary of this year’s Annual Meeting), then the written notice must be received no later than the 120th day prior to such Annual Meeting or, if later, the 10th day following the day on which public disclosure of the date of such Annual Meeting was first made. If a shareholder fails to meet these requirements or fails to satisfy the requirements of Rule 14a-4 under the Exchange Act, the named proxies may exercise discretionary voting authority under proxies that we solicit to vote on any such business or nomination in accordance with their best judgment. Our Bylaws are available on our website at www.insmed.com under the heading “Investor Relations—Corporate Governance” or by submitting a written request to the Corporate Secretary, Insmed Incorporated, 700 US Highway 202/206, Bridgewater, New Jersey 08807.
ANNUAL REPORT ON FORM 10-K
We will provide without charge to each person to whom this Proxy Statement has been made available on the written request of such person, a printed copy of our Annual Report on Form 10-K for the year ended December 31, 2020, including the financial statements and financial statement schedules. Requests should be directed to Ms. Christine Pellizzari, Corporate Secretary, Insmed Incorporated, 700 US Highway 202/206, Bridgewater, New Jersey, 08807, (908) 977-9900. In connection with any such request, we will provide a list of exhibits to the Annual Report on Form 10-K for the year ended December 31, 2020, and will provide copies of any such exhibit upon the payment of a reasonable fee.
SEPARATE COPIES FOR BENEFICIAL HOLDERS
Institutions that hold shares in street name for two or more beneficial owners with the same address are permitted to deliver a single set of proxy materials to that address. Only one set of proxy materials will be delivered to such address unless they receive contrary directions from one or more of such beneficial owners. Any such beneficial owner can request a separate copy of these proxy materials by contacting our Corporate Secretary as described above, and we will promptly provide a separate copy. If you are the beneficial owner, but not the record holder, of the Company’s shares and wish to receive only one copy of our proxy materials in the future, you will need to contact your broker, bank or other agent to request that only a single copy of each document be mailed to all shareholders at the shared address in the future.
Appendix A
AMENDMENT NO. 2
TO THE
INSMED INCORPORATED 2019 INCENTIVE PLAN
April 1, 2021
WHEREAS, Insmed Incorporated (the “Company”) sponsors and maintains the Insmed Incorporated 2019 Incentive Plan (as amended by Amendment No. 1 thereto, dated March 31, 2020, and the Omnibus Amendment to Insmed Incorporated Incentive Plans, dated December 10, 2020, the “Plan”);
WHEREAS, Section 18 of the Plan reserves to the Board of Directors of the Company (the “Board”) the right to amend the Plan from time to time; and
WHEREAS, the Board desires to
| f. | otherwise amend the Plan in theany manner hereinafter provided, subject torequiring shareholder approval by law or the Company’s shareholders.NOW, THEREFORE,rules of any stock exchange or market or quotation system on which the PlanCommon Stock is amended as follows, effective as of the date of approval by the Company’s shareholders:
| 1. | The reference to “8,000,000” in Section 5(a) of the Plan is hereby amended and replaced with “10,750,000”.traded, listed, or quoted. |
| 2. | The reference to “8,000,000” in Section 5(c) of the Plan is hereby amended and replaced with “10,750,000”. |
No amendment or alteration to the Plan or an Award or Award Agreement shall be made which would impair the rights of the holder of an Award, without such holder’s consent, provided that no such consent shall be required if the Administrator determines in its sole and absolute discretion and prior to the date of any Change in Control that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan, or the Award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminishment has been adequately compensated. | 3. | This Amendment shall be and is hereby incorporated in, and forms a part of, the Plan. All other terms and provisions of the Plan shall remain unchanged except as specifically modified by this Amendment. The Plan, as amended by this Amendment, is hereby ratified and confirmed. |
19. No Liability of Company [Signature page follows]
The Company, any Subsidiary or Affiliate which is in existence or hereafter comes into existence, the Board and the Administrator shall not be liable to a Participant or any other person as to: (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary for the lawful issuance and sale of any shares of Common Stock hereunder; and (b) any tax consequence expected, but not realized, by any Participant or other person due to the receipt, exercise, or settlement of any Award granted hereunder. A-14 INSMED PROXY STATEMENT 20. Non-Exclusivity of Plan Neither the adoption of the Plan by the Board nor the submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including without limitation, the granting of inducement or retention shares or stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases. 21. Governing Law The Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the Commonwealth of Virginia (without regard to any rule or principle of conflicts of laws that otherwise would result in the application of the substantive laws of another jurisdiction) and applicable federal law. Any reference in the Plan or in the agreement or other document evidencing any Awards to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule, or regulation of similar effect or applicability. 22. No Right to Employment, Reelection, or Continued Service Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries, and/or its Affiliates to terminate any Participant’s employment, service on the Board, or service for the Company at any time or for any reason not prohibited by law, nor shall the Plan or an Award itself confer upon any Participant any right to continue his or her employment or service for any specified period of time. Neither an Award nor any benefits arising under the Plan shall constitute an employment contract with the Company, any Subsidiary and/or its Affiliates. Subject to Sections 4 and 18 of the Plan, the Plan and the benefits hereunder may be terminated at any time in the sole and absolute discretion of the Board without giving rise to any liability on the part of the Company, its Subsidiaries, and/or its Affiliates. 23. Forfeiture upon Termination of Employment Except as otherwise provided by the Administrator in the Award Agreement, unvested Awards shall be forfeited immediately if the Participant terminates his or her employment with the Company, a Subsidiary, or an Affiliate for any reason. 24. Specified Employee Delay To the extent any payment under the Plan is considered deferred compensation subject to the restrictions contained in Section 409A of the Code, such payment may not be made to a specified employee (as determined in accordance with a uniform policy adopted by the Company with respect to all arrangements subject to Section 409A of the Code) upon Separation from Service before the date that is six months after the specified employee’s Separation form Service (or, if earlier, the specified employee’s death). Any payment that would otherwise be made during this period of delay shall be accumulated and paid on the sixth month plus one day following the specified employee’s Separation from Service (or, if earlier, as soon as administratively practicable after the specified employee’s death). 25. No Liability of Committee Members No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his or her behalf in his or her capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer, or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud or willful bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. A-15 INSMED PROXY STATEMENT 26. Severability If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Administrator, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award and the remainder of the Plan and any such Award shall remain in full force and effect. 27. Unfunded Plan The Plan is intended to be an unfunded plan. Participants are and shall at all times be general creditors of the Company with respect to their Awards. If the Administrator or the Company chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such funds shall at all times be subject to the claims of the creditors of the Company in the event of its bankruptcy or insolvency. 28. Successors All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 29. Recoupment Policy Any Participant and/or any Award, including any shares of Common Stock subject to an Award, shall be subject to any applicable recovery, recoupment, clawback, and/or other forfeiture policy maintained by the Company from time to time in accordance with the provisions of such policy. A-16 INSMED PROXY STATEMENT IN WITNESS WHEREOF, the undersigned officer hereby certifies that the foregoing amendment to the Plan was duly adopted by the Board. | INSMED INCORPORATED | | | | By: | /s/ Christine Pellizzari | | | Name: Christine Pellizzari
Title: Chief Legal Officer |
| | By: | | | | |  | | | | Name: Michael A. Smith | | | | Title: General Counsel, Senior Vice President |
A-17 INSMED PROXY STATEMENT
|
|
|
|
