UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

þ  Filed by the registrant                  ¨  Filed by a party other than the registrant

 

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Preliminary Proxy Statement

¨ CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
þ 

Definitive Proxy Statement

¨ 

Definitive Additional Materials

¨ 

Soliciting Material Pursuant to Section 240.14a-12

AMGEN INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of filing fee (check the appropriate box):

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

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(1) 

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(2) 

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

  

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Robert A. Bradway

Chairman of the Board,

Chief Executive Officer and President

LOGOLOGO

 
 

Amgen Inc.

One Amgen Center Drive

Thousand Oaks, CA 91320-1799

April 3, 20147, 2016

Dear Stockholder:

You are invited to attend the 20142016 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc. to be held on Thursday, May 15, 2014,19, 2016, at 11:00 A.M., local time, at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362.

At this year’s Annual Meeting youwe will be asked to: (i) elect 12 directors to serve fordiscuss and vote on the ensuing year; (ii) ratifymatters described in the selection of our independent registered public accountants; (iii) hold an advisory vote to approve our executive compensation; (iv) consider one stockholder proposal, if properly presented at the Annual Meeting and (v) transact such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof. The accompanying Notice of Annual Meeting of Stockholders and proxy statement describe these matters.statement. We urge you to read this information carefully.

The Board of Directors unanimously believes that the election of its nominees for directors, the ratification of its selection of independent registered public accountants and the advisory vote to approve our executive compensation are advisable and in the best interests of Amgen and our stockholders. Accordingly, the Board of Directors recommends a vote FOR the election of the 12 nominees for directors, FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accountants and FOR the advisory vote to approve our executive compensation. The Board of Directors unanimously believes that the stockholder proposal is not in the best interests of Amgen and its stockholders, and, accordingly, recommends a vote AGAINST the stockholder proposal. In addition to the business to be transacted, as described above, managementI will speak on our developments of the past year and respond to comments and questions of general interest to stockholders.

If you plan to attend the Annual Meeting, you will need an admittance ticket and proof of ownership of our Common Stock as of the close of business on March 17, 2014.21, 2016. Please read “INFORMATION CONCERNING VOTING AND SOLICITATION—Attendance at the Annual Meeting” in the accompanying proxy statement.

Your vote is important, regardless of the number of shares that you own. It is important that your shares be represented and voted whether or not you plan to attend the Annual Meeting in person. We are pleased to useoffer multiple options for voting your shares. Please read the SecuritiesNotice of Annual Meeting of Stockholders and Exchange Commission rule that permits companies to furnish proxy materials to certain of our stockholders over the Internet. If you are viewing the proxy statement onwith care and follow the Internet, you may submit your proxy electronically via the Internet by following thevoting instructions on the Notice Regarding the Availability of Proxy Materials previously mailed to you and the instructions listed on the Internet site. If you have received a paper copy of the proxy statement and proxy card, you may submit your proxy by completing and mailing the proxy card enclosed with the proxy statement, or you may submit your proxy electronically via the Internet or by telephone by following the instructions on the proxy card. Ifensure that your shares are held in “street name,” which means shares held of record by a broker, bank, trust or other nominee, you should review the Notice Regarding the Availability of Proxy Materials or proxy statement and voting instruction form used by that firm to determine whether and how you will be able to submit your proxy by telephone or over the Internet. Submitting a proxy over the Internet, by telephone or by mailing a proxy card, will ensure your shares are represented at the Annual Meeting. Your vote is important, regardless of the number of shares that you own.represented.

On behalf of the Board of Directors, I thank you for your participation. We look forward to seeing you on May 15.19. As a final note and also on behalf of the Board of Directors, I would like to thank Vance D. Coffman, our lead independent director who is not standing for re-election, for his counsel and guidance.

Sincerely,

 

LOGO

Robert A. Bradway

Chairman of the Board,

Chief Executive Officer and President


Amgen Inc.

One Amgen Center Drive

Thousand Oaks, California 91320-1799

Notice of Annual Meeting of Stockholders

To be Held on May 15, 201419, 2016

 

To the Stockholders of Amgen Inc.:

NOTICE IS HEREBY GIVEN that the 20142016 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc., a Delaware corporation, will be held on Thursday, May 15, 2014,19, 2016, at 11:00 A.M., local time, at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362, for the following purposes:

 

1.

To elect 1213 directors to the Board of Directors of Amgen for a term of office expiring at the 20152017 annual meeting of stockholders. The nominees for election to the Board of Directors are Dr. David Baltimore, Mr. Frank J. Biondi, Jr., Mr. Robert A. Bradway, Mr. François de Carbonnel, Dr. Vance D. Coffman, Mr. Robert A. Eckert, Mr. Greg C. Garland, Mr. Fred Hassan, Dr. Rebecca M. Henderson, Mr. Frank C. Herringer, Dr. Tyler Jacks, Ms. Judith C. Pelham, and Dr. Ronald D. Sugar;Sugar and Dr. R. Sanders Williams;

 

2.

To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2014;2016;

 

3.

To hold an advisory vote to approve our executive compensation;

 

4.

To consider one stockholder proposal to change the voting standard applicable to non-binding proposals submitted by stockholders, if properly presented; and

 

5.

To transact such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof.

The foregoing items of business are more fully described in the proxy statement accompanying this Notice of Annual Meeting of Stockholders.

The Board of Directors has fixed the close of business on March 17, 201421, 2016 as the record date for the determination of stockholders entitled to notice of, and to vote at, this Annual Meeting and any continuation, postponement or adjournment thereof. Whether or not you plan on attending the Annual Meeting, we encourage you to submit your proxy as soon as possible using one of three convenient methods: (i) by accessing the Internet site described in these voting materials or voting instruction form provided to you; (ii) by calling the toll-free number in the voting instruction form provided to you or (iii) by signing, dating and returning any proxy card or instruction form provided to you. By submitting your proxy promptly, you will save the Company the expense of further proxy solicitation.

By Order of the Board of Directors

 

LOGOLOGO

David J. ScottJonathan P. Graham

Secretary

Thousand Oaks, California

April 3, 20147, 2016


    TABLE OF CONTENTS   

 

Table of Contents

 

Proxy Statement Summary   1  
Information Concerning Voting and Solicitation   34  
Item 1 — 1—Election of Directors   89  
Item 2 — 2—Ratification of Selection of Independent Registered Public Accountants   1719  
Item 3 — 3—Advisory Vote to Approve Our Executive Compensation   1820  
Item 4 — 4—Stockholder Proposal   2124  
Security Ownership of Directors and Executive Officers   2427  
Security Ownership of Certain Beneficial Owners   2629  
Corporate Governance   2730  
Executive Compensation   3842  

Compensation Discussion and Analysis

 38  42

Executive Compensation Tables

 64  72

Director Compensation

 83

  90
Audit Matters   8895  
Annual Report and Form 10-K   9097  
Certain Relationships and Related Transactions   9097  
Other Matters   9299  
Appendix A: Amgen Inc. Board of Directors Guidelines for Director Qualifications and Evaluations   A-1  

 

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    PROXY STATEMENT SUMMARY  

 

Proxy Statement Summary

This summary contains highlights about our Company and the upcoming 20142016 Annual Meeting of Stockholders.Stockholders, or Annual Meeting. This summary does not contain all of the information that you should consider in advance of the meeting and we encourage you to read the entire proxy statement before voting.

20142016 Annual Meeting of Stockholders

 

 

Date and Time:

 

Thursday, May 15, 201419, 2016 at 11:00 A.M., local time

Location:

 

Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362

Record Date:

 

March 17, 201421, 2016

Mail Date:

 

We intend to mail the Notice Regarding the Availability of Proxy Materials, or the proxy statement and proxy card, as applicable, on or about April 3, 20147, 2016 to our stockholders.

Voting Matters and Board Recommendations

 

Matter  Our Board Vote Recommendation

Election of 1213 Nominees to the Board of Directors (page 8)9)

  

FOR each Director Nominee

Ratification of Selection of Independent Registered Public Accountants (page 17)19)

  

FOR

Advisory Vote to Approve Our Executive Compensation (page 18)20)

  

FOR

Stockholder Proposal (page 21)24)

  

AGAINST

20132015 Performance Highlights

 

 

Our stock price increased from $86.20 to $114.08 per share during 2013, with a one-year total shareholder return, or TSR, of 35%, including our dividends,Strong Strategic Execution and a three-year TSR of 114%.Financial Performance

 

We returned $1.4 billion of cash to our stockholders through dividends in 2013. Since the initiation of our first dividend in July 2011, we have raised the dividend three times over the previous quarterly amount by an average of 30% and returned a total of $3 billion of cash to our stockholders through dividends. In addition, we repurchased $0.8 billion of our stock in 2013 for a total return of capital of $2.2 billion to our stockholders.

We grew revenues by 8% over 20122014 to $18.7$21.7 billion in 2013.2015.

We executed on the launches of six innovative products in the oncology and cardiovascular therapeutic areas.

We advanced our next set of pipeline opportunities in our key therapeutic areas of oncology, cardiovascular, inflammation, bone health, neuroscience and nephrology, as well as in our biosimilars program.

Transformation and process improvement efforts drove a four percentage point increase to our adjusted operating margin in 2015 to 48%(1).

 

 

We grew adjusted net income by 14%19% to $5.8$8 billion(1) in 2013.2015.

We Invested for Long-Term Growth While Returning Substantial Capital to Our Stockholders

Our strong cash flows and balance sheet allowed continued investment for long-term growth through internal research and development and external business development transactions, while simultaneously providing substantial returns to stockholders.

We returned a total of $4.3 billion to our stockholders in 2015.

Ø

We returned $2.4 billion of cash to our stockholders in the form of dividends in 2015, with an increase in our quarterly dividend to $0.79 per share in 2015 from $0.61 per share in 2014.

 

Ø

Our year-over-year adjusted earnings per share growth is 17%.(1)We repurchased ~12 million shares of our Common Stock at an aggregate cost of $1.9 billion in 2015.

We effectively advanced the pipeline and successfully acquired Onyx Pharmaceuticals, Inc.

 

 

(1)

Adjusted net incomeoperating margin and adjusted earnings per sharenet income are reported and reconciled in our Form 8-K dated as of January 28, 2014.2016.

 

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    PROXY STATEMENT SUMMARY  

 

Executive Compensation Highlights

 

Each element of direct compensation for our executive officers in 2013 was targeted at the market median of our peer group.

We target compensation at the 50th percentile, or median, of our peer group for each element of compensation.

 

Our long-term incentive, or LTI, equity award pay mix is 80% performance units and 20% time-vested restricted stock units.primarily (80%) performance-based.

 

Performance units for the 2013-2015, 2014-2016 and 2015-2017 performance periods under our long-term incentiveLTI performance award program are earned and paid in shares based strictly on our TSR performance as compared to our comparator group (for awards grantedthe TSRs of the companies in the Standard & Poor’s 500 Index over the respective three-year performance periods.

2013 and 2014, the Standard & Poor’s 500) over a three-year performance period.

Annual cash incentive award payments for 20132015 were earned based on our financial (60%) and operational performance (40%) against targets. FinancialOur financial goals, ofcomprising revenues and adjusted net income, were each weighted 30%. Our operational goals included “Execute New Product/Delivery System Launches,” weighted 10%, “Execute Key Clinical Studies and Regulatory Filings,” weighted 20%, and various operational goals relating to “Deliver the Best Pipeline” and “Deliver Strategic Priorities” were each“Advance Early Pipeline,” weighted 20%10%.

 

 

Corporate Governance Highlights

 

 

The independent membersWe adopted Amended and Restated Bylaws of Amgen Inc., or Bylaws, to implement proxy access for director nominations. Eligible stockholders with an ownership threshold of 3% who have held their shares for at least 3 years and who otherwise meet the requirements set forth in our Bylaws may have their nominees consisting of the greater of 20% or two nominees of our Board of Directors, or Board, included in our proxy materials. Up to 20 eligible stockholders may group together to reach the 3% ownership threshold. In the course of designing our proxy access provisions, we carefully considered each element in the interest of our stockholders as a whole, including that the number of stockholders who may group together (20) would afford those stockholders likely to utilize proxy access with the opportunity to do so. (page 30)

The independent members of our Board elected Vance D. Coffman as our lead independent director with specific and significant duties. As Dr. Coffman is not standing for election at this Annual Meeting, the independent members of our Board have elected Robert A. Eckert as our new lead independent director effective following the Annual Meeting, subject to his re-election to the Board by our stockholders at the Annual Meeting. We have active participation by all directors, including the 1112 independent director nominees. We believeThe Board believes that the currentour corporate governance structure, with its strong emphasis on Board independence, an active lead independent director and strong Board and committee involvement, provides sound and robust oversight of management. (pages 30 and 32)

12 of our Board best positions us to benefit from the respective strengths of our Chief Executive Officer, or CEO, and lead independent director. (page 28)

11 of our 1213 director nominees (all directors except our CEO)Chief Executive Officer), and all members of the Audit, Compensation and Management Development, Corporate Responsibility and Compliance and Governance and Nominating Committees meet the criteria for independence under The NASDAQ Stock Market listing standards and the requirements of the Securities and Exchange Commission. Additionally, all members(pages 32 and 36)

All directors meet our Board of the Audit, CompensationDirectors Guidelines for Director Qualifications and Evaluations included in this proxy statement asAppendix A.

Management Development, Corporate Responsibility and Compliance and Governance and Nominating Committees are independent. (page 32)

 

Our independent directors meet privately on a regular basis. (page 33)

 

The Amended and RestatedOur Bylaws of Amgen Inc. provide for a majority voting standard for uncontested director elections.

We hold an annual advisory vote to approve our executive compensation. (page 18)30)

 

We have significant stock ownership requirements.requirements for our directors and officers. Officers are required to retain shares of our Common Stock acquired through the vesting of restricted stock units, the payout of performance units, or the exercise of stock options until they have reached their required stock ownership level. We have amended our equity incentive plan to provide that equity awards will be subject to a minimum vesting period of no less than one year. (pages 59, 65 and 90)

With respect to our Common Stock, our staff members and Board are prohibited from engaging in short sales, purchasing Common Stock on margin, pledging Common Stock, or entering into any hedging, derivative or similar transactions. (page 58)66)

 

 

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     PROXY STATEMENT SUMMARY  

We have an Enterprise Risk Management Program to identify, assess, manage, report and monitor enterprise risk and areas that may affect our ability to achieve our objectives. This includes an annual detailed compensation risk analysis performed with the assistance of the Compensation and Management Development Committee’s independent consultant. (page 34)

Our Board maintains a Corporate Responsibility and Compliance Committee that is responsible for overseeing our compliance program and reviewing our programs in a number of areas governing ethical conduct. (page 40)

We hold an annual advisory vote to approve our executive compensation. (page 20)

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INFORMATION CONCERNING VOTING AND SOLICITATION  

 

Amgen Inc.

One Amgen Center Drive

Thousand Oaks, California 91320-1799

Proxy Statement

Information Concerning Voting and Solicitation

General

 

 

The enclosed proxy is solicited on behalf of the Board of Directors, or Board, of Amgen Inc., a Delaware corporation, for use at our 20142016 Annual Meeting of Stockholders, or Annual Meeting, to be held on Thursday, May 15, 2014,19, 2016, at 11:00 A.M., local time, or at any continuation, postponement or adjournment thereof, for the purposes discussed in this proxy statement and in the accompanying Notice of Annual Meeting of Stockholders and any business properly brought before the Annual Meeting. Amgen Inc. may also be referred to as Amgen, the Company, we, us or our in this proxy statement. Proxies are solicited to give all stockholders of record an opportunity to vote on matters properly presented at the Annual Meeting. The Annual Meeting will be held at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362.

Pursuant to the rules adopted by the Securities and Exchange Commission, or SEC, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice Regarding the Availability of Proxy Materials, or Notice, to certain of our stockholders of record, and we are sending a paper copy of the proxy materials and proxy card to other stockholders of record who we believe would prefer receiving such materials in paper form. Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar Notice. Stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the Notice and on the website referred to in the Notice, including an option to request paper copies on an ongoing basis. We intend to make this proxy statement available on the Internet and to mail the Notice, or to mail the proxy statement and proxy card, as applicable, on or about April 3, 20147, 2016 to all stockholders entitled to notice of and to vote at the Annual Meeting.

Important Notice Regarding the Availability of Proxy Materials for the 20142016 Stockholder Meeting to Be Held on May 15, 2014.19, 2016.

This proxy statement, our 20132015 annual report and our other proxy materials are available at:www.astproxyportal.com/ast/Amgen.. At this website, you will find a complete set of the following proxy materials: notice of 20142016 annual meeting of stockholders; proxy statement; 20132015 annual report and form proxy card. You are encouraged to access and review all of the important information contained in the proxy materials before submitting a proxy or voting at the meeting.

What Are You Voting On?

You will be entitled to vote on the following proposals at the Annual Meeting:

 

The election of 12 directorsthe 13 director nominees named herein to serve on our Board for a term of office expiring at the 20152017 annual meeting of stockholders;

 

The ratification of the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2014;2016;

 

The advisory vote to approve our executive compensation;

 

One stockholder proposal, if properly presented; and

 

Any other business as may properly come before the Annual Meeting.

Who Can Vote

The Board has set March 17, 201421, 2016 as the record date for the Annual Meeting. You are entitled to notice and to vote if you were a stockholder of record of our common stock,Common Stock, $.0001 par value per share, or Common Stock, as of the close of

 

 

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   INFORMATION CONCERNING VOTING AND SOLICITATION  

 

par value per share, or Common Stock, as of the close of business on March 17, 2014.21, 2016. You are entitled to one vote on each proposal for each share of Common Stock you held on the record date. Your shares may be voted at the Annual Meeting only if you are present in person or your shares are represented by a valid proxy.

Difference Between a Stockholder of Record and a “Street Name” Holder

If your shares are registered directly in your name, you are considered the stockholder of record with respect to those shares.

If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the stockholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares using the methods described below.

Shares Outstanding and Quorum

At the close of business on March 17, 2014,21, 2016, there were 756,487,286750,032,702 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. The presence of the holders of a majority of the outstanding shares of our Common Stock entitled to vote constitutes a quorum, which is required to hold and conduct business at the Annual Meeting. Shares are counted as present at the Annual Meeting if:

 

you are present in person at the Annual Meeting; or

 

your shares are represented by a properly authorized and submitted proxy (submitted by mail, by telephone or over the Internet).

If you are a record holder and you submit your proxy, regardless of whether you abstain from voting on one or more matters, your shares will be counted as present at the Annual Meeting for the purpose of determining a quorum. If your shares are held in “street name,” your shares are counted as present for purposes of determining a quorum if your broker, bank, trust or other nominee submits a proxy covering your shares. Your broker, bank, trust or other nominee is entitled to submit a proxy covering your shares as

to certain “routine” matters, even if you have not instructed your broker, bank, trust or other nominee on how to vote on those matters. Please see the subsection “If You Do Not Specify How You Want Your Shares Voted” below. In the absence of a quorum, the Annual Meeting may be adjourned, from time to time, by the chairman of the meeting or by the vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting.

Voting Your Shares

You may vote by attending the Annual Meeting and voting in person or by submitting a proxy. The method of voting by proxy differs (1) depending on whether you are viewing this proxy statement on the Internet or receiving a paper copy and (2) for shares held as a record holder and shares held in “street name.”

Shares Held as a Record Holder.If you hold your shares of Common Stock as a record holder and you are viewing this proxy statement on the Internet, you may submit a proxy over the Internet by following the instructions on the website referred to in the Notice previously mailed to you. You may request paper copies of the proxy statement and proxy card by following the instructions on the Notice. If you hold your shares of Common Stock as a record holder and you are reviewing a paper copy of this proxy statement, you may submit a proxy over the Internet or by telephone by following the instructions on the proxy card, or by completing, dating and signing the proxy card that was included with the proxy statement and promptly returning it in the pre-addressed, postage-paid envelope provided to you.

Shares Held in Street Name.If you hold your shares of Common Stock in street name, you will receive a Notice from your broker, bank, trust or other nominee that includes instructions on how to vote your shares. Your broker, bank, trust or other nominee may allow you to deliver your voting instructions over the Internet and may also permit you to submit your voting instructions by telephone. In addition, you may request paper copies of the proxy statement and proxy card from your broker by following the instructions on the Notice provided by your broker, bank, trust or other nominee.

The Internet and telephone voting facilities will close at 11:59 P.M., Eastern Time, on May 14, 2014.18, 2016. Stockholders who submit a proxy through the Internet or telephone should be aware that they may incur costs to access the Internet or telephone, such as usage charges from telephone companies or Internet service

 

 

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   INFORMATION CONCERNING VOTING AND SOLICITATION  

 

telephone, such as usage charges from telephone companies or Internet service providers and that these costs must be borne by the stockholder. Stockholders who submit a proxy by Internet or telephone need not return a proxy card or the form forwarded by your broker, bank, trust or other holder of record by mail.

YOUR VOTE IS VERY IMPORTANT. You should submit your proxy even if you plan to attend the Annual Meeting.

Voting in Person

If you plan to attend the Annual Meeting and wish to vote in person, you may request a ballot at the Annual Meeting.Please note that if your shares are held of record by a broker, bank, trust or other nominee, and you decide to attend and vote at the Annual Meeting, your vote in person at the Annual Meeting will not be effective unless you present a legal proxy, issued in your name from the record holder (your broker, bank, trust or other nominee). Even if you intend to attend the Annual Meeting, we encourage you to submit your proxy in advance of the Annual Meeting. Please see the important instructions and requirements below regarding “Attendance at the Annual Meeting.”

Changing Your Vote

As a stockholder of record, if you submit a proxy, you may revoke that proxy at any time before it is voted at the Annual Meeting. Stockholders of record may revoke a proxy prior to the Annual Meeting by (i) delivering a written notice of revocation to the attention of the Secretary of the Company at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799, Mail Stop 38-5-A, (ii) duly submitting a later-dated proxy over the Internet, by mail or by telephone or (iii) attending the Annual Meeting in person and voting in person. Attendance at the Annual Meeting will not, by itself, revoke a proxy.

If your shares are held in the name of a broker, bank, trust or other nominee, you may change your voting instructions by following the instructions of your broker, bank, trust or other nominee.

If You Receive More Than One Proxy Card or Notice

If you receive more than one proxy card or Notice, it means you hold shares that are registered in more than one account. To ensure that all of your shares are voted, sign and

return each proxy card or, if you submit a proxy by telephone or the Internet, submit one proxy for each proxy card or Notice you receive.

How Will Your Shares Be Voted

Stockholders of record as of the close of business on March 17, 201421, 2016 are entitled to one vote for each share of our Common Stock held on all matters to be voted upon at the Annual Meeting. All shares entitled to vote and represented by properly submitted proxies received before the polls are closed at the Annual Meeting, and not revoked or superseded, will be voted at the Annual Meeting in accordance with the instructions indicated on those proxies.YOUR VOTE IS VERY IMPORTANT.

If You Do Not Specify How You Want Your Shares Voted

As a stockholder of record, if you submit a signed proxy card or submit your proxy by telephone or Internet and do not specify how you want your shares voted, the proxy holder will vote your shares:

 

FOR the election of the 1213 nominees listed in this proxy statement to serve on our Board for a term of office expiring at the 20152017 annual meeting of stockholders;

 

FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2014;2016;

 

FOR the advisory vote to approve our executive compensation; and

 

AGAINST the one stockholder proposal, if properly presented.

A “broker non-vote” occurs when a nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner and the nominee does not have discretionary authority to vote the shares. If you hold your shares in street name and do not provide voting instructions to your broker or other nominee, your shares will be considered to be broker non-votes and will not be voted on any proposal on which your broker or other nominee does not have discretionary authority to vote. Shares that constitute broker non-votes will be counted as present at the Annual Meeting for the purpose of determining a quorum, but will not be considered entitled to vote on the proposal in question. Brokers generally have discretionary authority to

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  INFORMATION CONCERNING VOTING AND SOLICITATION  

vote on the ratification of the selection of Ernst & Young LLP as our independent registered public accountants. Brokers, however, do not have discretionary authority to vote on the election of directors to serve on our Board, the advisory vote to approve our executive compensation or on any stockholder proposals.

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INFORMATION CONCERNING VOTING AND SOLICITATION  

In their discretion, the proxy holders named in the proxy are authorized to vote on any other matters that may properly come before the Annual Meeting and at any continuation, postponement or adjournment thereof. The Board knows of no other items of business that will be presented for consideration at the Annual Meeting other than those described in this proxy statement. In addition, other than the stockholder proposal described in this proxy statement, no other stockholder proposal or nomination was received on a timely basis or was subsequently withdrawn, so no such matters may be brought to a vote at the Annual Meeting.

Inspector of Election and Counting of Votes

All votes will be tabulated as required by Delaware law, the state of our incorporation, by the inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. Shares held by persons attending the Annual Meeting but not voting, shares represented by proxies that reflect abstentions as to one or more proposals and broker non-votes will be counted as present for purposes of determining a quorum.

Election of Directors.We have a majority voting standard for the election of directors in an uncontested election, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected at the meeting. In the election of directors, you may either vote “for,” “against” or “abstain” for each nominee. Cumulative voting is not permitted. Under our majority voting standard, in uncontested elections of directors, such as this election, each director must be elected by the affirmative vote of a majority of the votes cast by the shares present in person or represented by proxy and entitled to vote.proxy. A “majority of the votes cast” means that the number of votes cast “for” a director nominee exceeds the number of votes cast “against” the nominee. For these purposes, abstentions will not count as a vote “for” or “against” a nominee’s election and thus will have no effect in determining whether a director nominee has received a majority of the votes cast. Brokers do not

have discretionary authority to vote on this proposal. Broker non-votes will have no effect on the election of directors as brokers are not entitled to vote for or against a nominee without instruction from the beneficial owner. If a director nominee is an incumbent director and does not receive a majority of the votes cast in an uncontested election, that director will continue to serve on the Board as a “holdover” director, but must tender his or her resignation to the Board promptly after certification of the election results

of the stockholder vote. The Governance and Nominating Committee of the Board will then recommend to the Board whether to accept the resignation or whether other action should be taken. The Board will act on the tendered resignation, taking into account the recommendation of the Governance and Nominating Committee, and the Board’s decision will be publicly disclosed within 90 days after certification of the election results of the stockholder vote. A director who tenders his or her resignation after failing to receive a majority of the votes cast will not participate in the recommendation of the Governance and Nominating Committee or the decision of the Board with respect to his or her resignation.

RatificationManagement Proposals (Ratification of Auditors. Ernst & Young LLP and Advisory Vote on Executive Compensation) and Stockholder Proposal.The ratification of the selection of Ernst & Young LLP, requiresthe approval of the advisory vote on our executive compensation and the approval of the stockholder proposal, if properly presented at the Annual Meeting, each require the affirmative votevotes of the holders of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will have the same effect as votes “against” the ratification. each proposal.

Because brokers have discretionary authority to vote on the ratification of the selection of Ernst & Young LLP, we do not expect any broker non-votes in connection with the ratification.

Advisory Vote on Executive Compensation.The approval of the advisory vote on our executive compensation requires the affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will have the same effect as votes “against” the proposal. Brokers do not have discretionary authority to vote on this proposal. Brokernon-votes, however, will have no effect on the proposal as brokers are not entitled to vote on such proposal in the absence of voting instructions from the beneficial owner.

Stockholder Proposal. The approval of the stockholder proposal, if properly presented at the Annual Meeting, requires the affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will have the same effect as votes “against” such proposal. Brokers do not have discretionary authority to vote on the advisory vote on our executive compensation or on the stockholder proposal. Broker non-votes, therefore, will have no effect on the advisory vote on our executive compensation or on the stockholder proposal as brokers are not entitled to vote on such proposalproposals in the absence of voting instructions from the beneficial owner.

Inspector of Election

All votes will be tabulated by the inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes.

6   ��LOGOï 2014 Proxy Statement


INFORMATION CONCERNING VOTING AND SOLICITATION  

Solicitation of Proxies

We will bear the entire cost of solicitation of proxies, including preparation, assembly and mailing of this proxy

LOGOï 2016 Proxy Statement7


  INFORMATION CONCERNING VOTING AND SOLICITATION  

statement, the proxy, the Notice and any additional information furnished to stockholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding shares of our Common Stock in their names that are beneficially owned by others to forward to those beneficial owners. We may reimburse persons representing beneficial owners for their costs of forwarding the solicitation materials to the beneficial owners. Original solicitation of proxies may be supplemented by telephone, facsimile, electronic mail or personal solicitation by our directors, officers or staff members. No additional compensation will be paid to our directors, officers or staff members for such services. In addition, we have retained AST Phoenix AdvisorsD.F. King & Co. to assist in the solicitation of proxies for a fee of approximately $150,000 plus distribution costs and other costs and expenses. A list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder for any purpose germane to the Annual Meeting during ordinary business hours at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California, 91320-1799 for the ten days prior to the Annual Meeting and also at the Annual Meeting.

Attendance at the Annual Meeting

To attend the Annual Meeting, you will need an admittance ticket and proof of ownership of our Common Stock as of the close of business on March 17, 2014.21, 2016. If you have received a paper copy of the proxy statement, to receive an admittance ticket you will need to complete and return the postage-paid reply card attached to this proxy statement. If you received electronic delivery of this proxy statement, you will receive an e-mail with instructions for obtaining an admittance ticket. If you are viewing the proxy statement over the Internet, please follow the instructions indicated on the website referred to in the Notice. Each stockholder is entitled to one admittance ticket. Directions to attend the Annual Meeting will be sent with your admittance ticket and are available at the website referred to in the Notice andwww.astproxyportal.com/ast/Amgen.

You must bring certain documents with you to be admitted to the Annual Meeting. The purpose of this requirement is to help us verify that you are actually a stockholder of the

Company. Please read the following rules carefully, because they specify the documents that you must bring with you to

the Annual Meeting to be admitted. The items that you must bring with you differ depending upon whether or not you were a record holder of the Company’sour Common Stock as of the close of business on March 17, 2014.21, 2016. A “record holder” of stock is someone whose shares of stock are registered in his or her name in the records of the Company’s transfer agent. Many stockholders are not record holders because their shares of stock are registered in the name of their broker, bank, trust or other nominee, and the broker, bank, trust or other nominee is the record holder instead.All persons must bring a valid personal photo identification (such as a driver’s license or passport). If you are a record holder, at the Annual Meeting, we will check your name for verification purposes against our list of record holders as of the close of business on March 17, 2014.21, 2016.

If a broker, bank, trust or other nominee was the record holder of your shares of Common Stock as of the close of business on March 17, 2014,21, 2016, then you must also bring to the Annual Meeting:

 

Proof that you owned shares of our Common Stock as of the close of business on March 17, 2014.21, 2016.

 

If you intend to vote at the Annual Meeting, the executed proxy naming you as the proxy holder, signed by the broker, bank, trust or other nominee who was the record holder of your shares of Common Stock as of the close of business on March 17, 2014.21, 2016.

Examples of proof of ownership include the following: (1) an original or a copy of the voting information form from your bank or broker with your name on it; (2) a letter from your bank or broker stating that you owned shares of our Common Stock as of the close of business on March 17, 201421, 2016 or (3) a brokerage account statement indicating that you owned shares of our Common Stock as of the close of business on March 17, 2014.21, 2016.

If you are a proxy holder for a stockholder of the Company who owned shares of our Common Stock as of the close of business on March 17, 2014,21, 2016, then you must also bring to the Annual Meeting:

 

The executed proxy naming you as the proxy holder, signed by a stockholder of the Company who owned shares of our Common Stock as of the close of business on March 17, 2014.21, 2016.

 

 

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      ITEM 1 — ELECTION OF DIRECTORS  

 

Item 1

Election of Directors

 

 

Under the Amgen Inc. Restated Certificate of Incorporation and the Amended and Restated Bylaws of Amgen Inc.,our governing documents, the Board of Directors, or Board, has the power to set the number of directors from time to time by resolution. We currently have 14 authorized directors serving on our Board. On July 8, 2013, Leonard D. Schaeffer resigned from our Board, and on October 16, 2013, Greg C. Garland28, 2015, Fred Hassan was appointed to serve on our Board. Gilbert S. Omenn will not be standing for re-election to the Board at the 2014 Annual Meeting of Stockholders, or Annual Meeting. Effective as of the Annual Meeting, the Board will fix the authorized number of directors at 12. Effective January 1, 2014, the independent members of our Board elected Vance D. Coffman to serve for another

term as our lead independent director with specific and significant duties as discussed under “Corporate Governance.” Based upon the recommendation of our Governance and Nominating Committee, the Board has nominated each of the current directors set forth below to stand for re-election, or in the case of Mr. GarlandHassan to stand for initial election by our stockholders, in each case for a one-year term expiring at our 20152017 annual meeting of stockholders and until his or her successor is elected and qualified, or until his or her earlier retirement, resignation, disqualification, removal or death.

Vance D. Coffman will retire from our Board and has not been nominated for re-election at the 2016 Annual Meeting of Stockholders, or Annual Meeting. The Board has fixed the authorized number of directors at 13 to be effective as of the Annual Meeting. Dr. Coffman will serve as the lead independent director until his retirement from the Board at the Annual Meeting. The independent members of the Board have elected Robert A. Eckert as our new lead independent director effective following the Annual Meeting, subject to his re-election to the Board by our stockholders at the Annual Meeting. As lead independent director, Mr. Eckert will continue to have the specific and significant duties as discussed under “Corporate Governance.”

 

 

Nominee  Age   Director
Since
   Audit   Governance
and
Nominating
   Executive   Compensation
and
Management
Development
   Equity
Award
   Corporate
Responsibility
and
Compliance
 

David Baltimore

   76     1999     X     X          

Frank J. Biondi, Jr.

   69     2002     C       X     X      

Robert A. Bradway

   51     2011         C       X    

François de Carbonnel

   67     2008     X     X          

Vance D. Coffman

   70     2007       C     X     X     X    

Robert A. Eckert

   59     2012     X             X  

Greg C. Garland

   56     2013     X     X          

Rebecca M. Henderson

   53     2009       X           X  

Frank C. Herringer

   71     2004       X     X     C     C    

Tyler Jacks

   53     2012       X           X  

Judith C. Pelham

   68     1995     X         X      

Ronald D. Sugar

   65     2010       X     X         C  

Current Committee Composition

Nominee  Age   Director
Since
   Audit  Governance   
and   
Nominating(1)
  Executive  Compensation
and
Management
Development
  Equity
Award
  Corporate
Responsibility
and
Compliance

 

David Baltimore

 

  

 

 

 

 

78

 

 

  

 

  

 

 

 

 

1999

 

 

  

 

  

 

X

 

  

 

X

 

        

 

Frank J. Biondi, Jr.

 

  

 

 

 

 

71

 

 

  

 

  

 

 

 

 

2002

 

 

  

 

  

 

C

 

    

 

X

 

  

 

X

 

    

 

Robert A. Bradway

 

  

 

 

 

 

53

 

 

  

 

  

 

 

 

 

2011

 

 

  

 

      

 

C

 

    

 

X

 

  

 

François de Carbonnel

 

  

 

 

 

 

69

 

 

  

 

  

 

 

 

 

2008

 

 

  

 

  

 

X

 

  

 

X

 

        

 

Vance D. Coffman

 

  

 

 

 

 

72

 

 

  

 

  

 

 

 

 

2007

 

 

  

 

    

 

C

 

  

 

X

 

  

 

X

 

  

 

X

 

  

 

Robert A. Eckert

 

  

 

 

 

 

61

 

 

  

 

  

 

 

 

 

2012

 

 

  

 

  

 

X

 

          

 

X

 

 

Greg C. Garland

 

  

 

 

 

 

58

 

 

  

 

  

 

 

 

 

2013

 

 

  

 

  

 

X

 

  

 

X

 

        

 

Fred Hassan

 

  

 

 

 

 

70

 

 

  

 

  

 

 

 

 

2015

 

 

  

 

  

 

X

 

      

 

X

 

    

 

Rebecca M. Henderson

 

  

 

 

 

 

55

 

 

  

 

  

 

 

 

 

2009

 

 

  

 

    

 

X

 

        

 

X

 

 

Frank C. Herringer

 

  

 

 

 

 

73

 

 

  

 

  

 

 

 

 

2004

 

 

  

 

    

 

X

 

  

 

X

 

  

 

C

 

  

 

C

 

  

 

Tyler Jacks

 

  

 

 

 

 

55

 

 

  

 

  

 

 

 

 

2012

 

 

  

 

    

 

X

 

        

 

X

 

 

Judith C. Pelham

 

  

 

 

 

 

70

 

 

  

 

  

 

 

 

 

1995

 

 

  

 

  

 

X

 

      

 

X

 

    

 

Ronald D. Sugar

 

  

 

 

 

 

67

 

 

  

 

  

 

 

 

 

2010

 

 

  

 

    

 

X

 

  

 

X

 

      

 

C

 

 

R. Sanders Williams

 

  

 

 

 

 

67

 

 

  

 

  

 

 

 

 

2014

 

 

  

 

    

 

X

 

        

 

X

 

 

“C”

indicates Chair of the committee.

(1)

Dr. Coffman is currently Chair of the Governance and Nominating Committee, but is not standing for re-election at the Annual Meeting. Effective following Dr. Coffman’s retirement from the Board at the Annual Meeting, Mr. Garland has been appointed Chair of the Governance and Nominating Committee, subject to his re-election to the Board by our stockholders at the Annual Meeting.

LOGOï 2016 Proxy Statement9


  ITEM 1 — ELECTION OF DIRECTORS  

 

Vacancies on the Board (including any vacancy created by an increase in the size of the Board) may be filled only by a majority of the directors remaining in office, even though less than a quorum of the Board. A director elected by the Board to fill a vacancy (including a vacancy created by an increase in the size of the Board) will serve until the next annual meeting of stockholders and until such director’s successor is elected and qualified, or until such director’s earlier retirement, resignation, disqualification, removal or death.

If any nominee should become unavailable for election prior to the Annual Meeting, an event that currently is not anticipated by the Board, the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board or the number of directors may be reduced accordingly. Each nominee has agreed to serve if elected and the Board has no reason to believe that any nominee will be unable to serve. However, if any nominee should become unavailable for election prior to the Annual Meeting (an event that currently is not anticipated by the Board) the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board or, alternatively, the number of directors may be reduced accordingly by the Board.

 

 

8    LOGOï 2014 Proxy Statement


 ITEM 1 — ELECTIONTHE BOARD OF DIRECTORS

THE BOARD RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES NAMED BELOW. PROXIES WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES UNLESS OTHERWISE SPECIFIED.

Set forth below is biographical information for each nominee and a summary of the specific qualifications, attributes, skills and experiences which led our Board to conclude that each nominee should serve on the Board at this time. All of our directors meet the qualifications and skills of our Amgen Inc. Board of Directors Guidelines for Director Qualifications and Evaluations included in this proxy statement asAppendix A. There are no family relationships among any of our directors or among any of our directors and our executive officers.

David Baltimore

 

 

David Baltimore is President Emeritus and Robert Andrews Millikan Professor of Biology at the California Institute of Technology, or Caltech. He received the Nobel Prize in Medicine as a co-recipient in 1975. Dr. Baltimore has been a director of Regulus Therapeutics Inc., a biopharmaceutical company, since 2008,2007, serving on its Compensation Committee and chairing its Nominating and Governance Committee.Committee, and is a member of its scientific advisory board. Dr. Baltimore has also been a member of the board of directors of Immune Design Corp. (formerly Vaccsys), a clinical-stage immunotherapy company, since 2008, chairing its Nominating and Governance Committee, and is a member of its scientific advisory board. He was a director of BB Biotech, AG, a Swiss investment company, from 1994 to March 2011 and served as a director of MedImmune, Inc., a privately-held antibody formulation company, from 2003 to 2007. He has also been a member of the board of directors of Immune Design Corp. (formerly Vaccsys), a privately-held vaccine company of which he is a founder, since 2008. Also inIn 2008, heDr. Baltimore became a founder of Calimmune, Inc., a privately-held clinical-stage gene therapy company, developing a stem-cell HIV/AIDS therapy, and servesserved as Chairman of the board of directors.directors until November 2015.

Dr. Baltimore was President of Caltech from 1997 to 2006. Prior to this, he was a professor at the Massachusetts Institute of Technology, or MIT, and at The Rockefeller University where he also served as the President. During this time he was also the Chairman of the National Institutes of

Health AIDS Vaccine Research Committee, a director and member of the Whitehead Institute for Biomedical Research, and a professor of microbiology and research professor of the American Cancer Society. He was a postdoctoral fellow at MIT and Albert Einstein College of Medicine and on the staff of The Salk Institute for Biological Studies. Dr. Baltimore has been awarded honorary degrees from numerous institutions, including Harvard, Yale and Columbia.

Dr. Baltimore holds leadership roles in a number of scientific and philanthropic non-profit organizations, currently serving as a director and member of the Board of Scientific Counselors of the Broad Institute of MIT and Harvard, a director of the Foundation for Biomedical Research, and a member of the Human Genome OrganisationOrganisation. Dr. Baltimore received an undergraduate degree from Swarthmore College and a member of the scientific advisory board of Immune Design Corp.doctorate from The Rockefeller University.

The Board concluded that Dr. Baltimore should serve on the Board because Dr. Baltimore has spent his career in scientific academia at a number of well-known and highly regarded institutions.institutions and has played an important role in the field of biotechnology. This experience provides Dr. Baltimore with extensive scientific knowledge and a deep understanding of our industry and of the research and development activities and operations of our Company.

 

 

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      ITEM 1 — ELECTION OF DIRECTORS  

 

Frank J. Biondi, Jr.

 

 

Frank J. Biondi, Jr. has served as Senior Managing Director of WaterView Advisors LLC, an investment advisor organization, since 1999. Prior to WaterView Advisors, Mr. Biondi was the Chairman and Chief Executive Officer of Universal Studios, Inc. from 1996 to 1998, the President and Chief Executive Officer of Viacom, Inc. from 1987 to 1996, Executive Vice President of Entertainment Business Sector of The Coca-Cola Company and Chairman and Chief Executive Officer of Coca-Cola Television from 1985 to 1987, Chairman and Chief Executive Officer of Time Inc.’s subsidiary Home Box Office, Inc. from 1982 to 1984, Vice President of Time Inc. from 1978 to 1984 and Assistant Treasurer of the Children’s Television Workshop from 1974 to 1978.

Mr. Biondi has been a director of Cablevision Systems Corp., a telecommunications, media and entertainment company, since 2005; Hasbro, Inc., a toy and games company, since 2002, serving on its Compensation and Nominating, Governance and Social Responsibility Committees; Seagate Technology plc, a manufacturer of hard disk drives,data storage products, since 2005, serving on its Compensation Committee and chairing its Finance Committee; and ViaSat, Inc., a provider of satellite and other wireless networking systems, since April 2015, serving on its Audit and Compensation and Human Resources Committees.

Mr. Biondi was a director of RealD Inc., a global licensor of three-dimensional technologies, since July 2010, serving as its lead director and on

its Audit Committee and chairing its Compensation Committee.Committee from 2010 until it ceased being a public company

in March 2016. From 2002 to May 2015, Mr. Biondi serves as the leadwas a director of RealD.Hasbro, Inc., a toy and games company serving on its Compensation and Nominating, Governance and Social Responsibility Committees. From 2008 until May 2010, Mr. Biondi was a director of Yahoo! Inc., a provider of Internet services, serving on its Compensation Committee. From 2002 to 2008, he was a director of Harrahs Entertainment, Inc., a gaming corporation, serving on its Compensation and Governance Committees, and from 1995 to 2008 he was a director of The Bank of New York Mellon Corporation, an asset management and securities services company, serving on its Compensation and Risk Committees. He has also been a director of Vail Resorts, Inc., a mountain resort operator, and The Seagram Company, a liquor and spirits company. Mr. Biondi received an undergraduate degree from Princeton University and a master’s degree from Harvard Business School.

The Board concluded that Mr. Biondi should serve on the Board due to Mr. Biondi’s experience as chief executive officerChief Executive Officer of many large, public companies and his current role with WaterView Advisors which provide valuable management and leadership skills, as well as an understanding of the operations and financial results and prospects of our Company. Given his financial and leadership experience, Mr. Biondi has been determined to be an Audit Committee financial expert by our Board.

 

LOGOï 2016 Proxy Statement11


  ITEM 1 — ELECTION OF DIRECTORS  

 

Robert A. Bradway

 

 

Robert A. Bradway has served as our director since October 2011 and Chairman of the Board since January 1, 2013. Mr. Bradway has been our President since May 2010 and Chief Executive Officer since May 2012. From May 2010 to May 2012, Mr. Bradway served as our Chief Operating Officer. Mr. Bradway joined Amgen in 2006 as Vice President, Operations Strategy and served as Executive Vice President and Chief Financial Officer from April 2007 to May 2010. Prior to joining Amgen, he was a Managing Director at Morgan Stanley in London where, beginning in 2001, he had responsibility for the firm’s banking department and corporate finance activities in Europe and focused on healthcare.Europe.

Mr. Bradway has been a director of Norfolk Southern Corporation, a transportation company, since July 2011, serving on its Audit and Governance and Nominating Committees. He has served on the board of trustees of the

University of Southern California since April 2014 and on the advisory board of the Leonard D. Schaeffer Center for Health Policy and Economics at that university since 2012. Mr. Bradway holds a bachelor’s degree in biology from Amherst College and a master’s degree in business administration from Harvard Business School.

The Board concluded that Mr. Bradway should serve on the Board due to Mr. Bradway’s knowledge of all aspects of our business, combined with his leadership and management skills having served as our President and Chief Operating Officer and formerly our Chief Financial Officer. During this time, Mr. Bradway provided strong leadership through a variety of challenges and this positions him well to serve as a director and provides the Board with a knowledgeable perspective with regard to the Company’s products and operations.

 

 

10    LOGOï 2014 Proxy Statement


 ITEM 1 — ELECTION OF DIRECTORS  

François de Carbonnel

 

 

François de Carbonnel is a director of corporations and corporate advisor. Mr. de Carbonnel was a member of the group governance council of Mazars Group, a privately-held international organization specializing in audit, accountancy, tax, legal and advisory services, from December 2011 to January 2016. From 2004 to May 2015, Mr. de Carbonnel was a director of Solocal Group (formerly known as Pages Jaunes S.A.), a French company which offers online content, advertising solutions and transactional services, and served as Chairman of the Remuneration and Appointments Committee.

From 2004 until October 2013, Mr. de Carbonnel was a director of a number of funds managed by Ecofin, a privately-held investment management firm. Mr. de Carbonnel was a director of Thomson S.A., a French multimedia corporation, from 2007 to January 2010, serving as Chairman of the Audit Committee throughout his tenure, as a director, and as non-executive Chairman of the Board from April 2008 to April 2009. He has also been a director and President of the Remuneration and Nominating Committee of Solocal Group (formerly known as Pages Jaunes S.A.), a French company which offers online content, advertising solutions and transactional services and publishes directories, since 2004 and serves as chairman of the Remuneration and Appointments Committee. In 2013, Mr. de Carbonnel was appointed lead director of Solocal Group. Mr. de Carbonnel has been a director of Mazars Group, a privately-held international organization specializing in audit, accountancy, tax, legal and advisory services since December 2011, where he also serves as chair of the Audit Committee. Mr. de Carbonnel has been a director of Groupe Foncier de L’Ile de France (GFI), a privately-held French real estate company since 1995. Mr. de Carbonnel became the Chairman of Woodside Holdings Investment Management Pte. Ltd., a non-listed Singapore-based fund management company, in 2012. From 2004 until October 2013, Mr. de Carbonnel was a director of a number of funds managed by Ecofin, a privately-held investment management firm that provides discretionary fund management services and advice to institutions, utilities and infrastructure industries. Mr. de Carbonnel was a director of Quilvest S.A., a Luxembourg company which

provides wealth management and private equity services, from 2006 to 2012.2013.

Mr. de Carbonnel was thea Senior Advisor of the Global Corporate and Investment Bank of Citigroup from 2004 to 2006, and itsa Managing Director from 1999 to 2004. He was

the Chairman and Chief Executive Officer of Midial S.A., a French listed company, from 1994 to 1998, Chairman of General Electric Capital SNC from 1996 to 1998. He was a corporate Vice President of General Electric Company and President of General Electric Capital-Europe from 1990 to 1992, President of Strategic Planning Associates, an international consulting company, from 1981 to 1990 and Vice President of Boston Consulting Group from 1971 to 1981. He has beenis a member emeritus of the business boardBusiness Board of advisorsAdvisors of the Carnegie Mellon Tepper School of Business since 1984.Business. Mr. de Carbonnel is a French citizen and resides in Europe. Mr. de Carbonnel received an engineering diploma from the Ecole Centrale de Lyon, a master in economics from Lyon Université and a master of sciences degree from the Tepper School of Business at Carnegie Mellon University.

The Board concluded that Mr. de Carbonnel should serve on the Board because Mr. de Carbonnel has acquired knowledge, skills and brings a strong vantage point through his international career as an executive officer of well-known consulting companiesfirms as well as a number of public companies. This perspective is important as the Company undertakes further global expansion plans. Given his experience in the financial industry, Mr. de Carbonnel has been determined to be an Audit Committee financial expert by our Board.

 

 

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      ITEM 1 — ELECTION OF DIRECTORS  

 

Vance D. Coffman

Vance D. Coffman is our lead independent director. Dr. Coffman has been a director of 3M Company, a consumer and office products and services company, since 2002 and he has been a director of Deere & Company, a farm and construction machinery company, since 2004. He serves on the Nominating and Governance Committee and chairs the Compensation Committee of 3M Company and serves on the Corporate Governance and Executive Committees and chairs the Compensation Committee of Deere & Company. Dr. Coffman was also director of Bristol-Myers Squibb Company, a pharmaceutical company, and a member of its Audit and Governance Committees, from 1998 to 2007.

Dr. Coffman was the Chairman of the Board and Chief Executive Officer of Lockheed Martin Corporation, an aerospace and defense company, from 1998 to 2005, and was ex officio member of all board committees. From 1997

to 1998, he was Vice Chairman of the Board and Chief Executive Officer of Lockheed Martin. He is currently on the Board of Trustees of the Naval Postgraduate School Foundation, the Stanford Engineering Advisory Council of Stanford University and the Board of Governors of the Iowa State University Foundation. Dr. Coffman has been a Member of the National Academy of Engineering since 1997 and a Fellow of the American Institute of Aeronautics and Astronautics and the American Astronautical Society since 1989 and 1997, respectively.

The Board concluded that Dr. Coffman should serve on the Board as during his service as Chairman of the Board and Chief Executive Officer of Lockheed Martin, Dr. Coffman acquired important leadership and management skills that provide insight into the operations of our Company and the challenges of managing a complex organization.

Robert A. Eckert

 

 

Robert A. Eckert has been an Operating Partner at Friedman Fleischer & Lowe, a private equity firm, since September 2014. Mr. Eckert was the Chief Executive Officer of Mattel, Inc., a toy design, manufacture and marketing company, having held this position from 2000 through December 2011.2011, and its Chairman of the Board from 2000 through 2012. He was President and Chief Executive Officer of Kraft Foods Inc., a consumer packaged food and beverage company, from 1997 to 2000, Group Vice President from 1995 to 1997, President of the Oscar Mayer Foods Division from 1993 to 1995 and held various other senior executive and other positions from 1977 to 1992.

Mr. Eckert was Chairman of the Board of Mattel, Inc. from 2000 through 2012. He has been a director of McDonald’s Corporation, a company which franchises and operates McDonald’s restaurants in the global restaurant industry, since 2003, serving as the Chair of the Compensation Committee and a member of the Executive and Governance Committees. Mr. Eckert has beenwas a director of Smart & Final

Stores, LLC,Inc., a privately-held warehouse store, since 2013.from May 2013 until July 2014 prior to it becoming a publicly-traded company. Mr. Eckert also has

served as a director of Levi Strauss & Co., a privately-held jeans and casual wear manufacturer, since 2010. He was appointed director of Eyemart Express Holdings LLC, a privately-held eyewear retailer and portfolio company of Friedman Fleischer & Lowe, in 2015. Mr. Eckert is on the Global Advisory Board of the Kellogg Graduate School of Management at Northwestern University and serves on the Eller College National Board of Advisors at the University of Arizona. Mr. Eckert received an undergraduate degree from the University of Arizona and a master’s degree in business administration from the Kellogg School of Management at Northwestern University.

The Board concluded that Mr. Eckert should serve on our Board because of Mr. Eckert’s recent and long-tenured experience as a Chief Executive Officer of large public companies, his broad international experience in marketing and business development and his valuable leadership experience. Given his financial and leadership experience, Mr. Eckert has been determined to be an Audit Committee financial expert by our Board.

 

 

12    LOGOï 2014 Proxy Statement


 ITEM 1 — ELECTION OF DIRECTORS  

Greg C. Garland

 

 

Greg C. Garland has served as a director of the Company since October 2013. Mr. Garland was first identified to the Governance and Nominating Committee as a potential director candidate by the Board of Directors’ outside director search firm. Mr. Garland is the Chairman President and Chief Executive Officer of Phillips 66, an energy manufacturing and logistics company with midstream, chemical, refining and marketing and specialties businesses created through the repositioning of ConocoPhillips, having held this position since April 2012. Mr. Garland chairs the Executive Committee of Phillips 66. Prior to Phillips 66, Mr. Garland served as Senior Vice President, Exploration and Production, Americas of ConocoPhillips from 2010 to April 2012. He was President and Chief Executive Officer of

Chevron Phillips Chemical Company (now a joint venture between Phillips 66 and Chevron) from 2008 to 2010 and Senior Vice President, Planning and Specialty Chemicals from 2000 to 2008.

Mr. Garland served in various positions at Phillips Petroleum Company from 1980 to 2000. Mr. Garland is a member of the Engineering Advisory Board for Texas A&M University. Mr. Garland received an undergraduate degree from Texas A&M University.

The Board concluded that Mr. Garland should serve on our Board because of Mr. Garland’s experience as a Chief Executive Officer and his over 30 years of international experience in a highly regulated industry. Given his financial and leadership experience, Mr. Garland has been determined to be an Audit Committee financial expert by our Board.

 

 

LOGOï 2016 Proxy Statement13


  ITEM 1 — ELECTION OF DIRECTORS  

Fred Hassan

Fred Hassan has served as a director of the Company since July 28, 2015. Mr. Hassan was first identified to the Governance and Nominating Committee as a potential director candidate by the Company’s outside search firm. Fred Hassan has been Partner and Managing Director at Warburg Pincus LLC, a global private equity investment institution, since 2011 and, prior to that, served as Senior Advisor from 2009 to 2010. Mr. Hassan was Chairman of the Board and Chief Executive Officer of Schering-Plough Corporation from 2003 to 2009. Prior to this, Mr. Hassan was Chairman, President and Chief Executive Officer of Pharmacia Corporation, from 2001 to 2003. Before assuming these roles, he had served as President and Chief Executive Officer of Pharmacia Corporation from its creation in 2000 as a result of the merger of Pharmacia & Upjohn, Inc. with Monsanto Company. He was President and Chief Executive Officer of Pharmacia & Upjohn, Inc. beginning in 1997. Mr. Hassan previously held senior positions with Wyeth (formerly known as American Home Products), including that of Executive Vice President with responsibility for its pharmaceutical and medical products businesses, and served as a member of the board from 1995 to 1997. Prior to that, Mr. Hassan held various roles at Sandoz Pharmaceuticals and headed its U.S. pharmaceuticals businesses.

Mr. Hassan has been a director of Time Warner Inc., a media company, since 2009, serving on its Audit and Finance and

Compensation and Human Development Committees. Mr. Hassan was a director of Avon Products, Inc., a manufacturer and marketer of beauty and related products, from 1999 until 2013 and served on its Compensation and Management Development, Nominating and Corporate Governance and Audit Committees, as lead independent director from 2009 to 2012, and Chairman of the Board between January and April 2013. Mr. Hassan was Chairman of the Board of Bausch & Lomb, from 2010 until its acquisition by Valeant Pharmaceuticals International, Inc., a pharmaceutical company, in 2013. Mr. Hassan served on the board of directors and Compensation and Audit Committees of Valeant Pharmaceuticals International, Inc. between August 2013 and May 2014. Mr. Hassan received an undergraduate degree from Imperial College of Science and Technology, University of London and a master’s degree in business administration from Harvard Business School.

The Board concluded that Mr. Hassan should serve on the Board due to his global experience as a public company Chief Executive Officer, his particular knowledge and experience in the healthcare and pharmaceutical industries, including overseeing businesses with significant research and development operations, his diversified financial and business expertise, as well as prior public company board experience. Given his financial and leadership experience, Mr. Hassan has been determined to be an Audit Committee financial expert by our Board.

14    LOGOï 2016 Proxy Statement


  ITEM 1 — ELECTION OF DIRECTORS  

Rebecca M. Henderson

 

 

Rebecca M. Henderson has been the John and Natty McArthur University Professor at Harvard University since 2011 where she has a joint appointment at the Harvard Business School, and is the Co-Director of the Business and Environment Initiative.Initiative at Harvard Business School. From 2009 to 2011, Dr. Henderson served as the Senator John Heinz Professor of Environmental Management at Harvard Business School. Prior to this, she was a professor of management at the Massachusetts Institute of Technology, or MIT, for 21 years, having been the Eastman Kodak LFM Professor of Management since 1999. Since 1995, she has also been a Research Associate at the National Bureau of Economic Research. She specializes in technology strategy and the broader strategic problems faced by companies in high technology industries. Dr. Henderson has been a director of IDEXX Laboratories, Inc., a company which developsprovides diagnostic and commercializesinformation technology-based products and services for veterinary, food and water applications, since

2003, serving on its Finance Committee and chairing its Nominating and Governance Committee.

Dr. Henderson has also served as a director of the Ember Corporation, a privately-held semiconductor chip manufacturer,

and on its Compensation Committee, from 2001 to July 2009. She has further been a director of Linbeck Construction Corporation, a privately-held facility solutions company, from 2000 until 2004. In May 2011, Dr. Henderson was appointed to the U.S. Department of Commerce Innovation Advisory Board which was established as a result of the America COMPETES Reauthorization Act of 2010 signed into law by President Obama on January 4, 2011 and which guided a study of U.S. economic competitiveness and innovation to help inform national policies at the heart of U.S. job creation and global competitiveness. Dr. Henderson has published articles, papers and reviews in a range of scholarly journals, and sits on the editorial board ofResearch Policy, a multi-disciplinary journal.journals. Dr. Henderson received an undergraduate degree from the Massachusetts Institute of TechnologyMIT and a doctorate from Harvard University.

The Board concluded that Dr. Henderson should serve on the Board because Dr. Henderson’s study of the complex strategy issues faced by high technology companies provides unique insight into the Company’s strategic and technology issues.

 

 

LOGOï 2014 Proxy Statement13


 ITEM 1 — ELECTION OF DIRECTORS  

Frank C. Herringer

 

 

Frank C. Herringer has been Chairmana director of the Board of Transamerica Corporation, a financial services company, since 1995.1986, serving as Chairman of the board of directors from 1995 to December 2015. Mr. Herringer was an executive with Transamerica for 20 years, including its Chief Executive Officer from 1991 until its acquisition by Aegon N.V., a life insurance, pensions and asset management company, in 1999, subsequently serving on Aegon’s Executive Board for one year and he is currentlyyear. Mr. Herringer was a director of Aegon U.S. Holding Corporation a position he has held since 1999.from 1999 until its merger into Transamerica Corporation in December 2015. Mr. Herringer has been a director of The Charles Schwab Corporation, a brokerage and banking company, since 1996, serving on its Compensation and Nominating and Corporate Governance Committees, and of Safeway Inc., a food and drug retailer, since 2008, serving on its Executive Compensation and Executive Committees and chairing its Nominating and Corporate Governance Committee. HeCommittees. Mr. Herringer is also currently a director of Cardax Pharmaceuticals, Inc., a biotechnology company, which he joined in 2005, and a member of the

Board of Trustees of the California Pacific Medical Center Foundation, a not-for-profit organization which develops philanthropic resources for the California Pacific Medical Center, a privately-held, not-for-profit academic medical center, which he joined insince 2013. Mr. Herringer was a director of Safeway Inc., a food and drug retailer, from 2008 until January 2015,

serving on its Executive Compensation and Executive Committees and chairing its Nominating and Corporate Governance Committee. Mr. Herringer was a director of Cardax, Inc., a biotechnology company, from 2014 to April 2015, serving on its Compensation Committee and chairing its Governance and Nominating Committee, and was a director of its parent company, Cardax Pharmaceuticals, Inc., from 2006 until April 2015. From 2002 to 2005, Mr. Herringer was a director of AT&T Corporation, and a member of its Audit and Compensation Committees. In 2004, Mr. Herringer was named an Outstanding Director of the Year by the Outstanding Directors Exchange. Mr. Herringer received an undergraduate degree and master ofmaster’s degree in business administration from Dartmouth College.

The Board concluded that Mr. Herringer should serve on the Board due to Mr. Herringer’s career as Transamerica’s Chief Executive Officer and Chairman of the Board which developed Mr. Herringer’s management and leadership skills and provides an informed perspective on our financial performance, prospects and strategy.

 

 

LOGOï 2016 Proxy Statement15


  ITEM 1 — ELECTION OF DIRECTORS  

Tyler Jacks

 

 

Tyler Jacks joined the faculty of Massachusetts Institute of Technology, or MIT, in 1992 and is currently the David H. Koch Professor of Biology and director of the David H. Koch Institute for Integrative Cancer Research, which brings together biologists and engineers to improve detection, diagnosis and treatment of cancer.cancer, a position he has held since 2007. Dr. Jacks has been an investigator with the Howard Hughes Medical Institute, a nonprofit medical research organization, since 1994. Dr. Jacks has been a director of Thermo Fisher Scientific, Inc., a life sciences supply company, since May 2009, and serves on its Strategy and Finance Committee and scientific advisory board. He was a founder ofIn 2006, he co-founded T2 Biosystems, Inc., a privately-held biotechnology company, since 2006 and served on theits scientific advisory board until 2013. Dr. Jacks ishas been a consultant scientific advisor to Epizyme, Inc., a biopharmaceutical company, since 2007.2007, and has served on the scientific advisory board of SQZ Biotech, a privately-held biotechnology company, since 2015. Dr. Jacks served on the scientific advisory board of Aveo Pharmaceuticals Inc., a cancer therapeuticsbiopharmaceutical company, from 2001 until 2013. In 2015, Dr. Jacks founded Equipoise Therapeutics, a privately-held cancer therapeutics company. He was appointed to the National Cancer Advisory Board, which advises and assists the Director of the National Cancer

Institute with respect to the National Cancer Program, in

October 2011. Dr. Jacks was a director of the Massachusetts Institute of Technology’sMIT’s Center for Cancer Research from 2001 to 20082007 and received numerous awards including the Paul Marks Prize for Cancer Research and the American Association for Cancer Research Award for Outstanding Achievement. He was elected to the National Academy of Sciences as well as the Institute of Medicine in 2009. Dr. Jacks received an undergraduate degree from Harvard University and his doctorate from the University of California, San Francisco.

The Board concluded that Dr. Jacks should serve on the Board due to Dr. Jacks’ extensive scientific expertise relevant to our industry, including his broad experience as a cancer researcher and service on several scientific advisory boards. His expertise in the field of oncology, which includes pioneering the use of technology to study cancer-associated genes and to construct animal models of many human cancer types, is evidenced by his appointment to the National Cancer Advisory Board and by his numerous awards for cancer research. Dr. Jacks’ scientific knowledge and thorough understanding of our industry positions him to provide valuable insights into the scientific activities of our Company.

 

 

1416    LOGOLOGO  ï 20142016 Proxy Statement


      ITEM 1 — ELECTION OF DIRECTORS  

 

Judith C. Pelham

 

 

Judith C. Pelham is the President Emeritus of Trinity Health, a national system of healthcare facilities, including hospitals, long-term care, home care, psychiatric care, residences for the elderly and ambulatory care, and one of the largest Catholic healthcare systems in the U.S. Prior to her current position at Trinity Health, she was the President and Chief Executive Officer of Trinity Health from 2000 to 2004, the President and Chief Executive Officer of Mercy Health Services, a system of hospitals, home care, long-term care, ambulatory services and managed care, from 1993 to 2000, the President and Chief Executive Officer of the Daughters of Charity Health Services of Austin, a network of hospitals, home care and ambulatory services, from 1982 to 1992, and the Assistant Vice President of Brigham and Women’s Hospital from 1976 to 1980.

Ms. Pelham has been a director of Welltower Inc. (formerly known as Health Care REIT, Inc.), a public real estate investment trust for senior living and health care real estate, since May 2012 and serves on its Compensation, Planning, Nominating/Corporate Governance and Investment Committees. Ms. Pelham was a director of Zoll Medical Corporation, a medical products and software solutions company, from February 2011 to April 2012 when it became a wholly owned subsidiary of Asahi Kasei Group. Ms. Pelham was a director of Eclipsys Corporation, a healthcare IT solutions company, from 2009 to August 2010 when it merged with AllScripts, and was a member of its Compensation Committee. In addition, from 2005 to 2006 she was a director of Hospira, Inc., a specialty

pharmaceutical delivery company, and a member of its Audit

and Public Policy and Compliance Committees. She also sits on the board of trustees of Smith College and is a member of its Audit, Finance, and Buildings and Grounds, Executive and Libraries Committees and chairs the AuditBuildings and Information TechnologyGrounds Committees.

Ms. Pelham has received numerous honors for her civic and healthcare systems leadership, including the CEO IT Achievement Award in 2004 from Modern Healthcare and the Healthcare Information Management Systems Society for her leadership in implementing information technology in healthcare provider organizations and the National Quality Healthcare Award in 2004 from the National Committee for Quality Healthcare, for innovation and implementation of clinical quality and patient safety systems. She received the American Hospital Association Partnership for Action Grassroots Advocacy Award in 1992 in recognition of her work in healthcare reform. Ms. Pelham received an undergraduate degree from Smith College and a master’s degree in public administration from Harvard University.

The Board concluded that Ms. Pelham should serve on the Board due to Ms. Pelham’s career as an executive leader at a number of large healthcare systems, as well her extensive experience developing programs to improve the health status of communities and championing innovation and advances in the delivery of, access to and financing of healthcare, her understanding of the nation’s healthcare system, the patient populations served by our Company’s products and the operations of our Company.

 

 

LOGOLOGO  ï 20142016 Proxy Statement    1517


      ITEM 1 — ELECTION OF DIRECTORS  

 

Ronald D. Sugar

 

 

Ronald D. Sugar is the retired Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation, a global aerospace and defense company, having held these posts from 2003 through 2009. He was President and Chief Operating Officer of Northrop Grumman Corporation from 2001 until 2003. He was President, Chief Operating Officer and director of Litton Industries, Inc., a developer of military products, from 2000 until 2001, and Chief Financial Officer of TRW, Inc., an aerospace, automotive and credit reporting company, from 1994 to 1996, and President and Chief Operating Officer of TRW Aerospace, a developer of missile systems and spacecraft, from 1998 to 2000. He is a senior advisor to Ares Management LLC, a privately-held asset manager and registered investment advisor, and a senior advisor to Northrop Grumman Corporation, both since 2010.

Dr. Sugar has been a director of Chevron Corporation, a petroleum, exploration, production and refining company, since 2005. Dr. Sugar has also been a2005, serving as the lead director ofand on the Management Compensation Committee and chairing the Board Nominating and Governance Committee; Apple Inc.,

a manufacturer and seller of, among other things, personal

computers, mobile communication and media devices, since 2010, chairing the Audit and Finance Committee; and of Air Lease Corporation, an aircraft leasing company, since 2010. Dr. Sugar chairs the Audit Committee of Chevron, chairs the Audit and Finance Committee of Apple, chairs2010, chairing the Compensation Committee of Air Lease, and servesserving on the Air Lease Governance Committee. In 2014, Dr. Sugar joined the Temasek Americas Advisory Panel of Temasek Holdings (Private) Limited, a privately-held investment company based in Singapore. Dr. Sugar is a member of the National Academy of Engineering, trustee of the University of Southern California, member of the UCLA Anderson School of Management Board of Visitors, director and member of the Los Angeles Philharmonic Association and national trustee of the Boys and Girls Clubs of America.

The Board concluded that Dr. Sugar should serve on our Board because Dr. Sugar’s board and senior executive-level expertise, including his recent experience as Chairman and Chief Executive Officer of Northrop Grumman Corporation, provides valuable leadership experience and insight in the areas of operations, government affairs, science, technology and finance.

 

 

R. Sanders Williams

R. Sanders Williams is President of Gladstone Institutes, a non-profit biomedical research enterprise, and its Robert W. and Linda L. Mahley Distinguished Professor of Medicine, both since 2010. He is also a Professor of Medicine at the University of California, San Francisco since 2010. Prior to this, Dr. Williams served as Senior Vice Chancellor of the Duke University School of Medicine from 2008 to 2010 and Dean of the Duke University School of Medicine from 2001 to 2008. He was the founding Dean of the Duke-NUS Graduate Medical School, Singapore, from 2003 to 2008 and served on its Governing Board from 2003 to 2010. From 1990 to 2001, Dr. Williams was Chief of Cardiology and Director of the Ryburn Center for Molecular Cardiology at the University of Texas, Southwestern Medical Center. Dr. Williams has been a director of the Laboratory Corporation of America Holdings, a diagnostic technologies company, since 2007, serving on the Audit Committee and chairing the Quality and Compliance Committee. Dr. Williams was a director of Bristol-Myers

Squibb Company, a pharmaceutical company, from 2006 until 2013. Dr. Williams has served on the board of directors of the Gladstone Foundation, a non-profit institution that is distinct from Gladstone Institutes, since 2012 and on the board of directors of Exploratorium, a non-profit science museum and learning center located in San Francisco, since 2011. Dr. Williams received his undergraduate degree from Princeton University and his doctorate from Duke University.

The Board concluded that Dr. Williams should serve on the Board due to his broad medical and scientific background, including his leadership roles at Gladstone Institutes and Duke University, deep experience in cardiology, oversight of governance of multi-hospital healthcare provider systems, leadership and/or development of international medical programs in Singapore and China, and prior industry board experience, all of which provide valuable perspectives and insight into the operations of our Company.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE ABOVE 1213 NAMED NOMINEES.

 

1618    LOGOLOGO  ï 20142016 Proxy Statement


  ITEM 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED  PUBLIC ACCOUNTANTS  

 

Item 2

Ratification of Selection of Independent Registered Public Accountants

 

 

The Audit Committee of the Board of Directors, or Board, has selected Ernst & Young LLP, or Ernst & Young, as our independent registered public accountants for the fiscal year ending December 31, 2014,2016, and the Board has further directed that management submit this selection for ratification by the stockholders at our 20142016 Annual Meeting of Stockholders.Stockholders, or Annual Meeting. Ernst & Young has served as our independent registered public accounting firm and has audited our financial statements since the Company’s inception in 1980. The Audit Committee periodically considers whether there should be a rotation of our independent registered public accountants. The members of the Audit Committee believe that the continued retention of Ernst & Young as our independent registered public accountants is in the best interests of the Company.Company and its stockholders. In conjunction with the mandated rotation of Ernst & Young’s lead engagement partner, the Audit Committee and its chairperson are directly involved in the selection of Ernst & Young’s new lead engagement partner. A representative

of Ernst & Young is expected to be present at the Annual Meeting and will have an opportunity to make a statement and respond to appropriate questions.

Stockholder ratification of the selection of Ernst & Young as our independent registered public accountants is not required by the Amgen Inc. Restated Certificate of Incorporation, the Amended and Restated Bylaws of Amgen Inc., or otherwise. However, the Board is submitting the selection of Ernst & Young to the stockholders for ratification because we believe it is a matter of good corporate governance practice. If our stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain Ernst & Young, but still may retain them. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in our best interests and that of our stockholders.

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.

 

LOGOLOGO  ï 20142016 Proxy Statement    1719


      ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION  

 

Item 3

Advisory Vote to Approve Our Executive Compensation

 

 

This advisory stockholder vote, commonly known as “Say on Pay,” gives you, as a stockholder, the opportunity to endorse or not endorse our executive pay program and policies. Accordingly, you are being asked to vote on the compensation of our Named Executive Officers, or NEOs, as disclosed in the Compensation Discussion and Analysis (pages 42 through 71) and related compensation tables and the narrative in this proxy statement.statement (pages 72 through 89).

Our executive compensation program is designed to achieve the following objectives:

 

Pay for performance in a manner that strongly aligns with stockholder interests by rewarding both our short- and long-term measurable performance.

Attract, motivate and retain the highest level of executive talent by providing competitive compensation, consistent with their roles and responsibilities, our success and their contributions to this success.

 

Mitigate compensation riskby maintaining pay practices that reward actions and outcomes consistent with the sound operation of our Company and with the creation of long-term stockholder value.

 

Consider all Amgen staff members in the design of our executive compensation programs, to ensure a consistent approach that encourages and rewards all staff members who contribute to our success.

 

 

Our 20132015 Executive Compensation Was Aligned With Our Performance

 

 

Following extensive outreach to our stockholders over the past several years,As discussed more fully in our Compensation Discussion and Management Development Committee, or Compensation Committee, has implementedAnalysis starting on page 42, a number of compensation program changes to further reinforce the relationship between pay and performance. A significant majority of each NEO’s compensation is connected todependent on our performance and our execution of our strategic priorities. Our 2013 performance highlights include:priorities and the compensation objectives discussed above. 2015 was an exceptional year for Amgen as we delivered strong financial results while achieving an unprecedented number of product launches.

 

Delivering for Stockholders — Robust One-year and Three-year Total Shareholder Return.

Our annual cash incentive award program compensation is tied directly to our performance based onpre-established financial and operating performance goals.

Our annual cash incentive award program comprises two main performance goal categories:Deliver Results(70% weighting) andProgress Innovative Pipeline(30% weighting) with goals for each. Our stock price increased from $86.20 to $114.08 per share during 2013, reflecting appreciation of approximately 32% and a one-year total shareholder return, or TSR, of 35%, including our dividends. This compares to the Standard & Poor’s 500 average one-year TSR of 32%. Our three-year TSR is 114% compared with our peer group average three-year TSR of 103%.

Consistent with this robust three-year TSR, the performance units earned in 2013

We delivered results.

Financial performance objectives (revenues and adjusted net income) were weighted 60% and “Execute New Product/Delivery System Launches” was weighted 10% under our long-term incentive, or LTI, performance award program (for the 2011-2013 performance period) were 122.7% of target performance units based on our TSR for the 2011-2013 performance period compared with the average TSR of our 13-company peer group for this period.

Strong Financial Performance. Our strong operating performance resulted in above-target performance on our pre-established goals for 2013 revenues and adjusted net income that comprise 60% of the weighting under our 2013 annual cash incentive award program.

Our financial performance was strong.

Ø

Our revenues increased 8% to $21.7 billion in 2015.

 

 Ø

Our solid performanceadjusted operating margin improved by four percentage points to 48%(1) in 2013 grew revenues by 8% over 2012 to $18.7 billion and grew2015.

Ø

Our adjusted net income by 14%grew 19% to $5.8 billion.(1) In addition,our year-over-year adjusted earnings per share grew 17%$8 billion(1) in 2013.2015.

Ø

In 2015, free cash flow was $8.5 billion compared to $7.8 billion in 2014 driven by higher revenues and higher operating income.

 

 

(1)

Adjusted net incomeoperating margin and adjusted earnings per sharenet income are reported and reconciled in our Form 8-K dated as of January 28, 2014.2016.

 

1820    LOGOLOGO  ï 20142016 Proxy Statement


      ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION  

 

We executed on an unprecedented number of product launches.

 ŸØ

Our strong cash flowsWe executed on the launches of six innovative products in the oncology and balance sheet in 2013 permitted us to return $1.4 billion of cash to our stockholders through dividends. Since our first dividend in July 2011, we have raised the dividend three times over the previous quarterly amount by an average of 30% and returned a total of $3 billion of cash to our stockholders through dividends. In addition, we repurchased $0.8 billion of our stock in 2013 for a total return of capital of $2.2 billion to our stockholders.cardiovascular disease therapeutic areas. These launches are:

 

Oncology

Cardiovascular

  Kyprolis®

 

Advancement of the Pipeline.  Repatha®We exceeded our pre-established goal of “Deliver the Best Pipeline” that represents a 20% weighting under our 2013 annual cash incentive award program.

  BLINCYTO®

  Corlanor®

  IMLYGIC™

  Neulasta® Onpro™ Kit

We progressed our innovative pipeline.

Our “Progress Innovative Pipeline” goal was weighted 30% under our annual cash incentive award program with “Execute Key Clinical Studies and Regulatory Filings” weighted 20% and “Advance Early Pipeline” weighted 10%.

 

 Ø

During 2013, we successfully advancedOur late-stage pipeline continued to advance with the pipeline through our own clinical trial activities (as well as through the Onyx Pharmaceuticals, Inc. acquisition and the ivabradine license) such that we had tworecent regulatory submissions for Parsabiv™, positive phase 3 data read-outs in December 2013for romosozumab (in collaboration with UCB), phase 2 data for AMG 334 (in collaboration with Novartis AG), and threephase 2b data for omecamtiv mecarbil (in collaboration with Cytokinetics, Inc.). In 2015, we also continued to advance our biosimilar program, including the filing for global regulatory approval for ABP 501 biosimilar adalimumab (Humira®) and positive phase 3 data read-outs in January 2014 on evolocumab (AMG 145), we expect additional Phase 3 data read-outs on seven more of our innovative clinical programs (Kyprolisfor ABP 215 biosimilar bevacizumab (Avastin®, talimogene laherparepvec, trebananib, brodalumab, velcalcetide (AMG 416), romosozumab and rilotumumab) and, with the ivabradine license, we have data to support a U.S. filing.).

We made significant progress on the transformation of our business.

We continued to execute on the transformation and process improvement efforts announced in 2014. As part of these efforts, we committed to a more focused operating model. Our transformation and process improvement efforts across the Company have enabled us to reallocate resources to fund many of our innovative pipeline and growth opportunities to deliver value to patients and stockholders.

Ø

Execution on Key Strategic Priorities, including International Expansion. We exceededIn 2015, we reduced gross costs by approximately $700 million, the majority of which was re-invested in our pre-established goals of “Deliver Strategic Priorities” comprising 20% of the weighting under our 2013 annual cash incentive award program.product launches.

We invested for long-term growth while returning substantial capital to our stockholders.

Our strong cash flows and balance sheet allowed continued investment for long-term growth through internal research and development and external business development transactions, while simultaneously providing substantial returns to stockholders.

We returned $4.3 billion to our stockholders in 2015 through the payment of dividends and stock repurchases.

 

 Ø

We successfully acquired Onyx Pharmaceuticals, a global biopharmaceutical company engaged in the development and commercialization of innovative therapiesincreased our dividend per share 30% over 2014 (to $0.79 per share for improving the lives of people with certain cancers.

We also advanced our efforts to develop a presence in cardiovascular disease by licensing U.S. commercial rights to ivabradine, an innovative product already approved in over 100 countries for heart failure and angina.

We commenced our first pivotal studies for our biosimilar product candidates: in psoriasis and rheumatoid arthritis for our biosimilar for Humira® (adalimumab); in non-small cell lung cancer for our biosimilar for Avastin® (bevacizumab) and in breast cancer for our biosimilar for Herceptin® (trastuzumab)2015).

 

 Ø

We continued to expand internationally, including the commencement of operationsrepurchased ~12 million shares of our alliances in Japan and China and our acquisition from F. Hoffmann-La RocheCommon Stock during 2015 at an aggregate cost of rights to filgrastim and pegfilgrastim in key emerging growth markets around the world.$1.9 billion.

Positive 2013 Say on Pay Vote and Engagement With Our Stockholders

 

In 2013, we received over 85% stockholder support onOur long-term incentive, or LTI, equity award compensation is tied directly to our say on pay advisory vote. We have engaged consistently in broad direct stockholder outreach overstock performance and aligns with the past several years and have found these interactions highly valuable and informative and will continue to engage withinterests of our stockholders to further enhance our understandingstockholders.

Our three-year total shareholder return, or TSR, significantly outperformed the TSRs of the perspectives ofStandard and Poor’s 500 Index, or S&P 500, for the same period.

Payout under our investors. SinceLTI performance award program for our 2013 annual meeting of stockholders, we have engaged in outreach activities with stockholders comprising approximately 45% of2013-2015 performance period at 150% reflects our outstanding shares and have had extensive discussions with stockholders owning approximately 40% of our outstanding shares. In 2013,three-year TSR performance at the predominant feedback from our

investors was that they are satisfied with our compensation program. While we are pleased with our say on pay results and stockholder feedback, we will continue to reach out to understand and address the concerns of our stockholders. Therefore, our stockholder outreach efforts will continue after the filing of this proxy statement, as well as through our executive compensation website (accessible atwww.amgen.com/executivecompensation) that we initiated in 2008 and invites stockholders to provide feedback directly85.5 percentile relative to the Compensation Committee regarding our executive compensation program.TSRs of the companies in the S&P 500 for this performance period.

 

 

LOGOLOGO  ï 20142016 Proxy Statement    1921


      ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION  

 

Positive 2015 Say on Pay Vote and Engagement With Our Stockholders

97% stockholder support

on our 2015 say on pay

In 2015, we received approximately 97% stockholder support on our say on pay advisory vote. We have engaged consistently in broad direct stockholder outreach over the past several years and the compensation-related feedback is reviewed by our Compensation and Management Development Committee, or Compensation Committee. We have made a number of compensation changes in response to past discussions with our stockholders and have

implemented the compensation best practices discussed below.

Since our 2015 annual meeting of stockholders, we have engaged in outreach activities and discussions with stockholders comprising approximately 52% of our outstanding shares. Additionally, Mr. Bradway was a keynote speaker and met with investors at the Council of Institutional Investors’ 2015 Fall Conference. While we are pleased with our say on pay results and stockholder feedback, we will continue to reach out to understand and address any concerns of our stockholders. For more detail regarding stockholder engagement, see page 45.

We Have Implemented Compensation Best Practices

 

 

We are mindful of compensation and governance best practices and have implemented the following practices, among others:

 

Our LTI equity award grants are primarily performance-based with 80% of LTI equity awards granted as performance units.

We target the 50th percentile, or median, of our peer group for all elements of compensation.

We have no “single-trigger” equity vesting acceleration upon a change of control for restricted stock units and stock options, and our double-trigger cash severance is limited to a multiple of two times target annual cash compensation, without tax gross-ups.

We have a clawback policy that requires our Board of Directors, or Board, to consider the recapture of past cash or LTI equity award payouts to our NEOs if the amounts were determined based on financial results that are laterNEOs.

restated and the NEOs’ misconduct is determined by the Board to have caused the restatement.

 

Our incentive compensation plans contain recoupment provisions applicable to all staff members that expressly allow the Compensation Committee to determine that annual cash incentive awards are not earned fully or in part where such employee has engaged in misconduct that causes serious financial or reputational damage to the Company.

 

We do not provide tax gross-ups, except for business related payments such as reimbursement of certain moving and relocation expenses.Our LTI equity award grants are primarily (80%) performance-based.

 

We have robust stock ownership guidelines, with a six times base salary ownership requirement for our Chief Executive Officer.

 

Officers are required to retain shares of our Common Stock until they have reached the required stock ownership level.

Our equity incentive plan provides that equity awards are subject to a minimum vesting period of no less than one

year and our grants generally vest over four years, with no vesting in the first year and vesting in approximately three equal annual installments on the second, third and fourth anniversaries of the grant date.

With respect to our Common Stock, our staff members and Board are prohibited from engaging in short sales, purchasing Common Stock on margin, pledging Common Stock, or entering into any hedging, derivative or similar transactions.

Our LTI equity award plans and policies prohibit re-pricing or backdating of equity awards.

LTI equity awards are granted based on a specific dollar amount, rather than a set number of shares.

Dividends accrue on our performance units and restricted stock units, or RSUs, but are paid only when and to the extent the underlying award is earned and vested.

We target compensation at the 50th percentile, or median, of our peer group for each element of compensation.

We do not provide tax gross-ups, except for business related payments such as reimbursement of certain moving and relocation expenses.

22    LOGOï 2016 Proxy Statement


  ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION  

We do not have no“single-trigger” equity vesting acceleration upon a change of control for RSUs or stock options, and our double-trigger cash severance is limited to a multiple of two times target annual cash compensation, without tax gross-ups.

We do not have any defined benefit pension or supplemental executive retirement plan benefits or “above-market” interest on deferred compensation.

 

 

Board Recommends a Vote “FOR” Our Executive Compensation

 

 

Our Board believes that our current executive compensation program aligns the interests of our executives with those of our stockholders and is earnedcompensation outcomes are primarily based on the performance of our Company. We intend that our compensation programs reward actions and outcomes that are consistent with the sound operation of our Company and are aligned with the creation of long-term stockholder value.

For the reasons discussed above, the Board recommends that stockholders vote “FOR” the following resolution:

“Resolved, that the stockholders approve, on an advisory basis, the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Securities and

Exchange Commission rules in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure of this proxy statement.”

Although this vote is advisory and is not binding on the Board, our Compensation Committee values the opinions expressed by our stockholders and will consider the outcome of the vote when making future executive compensation decisions.

We currently conduct annual advisory votes on executive compensation, and we expect to conduct the next advisory vote on executive compensation at our 20152017 annual meeting of stockholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ADVISORY RESOLUTION INDICATING THE APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.

 

20    LOGOLOGO  ï 20142016 Proxy Statement23


      ITEM 4 — STOCKHOLDER PROPOSAL  

 

Item 4

Stockholder Proposal

 

 

A stockholder hasand co-filers have informed the Company that he intendsthey intend to present the proposal set forth below at our 20142016 Annual Meeting of Stockholders, or Annual Meeting. If the stockholder (or its respective “qualified representative” as determined under our Amended and Restated Bylaws of Amgen Inc., or Bylaws) isare present at the Annual Meeting and properly submitssubmit the proposal for a vote, then the stockholder proposal will be voted upon at the Annual Meeting.

In accordance with the Federal securities laws, the stockholder proposal and supporting statement is presented below as submitted by the stockholder and is quoted verbatim and is in italics. The Company disclaims all responsibility for the content of the proposal and the supporting statement, including other sources referenced in the supporting statement.

FOR THE REASONS STATED IN THE BOARD’SBOARD OF DIRECTOR’S, OR BOARD, RESPONSE, WHICH FOLLOWS THE STOCKHOLDER PROPOSAL, THE BOARD STRONGLY AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST” THE STOCKHOLDER PROPOSAL #1.PROPOSAL.

Stockholder Proposal #1

Francie Rutherford and Michael Burke Stansbury, each owner of a purported 50 shares of our Common Stock as of December 11, 2013,3, 2015, appointing Investor Voice,Newground Social Investment, SPC as histheir representative, with an address of 10033 12th12th Avenue NW, Seattle, WA 98177, hashave notified us of histheir intention to submit the following proposal at our Annual Meeting:Meeting. Walden Asset Management, owner of a purported 26,808 shares of our Common Stock as of December 3, 2015, and AJF Financial Services, Inc., on behalf of certain of their clients, have notified us that they are co-filing the proposal.

RESOLVED: Shareholders of Amgen, Inc. (“Amgen” or “Company”) hereby request the Board of Directorsto take or initiate the steps necessary to amend the Company’s governing documents to provide that all non-binding matters presented toby shareholders shall be decided

by a simple majority of the shares votedvotes cast FOR and AGAINST an item (or, “withheld” in the case of board elections).item. This policy shall apply to all such matters unless shareholders have approved higher thresholds, or applicable laws or stock exchange regulations dictate otherwise.

SUPPORTING STATEMENT:

Amgen is regulated by the Securities and Exchange Commission (SEC). The SEC dictates a specific vote-counting standard for the purpose of establishing eligibility for resubmission of shareholder-sponsored proposals. This formula is the votes cast FOR, divided only by(a)STATEMENT the FOR, plus(b) the AGAINST votes.:

A simple-majority voting formula includes FOR and AGAINST votes, but not abstentions.

Under management’s present system, on shareholder resolutions abstentions count as AGAINST votes. This disadvantages shareholders in three ways:

1.

Every abstention on a shareholder item is treated as an AGAINST vote.

Regardless of an abstaining voter’s intent, Amgen treats every abstention as ifagainst shareholder items, whilenot counting them against management-sponsored Director elections.

2.

Counting abstentions suppresses outcomes.

By simple math, including abstentions in a formula depresses the vote result.

Counting abstentions against shareholder items is burdensome, yet Amgen does not followplace thisSEC Standard, but instead determines results by the votes cast FOR a proposal, divided by(a) the FOR votes, plus(b) the AGAINST votes,plus(c) the ABSTAIN votes.

Amgen’s 2013 proxy indicates (for shareholder-sponsored proposals) that abstentions “will have the same effect as votes ‘against’ such proposal.”burden on management-sponsored Director elections.

Using ABSTAIN votes as Amgen does counters an accepted hallmark of fair voting – honoring voter intent. Thoughtful voters who choose to ABSTAIN should not have their choices arbitrarily and universally switched as if opposing a matter.

THREE CONSIDERATIONS:

[1] Abstaining voters consciously act to ABSTAIN – to have their vote noted, but not counted. Yet, Amgen unilaterally counts all abstentions as if AGAINST a shareholder-sponsored proposal (irrespective of the voter’s intent).

[2] Abstaining voters do not follow management’s recommendation AGAINST a shareholder-sponsored item. Ignoring this intent, Amgen arbitrarily counts all abstentions as if siding with management.

[3] Remarkably, Amgen embraces theSEC Standard that this Proposal requests andexcludes abstentions for Company-sponsored Proposal #1 (director elections, stating that abstentions will “have no effect”), while applying a more restrictive vote-counting formula thatincludes abstentions to all shareholder-sponsored proposals.

This advantages management’s slate of director nominees by artificially boostingdifferent formulas boosts the appearance of support on Proposal #1, and depresses (harms) the vote-count for every shareholder-sponsored proposal, regardless of topic.management’s Director slate, while artificially depressing support for shareholder items.

 

3.

Counting abstentions distorts communication among shareholders and Amgen.

This distortion happens at the annual general meeting (“AGM”) of shareholders – theonly time each year that owners can directly interact with Board or management.

Amgen’s voting policies create misimpressions that endure. Shareholders and the media may not be informed about voting practices at the AGM, so voting

 

 

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      ITEM 4 — STOCKHOLDER PROPOSAL  

 

distortions are widely reported in the press and imprinted on the minds of shareholders and the public. These same distortions impact Board awareness of shareholder concern/interest.

Three facts:

 

•  

A CalPERS study found that 48% of S&P 500 and Russell 1000 companies employ a simple-majority standard – showing this to be a mainstream practice.

Under this proposal, shareholders retain the right to ‘send a message’ with their abstention – in fact, message-sending may be more effective because Amgen will not use abstentions to depress reported outcomes on shareholder proposals.

Any suggestion that management- and shareholder-sponsored items are treated the same is false, because management-sponsored item No. 1 – Director elections – does not count abstentions.

IN CLOSING:Notable supporters of a simple-majority standard:

   The US Securities and Exchange Commission (Staff Legal Bulletin No. 14, Question F.4.): “Only votes FOR and AGAINST a proposal are included in the calculation of the shareholder vote of that proposal. Abstentions … are not included in this calculation.”

Institutional Shareholder Services (“ISS” – the nation’s leading proxy reporting service): “a simple majority of voting shares should be all that is necessary to effect change regarding a company and its governance provisions.”

The Council of Institutional Investors (Governance Policy 3.7): “Uninstructed broker votes and abstentions should be counted only for purposes of a quorum.”

Vote to enhance shareholder value and good governance at Amgen:Item 4 – Simple Majority Vote.

These practices — counting votes using two different formulas — fail to respect voter intent, are arbitrary, and run counter to core principles of sound corporate governance.

A system that is internally inconsistent — like Amgen’s — is confusing, harms shareholder best-interest, and unfairly empowers management at the expense of stockholders.

Amgen must recognize the inconsistency of applying theSEC Standard to the Company-sponsored proposal on board elections, while applying a different formula (that artificially lowers the vote) to shareholder-sponsored proposals.

Therefore, please vote FOR this common-sense governance Proposalthat calls for the use of the fair and consistentSEC Standard across-the-board, while allowing flexibility for different thresholds where required.~ ~ ~

 

 

Board Response to the Stockholder Proposal #1

 

 

The Board of Directors recommends a vote “AGAINST” the Stockholder Proposal #1 for the following reasons:

Our Board of Directors has considered this proposal and has concluded that it is not in the best interests of the Company or its stockholders to adopt the proponent’s vote-counting methodology.

Our stockholder approval standard and vote counting methodology of including abstentions adheres to Delaware law.The Company is incorporated in the State of Delaware and, therefore, Delaware law governs the voting standards for action by the Company’s stockholders. The required vote for action by the Company’s stockholders follows the default approval standard for stockholder action under Delaware law. The Company’s Amended and Restated Bylaws provide that, except in the election of directors, as otherwise provided by the Company’s governing documents or required by applicable laws, rules and regulations, when a quorum is present, the affirmative vote of the holders of a majority of the shares present (in person or by proxy) and entitled to vote is required to approve any matter brought before a stockholder meeting. We believe the majority of

Delaware corporations adhere to the same default voting standard.

Under Delaware law, abstention votesabstentions are considered shares “entitled to vote.” Accordingly, in the vote tabulation for matters that require the affirmative vote of the majority of the shares present and entitled to vote, abstentions are not included in the numerator (because they are not affirmative votes), but are included in the denominator as shares entitled to vote. Therefore, abstentions under this standard have the same practical effect as a vote “against” a proposal.

Further, inOur vote counting methodology applies identically to management-sponsored proposalsand stockholder proposals. In its supporting statement, the proponent focuses on the effect that counting abstentions has on stockholder proposals. As disclosed in this proxy statement, abstention votes are included in the vote count for each of thesethe management-sponsored proposals and have the same

practical effect as a vote against them. This vote count standard does not favor thesethe management-sponsored proposals over the stockholder proposals. Both are treated equally. In contrast, the

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  ITEM 4 — STOCKHOLDER PROPOSAL  

proponent’s vote-counting methodology favors stockholder proposals over management-sponsored proposals.

Our Board of Directors believes that since stockholders are made aware of the treatment and effect of abstentions, counting abstention votes effectively honors the intent of our stockholders. Stockholders typically have three voting choices for a particular proposal: for; againstagainst; and abstain. In the proxy statement for theeach annual meeting, the Company discloses the vote required to approve each proposal, and also describes how abstentions will be counted in the vote tabulation and the effect of abstentions on the outcome of a matter. The Company’s stockholders are informed that if they vote “abstain” on a proposal other than the election of directors, their vote will have the same practical effect as an “against” vote, and the Board believes that counting abstention votes effectively honors the intent of the Company’s stockholders. If a stockholder elects to abstain on a matter, the Board believes that the stockholder recognizes the impact of the vote and expects it to be included in the vote count.

Furthermore, the Board believes that abstentions serve a worthwhile purpose. The proponent of an item of business, be it management or a stockholder, bears the burden of persuading a majority of stockholders to affirmatively vote in favor of the item. Consistent with conversations we have had with some of our stockholders, the proponent’s own cited source recognizes the value of abstentions, noting, “that some institutional investors abstain on shareholder proposals when they wish to convey support for the general subject matter, but have reservations about the specific action requested.”(1) We therefore do not believe it would be in our stockholders’ best interest or effective corporate governance to disregard these views.

Our Board alsoof Directors believes that lowering the approval standard for stockholder-sponsored proposals would be poor corporate governance. The proponent requests that abstentions be ignored for all stockholder-sponsored matters presented to the Company’s stockholders. Ignoring abstention votes would lower the approval standard and effectively make approval easier. Except with respect to the election of directors and matters that require, statutorily

or otherwise, a different vote, the Board believes that a proposal—whether management-sponsored or stockholder-sponsored—should receive more “for” votes than the sum of “against” and “abstain” votes in order to constitute approval by the Company’s stockholders.

Moreover, the proponent’s argument of using the “SEC Standard”Securities and Exchange Commission, or SEC, standard of excluding abstentions in vote tabulations is based on the SEC’s vote-counting rules for determining whether a stockholder may resubmit a proposal for inclusion

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 ITEM 4 — STOCKHOLDER PROPOSAL  

in a company’s proxy statement. These rules do not govern whether a stockholder proposal has been approved by stockholders. It may be that in this limited context the SEC wished to set a lower bar to enable stockholders to more easily resubmit proposals. However, in other contexts, the SEC promotes voting standards similar to ours. For instance, the SEC expressly requires a form of proxy to include an abstention option with respect to the advisory vote on the frequency of advisory vote on executive compensation.

The Board believes that it would not be effective corporate governance or serve the best interests of the Company’s stockholders to take one voting standard that an organization applies to a specific context and adopt that standard universally.to stockholder-sponsored matters. Further, we also note that based on our review of our prior annual meeting voting results, the counting of abstention votes as shares entitled to vote was not determinative of the outcome of any proposal submitted to our stockholders at any of our annual meetings in the past decade.

TheFaced with similar proposals in 2015, stockholders overwhelmingly did not support the adoption of the proposed vote-counting methodology would be inconsistent with the standard followed byvote counting methodology. In 2015, seven companies included a proposal related to a majority vote counting methodology from Investor Voice, Newground Social Investment or Equality Network Foundation in their 2015 annual meeting proxy statements. Each of Delaware corporations, does not favor management-sponsoredthose proposals over stockholder-sponsored proposals, would be poor corporate governancereceived less than 10% support from stockholders. Additionally, Investor Voice and is notWalden Asset Management included a standard used by the SECsimilar proposal in determining whether a stockholder proposal has been approved for general matters. Accordingly, the Board does not believe that implementing the proposal would be in the best interests of the Company or itsour 2015 annual meeting proxy statement which received very low support (approximately 5.8%) from our stockholders.

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THE STOCKHOLDER PROPOSAL #1.PROPOSAL.

(1)

Vote Calculation Methodologies report dated September 17, 2013 prepared for CalPERS by GMI Ratings.

 

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      SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS  

 

Security Ownership of Directors and Executive Officers

The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of March 17, 201421, 2016 by: (i) each current director and nominee; (ii) our Named Executive Officers, or NEOs (as specified on page 38)42 and (iii) all of our current directors and executive officers as a group. There were 756,487,286750,032,702 shares of our Common Stock outstanding as of March 17, 2014.21, 2016. None of our directors, nominees, NEOs or executive officers, individually or as a group, beneficially owns greater than 1% of our outstanding shares of Common Stock.

 

  Amgen Inc.
Common Stock(1)(2)
   Amgen Inc.
Common Stock(1)(2)
 
Beneficial Owner  Total
Common
Stock
Beneficially
Owned
   Shares
Acquirable
Within 60
Days
   Percent
of Total
   Total
Common
Stock
Beneficially
Owned
   Shares
Acquirable
Within 60
Days
   Percent
of Total
 

Non-Employee Directors and Nominees

            

David Baltimore

   54,634     25,000     *    

 

 

 

 

47,350

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Frank J. Biondi, Jr.

   31,696     15,000     *    

 

 

 

 

31,696

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

*

 

 

  

 

François de Carbonnel

   26,266     10,000     *    

 

 

 

 

18,014

 

 

  

 

  

 

 

 

 

5,000

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Vance D. Coffman

   56,518     45,000     *    

 

 

 

 

48,156

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Robert A. Eckert

   20,000     20,000     *    

 

 

 

 

20,435

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Greg C. Garland

   429     0     *    

 

 

 

 

3,415

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Fred Hassan

  

 

 

 

 

3,582

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Rebecca M. Henderson

   8,000     8,000     *    

 

 

 

 

8,000

 

 

  

 

  

 

 

 

 

8,000

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Frank C. Herringer(3)

   42,858     25,000     *    

 

 

 

 

42,722

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Tyler Jacks

   21,890     20,000     *    

 

 

 

 

21,890

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Gilbert S. Omenn(4)

   199,165     25,000     *  

Judith C. Pelham

   13,939     0     *    

 

 

 

 

11,890

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Ronald D. Sugar

   30,000     30,000     *    

 

 

 

 

30,000

 

 

  

 

  

 

 

 

 

30,000

 

 

  

 

  

 

 

 

 

*

 

 

  

 

R. Sanders Williams

  

 

 

 

 

1,500

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Named Executive Officers

            

Robert A. Bradway

   481,306     362,107     *    

 

 

 

 

572,924

 

 

  

 

  

 

 

 

 

208,188

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Anthony C. Hooper

   90,234     2,961     *    

 

 

 

 

198,357

 

 

  

 

  

 

 

 

 

3,178

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Jonathan M. Peacock(5)

   161,639     100,807     *  

David W. Meline

  

 

 

 

 

6,591

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Sean E. Harper

   60,671     35,951     *    

 

 

 

 

115,959

 

 

  

 

  

 

 

 

 

40,178

 

 

  

 

  

 

 

 

 

*

 

 

  

 

Madhavan Balachandran(6)

   54,547     14,416     *  

All current directors and executive officers as a group (22 individuals)(7)

   1,454,325     772,470     *  

Jonathan P. Graham

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

*

 

 

  

 

All current directors and executive officers as a group (23 individuals)(4)

  

 

 

 

 

1,522,232

 

 

  

 

  

 

 

 

 

466,792

 

 

  

 

  

 

 

 

 

*

 

 

  

 

*

Less than 1%.

 

(1) 

Information in this table is based on our records and information provided by directors, NEOs, executive officers and in public filings. Unless otherwise indicated in the footnotes and subject to community property laws, where applicable, each of the directors and nominees, NEOs and executive officers has sole voting and/or investment power with respect to such shares, including shares held in trust.

 

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     SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS  

 

(2) 

Includes shares which the individuals shown have the right to acquire (a) upon vesting of restricted stock units, or RSUs, and related dividend equivalents (excluding fractional shares), where the shares are issuable as of March 17, 201421, 2016 or within 60 days thereafter, and (b) upon exercise of stock options that are vested as of March 17, 201421, 2016 or within 60 days thereafter, as set forth in the table below. Such shares are deemed to be outstanding in calculating the percentage ownership of such individual (and the group), but are not deemed to be outstanding as to any other person. Excludes vested RSUs, and related dividend equivalents, for which receipt has been deferred by certain of the non-employee directors to a date later than 60 days after March 17, 2014.21, 2016. Dividend equivalents credited on RSUs are deemed reinvested and are paid out with the vested RSUs in shares of our Common Stock. Excludes annual RSU grantsthe number of shares the Company is required to directors expected to be made in April 2014 pursuant towithhold for taxes from each executive officers’ performance units earned for the Amgen Inc. 2009 Director Equity Incentive Program,2013-2015 performance period, as such grant amounts were not available as of the date of the filing of this proxy statement.statement went to print.

 

Name  RSUs and
Dividend
Equivalents
Included
   Stock Options
Included
   RSUs and
Dividend
Equivalents
Excluded
   RSUs and
Dividend
Equivalents
Included
   Stock Options
Included
   RSUs and
Dividend
Equivalents
Excluded
 

David Baltimore

   0     25,000     0    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

  

 

 

 

 

 

 

  

 

Frank J. Biondi, Jr.

   0     15,000     13,323    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

16,955

 

 

  

 

François de Carbonnel

   0     10,000     2,087    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

5,000

 

 

  

 

  

 

 

 

 

2,173

 

 

  

 

Vance D. Coffman

   0     45,000     8,267    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

8,606

 

 

  

 

Robert A. Eckert

   0     20,000     1,879    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

  

 

 

 

 

5,041

 

 

  

 

Greg C. Garland

   0     0     0    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

 

 

  

 

Fred Hassan

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

 

 

  

 

Rebecca M. Henderson

   0     8,000     5,577    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

8,000

 

 

  

 

  

 

 

 

 

8,892

 

 

  

 

Frank C. Herringer

   0     25,000     14,729    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

18,419

 

 

  

 

Tyler Jacks

   0     20,000     0    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

  

 

 

 

 

3,086

 

 

  

 

Gilbert S. Omenn

   0     25,000     4,587  

Judith C. Pelham

   0     0     0    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

 

 

  

 

Ronald D. Sugar

   0     30,000     5,222    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

30,000

 

 

  

 

  

 

 

 

 

8,522

 

 

  

 

R. Sanders Williams

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

 

 

  

 

Robert A. Bradway

   18,597     343,510     0    

 

 

 

 

7,688

 

 

  

 

  

 

 

 

 

200,500

 

 

  

 

  

 

 

 

 

 

 

  

 

Anthony C. Hooper

   2,961     0     0    

 

 

 

 

3,178

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

 

 

  

 

Jonathan M. Peacock

   8,175     92,632     0  

David W. Meline

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

 

 

  

 

Sean E. Harper

   6,091     29,860     0    

 

 

 

 

3,178

 

 

  

 

  

 

 

 

 

37,000

 

 

  

 

  

 

 

 

 

 

 

  

 

Madhavan Balachandran

   3,218     11,198     0  

Jonathan P. Graham

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

 

 

  

 

(3) 

Includes 14,15217,152 shares held by family trusts.

(4) 

Dr. Omenn will not be standing for re-election to our Board of Directors at the 2014 Annual Meeting of Stockholders.

(5)

Mr. Peacock ceased service as an executive officer effective as of January 10, 2014. Data provided is based on information known as of January 10, 2014.

(6)

Includes 40,131 shares held by family trusts.

(7)

Includes 262,172334,751 shares (excluding fractional shares) held by the sixfive executive officers who are not NEOs and who have a right to acquire such shares upon the vesting of RSUs that have not been deferred to a date later than 60 days after March 17, 201421, 2016 or upon exercise of vested stock options as of March 17, 201421, 2016 or within 60 days thereafter. All current directors and executive officers as a group have the right to acquire a total of 48,36519,117 shares upon vesting of RSUs, and related dividend equivalents, where the shares are issuable as of March 17, 201421, 2016 or within 60 days thereafter and 724,105447,675 shares upon exercise of stock options that are vested as of March 17, 201421, 2016 or within 60 days thereafter.

 

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      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS  

 

Security Ownership of Certain Beneficial Owners

The following table shows the number of shares of our Common Stock owned by each person or entity known to the Company to be the beneficial owners of more than 5% of our Common Stock as of December 31, 2013,2015, except as noted, based on a review of publicly available statements of beneficial ownership filed with the Securities and Exchange Commission, or SEC, on Schedules 13D and 13G through March 17, 2014.21, 2016.

 

  Common Stock
Beneficially Owned
   

Common Stock
Beneficially Owned

 

Name and Address of Beneficial Owner  Number of
Shares
   Percent
of Total(1)
   Number of
Shares
   Percent
of Total(1)

Capital Research Global Investors(2)

333 South Hope Street

Los Angeles, CA 90071

   77,432,460     10.24%    

 

 

 

91,961,008

 

  

  

 

12.26%

FMR LLC(3)

245 Summer Street

Boston, MA 02210

   51,017,182     6.74%  

BlackRock, Inc.(4)

40 East 52nd Street

New York, NY 10022

   46,723,749     6.18%  

BlackRock, Inc.(3)

55 East 52nd Street

New York, NY 10055

  

 

 

 

50,675,509

 

  

  

 

6.76%

The Vanguard Group(4)

100 Vanguard Blvd.

Malvern, PA 19355

  

 

 

 

44,916,785

 

  

  

 

5.99%

(1) 

The “Percent of Total” reported in this column has been calculated based upon the numbers of shares of Common Stock outstanding as of March 17, 201421, 2016 and may differ from the “Percent of Class” reported in statements of beneficial ownership filed with the SEC.

(2) 

The amounts shown and the following information was provided by Capital Research Global Investors pursuant to a Schedule 13G13G/A filed with the SEC on January 10, 2014.February 16, 2016. Capital Research Global Investors reports that it has sole voting and dispositive power over all 77,432,46091,961,008 shares.

(3)

The amounts shown and the following information was provided by FMR LLC pursuant to a Schedule 13G amendment filed with the SEC on February 14, 2014. FMR LLC reports that it has sole voting power over 3,721,880 of these shares and sole dispositive power over all 51,017,182 shares.

(4) 

The amounts shown and the following information was provided by BlackRock, Inc. pursuant to a Schedule 13G13G/A filed with the SEC on January 28, 2014.February 10, 2016. BlackRock, Inc. reports that it has sole voting power over 37,223,94343,914,119 of these shares and sole dispositive power over all 46,723,74950,652,713 shares.

(4)

The amounts shown and the following information was provided by The Vanguard Group pursuant to a Schedule 13G/A filed with the SEC on February 10, 2016. The Vanguard Group reports that it has sole voting power over 1,410,260 of these shares and sole dispositive power over 43,422,249 shares.

 

26    LOGOLOGO  ï 20142016 Proxy Statement29


      CORPORATE GOVERNANCE  

 

Corporate Governance

Board of Directors Corporate Governance Highlights

 

Our Board of Directors, or Board, is governed by our Amgen Board of Directors Corporate Governance Principles, or Corporate Governance Principles, which are amended from time to time to incorporate certain current best practices in corporate governance. Our Corporate Governance Principles may be found on our website atwww.amgen.comwww.amgen.comand are available in print upon written request to the Company’s Secretary.Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799. The Board’s corporate governance practices include the following:

Proxy Access. We adopted Amended and Restated Bylaws of Amgen Inc., or Bylaws, to implement proxy access for director nominations. Eligible stockholders with an ownership threshold of 3% who have held their shares for at least 3 years and who otherwise meet the requirements set forth in our Bylaws may have their nominees consisting of the greater of 20% or two nominees of our Board included in our proxy materials. Up to 20 eligible stockholders may group together to reach the 3% ownership threshold. In the course of designing our proxy access provisions, we carefully considered each element in the interest of our stockholders as a whole, including that the number of stockholders who may group together (20) would afford those stockholders likely to utilize proxy access with the opportunity to do so.

 

 

Lead Independent Director. The independent members of the Board elect a lead independent director on an annual basis. The lead independent director has specific responsibilities and authorities as discussed below. Dr.Vance D. Coffman currently serveswill serve as the lead independent director until his retirement from the Board at the 2016 Annual Meeting of Stockholders, or Annual Meeting. The independent members of the Board have elected Robert A. Eckert as our new lead independent director.director effective following the Annual Meeting, subject to his re-election to the Board by our stockholders at the Annual Meeting.

 

 

Regular Executive Sessions of Independent Directors. Our independent directors meet privately on a regular

basis. Dr. Coffman, as ourOur lead independent director presides at such meetings.

 

 

Majority Approval Required for Director Elections. If an incumbent director up for re-election at a meeting of stockholders fails to receive a majority of affirmative votes in an uncontested election, the Board will adhere to the director resignation policy as provided in the Amended and Restated Bylaws of Amgen Inc.our Bylaws.

 

 

Board Access to Management. We afford our directors ready access to our management. Key members of management attend Board and committee meetings to present information concerning various aspects of the Company, its operations and results. The Corporate Responsibility and Compliance Committee, or Compliance Committee, members also have regular meetings in executive session with our Chief Compliance Officer, and the Audit Committee members have regular meetings in executive session with our internal auditors and separate meetings in executive session with our head of Corporate Audit.

 

 

Board Authority to Retain Outside Advisors. Our Board committees have the authority to retain outside advisors. The Audit Committee has the sole authority to appoint,

compensate, retain and oversee the independent registered public accountants. The Compensation and Management Development Committee, or Compensation Committee, has the sole authority to appoint, compensate, retain and oversee compensation advisors for senior management compensation review. The Governance and Nominating Committee, or Governance Committee, has the sole authority to appoint, retain and replace search firms to identify director candidates and compensation advisors for our directors’ compensation review.

 

 

Director Limitation on Number of Boards. A director who is currently serving as our Chief Executive Officer, or CEO, should not serve on more than two outside public company boards. No director should serve on more than five outside public company boards.

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  CORPORATE GOVERNANCE  

Director Tenure. Our average Board tenure of ~7.7 years is substantially less than the average board tenure of the companies in the Standard & Poor’s 500 Index.

 

 

Director Retirement Age. The Board has established a retirement age of 72. A director is expected to retire from the Board on the day of the annual meeting of stockholders following his or her 72nd72nd birthday. After due consideration, the Board has waived the retirement age with respect to Dr.David Baltimore based on its determination that it would be beneficial to have Dr. Baltimore continue to serve as a director due to his unique scientific knowledge and deep understanding of the research and development activities and operations of the Company. The Board has waived the retirement age with respect to Frank C. Herringer based on its determination that it would be beneficial to have Mr. Herringer continue to serve as a director due to his financial acumen and Company knowledge and experience.

 

 

Director Changes in Circumstances Evaluated. If a director has a substantial change in principal business or professional affiliation or responsibility, including a change in principal occupation, he or she shall offer his or her resignation to the chairman of the Governance Committee. The Governance Committee determines whether to accept the resignation based on what it believes to be in the best interests of the Company and our stockholders.

 

 

Director Outside Relationships Require Pre-Approval. Without the prior approval of disinterested members of the Board, directors should not enter into any transaction or relationship with the Company in which they will have a financial or a personal interest or any transaction that otherwise involves a conflict of interest.

 

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 CORPORATE GOVERNANCE  

 

Director Conflicts of Interest. If an actual or potential conflict of interest arises for a director or a situation arises giving the appearance of an actual or potential conflict, the director must promptly inform the Chairman of the Board, or Chairman, or the chairman of the Governance Committee. All directors will recuse themselves from any discussion or decision found to affect their personal, business or professional interests.

 

 

Regular Board and Committee Evaluations. The Board and the Audit, Compensation, Compliance and Governance Committees each have an annual evaluation process

which focuses on their role and effectiveness, as well as fulfillment of their fiduciary duties. In 2013,2015, the evaluations were each completed anonymously to encourage candid feedback. The Board completed its evaluation in December 2013,2015, while the Audit, Compensation, Compliance and Governance Committees each completed its assessment in October 20132015 for further evaluation by the Governance Committee in December 2013.2015. The results of the committee evaluations are reported to and reviewed by the full Board. Each committee and the Board was satisfied with its performance.performance and each was considered to be operating effectively, with appropriate balance among governance, oversight, strategic and operational matters.

Solicitation of Stockholder Perspectives. The Board believes that engagement with stockholders is the source of valuable information and perspectives on the Company. The Board has requested that management solicit input from investors on behalf of the Board and the lead independent director may also meet directly with stockholders when appropriate. We provide more information regarding the stockholder engagement program on page 45.

 

 

Director Qualifications and Review of Board Diversity

 

Our Governance Committee is responsible for determining Board membership qualifications and for selecting, evaluating and recommending to the Board nominees for annual election to the Board and to fill vacancies as they arise. The Governance Committee reviews, periodically with the Board, the composition and size of the Board, each committee’s performance and makes recommendations, as necessary, so that the Board reflects the appropriate balance

of knowledge, experience, skills, expertise and diversity advisable for the Board as a whole and contains at least the minimum number of independent directors required by applicable laws and regulations.

The Governance Committee maintains guidelines for selecting nominees to serve on the Board and for considering stockholder recommendations for nominees. The Amgen Inc.

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  CORPORATE GOVERNANCE  

Board of Directors Guidelines for Director Qualifications and Evaluations are included in this proxy statement as

Appendix A.A. Among other things, Board members should possess demonstrated breadth and depth of management and leadership experience, financial and/or business acumen or relevant industry or scientific experience, integrity and high ethical standards, sufficient time to devote to the Company’s business, the ability to oversee, as a director, the Company’s business and affairs for the benefit of our stockholders, the ability to comply with the Amgen Board of

Directors Code of Conduct and a demonstrated ability to think independently and work collaboratively. In addition, although the Governance Committee does not maintain a diversity policy, the Governance Committee considers diversity in its determinations. Diversity includes race, ethnicity, age and gender and is also broadly construed to take into consideration many other factors, including industry knowledge, operational experience and scientific and academic expertise, geography and personal backgrounds.

 

 

Leadership Structure

 

Our current leadership structure and governing documents permit the roles of Chairman and CEO to be filled by the same or different individuals. The Board has currently determined that it is in the best interests of the Company and our stockholders to have Mr.Robert A. Bradway, our CEO and President, serve as Chairman, coupled with an active lead independent director. As such, Mr. Bradway holds the position of Chairman, CEO and President, and Dr. Coffman serveswill serve as the lead independent director.director until his retirement from the Board at the Annual Meeting. Subject to his re-election at the Annual Meeting, Mr. Eckert has been elected by the independent directors to succeed Dr. Coffman as the lead independent director effective following the Annual Meeting.

Corporate Governance StructureStructure.. The Board believes our corporate governance structure, with its strong emphasis on

Board independence, an active lead independent director and strong Board and committee involvement, provides sound and robust oversight of management.

BoardDirector Independence. At least annually, the Governance Committee reviews the independence of each non-employee director and makes recommendations regarding director independence to the Board and the Board affirmatively determines whether each director qualifies as independent. Each director must keep the Governance Committee fully and promptly informed as to any development that may affect the director’s independence.

28    LOGOï 2014 Proxy Statement


 CORPORATE GOVERNANCE  

11 12 out of the 1213 director nominees (over 91%(approximately 92%) are independent as defined by The NASDAQ Stock Market, or NASDAQ, listing standards and the requirements of the Securities and Exchange Commission, or SEC, with the exception being Mr. Bradway. All of our directors are elected annually.

Lead Independent Director.The lead independent director is elected by the independent members of the Board on an annual basis. Dr. Coffman has servedbeen elected as the lead independent director since January 1, 2013. He was re-elected by2013 and he will serve as such until his retirement from the Board at the Annual Meeting. The independent members of the Board in December 2013have elected Mr. Eckert as our new lead independent director effective following the Annual Meeting, subject to serve for an additional term. his re-election to the Board by our stockholders at the Annual Meeting.

In such position, Dr. Coffmanthe lead independent director serves as a means for regular communication between the independent directors and Mr. Bradway, keeping Mr. Bradway apprised of any concerns, issues or determinations made during the independent sessions, and consults with Mr. Bradway on other matters pertinent to the Company and the Board. The lead independent director’s additional responsibilities include:

 

Presiding at meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;

 

Serving as a liaison between the Chairman and the independent directors;

 

Previewing the information to be provided to the Board;

 

Approving meeting agendas for the Board;

 

Assuring that there is sufficient time for discussion of all meeting agenda items;

 

Organizing and leading the Board’s evaluation of the CEO;

 

Being responsible for leading the Board’s annual self-assessment;

 

32    LOGOï 2016 Proxy Statement


  CORPORATE GOVERNANCE  

Having the authority to call meetings of the independent directors; and

 

If requested by major stockholders, ensuring that he/she is available for consultation and direct communication.

In March 2013, the Amended and Restated Bylaws of Amgen Inc. were amended to reflect the lead independent director’s responsibility to preside over meetings of the Board and meetings of stockholders when the Chairman is absent.

Key Committees ComprisedComposed of Independent Directors. The Audit, Compensation, Compliance and Governance Committees are each composed solely of independent directors and provide independent oversight of management. In addition, the Audit, Compensation and Compliance Committees meet in executive session on a regular basis with no members of management present (unless otherwise requested by the committee). Each of our committees effectively manages its Board delegatedBoard-delegated duties and communicates regularly with the Chairman and members of management. In addition, the Compensation Committee has an effective process for monitoring and evaluating Mr. Bradway’s compensation and performance. Each committee chair reportsprovides a report on committee meetings held to the full Board at each regular meeting of the Board.

Independent Directors Sessions. At each regularly scheduled Board meeting,On a regular basis, the independent directors meet in an executive session without Mr. Bradway to review Company performance, management effectiveness, proposed programs and transactions and the Board meeting agenda items. These independent sessions are organized and chaired by our lead independent director.

Annual Assessment. As part of the Board’s annual self-evaluation process, the Board reviews its leadership structure and whether combining or separating the roles of Chairman and CEO is in the best interests of the Company and our stockholders.

Benefits of Combined Leadership Structure. The Board believes that the Company and our stockholders have been best served by having Mr. Bradway in the role of Chairman and CEO for the following reasons:

 

Mr. Bradway is most familiar with our business and the unique challenges we face. Mr. Bradway’s day-to-day insight into our challenges facilitates a timely deliberation by the Board of important matters.

 

Mr. Bradway has and will continue to identify agenda items and lead effective discussions on the important matters affecting us. Mr. Bradway’s knowledge and extensive experience regarding our operations and the highly-regulated industries and markets in which we compete positions him to identify and prioritize matters for Board review and deliberation.

compete position him to identify and prioritize matters for Board review and deliberation.

 

As Chairman and CEO, Mr. Bradway serves as an important bridge between the Board and management and provides critical leadership for carrying out our strategic initiatives and confronting our challenges. The Board believes that Mr. Bradway brings a unique, stockholder-focused insight to assist the Company to most effectively execute its strategy and business plans to maximize stockholder value.

LOGOï 2014 Proxy Statement29


 CORPORATE GOVERNANCE  

strategic initiatives and confronting our challenges. The Board believes that Mr. Bradway brings unique insight to assist the Company to most effectively execute its strategy and business plans to maximize stockholder value.

 

The strength and effectiveness of the communications between Mr. Bradway as our Chairman and Dr. Coffman as our lead independent director resultsresult in effective Board oversight of the issues, plans and prospects of our Company.

 

This leadership structure provides the Board with more complete and timely information about the Company, a unified structure and consistent leadership direction internally and externally and provides a collaborative and collegial environment for Board decision making.

Flexibility of the Board.Leadership Structure. The Board is committed to high standards of corporate governance. The Board values its flexibility to select, from time to time, a leadership structure that is bestmost able to serve the Company’s and stockholders’ best interests based on the qualifications of individuals available and circumstances existing at the time. As such, the Board regularly evaluates whether combining or separating the roles of Chairman and CEO is in the best interests of the Company and our stockholders. The Board believes that a policy limiting its flexibility to choose, consistent with its fiduciary duties, a leadership structure that will enable the Company to most effectively execute its strategy and business plans to maximize stockholder value would be detrimental to the Company and our stockholders.

The Board’s Role in Risk Oversight

Our Board oversees an enterprise-wide approach to risk management, which is designed to support the achievement of the Company’s objectives, including strategic objectives to improve long-term financial and operational performance and enhance stockholder value. Our Board believes that a fundamental part of risk management is understanding the risks that we face, monitoring these risks and adopting appropriate control and mitigation of these risks. We believe

LOGOï 2016 Proxy Statement33


  CORPORATE GOVERNANCE  

that the risk management areas that are fundamental to the success of our annual and strategic plans include the areas of product development, safety, supply, quality, value and access, sales and promotion and corporate development, as well as protecting our assets (financial, intellectual property and information), all of which are managed cross-functionally by senior executive management reporting directly to our CEO.

We have implemented an Enterprise Risk Management, or ERM, program, which is a Company-wide effort to identify, assess, manage, report and monitor enterprise risks and risk areas that may affect our ability to achieve the Company’s objectives. The ERM program involves our Board, our management and other personnel and is overseen by one of

our senior executive officers. Enterprise risks are identified and managed by management and the business functions and, as discussed below, are overseen by the Board or the appropriate Board committee.

30    LOGOï 2014 Proxy Statement


 CORPORATE GOVERNANCE  

The Board discusses enterprise risks with our senior management on a regular basis, including as a part of its annual strategic planning process, annual budget review and approval, capital plan review and approval and through reviews of compliance issues in the appropriateapplicable committees of our Board, as appropriate. While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board are structured to oversee specific risks, as follows:

 

Committee Primary Risk Oversight Responsibility

Audit Committee

  

Oversees financial risk, such as capital risk, financial compliance risk and internal controls over financial reporting.

Corporate Responsibility and Compliance Committee

  

Oversees non-financial compliance risk, such as regulatory risks (including the compliance risks associated with the requirements of the Federal health care program, Food and Drug Administration and Corporate Integrity Agreement). Oversees staff member compliance with the Code of Conduct.

Compensation and Management Development Committee

  

Evaluates whether the right management talent is in place. Oversees our compensation policies and practices, including whether such policies and practices balance risk-taking and rewards in an appropriate manner as discussed further below.

Governance and Nominating Committee

  

Oversees the assessment of each member of the Board’s independence, as well as the effectiveness of our Corporate Governance Principles and Board of Directors’ Code of Conduct.

 

At each regular meeting, or more frequently as needed, the Board considers reports from each of the committees set forth above, above, which reports may provide additional detail on risk management issues and management’s response.

Compensation Risk Management

On an annual basis, management, working with the Compensation Committee’s independent compensation consultant, conducts an assessment of the Company’s compensation policies and practices for all staff members generally, and for our staff members who participate in our

sales incentive compensation program, for material risk to the Company. The results of this assessment are reviewed and discussed with the Compensation Committee. Based on this assessment, review and discussion, we believe that, through a combination of risk-mitigating features and incentives guided by relevant market practices and Company-wide goals, our compensation policies and practices do not present risks that are reasonably likely to have a material adverse effect on us.

In evaluating our compensation policies and practices, a number of factors were identified which the Company, the

34    LOGOï 2016 Proxy Statement


  CORPORATE GOVERNANCE  

Compensation Committee and its independent consultant believe discourage excessive risk-taking, including the factors described below:

 

Our compensation programs consist of a mix of incentives that are tied to varying performance periods and are designed to balance our need to drive our current performance with the need to position the Company for longer-term success.

 

Of this mix of incentives, Company-wide results are the most important factor in determining the amount of an incentive award for each of our staff members. Additionally, we cap short-term incentives and make long-term incentive, or LTI, equity awards a component of compensation for nearly all of our full-time staff members. In particular, the CEO and the other executive officers participate in compensation plans that are designed so that the largest component of their compensation is in the form of LTI equity awards to ensure that a significant portion of their compensation is associated with long-term, rather than short-term, outcomes, which aligns these individuals’ interests with our stockholders.

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 CORPORATE GOVERNANCE  

associated with long-term outcomes rather than short-term outcomes, which aligns these individuals’ interests with our stockholders.

 

We employ strong practices with respect to equity awards: we do not award mega-grants, discounted stock options or immediately vested stock options to staff members; we have grant guidelines that generally limit the grant date for our equity grants to the third business day after our announcement of quarterly earnings and we prohibit staff members from hedging the economic risk of our Company’s Common Stock.earnings.

 

We have robust stock ownership guidelines for vice presidents and above that require significant investment by these individuals in our Common Stock.

Our Company values and leadership behaviors are an integral part of the performance assessments of our staff members and are particularly emphasized in our assessment tools at higher positions. These evaluations serve as an important information tool and basis for compensation decisions.

The Compensation Committee retains full discretion to reduce or eliminate annual cash incentive awards to our executive officers and can and has modified awards downwards.

 

We have a clawback policy that requires our Board to consider recapturing past cash or equity compensation payouts awarded to our executive officers if it is subsequently determined that the amounts of such compensation were determined based on financial results that are later restated and the executive officer’s misconduct caused or partially caused such restatement.

 

We have recoupment provisions that expressly allow the Compensation Committee or management, as appropriate, to consider employee misconduct that caused serious financial or reputational damage to the Company when determining whether an employee has earned an annual cash incentive award or the amount of any such award.

Our Insider Trading Policy prohibits pledging of our Common Stock and hedging the economic risk of our Common Stock.

 

 

CodeCodes of Ethics and Business Conduct

 

 

Our Board has adopted two codes of business conduct and ethics, one that applies to our directors and the second which applies to all of our staff members, including our executive officers. We also have a Code of Ethics for senior financial officers. To view our codes of business conduct, please visit our website atwww.amgen.com. We intend to disclose any

disclose any future amendments to certain provisions of our codes of business conduct and ethics, or waivers of such provisions, applicable to our directors and executive officers, at the same location on our website identified above. There were no waivers of any of the codes of business conduct or the codecodes of ethics in 2013.2015.

 

 

BoardLOGOï 2016 Proxy Statement35


  CORPORATE GOVERNANCE  

Director Independence

 

 

At least annually, the Governance Committee reviews the independence of each non-employee director and makes recommendations to the Board and the Board affirmatively determines whether each director qualifies as independent. Each director must keep the Governance Committee fully and promptly informed as to any development that may affect the director’s independence.

The Board has determined that each of our non-employee directors is independent under the listing standards of NASDAQ and the requirements of the SEC. Mr. Bradway is not independent based on his service as our CEO and President. Mr. Bradway is the only director who also serves

us in a management capacity. In making its independence determinations, the Board reviewed direct and indirect transactions and relationships between each director, or any member of his or her immediate family, and us or one of our subsidiaries or affiliates based on information provided by the director, our records and publicly available information. All of the reviewed transactions and arrangements were entered into in the ordinary course of business and none of the business transactions, donations or grants involved an amount that (i) exceeded the greater of 5% of the recipient entity’s revenues or $200,000 with respect to transactions where a director or any member of his or her immediate family or

32    LOGOï 2014 Proxy Statement


 CORPORATE GOVERNANCE  

spouse served in any capacity other than as a director of a publicly held-corporation or (ii) exceeded $10,000 with respect to professional or consulting services provided by entities at which our directors serve as professors or employees. The following types and categories of transactions, relationships and arrangements were considered by our Board in making its independence determinations:

 

Each of our independent directors (or their immediate family members), currently serves or has previously served within the last three years as a professor, trustee, director, or member of a board, council or committee for one or more colleges, universities or non-profit, charitable organizations, including research or scientific institutions, to which The Amgen Foundation, Inc. has made matching donations under our Amgen matching gift program that is available to all of our employees and directors, or has made grants.

director, or member of a board, council or committee for one or more colleges, universities or non-profit, charitable organizations, including research or scientific institutions, to which The Amgen Foundation, Inc. has made matching donations under our Amgen matching gift program that is available to all of our employees and directors, or has made grants.

 

Each of our independent directors (or their immediate family members), other than Mr. Biondi and Ms.Judith C. Pelham, currently serves or has previously served within the last three years as a member of the board of directors or the board of trustees or an advisory board for an entity with which Amgen has business transactions or to which Amgen makes donations or grants. The business transactions include, among other things, purchasing supplies, equipment and software licenses, repair and maintenance fees, healthcare sponsorships and programs, utilities, clinical trials, research and development expenses, executive education, conferences and limited consulting services.

which Amgen has business transactions or to which Amgen makes donations or grants. The business transactions include, among other things, purchasing supplies, equipment and software licenses, healthcare sponsorships and programs, utilities, clinical trials, research and development lab expenses, executive education, conferences and limited consulting services.

 

Drs. Baltimore, Rebecca M. Henderson, Tyler Jacks and OmennR. Sanders Williams currently serve as professors for universities and Dr. Sugar serves as a senior advisor to corporations, to which Amgen has made payments for certain business transactions such as symposiums, conferences, clinical trials, training and research and development expenses, subscription, equipment repairsoftware licenses and licensemaintenance fees, as well as for grants and consulting services.grants.

None of our directors directly or indirectly provides any professional or consulting services to us and none of our directors currently has or has had any direct or indirect material interest in any of the above transactions and arrangements. The Board determined that these transactions and arrangements did not warrant a determination that the director was not independent.

 

 

Board Meetings

 

 

The Board held six meetings in 20132015 and all of the directors attended at least 75% of the total number of meetings of the Board and committees on which they served. Mr. GarlandFred Hassan was appointed to the Board in October 2013July 2015 and attended all meetings of the Board and committees on which he served in 2013

2015 after the date of his appointment. The independent directors meet in executive session without management, including Mr. Bradway, present at all regularly scheduled

meetings of the Board. Dr. Coffman, our lead independent director, presided at such meetings. We and the Board

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expect all current directors to attend our annual meetings of stockholders barring unforeseen circumstances or irresolvable conflicts. All of the then-current members of

the Board, except for Ronald D. Sugar, were present at our 20132015 annual meeting of stockholders.

 

 

Board Committees and Charters

 

 

The Board has six standing committees: Audit Committee; Compensation Committee; Compliance Committee; Equity Award Committee; Executive Committee and Governance Committee. The Board maintains charters for each of these standing committees. In addition, the Board has adopted a written set of Corporate Governance Principles and a

Board of Directors’ code of conduct that generally formalize practices we have in place. To view the charters of our standing Board committees, our Corporate Governance Principles and the Board of Directors’ code of conduct, please visit our website atwww.amgen.com.

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 CORPORATE GOVERNANCE  

Audit Committee

The Audit Committee met nine times in 2013.2015. Throughout 20132015 and currently, Mr.Frank J. Biondi, Jr. serves as chairman and Ms. Pelham, Drs.Dr. Baltimore, and Omenn and Messrs.François de Carbonnel, Mr. Eckert and EckertGreg C. Garland serve as members of the Audit Committee.Committee, with Mr. Garland was appointed toHassan joining the Audit Committee in October 2013.effective July 28, 2015. All members of the Audit Committee meet the NASDAQ composition requirements, including the requirements regarding financial literacy and financial sophistication, and the Board has determined that each member is independent under the listing standards of NASDAQ and the rules of the SEC regarding audit committee membership. The Board has also determined that Messrs. Biondi, de Carbonnel, Eckert, Garland, and GarlandHassan are each an “audit committee financial expert” as defined by SEC rules.

The Audit Committee has sole authority for the appointment, compensation, retention and oversight of the work of the independent registered public accountants, and responsibility for reviewing and discussing, prior to filing or issuance, with management and the independent registered public accountants (when appropriate) our audited consolidated financial statements to be included in our Annual Report on Form 10-K and earnings press releases.

Compensation and Management Development Committee

The Compensation Committee met fourfive times in 2013.2015. Throughout 20132015 and currently, Mr. Herringer serves as chairman and Ms. Pelham, Mr. Biondi and Dr. Coffman serve as members of the Compensation Committee. Ms. Pelham was appointed toCommittee, with Mr. Hassan joining the Compensation Committee effective October 2013. Admiral J. Paul Reason served on the Compensation Committee until his retirement from the Board in May 2013 and Mr. Schaeffer served on the Compensation Committee until July 2013 when he resigned from our Board.28, 2015. Each member of the Compensation Committee has been determined by the Board to be independent under the listing standards of NASDAQ and the requirements of the SEC.

The Compensation Committee assists the Board in fulfilling its fiduciary responsibilities with respect to the oversight of the Company’s compensation plans, policies and programs, especially those regarding executive compensation. The Compensation Committee is responsible for designing the Company’s compensation programs that encourage high performance, promote accountability and adherence to

Company values and the staff member code of conduct and to align with the interests of the Company’s stockholders. The Compensation Committee is responsible for ensuring that the executive management development processes attract, develop and retain talented leadership to serve the long-term best interests of the Company.

The Compensation Committee has authority for overseeing the Board’s relationship with stockholders on executive compensation matters, including stockholder outreach efforts, stockholder proposals, advisory votes, communications with proxy advisory firms and related matters.

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  CORPORATE GOVERNANCE  

The processes and procedures of the Compensation Committee for considering and determining compensation for 20132015 for our executive officers were as follows:

Compensation for our executive officers, including our Named Executive Officers, or NEOs, is generally determined annually in March, except for annual LTI equity awards which are determined in December and are granted in January.

 

With respect to our CEO, by the first calendar quarter of each year, the Compensation Committee reviews and approves Company performance goals and objectives for the current year and evaluates the CEO’s performance in light of the Company performance goals and objectives established for the prior year. The Compensation Committee evaluates the performance of the CEO within the context of the financial and operational performance of the Company, considers competitive market data and establishes the CEO’s compensation based on this evaluation. The values of each component of total compensation (base salary, target annual cash incentive awards and equity awards) for the current year, as well as total annual compensation for the prior year (including the value of equity holdings, potential change of control payments and vested benefits under our Retirement and Savings Plan, Supplemental Retirement Plan and Nonqualified Deferred Compensation Plan as of the end of the last fiscal year) are considered at this time. Final determinations regarding our CEO’s performance and compensation are made during an executive session of the Compensation Committee and are reported to and reviewed by the Board in an independent directors’ session.

 

During 2013,2015, the Compensation Committee engaged Frederic W. Cook & Co., Inc., or Cook & Co. or the consultant, an independent compensation consultant, to provide advice regarding executive compensation and executive compensation trends and developments, compensation designs and equity compensation practices, market data as requested, and opinions on the appropriateness and competitiveness of our executive compensation programs relative to market practice. Cook & Co. reported directly to the Compensation Committee and attended regularly scheduled meetings of the Compensation Committee (including meeting in executive session with the Compensation Committee, as requested). In cooperation with management, Cook & Co. assesses the potential risks arising from our compensation policies and practices. Management interacts with the consultant to provide information or the perspective of management as requested by the consultant or Compensation Committee, coordinates payment to the consultant out of the Board’s budget, notifies the consultant of upcoming agenda items and makes the consultant aware of regular or special meetings of the Compensation Committee.

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consultant, an independent compensation consultant, to provide advice regarding executive compensation and executive compensation trends and developments, compensation designs and equity compensation practices, market data as requested, and opinions on the appropriateness and competitiveness of our executive compensation programs relative to market practice. Cook & Co. reported directly to the Compensation Committee and attended regularly scheduled meetings of the Compensation Committee (including meeting in executive session with the Compensation Committee, as requested). In cooperation with management, Cook & Co. conducts an assessment of the risks arising from our compensation policies and practices. Management interacts with the consultant to provide information or the perspective of management as requested by the consultant or Compensation Committee, coordinates payment to the consultant out of the Board’s budget, notifies the consultant of upcoming agenda items and makes the consultant aware of regular or special meetings of the Compensation Committee.

In setting executive compensation, the Compensation Committee compares the Company’s pay levels and programs to those of the Company’s competitors for executive talent and uses this comparative data as a guide in its review and determination of compensation. Our Compensation Committee considers and selects an appropriate peer group (consisting of biotechnology and pharmaceutical companies), based in part on the recommendations of Cook & Co., and, for each Named Executive Officer, or NEO, the Compensation Committee reviews the compensation levels and practices of our peer group, consistingwhich for our NEOs, other than the CEO, is based on reports prepared by management from information contained in compensation surveys and proxy statements. Cook & Co. provides the Compensation Committee with market data, the practices of biotechnologyour peer group and pharmaceutical companies.recommendations for the CEO position.

 

Our Compensation Committee determines compensation for the executive officers (other than the CEO) based, in part, on the recommendations of our CEO regarding base salary, annual cash incentive awards and annual equity awards. In determining his compensation recommendations for each NEO, our CEO reviews comparative peer group data. The Compensation Committee has typically followed these recommendations.

 

The Compensation Committee generally holds executive sessions (with no members of management present, unless requested by the Compensation Committee) at each of its regular meetings.

The Compensation Committee has authority to delegate any of the functions described above to a subcommittee of its members. No delegation of this authority was made in 2013.2015.

Each year the Compensation Committee reviews the independence of its compensation consultantsCook & Co. and other advisors.whether any conflicts of interest exist. In performing its analysis, the Compensation Committee considers the factors set forth in the SEC rules and the NASDAQ listing requirements that recently became effective.standards. After review and consultation with Cook & Co., the Compensation Committee has determined that Cook & Co. is independent and there is no conflict of interest resulting from retaining Cook & Co. currently or during the year ended December 31, 2013.2015.

Equity Award Committee

The Equity Award Committee met four times in 2013.2015. Throughout 20132015 and currently, Mr. Herringer serves as

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chairman and Dr. Coffman and Mr. Bradway servesserve as members of the Equity Award Committee. Our Board has delegated to the Equity Award Committee the responsibility for determining annual equity-based awards to vice presidents and below who are not Section 16 officers and authority to make equity-based awards from time to time to such eligible staff members for purposes of compensation, retention, promotion and upon commencement of their employment consistent with the equity grant guidelines established by the Compensation Committee. In addition, the Equity Award Committee presents a report to the Compensation Committee detailing the equity-based awards made by the Equity Award Committee at least twice per year.

Governance and Nominating Committee

The Governance Committee met five times in 2013.2015. Throughout 20132015 and currently, Dr. Coffman serves as chairman and Drs. Baltimore, Henderson, Jacks, Sugar and Sugar,Williams, and Messrs. de Carbonnel, Garland and Herringer serve as members of the Governance Committee, withCommittee. Dr. Coffman is retiring from our Board effective as of the Annual Meeting, and Mr. Garland joininghas been appointed by the Board to serve as the chairman of the Governance Committee effective October 2013.after the Annual Meeting, subject to his re-election to the Board by stockholders at the Annual Meeting. Each of the members of the Governance Committee has been determined by the Board to be independent under the listing standards of NASDAQ and the requirements of the SEC.

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 CORPORATE GOVERNANCE  

The Governance Committee is responsible for developing and overseeing the Board’s Corporate Governance Principles and a code of conduct applicable to members of the Board and for monitoring the independence of the Board. The Governance Committee also determines Board membership qualifications, selects, evaluates and recommends to the Board nominees to fill vacancies as they arise, reviews the performance of the Board and its committees and is responsible for director education. The Governance Committee maintains, with the approval of the Board, guidelines for selecting nominees to serve on the Board and considering stockholder recommendations for nominees. Such guidelines are included in this proxy statement asAppendix A. Stockholders wishing to communicate with the Governance Committee regarding recommendations for director nominees should follow the procedure described in “Communication with the Board” below. See “Other Matters—“OTHER MATTERS—Stockholder Proposals”Proposals for 2017 Annual Meeting” for a description of the information that

a stockholder proposing to nominate a director for election must provide to the Company in their advance notice. Additionally, the Governance Committee recommends to the Board nominees for appointment as executive officers and certain other officers.

The Governance Committee also oversees the corporate governance and Board membership matters of the Company. The Governance Committee identifies and recommends to the Board qualified individuals for Board and committee membership and considers and recommends to the Board nominees to stand for election at the annual meeting of stockholders and to fill vacancies as they arise as more fully described previously in “Director Qualifications and Review of Board Diversity” above.Diversity.” Among the Governance Committee’s responsibilities, the Governance Committee evaluates and makes recommendations to our Board regarding compensation for non-employee Board members. Any Board member who is also an employee of the Company does not receive separate compensation for service on the Board.

The processes and procedures of the Governance Committee for considering and determining director compensation are as follows:

 

The Governance Committee has the authority to evaluate and make recommendations to our Board regarding director compensation. The Governance Committee conducts this evaluation periodically by reviewing our director compensation practices against the practices of an appropriate peer group and the Governance Committee may determine to make recommendations to our Board regarding possible changes to director compensation.

an appropriate peer group and the Governance Committee may determine to make recommendations to our Board regarding possible changes to director compensation.

 

The Governance Committee has the authority to retain consultants to advise on director compensation matters. No executive officer has any role in determining or recommending the form or amount of director compensation. In 2012, the Governance Committee retained Cook & Co. to advise on director compensation and determined to make a change to director compensation, the first increase to director cash compensation since 2003, effective January 1, 2013. No additional changes were made to director compensation in 2013.2014 or 2015.

 

The Governance Committee has authority to delegate any of these functions to a subcommittee of its members. No delegation of this authority was made in 2013.2015.

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  CORPORATE GOVERNANCE  

Corporate Responsibility and Compliance Committee

The Compliance Committee met five times in 2013.2015. Throughout 20132015 and currently, Dr. Sugar serves as chairman and Drs. Henderson, Jacks, and OmennWilliams and Mr. Eckert serve as members of the Compliance Committee. Dr. Sugar joined the Compliance Committee and was appointed chairman effective October 2013. Mr. Schaeffer served as chairman of the Compliance Committee until July 2013 when he resigned from our Board. Admiral Reason served on the Compliance Committee until his retirement from the Board in May 2013 and Ms. Pelham served on the Compliance Committee through July 2013.

The Compliance Committee is responsible for overseeing our compliance program and reviewing our programs in a number of areas governing ethical conduct including: (i) Federal health care program requirements; (ii) Food and Drug Administration requirements and other regulatory agency requirements, including good manufacturing, clinical and laboratory practices, drug safety and pharmacovigilance activities; (iii) interactions with members of the healthcare community; (iv) the Company’s Corporate Integrity Agreement; (v) environment, health and safety and (iv)(vi) human resources and government affairs. Additionally, the Compliance Committee receives regular updates on political, social and environmental trends, and public policy issues that may affect our business or public image, and reviews our environmental sustainability, political and philanthropic activities.

Our compliance program is designed to promote ethical business conduct and ensure compliance with applicable

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laws and regulations. We have codes of conduct for our officers, staff and suppliers that delineate standards for ethical business conduct and legal and regulatory

compliance as well as a business conduct hotline through which anonymous reports of misconduct can be made to our Chief Compliance Officer. To view the codes of conduct, please visit our website atwww.amgen.comwww.amgen.com..

Our Chief Compliance Officer, who reports to the Compliance Committee, oversees the ongoing operations of the compliance program. The key objectives of our compliance program operations include developing policies and procedures, providing ongoing compliance training and education, auditing and monitoring of compliance risks, maintaining and promoting the business conduct hotline, conducting investigations, responding appropriately to any compliance violations and taking appropriate steps to detect and prevent recurrence.

Executive Committee

The Executive Committee did not meet in 2013.2015. Throughout 20132015 and currently, Mr. Bradway serves as chairman and Messrs. Biondi and Herringer and Dr.Drs. Coffman servedand Sugar serve as members of the Executive Committee. Mr. Schaeffer left the Executive Committee when he resigned from the Board on July 8, 2013. Dr. Sugar joined the Executive Committee effective October 2013. The Executive Committee has all the powers and authority of the Board in the management of our business and affairs, except with respect to certain enumerated matters, including Board composition and compensation, changes to the Amgen Inc. Restated Certificate of Incorporation or any other matter expressly prohibited by law or the Amgen Inc. Restated Certificate of Incorporation.

 

 

Communication with the Board

 

 

Our annual meeting of stockholders provides an opportunity each year for stockholders to ask questions of, or otherwise communicate directly with, members of the Board on appropriate matters. In addition, stockholders may communicate in writing with any particular director, any committee of the Board, or the directors as a group, by sending such written communication to our Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799, Mail Stop 38-5-A.91320-1799. Copies of written communications received at such address will be provided to the Board or the relevant director unless such communications are considered, in the reasonable judgment of our Secretary, to be inappropriate for submission to the intended recipient(s). Examples of stockholder

communications that would be considered inappropriate for submission to the Board include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to our business or communications that relate to improper or irrelevant topics. The Secretary or his designee may analyze and prepare a response to the information contained in communications received and may deliver a copy of the communication to other Company staff members or agents who are responsible for analyzing or responding to complaints or requests. Communications concerning potential director nominees submitted by any of our stockholders will be forwarded to the chairman of the Governance Committee.

 

 

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Compensation Committee Report

 

 

The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management, and based on the review and discussions, recommended to the Board of Directors that the

Compensation Discussion and Analysis be included in the Company’s 20142016 Annual Meeting proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K.

 

 

Compensation Committee of the Board of Directors

Frank C. Herringer, Chairman

Frank J. Biondi, Jr.

Vance D. Coffman

Fred Hassan

Judith C. Pelham

 

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      COMPENSATION DISCUSSION AND ANALYSIS  

 

Executive Compensation

Compensation Discussion and Analysis

 

This Compensation Discussion and Analysis describes our compensation strategy, philosophy, policies, programs and practices, or compensation program, for our Named Executive Officers, or NEOs, and the positions they held in 2013:2015:

 

Name  Role in 20132015

Robert A. Bradway

  

Chairman of the Board, Chief Executive Officer and President

Anthony C. Hooper

  

Executive Vice President, Global Commercial Operations

Jonathan M. PeacockDavid W. Meline

  

Executive Vice President and Chief Financial Officer(1)

Sean E. Harper

  

Executive Vice President, Research and Development

Madhavan BalachandranJonathan P. Graham

  

ExecutiveSenior Vice President, OperationsGeneral Counsel and Secretary(1)

(1)

Mr. Graham commenced employment with the Company on July 13, 2015.

Selected 20132015 Business Highlights and Pay for Performance

 

 

Following extensive outreach to our stockholders over the past several years, our Compensation and Management Development Committee, or Compensation Committee, has implemented a number of compensation program changes to further reinforce the relationship between pay and performance. A significant majority of each NEO’s compensation is connected todependent on our performance and our execution of our strategic priorities. In 2015, we delivered strong financial results while achieving an unprecedented number of product launches.

Our 2013annual cash incentive award program compensation is tied directly to our performance highlights include:based on pre-established financial and operating performance goals.

 

Delivering for Stockholders — Robust One-year and Three-year Total Shareholder Return. Our stock price increased from $86.20 to $114.08 per share during 2013, reflecting appreciation of approximately 32% and a one-year total shareholder return, or TSR, of 35%, including our dividends. This compares to the Standard & Poor’s 500, or S&P 500, average one-year TSR of 32%. Our three-year TSR is 114% compared with our peer group average three-year TSR of 103%.

Revenues increased 8% to$21.7 billion and adjusted

net income grew

19% to $8 billion(2)in 2015

 

  

Consistent with this robust three-year TSR, the performance units earned in 2013 underUnder our long-termannual cash incentive or LTI, performance award program, (forthese pre-established financial performance objectives are weighted 60% in the 2011-2013 performance period) were 122.7% of target performance units based onaggregate and our TSR for the

2011-2013 performance period compared with the average TSR of our 13-company peer group for this period.

Strong Financial Performance. Our strong operating performance resulted in above-target performance, on our pre-established goals for 2013with revenues and adjusted net income that comprise 60%performing at 135.1% and 218.3% of the weighting under our 2013 annual cash incentive award program.target performance, respectively.

Ø

Our adjusted operating margin improved by four percentage points to 48%(2) in 2015.

 

 Ø

Our solid performanceIn 2015, free cash flow was $8.5 billion compared to $7.8 billion in 2013 grew2014, driven by higher revenues by 8% over 2012 to $18.7 billion and grew adjusted net income by 14% to $5.8 billion.(2) In addition, our year-over-year adjusted earnings per share, or EPS, grew 17%(2) in 2013.higher operating income.

 

Ÿ 

Our strong cash flowsWe executed on an unprecedented number of product launches and balance sheet in 2013 permitted us to return $1.4 billion of cash to our stockholders through dividends. Since our first dividend in July 2011, we have raised the dividend three times over the previous quarterly amount by an average of 30% and returned a total of $3 billion of cash to our stockholders through dividends. In addition, we repurchased $0.8 billion of our stock in 2013 for a total return of capital of $2.2 billion to our stockholders.successfully introduced differentiating delivery systems.

2015 was an exceptional year for Amgen as we launched six innovative products in the oncology and cardiovascular disease therapeutic areas.

Executed on 6

innovative launches

Oncology

Cardiovascular

   Kyprolis®

   Repatha®

   BLINCYTO®

   Corlanor®

   IMLYGIC™

   Neulasta® Onpro™ Kit

We expect Kyprolis® and Repatha® to be significant opportunities for the Company and see these products as

 

 

(1)

Mr. Peacock ceased service as our Chief Financial Officer as of January 10, 2014 and is no longer an executive officer. Michael A. Kelly became our Acting Chief Financial Officer, effective January 10, 2014.

(2)

Adjusted net income and adjusted earnings per shareoperating margin are reported and reconciled in our Form 8-K dated as of January 28, 2014.2016.

 

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examples of innovative medicines that address unmet

needs by providing meaningful clinical benefits and demonstrable value propositions for patients and providers.

We continued to innovate with patient and provider-friendly delivery systems to differentiate our products. The success of our launch in the first quarter of 2015 of the Neulasta® Onpro™ kit is evidenced by it representing 24% of our U.S. Neulasta® business in the fourth quarter of 2015. We also submitted applications to regulators, including the U.S. Food and Drug Administration and the European Medicines Agency, for a single-dosing option for the monthly administration of Repatha®.

Under our annual cash incentive award program, “Execute New Product/Delivery System Launches” was weighted 10%, and we achieved 77.5% of target performance on our new product and delivery system launches.

We significantly advanced our late-stage pipeline.

Our late-stage pipeline continued to advance with the recent regulatory submissions for Parsabiv™, positive phase 3 data for romosozumab (in collaboration with UCB), phase 2 data for AMG 334 (in collaboration with Novartis AG), and phase 2b data for omecamtiv mecarbil (in collaboration with Cytokinetics, Inc.). In 2015, we also continued to advance our biosimilar program, including the filing for global regulatory approval for ABP 501 biosimilar adalimumab (Humira®) and positive phase 3 data for ABP 215 biosimilar bevacizumab (Avastin®).

Under our annual cash incentive award program, “Progress Innovative Pipeline” was weighted 30% and we achieved a weighted score of 62.3%.

Ø

“Execute Key Clinical Studies and Regulatory Filings” was weighted 20% and we achieved 199% of target performance.

Ø

“Advance Early Pipeline” was weighted 10% and we achieved 225% of target performance.

Based on our strong performance in 2015 compared to these pre-established performance goals, payout under our annual cash incentive award program was 176.1% of target bonus opportunity.

We made significant progress on the transformation of our business.

We continued to execute on the transformation and process improvement efforts announced in 2014. As part of these efforts, we committed to a more focused operating model. Our transformation and process improvement efforts across the Company have enabled us to reallocate resources to fund many of our innovative pipeline and growth opportunities to deliver value to patients and stockholders.

For the second year in a row, our NEOs did not receive base salary increases. This is consistent with the Compensation and Management Development Committee’s, or Compensation Committee, determination that base salaries for executive staff members would not be increased in recognition of our on-going transformation activities.

Ø

In 2015, we reduced gross costs by approximately $700 million, the majority of which was re-invested in our product launches.

We invested for long-term growth while returning substantial capital to our stockholders.

Our strong cash flows and balance sheet allowed continued investment for long-term growth through internal research and development and external business development transactions, while simultaneously providing substantial returns to stockholders.

We returned $4.3 billion of capital to our stockholders in 2015 through the payment of dividends and stock repurchases.

$2.4 billion

in dividends in 2015

We returned a total of $2.4 billion of cash to our stockholders in the form of dividends, a 29% increase over 2014.

Ø

We increased our dividend per share 30% over 2014 (to $0.79 per share for 2015).

Ø

In December 2015, we declared a dividend of $1.00 per share for the first quarter of 2016, representing a 27% increase over the quarterly dividends paid in 2015.

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  COMPENSATION DISCUSSION AND ANALYSIS  

Total Dividend Growth of

182% (per share)

Since our first dividend in July 2011 through 2015, we have returned a total of $7.3 billion of cash to our stockholders through dividends over this period, achieving total dividend growth per share of 182%.

Annual Dividend Increases

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Represents annualized dividend

~12 million shares

repurchased in 2015 at an

aggregate cost of$1.9 billion

We repurchased ~12 million shares of our Common Stock during 2015 at an aggregate cost of $1.9 billion. As of December 31, 2015, $4.9 billion remained available under the Board-approved stock repurchase program.

Our long-term incentive, or LTI, equity award compensation is tied directly to our stock performance and aligns with the interests of our stockholders.

Our three-year total shareholder return, or TSR, significantly outperformed the TSRs of the Standard and Poor’s 500 Index, or S&P 500, for the same period.

Payout under our LTI performance award program for our 2013-2015 performance period at 150% reflects our three-year TSR performance at the 85.5 percentile relative to the TSRs of the companies in the S&P 500 for this performance period. 80% of our annual LTI equity award grants are performance-based and, as such, a significant portion of total compensation is tied to our stock price performance and value creation for our stockholders.

An investor who had invested in our Company Common Stock on January 1, 2013 would have earned a TSR of 97% as of December 31, 2015 versus 53% for the S&P 500 Index for the same period as depicted below.

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Advancement of the Pipeline. We exceeded our pre-established goal of “Deliver the Best Pipeline” that represents a 20% weighting under our 2013 annual cash incentive award program.

During 2013, we successfully advanced the pipeline through our own clinical trial activities (as well as through the Onyx Pharmaceuticals, Inc. acquisition and the ivabradine license) such that we had two phase 3 data read-outs in December 2013 and three phase 3 data read-outs in January 2014 on evolocumab (AMG 145), we expect additional Phase 3 data read-outs on seven more of our innovative clinical programs (Kyprolis®, talimogene laherparepvec, trebananib, brodalumab, velcalcetide (AMG 416), romosozumab and rilotumumab) and, with the ivabradine license, we have data to support a U.S. filing.

Execution on Key Strategic Priorities, including International Expansion. We exceeded our pre-established goals of “Deliver Strategic Priorities” comprising 20% of the weighting under our 2013 annual cash incentive award program.

We successfully acquired Onyx Pharmaceuticals, a global biopharmaceutical company engaged in the development and commercialization of innovative therapies for improving the lives of people with certain cancers.

We also advanced our efforts to develop a presence in cardiovascular disease by licensing U.S. commercial rights to ivabradine, an innovative product already approved in over 100 countries for heart failure and angina.

We commenced our first pivotal studies for our biosimilar product candidates: in psoriasis and rheumatoid arthritis for our biosimilar for Humira® (adalimumab); in non-small cell lung cancer for our biosimilar for Avastin® (bevacizumab) and in breast cancer for our biosimilar for Herceptin® (trastuzumab).

We continued to expand internationally, including the commencement of operations of our alliances in Japan and China and our acquisition from F. Hoffmann-La Roche of rights to filgrastim and pegfilgrastim in key emerging growth markets around the world.

Our 20132015 Say on Pay Vote and Engagement With Our Stockholders

 

 

97% stockholder support

on our 2015 say on pay

In 2013,2015, we received over 85%approximately 97% stockholder support on our say on pay advisory vote. We have engaged consistently in broad direct stockholder outreach over the past several years andyears. These interactions have found these interactions highlybeen valuable and informative and we will continue to engage with our stockholders to further enhance our understanding of the perspectives of our investors. Insights from investors are reported to the full Board. The compensation-related feedback from our stockholders is reviewed by our Compensation Committee, and over the past several years, we have made a number of compensation changes in response to thepast discussions with our stockholders. Governance-related feedback is reviewed by our Governance and Nominating Committee and has also been a source of governance changes, including our recent adoption of proxy access for director nominations.

Since our 20132015 annual meeting of stockholders, we have engaged in outreach activities and discussions with stockholders comprising approximately 45% of our outstanding shares and have had extensive discussions with stockholders owning approximately

40%52% of our outstanding shares. The reason most often cited by thoseAdditionally, among our presentation activities to investors, who declined our invitation for extended discussionMr. Bradway was that they had no outstanding concerns or questions.a keynote speaker and met with investors at the Council of Institutional Investors’ 2015 Fall Conference. In 2013,2015, our predominant feedback from investors with respect to our compensation and governance practices was that they are satisfied with our compensation program.program and governance practices. While we are pleased with our say on pay results and stockholder feedback, we will continue to reach out to understand and address theany concerns of our stockholders. Therefore, ourOur stockholder outreach efforts will continue after the filing of this proxy statement, as well as through our executive compensation website (accessible atwww.amgen.com/executivecompensation) that we initiated in 2008 andthat invites stockholders to provide feedback directly to the Compensation Committee regarding our executive compensation program.

 

 

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Our Compensation Program Highlights and Objectives

 

Our compensation practices include three elements (LTI Equity Awards, Annual Cash Incentive Awards and Base Salaries) presented below in order of magnitude and degree of alignment with pay for performance.

73%For 2015, 89% of our CEO’s target direct compensation and 69%81% of target direct compensation of our other NEOs was “at risk.” The vast majority of this “at risk” compensation is earned based solely on our performance (approximately 74% for the CEO and isapproximately 68% for the other NEOs) and paid in the form of long-term performance units and annual cash incentives and performance units.incentive awards.

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LTI Equity Awards (the(at risk and the largest component of compensation for our NEOs)

 

   Purposes
LOGO

LOGO         LOGO

  

   ProvidesProvide a direct link to the creation of stockholder value and execution of our strategy.

 

   AlignsAlign NEOs’ interests with stockholders.

 

   FostersFoster long-term focus and retention.

 

 

Ourequity award grants are primarily performance-based with80% of LTI equity awards granted in the form of long-term performance units and the remaining 20% in restricted stock units, or RSUs.

 

LOGO



46    LOGOï 2016 Proxy Statement


  COMPENSATION DISCUSSION AND ANALYSIS  

Performance units are earned only if specified long-term performance goals are achieved. For all performance periods commencing with 2011 and thereafter, Our outstanding performance units are earned based on our relative TSR performance over thea three-year performance period. We believe relative TSR is an important metric as it alignsperiod to align our payouts with the experiencesexperience of our stockholders. Our payout forBeginning with the most recent 2011-20132013-2015 performance period was above-target because of our high TSR for this performance period (114%) compared with the average of the TSRs of our 13-company peer group for this period (103%).

Performance Period  

Relative

TSR Multiplier
(% of Earned
Award Paid)

   Absolute TSR   Payout as a %
of Target
 

2011-2013 performance period

   n/a     114.4%    122.7%  

2010-2012 performance period(1)

   133.7%     60.9%    144.1%  

2009-2011 performance period(1)

   50.0%     6.5%    45.5%  
(1)

Performance units for the performance periods beginning prior to 2011 were earned based upon our revenues and adjusted EPS (weighted equally) during the first year of the performance period as compared to target performance, and modified by a relative TSR multiplier based on our TSR ranking compared with companies in our peer group at the beginning of the period.

award program,Certain changes were made to the design of the performance unit program in 2013 to improve the reliability of the program as a measure of our stock performance and to tie to stockholder interests. For the performance units granted in 2013, we measuredmeasure our TSR compared with the TSRTSRs of the companies in the S&P 500, a more broad-based and realistic measure of our stockholders’ investment opportunities. We added a requirement that, ifopportunities. Payouts under our outstanding performance units can range from 0 to 150% of the units granted based on our relative TSR performance. If, however, our absolute TSR is less than zero, the payout percentage shall not be greater than 100% to limit rewards in a performance period in which we perform in-line with, or better than, the S&P 500 companies, but investors do not recognize growth in their investments.investment in our Company.

Our payout for the most recent 2013-2015 performance period was at 150% of target, or maximum payout, because our absolute TSR for this performance period (89.9%) resulted in our 85.5 percentile ranking, above the 75th percentile relative to the TSRs of the companies in the S&P 500 since the beginning of the performance period (January 28, 2013). (See “Elements of Compensation and Specific Compensation Decisions—Long-Term Incentive Equity Awards—Performance Units—Performance Award Program—Performance Units Earned for the 2013-2015 Performance Period.”)

Performance Period  Comparison
Group
   Absolute TSR   Amgen
Percentile
Ranking
   Payout as a %
of Target
 

 

2013-2015 performance period

 

  

 

 

 

 

S&P 500

 

 

  

 

  

 

 

 

 

89.9%

 

 

  

 

  

 

 

 

 

85.5%

 

 

  

 

  

 

 

 

 

150.0%

 

 

  

 

 

2012-2014 performance period

 

  

 

 

 

 

Peer Group

 

 

  

 

  

 

 

 

 

185.7%

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

150.0%

 

 

  

 

 

2011-2013 performance period

 

  

 

 

 

 

Peer Group

 

 

  

 

  

 

 

 

 

114.4%

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

122.7%

 

 

  

 

Our RSUs are designed to encourage retention and long-term value creationas they generally vest over four years, with no vesting in the first year and vesting in approximately three equal annual installments on the second, third and fourth anniversaries of the grant date.

 

Annual Cash Incentive Awards (at risk)

Our Compensation Committee annually approves Company performance goals for our Global Management Incentive Plan, or GMIP, designed to focus the Company’s staff on and reward performance against the results of such goals. Our Executive Incentive Plan, or EIP, establishes a maximum award possible for each participant and annual cash incentive awards are generally made to our NEOs under the EIP based on the Company’s performance against pre-established GMIP Company performance goals. Each year, the GMIP Company performance goals are established to focus on our financial performance, operational objectives and specific priorities to drive annual performance and position us to execute on our longer-term strategy.

Purposes

LOGO         LOGO

Measure NEOs’ performance against pre-established GMIP Company performance goals.

Align all staff members around the same GMIP Company performance goals as all such annual cash incentive awards are based on these goals.

Motivate NEOs to meet or exceed our annual GMIP Company performance goals to drive annual performance and position us for longer-term success.



 

40    LOGOLOGO  ï 20142016 Proxy Statement47


       COMPENSATION DISCUSSION AND ANALYSIS  

 

Annual Cash Incentive Awards

Made under the Executive Incentive Plan, or EIP, andOur annual cash incentive awards are determined by the Compensation Committeeearned based on achieving our financial growth and operational objectives that drive near- and long-term growth and stockholder value. In 2015, we established annual cash incentive awards based on our performance against our pre-established GMIP Company performance goals of revenues (30%), adjusted net income (30%), and results measured undera number of operational measures supporting “Execute New Product/Delivery System Launches” (10%) and “Progress Innovative Pipeline” (30%) (comprises “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%)). Based on our Global Management Incentive Plan, or GMIP.strong performance in 2015 compared to these pre-established GMIP Company performance goals, we paid annual cash incentive awards at 176.1% of target bonus opportunity.

In 2015, we increased our CEO’s target annual cash incentive award opportunity from 130% to 140% of base salary, as Mr. Bradway’s 2014 target total annual cash compensation approximated the 25th percentile, and the Compensation Committee wanted Mr. Bradway’s target total annual cash compensation to more closely approximate the 2014 Market Median (as described under “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data” below) for target total annual cash and to have a greater percentage of compensation at risk based on our objective performance.

Base Salaries (the smallest component of compensation for our NEOs)

 

LOGO         LOGO

   Purposes

LOGO

 

MotivatesProvide a degree of financial certainty and stability that helps us retain talent.

Recognize competitive market conditions and/or rewards individual performance through periodic increases.

As discussed as part of the transformation of our business, there were no base salary increases for our NEOs for 2015. The base salary of our CEO is at the 25th percentile of 2014 Market Median, and for our NEOs below the 2014 Market Median, on average, for these positions.

The preceding pie charts are calculated using (i) the “Salary” column from the “Summary Compensation Table” in our Executive Compensation Tables, (ii) the target annual cash incentive award in the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards—Target” column in the table in footnote 2 to the “Grants of Plan-Based Awards” table in our Executive Compensation Tables and (iii) the grant date fair value of annual grants of performance units and RSUs in the “Grant Date Fair Value of Stock and Option Awards” column of the “Grants of Plan-Based Awards” table in our Executive Compensation Tables. Mr. Graham is not included in the pie charts because Mr. Graham commenced employment with our Company on July 13, 2015.

Our compensation practices are designed to be competitive and balanced.

We target compensation at the 50th percentile, or median, of our peer group for all elements of compensation.

We target the 50th percentile of our peer group for our LTI equity award budget generally by job level. We are mindful of stockholder dilution and the potential dilutive effect is considered against our peer group levels.We provide broad-based grants to meetnearly all of our full-time staff members and our Board of Directors, or exceedBoard. The rates at which we grant LTI equity awards and the resulting potential dilutive effect are consistent with our annual GMIP Company performance goals to drive annual performancepeer group and position us for longer-term success.have decreased over the last five years.

We have objective criteria for selection of our peer group and review our peer group annually. We draw our peers from biotechnology and pharmaceutical companies as we believe they are our direct competitors for executive talent and have comparable enterprise requirements and complexity.



48    LOGOï 2016 Proxy Statement


  COMPENSATION DISCUSSION AND ANALYSIS  

We Maintain Other Compensation and Governance Best Practices

 

Clawback

 

Measures NEOs’ performance against pre-established GMIP Company performance goals.

 

AlignsWe have a clawback policy that requires our Board to consider the recapture of past cash or LTI equity award payouts to our NEOs if the amounts were determined based on financial results that are later restated and the NEOs’ misconduct is determined by the Board to have caused the restatement.

Recoupment Provisions

Our incentive compensation plans contain recoupment provisions applicable to all staff members aroundthat expressly allow the same Company performance goals as all such Compensation Committee to determine thatannual cash incentive awards are not earned fully or in part where such employee has engaged in misconduct that causes serious financial or reputational damage to the Company.

Equity Practices

We have robust stock ownership guidelines, with a six times base salary ownership requirement for our CEO.

Officers are required to retain shares of our Common Stockacquired through the vesting of RSUs, the payout of performance units, or the exercise of stock optionsuntil they have reached the required stock ownership level.

Our equity incentive plan provides that our equity awards are subject to a minimum vesting period of no less than one year and our grants generally vest over four years, with no vesting in the first year and vesting in approximately three equal annual installments on the second, third and fourth anniversaries of the grant date.

With respect to our Common Stock, our staff members and Board areprohibited from engaging in short sales, purchasing Common Stock on margin, pledging Common Stock, or entering into any hedging, derivative or similar transactions.

We have strong LTI equity award plans and policies thatprohibit re-pricing or backdating of equity awards.

LTI equity awards are granted based on a specific dollar amount, rather than a set number of shares, to avoid the same GMIPimpact of fluctuations in the stock price between the date the Compensation Committee determines the grant amount and the actual grant date.

Dividends accrue on our performance units and RSUs, but arepaid only when and to the extent the underlying award is earned and vested.

Tax Gross-Ups

We do not provide tax gross-ups, except for business-related payments such as reimbursement of certain moving and relocation expenses on behalf of newly-hired and current executives who agree to relocate to work on the Company’s behalf.

Change of Control 

We do not have “single-trigger” equity vesting acceleration upon a change of controlfor RSUs and stock options. In the event of a change of control, a qualifying termination of employment, or “double-trigger,” is required for acceleration of RSU and stock option vesting.

Any performance awards earned upon a change in control are based on a truncated performance period and TSR based on our actual stock price or, if greater, the value paid in such change in control.

In the event of a change of control, double-trigger cash severance islimited to a multiple of two times target annual cash compensation, without tax gross-ups.

Limited Additional 

Our perquisites are limited to those with a clear business-related rationale.

Compensation

We do not have employment contracts or guaranteed bonuses, other than in countries where they are required by law.

We do not have defined benefit pension or supplemental executive retirement plan (SERP) benefitsor “above market” interest on deferred compensation.



LOGOï 2016 Proxy Statement49


  COMPENSATION DISCUSSION AND ANALYSIS  

How Compensation Decisions Are Made For Our Named Executive Officers

Responsible PartyPrimary Roles and Responsibilities

Compensation Committee

(Composed solely of independent

directors and reports to the Board)

Evaluates the performance of our CEO within the context of the financial and operational performance of the Company.

Determines and approves compensation packages for our CEO, other NEOs, Executive Vice Presidents, Senior Vice Presidents and Section 16 officers (collectively, “Senior Management”).

Reviews and approves all compensation programs in which our NEOs participate.

Oversees the development and effective succession planning for members of Senior Management.

Oversees the Board’s relationship with and response to stockholders on executive compensation matters and the Compensation Discussion and Analysis.

Exercises the sole authority to select, retain, replace and/or obtain advice from compensation consultants, legal counsel and other outside advisors and assesses the independence of each such advisor, taking into consideration the factors set forth in the Securities and Exchange Commission, or SEC, rules and The NASDAQ Stock Market listing standards.

Consultant to the

Compensation Committee

(Frederic W. Cook & Co., Inc.–

independent consultant

retained directly by the

Compensation Committee)

Regularly attends Compensation Committee meetings, including meeting in executive session with the Compensation Committee.

Provides advice on the appropriateness and competitiveness of our compensation program relative to market practice, including advising the Compensation Committee on CEO compensation and the selection of our peer group.

Consults on executive compensation trends and developments.

Consults on various compensation matters and recommends compensation program designs and practices to support our business strategy and objectives.

Cooperates with management to compile market data and review the appropriateness of such data.

Works with management to assess the potential risks arising from our compensation policies and practices.

CEO

(Assisted by the Senior Vice

President, Human Resources and

other Company staff members)

Conducts performance goals.reviews for the other NEOs and makes recommendations to the Compensation Committee with respect to compensation of Senior Management other than himself.

Provides recommendations on the development of and succession planning for the members of Senior Management other than himself.

50    LOGOï 2016 Proxy Statement


  COMPENSATION DISCUSSION AND ANALYSIS  

Use of Independent Compensation Committee Consultant

To assist the Compensation Committee in its review and determination of executive compensation, the Compensation Committee retained and sought advice from Frederic W. Cook & Co., Inc., or Cook & Co., an independent consultant, throughout 2015 and to date in 2016. George B. Paulin, the Chairman of Cook & Co., worked directly with the Compensation Committee in the roles and undertaking the responsibilities previously described in “How Compensation Decisions Are Made for Our Named Executive Officers” and specifically provided consultation regarding regulatory updates, selection of our peer group, competitive practice for CEO compensation and general market practices for NEO compensation.

On a periodic basis, the Company purchases proprietary executive compensation survey data from Cook & Co. to inform the Compensation Committee’s decisions, but does not engage Cook & Co. for any other services to the Company. During 2015, the Compensation Committee, as in past years, had responsibility for engaging Cook & Co. and directed the nature of the activity and interchange of data between Cook & Co. and management.

Peer Group

The Compensation Committee recognizes the unique demands of our industry, including its complex regulatory and reimbursement environment, and the challenges of running an enterprise focused on the discovery, development, manufacture and commercialization of innovative treatments to address serious illness. The Compensation Committee believes that these unique demands require executive talent that has significant industry experience as well as, for certain key functions, unique scientific expertise to oversee research and development activities and the complex manufacturing requirements for biologic products. Further, the Compensation Committee believes that these very specific skills and capabilities limit the pool of talent from which we can recruit and also cause our employees to be highly valued and sought after in our industry. This makes it imperative that our peer group for compensation purposes include those companies with which we compete for new executives given the similarities in experience and knowledge that are developed at these companies. Moreover, as evidenced by

the fact that 11 of the 15 companies in our peer group (eight U.S.-based companies) also list us as a peer, we believe that our peer group accurately reflects those companies with whom we compete for executive talent. The Compensation Committee compares our pay levels and programs to the peer group and uses this comparative data as a reference point in its review and determination of executive compensation. The Compensation Committee’s approach also considers our performance, the individual’s performance and other relevant factors in setting pay.

On an annual basis, Cook & Co. reviews our peer group with the Compensation Committee to determine whether it remains appropriate. The following objective criteria are typically applied in the review:

GICS codes of biotechnology (352010) and pharmaceuticals (352020);

12-month average market capitalization between 0.25 and 4.0x that of Amgen’s average market capitalization for the same period;

trailing four-quarter revenues between 0.25 and 4.0x that of Amgen’s revenues;

non-U.S. peers limited to those commonly identified as a “peer of peers”;

competitors for executive talent;

companies of comparable scope and complexity;

competitors for equity investor capital;

companies that identify us as their direct peer; and

companies with similar pay practices.

In March 2015, Allergan, Inc. was acquired by Actavis plc and, following the acquisition of Allergan, Inc., Actavis plc changed its name to Allergan plc. In July 2015, the Compensation Committee completed its annual review of the peer group and discussed the replacement of Allergan, Inc. with Allergan plc. The Compensation Committee determined that, based in part on recommendations from Cook & Co., this merged entity also met the criteria outlined above and should be added to our peer group for 2015 to replace Allergan, Inc. Further, based in part on recommendations from Cook & Co., the Compensation Committee determined that the remainder of the peer group was appropriate and continued to meet the criteria from the universe of other

LOGOï 2016 Proxy Statement51


  COMPENSATION DISCUSSION AND ANALYSIS  

biotechnology and pharmaceutical companies given that our relative size and positioning remains generally the same as the prior year.

As a result, the Compensation Committee replaced Allergan, Inc. with Allergan plc and no other changes were made to the

peer group in 2015. It is the Compensation Committee’s view that this peer group is the most appropriate for benchmarking executive compensation as these companies are generally those with which we most closely compete for executive talent.

2015 Peer Group

   AbbVie Inc.

   Allergan plc

   AstraZeneca plc

   Biogen Inc.

   Bristol-Myers Squibb Company

   Celgene Corporation

   Eli Lilly and Company

   Gilead Sciences, Inc.

   GlaxoSmithKline plc(1)

   Johnson & Johnson

   Merck & Co., Inc.

   Novartis AG

   Pfizer Inc.

   Roche Holding AG(1)

   Sanofi S.A.(1)

 

 

The market capitalization of our peer group ranged between $68 billion and $293 billion determined as of the last trading day of 2014 as provided by ThomsonONE™. The 2014 revenues of our peer group ranged between $7.7 billion and $74.3 billion based on public filings. Amgen’s 2014 market capitalization and revenues were $121 billion and $20.1 billion, respectively. The median 2014 market capitalization and revenues of our peer group (not including Amgen) was $104 billion and $26.1 billion, respectively. We were between the 50th and 75th percentile for market capitalization and between the 25th and 50th percentile for revenues relative to our peer group.

Peer Group Data

Our primary data sources for evaluating all elements of compensation for our CEO is data compiled by Cook & Co. from proxy statement and Form 8-K filings filed with the SEC for our peer group. For our other NEOs, our primary data sources for evaluating all elements of compensation are the Towers Watson Pharmaceutical Human Resources Association, or PHRA, Executive Compensation Survey and the available data from proxy statements filed with the SEC for our peer group. The Towers Watson PHRA Executive

Compensation Survey contains compensation information from pharmaceutical companies in our peer group, but does not contain information on many biotechnology companies. Therefore, compensation information for the biotechnology companies within our peer group is compiled using proxy statement filings to provide additional data and to inform the Compensation Committee. The Towers Watson PHRA Executive Compensation Survey data and the peer group proxy data is compiled and presented by management to the Compensation Committee both individually and in the aggregate. For Mr. Bradway, Cook & Co. provides data to the Compensation Committee of a range between the 25th, 50th and 75th percentiles of the specific compensation elements paid to CEOs in our peer group (and 85th percentile specifically in connection with LTI equity awards). For each of the other NEOs, the comparison of each NEO on a position or pay rank basis and an analysis of each element of direct compensation at the 50th and 75th percentile of the peer group for each NEO position is presented to the Compensation Committee. In addition to the sources provided previously, for the determination of LTI equity awards, we also provided the Cook & Co. Survey of Long-Term Incentives (Cook & Co. Survey).

(1)

Revenues for GlaxoSmithKline plc, Roche Holding AG and Sanofi S.A. were converted into U.S. dollars using the average of daily exchange rates for 2014 as provided by Bloomberg L.P.

Our52    LOGOï 2016 Proxy Statement


  COMPENSATION DISCUSSION AND ANALYSIS  

The “Market Median” shown for Mr. Bradway was the 50th percentile of the specific compensation elements paid to CEOs in our peer group, as compiled by Cook & Co. from proxy statement filings and Form 8-K filings. The “Market Median” for the other NEOs is derived by averaging the values of the Towers Watson PHRA Executive Compensation Survey 50th percentile and the peer group proxy statement 50th percentile. For 2015 compensation decisions considered in March 2015, the 2014 Market Median was derived by averaging the 2014 Towers Watson PHRA Executive Compensation Survey (the 2014 Towers Survey) and 2014

proxy statement filings with the SEC. For 2016 compensation decisions considered in March 2016, the 2015 Market Median was derived by averaging the 2015 Towers Watson PHRA Executive Compensation Survey (the 2015 Towers Survey) and 2015 proxy statement filings with the SEC. Because Towers Watson PHRA Executive Compensation Survey data is only available for the previous calendar year, base pay data is aged forward to the current year based on expected salary movement, consistent with generally accepted practice. Target annual cash incentive award and LTI equity award market data are not adjusted for aging.

Elements of Compensation and Specific Compensation Decisions

Described below are our three primary elements of executive compensation in order of magnitude and alignment with pay for performance: LTI equity awards; annual cash incentive awards and base salaries.

Long-Term Incentive Equity Awards

Our compensation program aims to achieve the appropriate balance of compensation relative to the responsibilities of our staff members, with the result that the largest proportion of the compensation program for our CEO and the other NEOs is in the form of LTI equity awards that are risk-based and closely aligned with the creation of long-term stockholder value. Equity-based compensation represents 73% of our CEO’s target compensation and 64% of target compensation for our other NEOs. In addition, we also grant LTI equity awards each year to nearly all of our staff members worldwide to increase individual awareness of how our performance impacts stockholder value.

Company Continues to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards

Our compensation philosophy, practices and approach continue to be effective in balancing the use of equity to align employees with our stockholders while being mindful of the level of dilution that our stockholders experience. LTI equity award grant guidelines are established for each job level within the Company targeting the 50th percentile of our peer group, except at lower levels in the organization where equity

participation is less prevalent. For certain lower job levels where data is not as comprehensive, we have developed guidelines that trend in line with available data and that consider internal equity. The Compensation Committee sets an LTI equity award budget approximately at the 50th percentile of our peer group by job level as available. The Compensation Committee periodically reviews the Shareholder Value Transfer (SVT) associated with the aggregate LTI equity award grants to ensure that our SVT is aligned with our peer group practice because, while the Compensation Committee supports a broad-based equity plan to align our staff members with our stockholders, the Compensation Committee also strives to limit the amount of stockholder dilution to that stockholders of our peer group would expect to experience. The rates at which we grant LTI equity awards and the resulting potential dilutive effect are consistent with our peer group and have decreased over the last five years.

We believe that our capacity to grant equity-based compensation has been a significant factor in achieving our strategic objectives by rewarding execution of our strategy and stock price appreciation, aligning our NEOs’ and staff members’ interests with stockholders and fostering long-term focus and retention.

LOGOï 2016 Proxy Statement53


  COMPENSATION DISCUSSION AND ANALYSIS  

Long-Term Incentive Equity Award Composition

LTI equity awards granted to our NEOs in 2015 consisted of 80% performance units and 20% RSUs.

LOGO

This allocation results in the substantial majority of equity compensation being earned under our performance units based solely on our achieved objective performance. We believe it is important to maintain a relatively small percentage of equity awards in the form of RSUs to incentivize retention. Performance units are earned at the end of the performance period (generally three years) to the extent to which the performance goals for the applicable period are met. Our time-vested RSUs generally vest over four years, with no vesting in the first year and vesting in approximately three equal annual installments on the second, third and fourth anniversaries of the grant date (instead of four equal annual installments commencing on the first anniversary of the grant date). This delay in the commencement of RSU vesting further emphasizes the long-term performance focus of our LTI equity award program and enhances retention.

Value of Long-Term Incentive Equity Awards Granted to Named Executive Officers in 2015

In December 2014, the Compensation Committee considered executive LTI equity award grants for 2015. In its review, the Compensation Committee considered a range between the 25th and 85th percentile of the peer group for the CEO and, for proposed awards to NEOs other than the CEO, the Compensation Committee considered the recommendations

of our CEO and analyzed the 50th and 75th percentile of the peer group for each available NEO position. The Compensation Committee also took into account the Company’s performance, the individual’s performance in their role and historical grant levels when determining individual grants.

In December 2014, the Compensation Committee awarded Mr. Bradway a 2015 LTI equity award grant valued at $10.2 million, which is approximately 13% higher than 2014, to maintain median positioning against the 2014 Market Median (as the 2014 LTI equity award median for the CEO position increased over the prior year), while continuing to provide long-term performance incentives and at-risk compensation that aligns with stockholder interests. The 2014 Market Median reviewed in December 2014 supported greater differentiation of LTI equity grant values among Executive Vice President roles and, in contrast to prior years, provided market data that was more representative of Mr. Hooper’s position. In reviewing the 2014 Market Median data, the Compensation Committee noted the difference in LTI equity award median values between that of the Executive Vice President, Global Commercial Operations role compared to that of the Chief Financial Officer and Executive Vice President, Research and Development roles. As a result, the Compensation Committee approved a higher grant value for Mr. Hooper of $3.5 million that was matched to the 2014 Market Median for his role of Executive Vice President, Global Commercial Operations. The Compensation Committee determined that this increase of approximately 16.7% was appropriate, not only because of its 2014 Market Median competitiveness, but also because of the scope and span of Mr. Hooper’s responsibility and the level of importance of his role to the Company. The Compensation Committee approved a $3 million grant value for Dr. Harper and Mr. Meline which approximates the 2014 Market Median for each role and takes into account the similar strategic impact of their roles to the Company. Mr. Graham commenced employment with us effective July 13, 2015 and was not an employee at the time that the annual LTI equity awards were determined.

54    LOGOï 2016 Proxy Statement


  COMPENSATION DISCUSSION AND ANALYSIS  

2015 Annual Long-Term Incentive Equity Awards

Given the design of our performance award program, there is no guarantee of any value realized from grants of performance units as they are dependent on our relative TSR. The Compensation Committee determined to grant the following LTI equity awards to our CEO and the other NEOs in December 2014, with an effective grant date of January 30, 2015, the third business day after the announcement of our earnings results. The 2015-2017 performance period runs from January 30, 2015 through January 30, 2018. The Compensation Committee approved the aggregate grant value, with the exact number of performance units and RSUs determined based on the fair value of such awards in the 80% performance units/20% RSUs proportion on the grant date. For more information regarding the determination of the 2014 Market Median, see “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data” previously discussed.

Named Executive Officer  

Performance
Units

($)

   

Restricted
Stock
Units

($)

   

Total Equity
Value
Granted

($)

   

2014

Market
Median

($)

   Difference vs.
Market Median
Over/ (Under)
(%)
 

 

Robert A. Bradway

 

  

 

 

 

 

8,160,000

 

 

  

 

  

 

 

 

 

2,040,000

 

 

  

 

  

 

 

 

 

10,200,000

 

 

  

 

  

 

 

 

 

10,235,000

 

 

  

 

  

 

 

 

 

(0.3

 

 

 

 

Anthony C. Hooper

 

  

 

 

 

 

2,800,000

 

 

  

 

  

 

 

 

 

700,000

 

 

  

 

  

 

 

 

 

3,500,000

 

 

  

 

  

 

 

 

 

3,574,394

 

 

  

 

  

 

 

 

 

(2.1

 

 

 

 

David W. Meline

 

  

 

 

 

 

2,400,000

 

 

  

 

  

 

 

 

 

600,000

 

 

  

 

  

 

 

 

 

3,000,000

 

 

  

 

  

 

 

 

 

2,971,892

 

 

  

 

  

 

 

 

 

0.9

 

 

  

 

 

Sean E. Harper

 

  

 

 

 

 

2,400,000

 

 

  

 

  

 

 

 

 

600,000

 

 

  

 

  

 

 

 

 

3,000,000

 

 

  

 

  

 

 

 

 

2,921,167

 

 

  

 

  

 

 

 

 

2.7

 

 

  

 

 

Jonathan P. Graham(1)

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

(1)

Mr. Graham commenced employment with the Company effective July 13, 2015 and was not an employee at the time that the annual LTI equity awards were determined. For a description of the new hire LTI equity awards granted to Mr. Graham in 2015 in connection with the commencement of his employment, see the subsection “Mr. Graham’s New Hire Equity Grant” below.

Mr. Graham’s New Hire Equity Grant

Mr. Graham was appointed to serve as our General Counsel and Secretary, effective July 13, 2015. In connection with his hiring, Mr. Graham received an RSU grant with a value of $8,600,000, largely to compensate Mr. Graham for equity forfeited as a result of leaving his previous employer, as well as to provide LTI equity awards that are in alignment with our stockholder interests and, to a lesser extent, to induce him to join us. To better align with the value forfeited by Mr. Graham, these new hire grant RSUs vest in equal 25% installments on each of the first four anniversaries of the grant date, subject to continued service with us.

Performance Units

The Compensation Committee grants performance units to tie actual compensation earned from LTI equity awards directly to our long-term performance. Performance units are rights to earn shares of our Common Stock, based on pre-established performance goals achieved over a performance period, generally three years. The number of performance units earned is determined by our performance as measured against the pre-established performance goals at the end of

the related performance period. Each performance unit earned entitles the participant to one share of our Common Stock. Performance units granted to our NEOs in 2015 represented 80% in value of their total LTI equity awards, ensuring that a significant proportion of equity compensation is earned based on achievingthe performance achieved by the Company.

Performance Award Program—Performance Units Earned for the 2013-2015 Performance Period

Performance units for the 2013-2015 performance period, which ended January 28, 2016, were earned, certified and converted into shares of Common Stock in March 2016, calculated as set forth below using a payout percentage of 150% which is the relative TSR multiplier resulting from the Company’s three-year TSR of 89.9% with a 85.5 percentile ranking relative to the TSRs of the companies in the S&P 500 as of the beginning of the performance period (January 28, 2013). The number of performance units earned for performance at or above the 75th percentile ranking cannot exceed 150% of the target performance units granted.

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  COMPENSATION DISCUSSION AND ANALYSIS  

2013-2015 Performance Period Program Design

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Payout Calculation for the 2013-2015 Performance Period

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2013-2015 Performance Period Performance Units Earned

Our actual performance results (the 85.5 percentile, or above the 75th percentile) for the 2013-2015 performance period that ended January 28, 2016 resulted in the following number of shares of Common Stock being earned under our financialperformance award program for this performance period. Each earned performance unit converts to one share of Common Stock upon the payout date.

Named Executive Officer  

Performance Units
Value
Granted (Target)

($)

  

Number of
Performance
Units Granted

(#)

  

Number of
Shares
of our Common
Stock Earned(1)

(#)

 

 

Robert A. Bradway

 

  

 

 

 

 

6,400,000

 

 

  

 

 

 

 

 

 

71,309

 

 

  

 

 

 

 

 

 

106,963

 

 

  

 

 

Anthony C. Hooper

 

  

 

 

 

 

2,560,000

 

 

  

 

 

 

 

 

 

28,523

 

 

  

 

 

 

 

 

 

42,784

 

 

  

 

 

David W. Meline

 

  

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

 

Sean E. Harper

 

  

 

 

 

 

2,560,000

 

 

  

 

 

 

 

 

 

28,523

 

 

  

 

 

 

 

 

 

42,784

 

 

  

 

 

Jonathan P. Graham

 

  

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

(1)

Excludes dividend equivalents earned on these amounts. The value of performance units earned was not determinable as of the date this proxy statement went to print.

(2)

Messrs. Meline and Graham commenced employment with the Company after the participants for the 2013-2015 performance period had been determined and, as such, they did not receive any performance units for the 2013-2015 performance period.

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Performance Award Program—Performance Units Granted in 2015 for the 2015-2017 Performance Period

To ensure that the performance award program continues to strongly align with the interests of our stockholders, the Compensation Committee regularly reviews and operational growth objectives. In 2013, we paid annual cash incentivesconsiders whether to update the performance award goal design with input from management and Cook & Co. Based on such review, in December 2014, the Compensation Committee approved a performance goal design for the 2015-2017 performance period substantially identical to that of the previous two years’ performance awards (i.e., for the 2013-2015 and 2014-2016 performance periods) based on the

relative ranking of the Company’s three-year TSR results against the three-year TSR results of the companies in the S&P 500 as of the beginning of the performance period (January 30, 2015). The continued use of this design was based on the belief that a comparison to the S&P 500 companies:

Allows a comparison to a broader market performance indicator, and a realistic representation of our stockholders’ investment opportunities;

Addresses the challenges of using a single performance metric (TSR) with a broader comparator group; and

Tests our performance against our competition for equity investor capital.

2015-2017 Performance Period Performance Award Goal Design

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As depicted above, maximum payout of 150% is based on a 75th percentile ranking or above, the target payout of 100% of the units granted requires our TSR to rank at the 50th percentile, 50% payout is based on the 25th percentile ranking and 0% payout is based on a bottom ranking, with linear interpolation between the bottom ranking and the 75th percentile ranking (resulting in payouts ranging from 0% to 150% of the target performance units granted). In no event will the maximum payout exceed 150%. Further, in the event our absolute TSR is less than zero, the payout percentage will not be greater than 100%, notwithstanding our ranking, to limit rewards in a performance period in which we perform in-line with, or better than, the S&P 500 companies for the period, but investors do not recognize growth in their investment in our Company.

The grant date of LTI equity awards is generally the third business day after the announcement of earnings results and, for the 2015-2017 performance period, the performance period commences on the grant date. Thus, the

2015-2017 performance units were granted on January 30, 2015, subsequent to our fourth quarter 2014 earnings announcement. The stock prices for TSR measurements is determined using the average daily closing price for the 20 trading days starting on the grant date and the last 20 trading days of the performance period.

Change to Performance Award Program— 2016–2018 Performance Period

As part of its regular review and consideration of the performance award goal design of our performance award program, the Compensation Committee evaluated potential design options for the performance award goals for the 2016-2018 performance period (January 1, 2016 to December 31, 2018) and reviewed the performance award goal designs of members of our peer group with input from management and Cook & Co. The Compensation Committee constructed the 2016-2018 performance period performance

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  COMPENSATION DISCUSSION AND ANALYSIS  

award goal design to add annual operating performance metrics to drive operating performance in alignment with our 2018 operating performance commitments to our investors and to better harmonize our performance award goal design with that of the practices of a number of companies in our peer group. The Compensation Committee retained our relative TSR performance against the TSRs of the companies in the S&P 500 for this performance period as a modifier, consistent with the current performance period award goal design. The Compensation Committee selected the three annual operating measures, composed of revenue(i) adjusted earnings per share growth, (ii) adjusted operating margin and (iii) adjusted operating expense, weighted equally (one-third per measure) and each measured against targets for every year in the 2016-2018 performance period; all such targets were set when the Compensation Committee approved the performance award grants for such period. The three annual operating performance measure percentages are averaged resulting in a final annual operating performance percentage that can range from 50% to 150% for maximum performance. At the end of the performance period, the final annual operating performance percentages for all three years are averaged, resulting in a total operating measures score that is then modified by an increase or decrease of up to 50 percentage points based on our TSR performance ranking relative to the TSRs from the grant date through the end of the performance period of the companies in the S&P 500 (the relative TSR modifier). The Compensation Committee

believes that the addition of these operating measures focuses our executives on the transformation of our business and our operating efficiency and profitability and addresses the challenges of a single performance metric for a full three-year period. Further, the Compensation Committee believes that retaining our relative TSR performance as a modifier supports the Compensation Committee’s goal of designing LTI equity awards that clearly tie to our market performance and aligns best with stockholder interests.

The total operating measures score and the relative TSR modifier result in a payout range of 0% to 200% of target awards granted, representing an increase of 50% in the maximum payout from our current program where 0% to 150% of target awards can be earned. The Compensation Committee considered the increase in the maximum number of units that can be earned to be appropriate because it aligned more closely to the opportunities available under the performance-based compensation programs of our peer group, and further encourages our executives to reach for the maximum goals. Consistent with our current design, in the event our absolute TSR is less than zero, the TSR modifier shall not add any percentage points notwithstanding our ranking, to limit rewards in a performance period in which we perform in-line with, or better than, the S&P 500 companies for the period but investors do not recognize growth in their investment in our stock.

2016-2018 Performance Period Performance Award Goal Design

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Restricted Stock Units

Time-vested RSUs comprise only 20% of our LTI equity award grants for NEOs. They result in one share of Common Stock being delivered on the vesting of each RSU and serve as an important and cost-effective retention tool because RSUs have intrinsic value on the grant date and going forward. Our annual RSU grants generally vest over four years in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date (instead of four equal annual installments commencing on the first anniversary of the grant date). This delayed vesting schedule further emphasizes the long-term performance focus of our LTI equity award program and enhances the retention of staff members.

Dividend Equivalents

RSUs and performance units have dividend equivalent rights. Such dividend equivalents are payable only when, and to the extent, such awards are earned and converted to shares of Common Stock. The dividend equivalents may be paid in stock (with cash paid for fractional shares) or in cash.

Long-Term Incentive Equity Awards Granted to Named Executive Officers in 2016

In its annual review of our LTI equity award practices, the Compensation Committee reviewed our LTI equity award mix with Cook & Co. Based on the Compensation Committee’s interest in aligning long-term executive compensation with stockholder interests through a balanced equity program, the Compensation Committee determined to re-introduce non-qualified stock options (stock options) into our LTI equity award mix at executive levels in 2016. The introduction of stock options, in addition to the new 2016-2018 performance period performance award goal design previously described, results in a diversified mix of performance-based equity measured on strategic operating goals and both relative and absolute TSR. The Compensation Committee believes that stock options are an important addition to available forms of performance-based LTI equity awards given the direct link between the value of stock price appreciation to our stockholders and the compensation value delivered by stock option awards to our executives. In making its determination to re-introduce stock options, the Compensation Committee also considered that six of our 15 peer group members (five of nine U.S.-based peer group members) offer stock option

awards, and concluded that the re-introduction of stock options was a competitive practice within our peer group.

On a value basis, in 2016 our performance-based LTI equity awards will comprise performance units (50%) and stock options (30%). Thus, performance-based LTI equity awards will remain at 80% of the annual equity award value and time-vested RSUs will continue to make up the remaining 20% of value. The Compensation Committee believes that this equity award mix presents a balanced approach to LTI equity award grants for executives of the Company and is appropriately aligned with stockholder interests and pay for performance. The Compensation Committee continued to align the value of the LTI equity awards granted in 2016 to approximate the 2015 Market Median, with the result that the 2016 grant value for our CEO was slightly above 2015 Market Median (3.5%) and the remaining NEOs grant values were slightly less than 2015 Market Median (from 0.4% to 7.1%).

Minimum Vesting Period of One Year

Mindful of stockholder concerns and best practices, we have amended our equity incentive plan to reflect our actual practices and to provide that 95% of all equity awards, including RSUs, restricted stock and stock options, granted to staff members (including NEOs) will be subject to a minimum vesting period of no less than one year.

Annual Cash Incentive Awards

Annual cash incentive awards to our NEOs are generally made under our stockholder-approved EIP, which employs a stockholder-approved formula that establishes a maximum award possible for each participant based on our adjusted net income. Our EIP is an umbrella plan intended to satisfy the performance-based requirements of Section 162(m) of the Internal Revenue Code. This year, and in the past, actual awards under the EIP are determined by the Compensation Committee using their negative discretion under the EIP, generally employing the pre-established Company performance goals under our GMIP. This approach is not purely formulaic, as the Compensation Committee also considers the contributions of each participant’s role to our success during the performance period. The majority of our staff members participate in our GMIP or our Global Performance Incentive Plan, or GPIP, an annual cash incentive award program also based on our pre-established GMIP Company performance goals.

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No later than the first 90 days of the calendar year, the Compensation Committee determines the EIP participants, the EIP definition of adjusted net income, the maximum award payable to each participant under the EIP, the target annual cash incentive award opportunities under the EIP as a percentage of base salary, the GMIP Company performance goals and the weightings and percentages payable for threshold, target and maximum performance under the GMIP.

For 2015, Messrs. Bradway, Hooper, Meline and Dr. Harper were each a participant in the EIP and the maximum award for each participant under the EIP continued to be based on a percentage of our adjusted net income, as defined in the EIP(1) (0.125% for our CEO and 0.075% for each of the Executive Vice President NEOs). In 2015, Mr. Graham was a participant in the GMIP because he was not an employee at the time participants in the EIP were determined. Historically, and in 2015, the Compensation Committee has paid well below the maximum award permitted under the EIP. In 2015, the Compensation Committee continued its practice of exercising negative discretion from the calculated EIP maximum award payable to each individual by using the GMIP Company performance goals score as applied to the participant’s target annual cash incentive award opportunity in making its determination of the actual award amount paid. Annual cash incentive awards are paid in March of the year following the annual performance period and certification of the resulting payouts by the Compensation Committee.

The target annual cash incentive award opportunity for 2015 for Mr. Bradway was 140%, and for each Executive Vice President was 90%, of base salary. The target annual cash incentive award opportunity for Mr. Bradway was increased for 2015 from 130% to 140% as Mr. Bradway’s 2014 target total annual cash compensation approximated the 25th percentile of our peer group and the Compensation Committee wanted his target total annual cash compensation to more closely align with the 50th percentile of our peer group, while continuing to emphasize compensation that is at risk and performance-based. With this increase to Mr. Bradway’s target annual cash incentive award opportunity, such opportunity for Mr. Bradway and each

Executive Vice President aligns us competitively with the 2014 Market Median. Mr. Graham’s target annual cash incentive award opportunity was set upon his hiring at 80% of base salary, consistent with the target percentage we have maintained for this position and aligned with the 50th percentile for this role based on the 2014 Towers Survey. To induce Mr. Graham to accept employment with us, and given his July start date, Mr. Graham’s new hire package included a guaranteed minimum equivalent to a GMIP Company performance goals composite score of 130% (which minimum score was exceeded given the actual Company performance goals composite score of 176.1% for 2015).

2015 GMIP Company Performance Goals

The GMIP Company performance goal categories approved by the Compensation Committee for 2015 were “Deliver Results” (70% weighting) and “Progress Innovative Pipeline” (30% weighting). These goal categories were selected to retain the emphasis on financial performance (60%), while focusing the remaining goals on other factors that are relevant to the Company’s strategy and critical to our near- and longer-term clinical and commercialization success. While all of the goals measure single-year performance, taken as a whole, they are intended to positively position us for both near- and longer-term success:

The 2015 “Deliver Results” goals (70%) comprise “Revenues” (30%), “Adjusted Net Income” (30%) and adjusted net income“Execute New Product/Delivery System Launches” (10%).

“Revenues” and “Adjusted Net Income” are equally focused on top- and bottom-line growth and were assigned the largest weighting of 30% each, consistent with the fundamental importance of financial performance to us and our stockholders over the longer-term.

“Execute New Product/Delivery System Launches” was assigned 10%. We executed on the launches of six innovative products in the oncology and cardiovascular disease therapeutic areas.

(1)

For 2015, adjusted net income for purposes of the EIP was defined as net income determined under U.S. generally accepted accounting principles, adjusted for the following, net of tax: the adverse impact of changes in accounting principles; expenses and related costs incurred in connection with business combinations; losses and related costs incurred with respect to litigation, arbitration, investigations and legal and contractual settlements; losses or benefits on non-routine settlements with tax authorities; expenses incurred in connection with restructurings and related actions; asset impairment charges, inventory write-offs; adverse impact of changes in tax law, costs arising from a natural disaster and the impact of discontinued operations.

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“Progress Innovative Pipeline” goals (30%) comprise “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%) and measured progress on both early- and later-stage product candidates to focus us on executing key clinical studies and delivering a robust product pipeline at all stages of the development continuum, which we believe is critical to our continued success over both the near- and longer-term. We executed clinical studies for Repatha®, Kyprolis®, AMG 334, Romosozumab, and IMLYGIC®, among others, and submitted regulatory filings, including those for Repatha®, Kyprolis®, Corlanor®, ABP 501 biosimilar adalimumab (Humira®), IMLYGIC® and Parsabiv™.

All of these goals are intended to create stockholder value in the near- and longer-term. There are no payouts for below-threshold performance on the two financial metrics. Measurements of performance for the non-financial primary metrics, which are often expressed in milestones, are more subjective in nature than are the financial metrics and could result in a very small payout percentage (less than 1% of annual cash compensation). Maximum performance under each metric results in earning 225% of target annual cash incentive award opportunity for that metric.

2015 GMIP Company Performance Goals and Results

The table below illustrates the weighting of each goal, the goals established and our actual performance for 2015:

Deliver Results (70% weighting)Achieved 113.8%
Financial Goals (60%)ThresholdTargetMaximumAchieved

Revenues (30%)

$19,750 million$21,110 million$22,775 million

$21,662 million

135.1%


Adjusted Net Income(1) (30%)

$6,600 million$7,180 million$7,900 million

$7,868 million

218.3%


Execute New Product/

Delivery System Launches Goals (10%)

Results

Achieved

  Repatha®77.5%

  Corlanor®

  BLINCYTO®

  Neulasta® Onpro™ Kit

Progress Innovative Pipeline (30% weighting)Achieved 62.3%
GoalsResultsAchieved

Execute Key Clinical Studies and Regulatory Filings (20%)

  Executed clinical studies for Repatha®, AMG 334, Romosozumab, IMLYGIC®, Omecamtiv mecarbil, and Kyprolis®

199.0%

  Completed regulatory filings for Kyprolis®, Repatha®, ABP 501 biosimilar adalimumab (Humira®), Parsabiv™, Corlanor®, IMLYGIC®

Advance Early Pipeline (10%)

  Generated new product strategy teams, initiated first-in-human studies, and advanced programs through the early-to-late stage portal

225.0%

2015 GMIP Company Performance Goals Composite ScoreAchieved 176.1%
(1)

Adjusted net income for purposes of the GMIP is adjusted net income as we reported in our Form 8-K dated as of January 28, 2016, excluding the benefit of the reinstated federal Research and Development tax credit.

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2015 Annual Cash Incentive Awards

As shown in the table above, our performance against the 2015 GMIP Company performance goals yielded a composite score of 176.1% and the Compensation Committee awarded actual annual cash incentive awards under the EIP to our NEOs, other than Mr. Graham, based on this composite score. No further discretion was employed.

Named Executive Officer  Target 2015
Award($)(1)
  Actual 2015
Award($)
 

 

Robert A. Bradway

 

  

 

 

 

 

2,180,769

 

 

  

 

 

 

 

 

 

3,841,000

 

 

  

 

 

Anthony C. Hooper

 

  

 

 

 

 

936,298

 

 

  

 

 

 

 

 

 

1,649,000

 

 

  

 

 

David W. Meline

 

  

 

 

 

 

841,169

 

 

  

 

 

 

 

 

 

1,482,000

 

 

  

 

 

Sean E. Harper

 

  

 

 

 

 

837,883

 

 

  

 

 

 

 

 

 

1,476,000

 

 

  

 

 

Jonathan P. Graham(2)

 

  

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

579,000

 

 

  

 

(1)

Calculated in accordance with GMIP.

(2)

Because Mr. Graham commenced employment with us in July 2015, he was not eligible to participate in the EIP. Mr. Graham received his 2015 eligible award under the GMIP based on the actual GMIP Company performance goals composite score. As part of Mr. Graham’s offer letter, we guaranteed a minimum payout based on a GMIP Company performance goals composite score of 130% for his 2015 GMIP award, which would have resulted in a minimum award for 2015 of $427,203.

Mr. Meline’s Vesting of Sign-On Bonus

To replace the pro-rata value of Mr. Meline’s 2014 bonus at his current employer, which was forfeited upon his leaving, and to induce Mr. Meline to accept the Company’s offer of employment and join the Company in 2014, Mr. Meline received a sign-on bonus of $2,000,000 (50% vested on August 21, 2014 and the other 50% vested on July 21, 2015).

Mr. Graham’s Sign-On Bonus

To replace the pro-rata value of Mr. Graham’s 2015 bonus at his current employer, which was forfeited upon his leaving, and to induce Mr. Graham to accept the Company’s offer of employment and join the Company in July 2015, Mr. Graham received a sign-on bonus of $2,000,000 (50% was paid as an advance by August 13, 2015, and the other 50% will be paid by July 13, 2016, subject to continued service with us on that date). Mr. Graham will be required to repay the advance if he resigns his employment within two years.

2016 GMIP Company Performance Goals

In March 2016, the Compensation Committee established GMIP Company performance goal categories for 2016 performance. While the overall goal categories remained the same as our 2015 Company performance goal categories (“Deliver Results” (70%) (which comprise “Revenues” (30%),

“Adjusted Net Income” (30%) and a number of operational objectives designed to drive delivery“Execute Product/Delivery System Launches” (10%) goals) and “Progress Innovative Pipeline” (which comprise “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%) goals), the metrics and measures of the best pipeline (20%)goals underlying the goal categories were progressed to reflect key focus areas for 2016. Based on Cook & Co.’s recommendation and deliveryto align Mr. Bradway with the 2015 Market Median, while continuing to emphasize compensation that is at risk and performance-based, the Compensation Committee approved an increase to the target annual cash incentive award opportunity for 2016 for Mr. Bradway to 150% of strategic priorities (20%base salary (from 140%). For 2013, we implementedour Executive Vice Presidents, to also align with the 2015 Market Median, while continuing to emphasize compensation that is at risk and performance-based and to continue to treat our Executive Vice Presidents as a higher levelteam, each Executive Vice President target annual cash incentive award opportunity for 2016 was increased to 100% of required performancebase salary (from 90%). To maintain Mr. Graham’s target annual cash incentive award opportunity in alignment with the 2015 Market Median for our financial goals.his role, his target annual cash incentive award opportunity was unchanged at 80% of base salary for 2016.

Base SalariesPeer Group

The Compensation Committee recognizes the unique demands of our industry, including its complex regulatory and reimbursement environment, and the challenges of running an enterprise focused on the discovery, development, manufacture and commercialization of innovative treatments to address serious illness. The Compensation Committee believes that these unique demands require executive talent that has significant industry experience as well as, for certain key functions, unique scientific expertise to oversee research and development activities and the complex manufacturing requirements for biologic products. Further, the Compensation Committee believes that these very specific skills and capabilities limit the pool of talent from which we can recruit and also cause our employees to be highly valued and sought after in our industry. This makes it imperative that our peer group for compensation purposes include those companies with which we compete for new executives given the similarities in experience and knowledge that are developed at these companies. Moreover, as evidenced by

the fact that 11 of the 15 companies in our peer group (eight U.S.-based companies) also list us as a peer, we believe that our peer group accurately reflects those companies with whom we compete for executive talent. The Compensation Committee compares our pay levels and programs to the peer group and uses this comparative data as a reference point in its review and determination of executive compensation. The Compensation Committee’s approach also considers our performance, the individual’s performance and other relevant factors in setting pay.

On an annual basis, Cook & Co. reviews our peer group with the Compensation Committee to determine whether it remains appropriate. The following objective criteria are typically applied in the review:

 

Purposes

LOGO

Provides a degree of financial certainty and stability that helps us retain talent.

Recognizes competitive market conditions and/or rewards individual performance through periodic increases.

All pie chartsGICS codes of biotechnology (352010) and pharmaceuticals (352020);

12-month average market capitalization between 0.25 and 4.0x that of Amgen’s average market capitalization for the same period;

trailing four-quarter revenues between 0.25 and 4.0x that of Amgen’s revenues;

non-U.S. peers limited to those commonly identified as a “peer of peers”;

competitors for executive talent;

companies of comparable scope and complexity;

competitors for equity investor capital;

companies that identify us as their direct peer; and

companies with similar pay practices.

In March 2015, Allergan, Inc. was acquired by Actavis plc and, following the acquisition of Allergan, Inc., Actavis plc changed its name to Allergan plc. In July 2015, the Compensation Committee completed its annual review of the peer group and discussed the replacement of Allergan, Inc. with Allergan plc. The Compensation Committee determined that, based in part on recommendations from Cook & Co., this merged entity also met the criteria outlined above are calculated using (i)and should be added to our peer group for 2015 to replace Allergan, Inc. Further, based in part on recommendations from Cook & Co., the “Salary” columnCompensation Committee determined that the remainder of the peer group was appropriate and continued to meet the criteria from the “Summary Compensation Table” in our Executive Compensation Tables, (ii) the target annual cash incentive award in the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards – Target” column in the table in footnote 2 to the “Grantsuniverse of Plan-Based Awards” table in our Executive Compensation Tables and (iii) the grant date fair value of annual grants of performance units and RSUs in the “Grant Date Fair Value of Stock and Option Awards” column of the “Grants of Plan-Based Awards” table in our Executive Compensation Tables.

other

 

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biotechnology and pharmaceutical companies given that our relative size and positioning remains generally the same as the prior year.

As a result, the Compensation Committee replaced Allergan, Inc. with Allergan plc and no other changes were made to the

Ourpeer group in 2015. It is the Compensation Committee’s view that this peer group is the most appropriate for benchmarking executive compensation practicesas these companies are designed to be competitive and balanced.generally those with which we most closely compete for executive talent.

2015 Peer Group

 

 

We target the 50th percentile, or median, of our peer group for all elements of compensation.   AbbVie Inc.

 

   Allergan plc

   AstraZeneca plc

   Biogen Inc.

   Bristol-Myers Squibb Company

   Celgene Corporation

   Eli Lilly and Company

   Gilead Sciences, Inc.

 

We target the 50th percentile of our peer group for our equity award budget. We are mindful of stockholder dilution   and remain committed to the significant performance weighting of the equity awards we grant to our senior management team. We provide broad-based grants to nearly all of our full-time staff members and our Board of Directors, or Board. The rates at which we grant awards of stock and its potential dilutive effect are consistent with our peer group levels and have decreased over the last four years.GlaxoSmithKline plc(1)

   Johnson & Johnson

   Merck & Co., Inc.

   Novartis AG

   Pfizer Inc.

   Roche Holding AG(1)

   Sanofi S.A.(1)

 

We have objective criteria for selectionThe market capitalization of our peer group ranged between $68 billion and review$293 billion determined as of the last trading day of 2014 as provided by ThomsonONE™. The 2014 revenues of our peer group annually.ranged between $7.7 billion and $74.3 billion based on public filings. Amgen’s 2014 market capitalization and revenues were $121 billion and $20.1 billion, respectively. The median 2014 market capitalization and revenues of our peer group (not including Amgen) was $104 billion and $26.1 billion, respectively. We drawwere between the 50th and 75th percentile for market capitalization and between the 25th and 50th percentile for revenues relative to our peerspeer group.

Peer Group Data

Our primary data sources for evaluating all elements of compensation for our CEO is data compiled by Cook & Co. from biotechnologyproxy statement and pharmaceuticals companies as we believe they are our direct competitors for executive talent and have comparable complexity and pay practices. In 2013, we modifiedForm 8-K filings filed with the selection criteriaSEC for our peer group. For our other NEOs, our primary data sources for evaluating all elements of compensation are the Towers Watson Pharmaceutical Human Resources Association, or PHRA, Executive Compensation Survey and the available data from proxy statements filed with the SEC for our peer group. The Towers Watson PHRA Executive

Compensation Survey contains compensation information from pharmaceutical companies in our peer group, but does not contain information on many biotechnology companies. Therefore, compensation information for the biotechnology companies within our peer group is compiled using proxy statement filings to include revenues as a primary factor along with market capitalization valuations (each withinprovide additional data and to inform the Compensation Committee. The Towers Watson PHRA Executive Compensation Survey data and the peer group proxy data is compiled and presented by management to the Compensation Committee both individually and in the aggregate. For Mr. Bradway, Cook & Co. provides data to the Compensation Committee of a range between the 25th, 50th and 75th percentiles of 0.25xthe specific compensation elements paid to 4xCEOs in our peer group (and 85th percentile specifically in connection with LTI equity awards). For each of Amgen’s size),the other NEOs, the comparison of each NEO on a position or pay rank basis and limitedan analysis of each element of direct compensation at the inclusion50th and 75th percentile of non-U.S. companiesthe peer group for each NEO position is presented to those commonly identified as “peerthe Compensation Committee. In addition to the sources provided previously, for the determination of peers.”LTI equity awards, we also provided the Cook & Co. Survey of Long-Term Incentives (Cook & Co. Survey).

 

(1)

Revenues for GlaxoSmithKline plc, Roche Holding AG and Sanofi S.A. were converted into U.S. dollars using the average of daily exchange rates for 2014 as provided by Bloomberg L.P.

 

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The “Market Median” shown for Mr. Bradway was the 50th percentile of the specific compensation elements paid to CEOs in our peer group, as compiled by Cook & Co. from proxy statement filings and Form 8-K filings. The “Market Median” for the other NEOs is derived by averaging the values of the Towers Watson PHRA Executive Compensation Survey 50th percentile and the peer group proxy statement 50th percentile. For 2015 compensation decisions considered in March 2015, the 2014 Market Median was derived by averaging the 2014 Towers Watson PHRA Executive Compensation Survey (the 2014 Towers Survey) and 2014

proxy statement filings with the SEC. For 2016 compensation decisions considered in March 2016, the 2015 Market Median was derived by averaging the 2015 Towers Watson PHRA Executive Compensation Survey (the 2015 Towers Survey) and 2015 proxy statement filings with the SEC. Because Towers Watson PHRA Executive Compensation Survey data is only available for the previous calendar year, base pay data is aged forward to the current year based on expected salary movement, consistent with generally accepted practice. Target annual cash incentive award and LTI equity award market data are not adjusted for aging.

We Maintain Other Compensation and Governance Best Practices

Elements of Compensation and Specific Compensation Decisions

Clawback

We have a clawback policy that requires our Board to consider the recapture of past cash or LTI equity award payouts to our NEOs if the amounts were determined based on financial results that are later restated and the NEOs’ misconduct is determined by the Board to have caused the restatement.

Recoupment Provisions   

Our incentive compensation plans contain recoupment provisions applicable to all staff members that expressly allow the Compensation Committee to determine thatannual cash incentive awards are not earned fully or in part where such employee has engaged in misconduct that causes serious financial or reputational damage to the Company.

Change of Control

We have no “single-trigger” equity vesting acceleration upon a change of control for RSUs and stock options. In the event of a change of control, a qualifying termination of employment, or “double-trigger,” is required for acceleration of RSU and stock option vesting.

In the event of a change of control, double-trigger cash severance islimited to a multiple of two times target annual cash compensation.

Tax Gross-Ups

We do not provide tax gross-ups, except for business-related payments such as reimbursement of certain moving and relocation expenses.

Equity Practices

We haverobust stock ownership guidelines, with asix times base salary ownership requirement for our CEO.

We havestrong LTI equity award plans and policies that prohibit re-pricing or backdating of equity awards.

Ourstaff members and Board are prohibited from engaging in short sales, purchasing Common Stock on margin, pledging Common Stock, or entering into any hedging, derivative or similar transactions with respect to our Common Stock.

LTI equity awards are granted based on a specific dollar valuation, rather than a set number of shares, to avoid the impact of fluctuations in the stock price between the date the Compensation Committee determines the grant amount and the actual grant date.

Limited Additional

Compensation

Our perquisites are limited to those with a clear business-related rationale.

We haveno employment contracts or guaranteed bonuses.


We haveno defined benefit pension or supplemental executive retirement plan (SERP) benefitsor “above market” interest on deferred compensation.

 

Described below are our three primary elements of executive compensation in order of magnitude and alignment with pay for performance: LTI equity awards; annual cash incentive awards and base salaries.

Long-Term Incentive Equity Awards

Our compensation program aims to achieve the appropriate balance of compensation relative to the responsibilities of our staff members, with the result that the largest proportion of the compensation program for our CEO and the other NEOs is in the form of LTI equity awards that are risk-based and closely aligned with the creation of long-term stockholder value. Equity-based compensation represents 73% of our CEO’s target compensation and 64% of target compensation for our other NEOs. In addition, we also grant LTI equity awards each year to nearly all of our staff members worldwide to increase individual awareness of how our performance impacts stockholder value.

Company Continues to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards

Our compensation philosophy, practices and approach continue to be effective in balancing the use of equity to align employees with our stockholders while being mindful of the level of dilution that our stockholders experience. LTI equity award grant guidelines are established for each job level within the Company targeting the 50th percentile of our peer group, except at lower levels in the organization where equity

participation is less prevalent. For certain lower job levels where data is not as comprehensive, we have developed guidelines that trend in line with available data and that consider internal equity. The Compensation Committee sets an LTI equity award budget approximately at the 50th percentile of our peer group by job level as available. The Compensation Committee periodically reviews the Shareholder Value Transfer (SVT) associated with the aggregate LTI equity award grants to ensure that our SVT is aligned with our peer group practice because, while the Compensation Committee supports a broad-based equity plan to align our staff members with our stockholders, the Compensation Committee also strives to limit the amount of stockholder dilution to that stockholders of our peer group would expect to experience. The rates at which we grant LTI equity awards and the resulting potential dilutive effect are consistent with our peer group and have decreased over the last five years.

We believe that our capacity to grant equity-based compensation has been a significant factor in achieving our strategic objectives by rewarding execution of our strategy and stock price appreciation, aligning our NEOs’ and staff members’ interests with stockholders and fostering long-term focus and retention.

 

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Long-Term Incentive Equity Award Composition

LTI equity awards granted to our NEOs in 2015 consisted of 80% performance units and 20% RSUs.

LOGO

This allocation results in the substantial majority of equity compensation being earned under our performance units based solely on our achieved objective performance. We believe it is important to maintain a relatively small percentage of equity awards in the form of RSUs to incentivize retention. Performance units are earned at the end of the performance period (generally three years) to the extent to which the performance goals for the applicable period are met. Our time-vested RSUs generally vest over four years, with no vesting in the first year and vesting in approximately three equal annual installments on the second, third and fourth anniversaries of the grant date (instead of four equal annual installments commencing on the first anniversary of the grant date). This delay in the commencement of RSU vesting further emphasizes the long-term performance focus of our LTI equity award program and enhances retention.

Value of Long-Term Incentive Equity Awards Granted to Named Executive Officers in 2015

In December 2014, the Compensation Committee considered executive LTI equity award grants for 2015. In its review, the Compensation Committee considered a range between the 25th and 85th percentile of the peer group for the CEO and, for proposed awards to NEOs other than the CEO, the Compensation Committee considered the recommendations

of our CEO and analyzed the 50th and 75th percentile of the peer group for each available NEO position. The Compensation Committee also took into account the Company’s performance, the individual’s performance in their role and historical grant levels when determining individual grants.

In December 2014, the Compensation Committee awarded Mr. Bradway a 2015 LTI equity award grant valued at $10.2 million, which is approximately 13% higher than 2014, to maintain median positioning against the 2014 Market Median (as the 2014 LTI equity award median for the CEO position increased over the prior year), while continuing to provide long-term performance incentives and at-risk compensation that aligns with stockholder interests. The 2014 Market Median reviewed in December 2014 supported greater differentiation of LTI equity grant values among Executive Vice President roles and, in contrast to prior years, provided market data that was more representative of Mr. Hooper’s position. In reviewing the 2014 Market Median data, the Compensation Committee noted the difference in LTI equity award median values between that of the Executive Vice President, Global Commercial Operations role compared to that of the Chief Financial Officer and Executive Vice President, Research and Development roles. As a result, the Compensation Committee approved a higher grant value for Mr. Hooper of $3.5 million that was matched to the 2014 Market Median for his role of Executive Vice President, Global Commercial Operations. The Compensation Committee determined that this increase of approximately 16.7% was appropriate, not only because of its 2014 Market Median competitiveness, but also because of the scope and span of Mr. Hooper’s responsibility and the level of importance of his role to the Company. The Compensation Committee approved a $3 million grant value for Dr. Harper and Mr. Meline which approximates the 2014 Market Median for each role and takes into account the similar strategic impact of their roles to the Company. Mr. Graham commenced employment with us effective July 13, 2015 and was not an employee at the time that the annual LTI equity awards were determined.

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How2015 Annual Long-Term Incentive Equity Awards

Given the design of our performance award program, there is no guarantee of any value realized from grants of performance units as they are dependent on our relative TSR. The Compensation Committee determined to grant the following LTI equity awards to our CEO and the other NEOs in December 2014, with an effective grant date of January 30, 2015, the third business day after the announcement of our earnings results. The 2015-2017 performance period runs from January 30, 2015 through January 30, 2018. The Compensation Committee approved the aggregate grant value, with the exact number of performance units and RSUs determined based on the fair value of such awards in the 80% performance units/20% RSUs proportion on the grant date. For more information regarding the determination of the 2014 Market Median, see “How Compensation Decisions Are Made For Our Named Executive OfficersOfficers—Peer Group Data” previously discussed.

 

Named Executive Officer  

Performance
Units

($)

   

Restricted
Stock
Units

($)

   

Total Equity
Value
Granted

($)

   

2014

Market
Median

($)

   Difference vs.
Market Median
Over/ (Under)
(%)
 

 

Robert A. Bradway

 

  

 

 

 

 

8,160,000

 

 

  

 

  

 

 

 

 

2,040,000

 

 

  

 

  

 

 

 

 

10,200,000

 

 

  

 

  

 

 

 

 

10,235,000

 

 

  

 

  

 

 

 

 

(0.3

 

 

 

 

Anthony C. Hooper

 

  

 

 

 

 

2,800,000

 

 

  

 

  

 

 

 

 

700,000

 

 

  

 

  

 

 

 

 

3,500,000

 

 

  

 

  

 

 

 

 

3,574,394

 

 

  

 

  

 

 

 

 

(2.1

 

 

 

 

David W. Meline

 

  

 

 

 

 

2,400,000

 

 

  

 

  

 

 

 

 

600,000

 

 

  

 

  

 

 

 

 

3,000,000

 

 

  

 

  

 

 

 

 

2,971,892

 

 

  

 

  

 

 

 

 

0.9

 

 

  

 

 

Sean E. Harper

 

  

 

 

 

 

2,400,000

 

 

  

 

  

 

 

 

 

600,000

 

 

  

 

  

 

 

 

 

3,000,000

 

 

  

 

  

 

 

 

 

2,921,167

 

 

  

 

  

 

 

 

 

2.7

 

 

  

 

 

Jonathan P. Graham(1)

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

Responsible Party(1)

Primary RolesMr. Graham commenced employment with the Company effective July 13, 2015 and Responsibilities

Compensation Committee

(Comprised solely of independent

directors and reports towas not an employee at the Board)

Evaluatestime that the performanceannual LTI equity awards were determined. For a description of the CEO within the context of the financial and operational performance of the Company.

Determines and approves compensation packages for our CEO, other NEOs, Executive Vice Presidents, Senior Vice Presidents and other Section 16 officers (collectively, “Senior Management”).

Reviews and approves all programsnew hire LTI equity awards granted to Mr. Graham in which our NEOs participate.

Oversees the development and effective succession plan of the members of Senior Management.

Oversees the development and effective succession plan of the members of Senior Management.

Oversees the Board’s relationship with and response to stockholders on executive compensation matters and the Compensation Discussion and Analysis.

Exercises the sole authority to select, retain, replace and/or obtain advice of compensation and benefits consultants, legal counsel and other outside advisors and oversees an analysis of the independence of each such advisor.

Consultant to the

Compensation Committee

(Frederic W. Cook & Co., Inc.–

independent consultant

retained directly by the

Compensation Committee)

Regularly attends Compensation Committee meetings, including meeting2015 in executive sessionconnection with the Compensation Committee.

Assists management with presenting market data and reviewscommencement of his employment, see the appropriateness of market data compiled by the Human Resources Department.

Provides advice on the appropriateness and competitiveness of our compensation program relative to market practice, including advising the Compensation Committee on the selection of our peer group.

Consults on executive compensation trends and developments.

Consults on various compensation matters and recommends compensation program designs and practices to support our business strategy and objectives.

Works with management to conduct an assessment of the risks arising from our compensation policies and practices.

CEO

(Assisted by the Senior Vice

President, Human Resources and

other Company staff members)

Conducts performance reviews for the other NEOs and makes recommendations to the Compensation Committee with respect to compensation of Senior Management other than himself.

Provides recommendations on the development of and succession planning for the members of Senior Management other than himself.subsection “Mr. Graham’s New Hire Equity Grant” below.

 

Mr. Graham’s New Hire Equity Grant

Mr. Graham was appointed to serve as our General Counsel and Secretary, effective July 13, 2015. In connection with his hiring, Mr. Graham received an RSU grant with a value of $8,600,000, largely to compensate Mr. Graham for equity forfeited as a result of leaving his previous employer, as well as to provide LTI equity awards that are in alignment with our stockholder interests and, to a lesser extent, to induce him to join us. To better align with the value forfeited by Mr. Graham, these new hire grant RSUs vest in equal 25% installments on each of the first four anniversaries of the grant date, subject to continued service with us.

Performance Units

The Compensation Committee grants performance units to tie actual compensation earned from LTI equity awards directly to our long-term performance. Performance units are rights to earn shares of our Common Stock, based on pre-established performance goals achieved over a performance period, generally three years. The number of performance units earned is determined by our performance as measured against the pre-established performance goals at the end of

the related performance period. Each performance unit earned entitles the participant to one share of our Common Stock. Performance units granted to our NEOs in 2015 represented 80% in value of their total LTI equity awards, ensuring that a significant proportion of equity compensation is earned based on the performance achieved by the Company.

Performance Award Program—Performance Units Earned for the 2013-2015 Performance Period

Performance units for the 2013-2015 performance period, which ended January 28, 2016, were earned, certified and converted into shares of Common Stock in March 2016, calculated as set forth below using a payout percentage of 150% which is the relative TSR multiplier resulting from the Company’s three-year TSR of 89.9% with a 85.5 percentile ranking relative to the TSRs of the companies in the S&P 500 as of the beginning of the performance period (January 28, 2013). The number of performance units earned for performance at or above the 75th percentile ranking cannot exceed 150% of the target performance units granted.

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2013-2015 Performance Period Program Design

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Payout Calculation for the 2013-2015 Performance Period

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2013-2015 Performance Period Performance Units Earned

Our actual performance results (the 85.5 percentile, or above the 75th percentile) for the 2013-2015 performance period that ended January 28, 2016 resulted in the following number of shares of Common Stock being earned under our performance award program for this performance period. Each earned performance unit converts to one share of Common Stock upon the payout date.

Named Executive Officer  

Performance Units
Value
Granted (Target)

($)

  

Number of
Performance
Units Granted

(#)

  

Number of
Shares
of our Common
Stock Earned(1)

(#)

 

 

Robert A. Bradway

 

  

 

 

 

 

6,400,000

 

 

  

 

 

 

 

 

 

71,309

 

 

  

 

 

 

 

 

 

106,963

 

 

  

 

 

Anthony C. Hooper

 

  

 

 

 

 

2,560,000

 

 

  

 

 

 

 

 

 

28,523

 

 

  

 

 

 

 

 

 

42,784

 

 

  

 

 

David W. Meline

 

  

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

 

Sean E. Harper

 

  

 

 

 

 

2,560,000

 

 

  

 

 

 

 

 

 

28,523

 

 

  

 

 

 

 

 

 

42,784

 

 

  

 

 

Jonathan P. Graham

 

  

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

(1)

Excludes dividend equivalents earned on these amounts. The value of performance units earned was not determinable as of the date this proxy statement went to print.

(2)

Messrs. Meline and Graham commenced employment with the Company after the participants for the 2013-2015 performance period had been determined and, as such, they did not receive any performance units for the 2013-2015 performance period.

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Performance Award Program—Performance Units Granted in 2015 for the 2015-2017 Performance Period

To ensure that the performance award program continues to strongly align with the interests of our stockholders, the Compensation Committee regularly reviews and considers whether to update the performance award goal design with input from management and Cook & Co. Based on such review, in December 2014, the Compensation Committee approved a performance goal design for the 2015-2017 performance period substantially identical to that of the previous two years’ performance awards (i.e., for the 2013-2015 and 2014-2016 performance periods) based on the

relative ranking of the Company’s three-year TSR results against the three-year TSR results of the companies in the S&P 500 as of the beginning of the performance period (January 30, 2015). The continued use of this design was based on the belief that a comparison to the S&P 500 companies:

Allows a comparison to a broader market performance indicator, and a realistic representation of our stockholders’ investment opportunities;

Addresses the challenges of using a single performance metric (TSR) with a broader comparator group; and

Tests our performance against our competition for equity investor capital.

2015-2017 Performance Period Performance Award Goal Design

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As depicted above, maximum payout of 150% is based on a 75th percentile ranking or above, the target payout of 100% of the units granted requires our TSR to rank at the 50th percentile, 50% payout is based on the 25th percentile ranking and 0% payout is based on a bottom ranking, with linear interpolation between the bottom ranking and the 75th percentile ranking (resulting in payouts ranging from 0% to 150% of the target performance units granted). In no event will the maximum payout exceed 150%. Further, in the event our absolute TSR is less than zero, the payout percentage will not be greater than 100%, notwithstanding our ranking, to limit rewards in a performance period in which we perform in-line with, or better than, the S&P 500 companies for the period, but investors do not recognize growth in their investment in our Company.

The grant date of LTI equity awards is generally the third business day after the announcement of earnings results and, for the 2015-2017 performance period, the performance period commences on the grant date. Thus, the

2015-2017 performance units were granted on January 30, 2015, subsequent to our fourth quarter 2014 earnings announcement. The stock prices for TSR measurements is determined using the average daily closing price for the 20 trading days starting on the grant date and the last 20 trading days of the performance period.

Change to Performance Award Program— 2016–2018 Performance Period

As part of its regular review and consideration of the performance award goal design of our performance award program, the Compensation Committee evaluated potential design options for the performance award goals for the 2016-2018 performance period (January 1, 2016 to December 31, 2018) and reviewed the performance award goal designs of members of our peer group with input from management and Cook & Co. The Compensation Committee constructed the 2016-2018 performance period performance

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  COMPENSATION DISCUSSION AND ANALYSIS  

award goal design to add annual operating performance metrics to drive operating performance in alignment with our 2018 operating performance commitments to our investors and to better harmonize our performance award goal design with that of the practices of a number of companies in our peer group. The Compensation Committee retained our relative TSR performance against the TSRs of the companies in the S&P 500 for this performance period as a modifier, consistent with the current performance period award goal design. The Compensation Committee selected the three annual operating measures, composed of (i) adjusted earnings per share growth, (ii) adjusted operating margin and (iii) adjusted operating expense, weighted equally (one-third per measure) and each measured against targets for every year in the 2016-2018 performance period; all such targets were set when the Compensation Committee approved the performance award grants for such period. The three annual operating performance measure percentages are averaged resulting in a final annual operating performance percentage that can range from 50% to 150% for maximum performance. At the end of the performance period, the final annual operating performance percentages for all three years are averaged, resulting in a total operating measures score that is then modified by an increase or decrease of up to 50 percentage points based on our TSR performance ranking relative to the TSRs from the grant date through the end of the performance period of the companies in the S&P 500 (the relative TSR modifier). The Compensation Committee

believes that the addition of these operating measures focuses our executives on the transformation of our business and our operating efficiency and profitability and addresses the challenges of a single performance metric for a full three-year period. Further, the Compensation Committee believes that retaining our relative TSR performance as a modifier supports the Compensation Committee’s goal of designing LTI equity awards that clearly tie to our market performance and aligns best with stockholder interests.

The total operating measures score and the relative TSR modifier result in a payout range of 0% to 200% of target awards granted, representing an increase of 50% in the maximum payout from our current program where 0% to 150% of target awards can be earned. The Compensation Committee considered the increase in the maximum number of units that can be earned to be appropriate because it aligned more closely to the opportunities available under the performance-based compensation programs of our peer group, and further encourages our executives to reach for the maximum goals. Consistent with our current design, in the event our absolute TSR is less than zero, the TSR modifier shall not add any percentage points notwithstanding our ranking, to limit rewards in a performance period in which we perform in-line with, or better than, the S&P 500 companies for the period but investors do not recognize growth in their investment in our stock.

2016-2018 Performance Period Performance Award Goal Design

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Restricted Stock Units

Time-vested RSUs comprise only 20% of our LTI equity award grants for NEOs. They result in one share of Common Stock being delivered on the vesting of each RSU and serve as an important and cost-effective retention tool because RSUs have intrinsic value on the grant date and going forward. Our annual RSU grants generally vest over four years in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date (instead of four equal annual installments commencing on the first anniversary of the grant date). This delayed vesting schedule further emphasizes the long-term performance focus of our LTI equity award program and enhances the retention of staff members.

Dividend Equivalents

RSUs and performance units have dividend equivalent rights. Such dividend equivalents are payable only when, and to the extent, such awards are earned and converted to shares of Common Stock. The dividend equivalents may be paid in stock (with cash paid for fractional shares) or in cash.

Long-Term Incentive Equity Awards Granted to Named Executive Officers in 2016

In its annual review of our LTI equity award practices, the Compensation Committee reviewed our LTI equity award mix with Cook & Co. Based on the Compensation Committee’s interest in aligning long-term executive compensation with stockholder interests through a balanced equity program, the Compensation Committee determined to re-introduce non-qualified stock options (stock options) into our LTI equity award mix at executive levels in 2016. The introduction of stock options, in addition to the new 2016-2018 performance period performance award goal design previously described, results in a diversified mix of performance-based equity measured on strategic operating goals and both relative and absolute TSR. The Compensation Committee believes that stock options are an important addition to available forms of performance-based LTI equity awards given the direct link between the value of stock price appreciation to our stockholders and the compensation value delivered by stock option awards to our executives. In making its determination to re-introduce stock options, the Compensation Committee also considered that six of our 15 peer group members (five of nine U.S.-based peer group members) offer stock option

awards, and concluded that the re-introduction of stock options was a competitive practice within our peer group.

On a value basis, in 2016 our performance-based LTI equity awards will comprise performance units (50%) and stock options (30%). Thus, performance-based LTI equity awards will remain at 80% of the annual equity award value and time-vested RSUs will continue to make up the remaining 20% of value. The Compensation Committee believes that this equity award mix presents a balanced approach to LTI equity award grants for executives of the Company and is appropriately aligned with stockholder interests and pay for performance. The Compensation Committee continued to align the value of the LTI equity awards granted in 2016 to approximate the 2015 Market Median, with the result that the 2016 grant value for our CEO was slightly above 2015 Market Median (3.5%) and the remaining NEOs grant values were slightly less than 2015 Market Median (from 0.4% to 7.1%).

Minimum Vesting Period of One Year

Mindful of stockholder concerns and best practices, we have amended our equity incentive plan to reflect our actual practices and to provide that 95% of all equity awards, including RSUs, restricted stock and stock options, granted to staff members (including NEOs) will be subject to a minimum vesting period of no less than one year.

Annual Cash Incentive Awards

Annual cash incentive awards to our NEOs are generally made under our stockholder-approved EIP, which employs a stockholder-approved formula that establishes a maximum award possible for each participant based on our adjusted net income. Our EIP is an umbrella plan intended to satisfy the performance-based requirements of Section 162(m) of the Internal Revenue Code. This year, and in the past, actual awards under the EIP are determined by the Compensation Committee using their negative discretion under the EIP, generally employing the pre-established Company performance goals under our GMIP. This approach is not purely formulaic, as the Compensation Committee also considers the contributions of each participant’s role to our success during the performance period. The majority of our staff members participate in our GMIP or our Global Performance Incentive Plan, or GPIP, an annual cash incentive award program also based on our pre-established GMIP Company performance goals.

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No later than the first 90 days of the calendar year, the Compensation Committee determines the EIP participants, the EIP definition of adjusted net income, the maximum award payable to each participant under the EIP, the target annual cash incentive award opportunities under the EIP as a percentage of base salary, the GMIP Company performance goals and the weightings and percentages payable for threshold, target and maximum performance under the GMIP.

For 2015, Messrs. Bradway, Hooper, Meline and Dr. Harper were each a participant in the EIP and the maximum award for each participant under the EIP continued to be based on a percentage of our adjusted net income, as defined in the EIP(1) (0.125% for our CEO and 0.075% for each of the Executive Vice President NEOs). In 2015, Mr. Graham was a participant in the GMIP because he was not an employee at the time participants in the EIP were determined. Historically, and in 2015, the Compensation Committee has paid well below the maximum award permitted under the EIP. In 2015, the Compensation Committee continued its practice of exercising negative discretion from the calculated EIP maximum award payable to each individual by using the GMIP Company performance goals score as applied to the participant’s target annual cash incentive award opportunity in making its determination of the actual award amount paid. Annual cash incentive awards are paid in March of the year following the annual performance period and certification of the resulting payouts by the Compensation Committee.

The target annual cash incentive award opportunity for 2015 for Mr. Bradway was 140%, and for each Executive Vice President was 90%, of base salary. The target annual cash incentive award opportunity for Mr. Bradway was increased for 2015 from 130% to 140% as Mr. Bradway’s 2014 target total annual cash compensation approximated the 25th percentile of our peer group and the Compensation Committee wanted his target total annual cash compensation to more closely align with the 50th percentile of our peer group, while continuing to emphasize compensation that is at risk and performance-based. With this increase to Mr. Bradway’s target annual cash incentive award opportunity, such opportunity for Mr. Bradway and each

Executive Vice President aligns us competitively with the 2014 Market Median. Mr. Graham’s target annual cash incentive award opportunity was set upon his hiring at 80% of base salary, consistent with the target percentage we have maintained for this position and aligned with the 50th percentile for this role based on the 2014 Towers Survey. To induce Mr. Graham to accept employment with us, and given his July start date, Mr. Graham’s new hire package included a guaranteed minimum equivalent to a GMIP Company performance goals composite score of 130% (which minimum score was exceeded given the actual Company performance goals composite score of 176.1% for 2015).

2015 GMIP Company Performance Goals

The GMIP Company performance goal categories approved by the Compensation Committee for 2015 were “Deliver Results” (70% weighting) and “Progress Innovative Pipeline” (30% weighting). These goal categories were selected to retain the emphasis on financial performance (60%), while focusing the remaining goals on other factors that are relevant to the Company’s strategy and critical to our near- and longer-term clinical and commercialization success. While all of the goals measure single-year performance, taken as a whole, they are intended to positively position us for both near- and longer-term success:

The 2015 “Deliver Results” goals (70%) comprise “Revenues” (30%), “Adjusted Net Income” (30%) and “Execute New Product/Delivery System Launches” (10%).

“Revenues” and “Adjusted Net Income” are equally focused on top- and bottom-line growth and were assigned the largest weighting of 30% each, consistent with the fundamental importance of financial performance to us and our stockholders over the longer-term.

“Execute New Product/Delivery System Launches” was assigned 10%. We executed on the launches of six innovative products in the oncology and cardiovascular disease therapeutic areas.

(1)

For 2015, adjusted net income for purposes of the EIP was defined as net income determined under U.S. generally accepted accounting principles, adjusted for the following, net of tax: the adverse impact of changes in accounting principles; expenses and related costs incurred in connection with business combinations; losses and related costs incurred with respect to litigation, arbitration, investigations and legal and contractual settlements; losses or benefits on non-routine settlements with tax authorities; expenses incurred in connection with restructurings and related actions; asset impairment charges, inventory write-offs; adverse impact of changes in tax law, costs arising from a natural disaster and the impact of discontinued operations.

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“Progress Innovative Pipeline” goals (30%) comprise “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%) and measured progress on both early- and later-stage product candidates to focus us on executing key clinical studies and delivering a robust product pipeline at all stages of the development continuum, which we believe is critical to our continued success over both the near- and longer-term. We executed clinical studies for Repatha®, Kyprolis®, AMG 334, Romosozumab, and IMLYGIC®, among others, and submitted regulatory filings, including those for Repatha®, Kyprolis®, Corlanor®, ABP 501 biosimilar adalimumab (Humira®), IMLYGIC® and Parsabiv™.

All of these goals are intended to create stockholder value in the near- and longer-term. There are no payouts for below-threshold performance on the two financial metrics. Measurements of performance for the non-financial primary metrics, which are often expressed in milestones, are more subjective in nature than are the financial metrics and could result in a very small payout percentage (less than 1% of annual cash compensation). Maximum performance under each metric results in earning 225% of target annual cash incentive award opportunity for that metric.

2015 GMIP Company Performance Goals and Results

The table below illustrates the weighting of each goal, the goals established and our actual performance for 2015:

Deliver Results (70% weighting)Achieved 113.8%
Financial Goals (60%)ThresholdTargetMaximumAchieved

Revenues (30%)

$19,750 million$21,110 million$22,775 million

$21,662 million

135.1%


Adjusted Net Income(1) (30%)

$6,600 million$7,180 million$7,900 million

$7,868 million

218.3%


Execute New Product/

Delivery System Launches Goals (10%)

Results

Achieved

  Repatha®77.5%

  Corlanor®

  BLINCYTO®

  Neulasta® Onpro™ Kit

Progress Innovative Pipeline (30% weighting)Achieved 62.3%
GoalsResultsAchieved

Execute Key Clinical Studies and Regulatory Filings (20%)

  Executed clinical studies for Repatha®, AMG 334, Romosozumab, IMLYGIC®, Omecamtiv mecarbil, and Kyprolis®

199.0%

  Completed regulatory filings for Kyprolis®, Repatha®, ABP 501 biosimilar adalimumab (Humira®), Parsabiv™, Corlanor®, IMLYGIC®

Advance Early Pipeline (10%)

  Generated new product strategy teams, initiated first-in-human studies, and advanced programs through the early-to-late stage portal

225.0%

2015 GMIP Company Performance Goals Composite ScoreAchieved 176.1%
(1)

Adjusted net income for purposes of the GMIP is adjusted net income as we reported in our Form 8-K dated as of January 28, 2016, excluding the benefit of the reinstated federal Research and Development tax credit.

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2015 Annual Cash Incentive Awards

UseAs shown in the table above, our performance against the 2015 GMIP Company performance goals yielded a composite score of Independent Compensation Committee Consultant

To assist176.1% and the Compensation Committee awarded actual annual cash incentive awards under the EIP to our NEOs, other than Mr. Graham, based on this composite score. No further discretion was employed.

Named Executive Officer  Target 2015
Award($)(1)
  Actual 2015
Award($)
 

 

Robert A. Bradway

 

  

 

 

 

 

2,180,769

 

 

  

 

 

 

 

 

 

3,841,000

 

 

  

 

 

Anthony C. Hooper

 

  

 

 

 

 

936,298

 

 

  

 

 

 

 

 

 

1,649,000

 

 

  

 

 

David W. Meline

 

  

 

 

 

 

841,169

 

 

  

 

 

 

 

 

 

1,482,000

 

 

  

 

 

Sean E. Harper

 

  

 

 

 

 

837,883

 

 

  

 

 

 

 

 

 

1,476,000

 

 

  

 

 

Jonathan P. Graham(2)

 

  

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

579,000

 

 

  

 

(1)

Calculated in accordance with GMIP.

(2)

Because Mr. Graham commenced employment with us in July 2015, he was not eligible to participate in the EIP. Mr. Graham received his 2015 eligible award under the GMIP based on the actual GMIP Company performance goals composite score. As part of Mr. Graham’s offer letter, we guaranteed a minimum payout based on a GMIP Company performance goals composite score of 130% for his 2015 GMIP award, which would have resulted in a minimum award for 2015 of $427,203.

Mr. Meline’s Vesting of Sign-On Bonus

To replace the pro-rata value of Mr. Meline’s 2014 bonus at his current employer, which was forfeited upon his leaving, and to induce Mr. Meline to accept the Company’s offer of employment and join the Company in its review2014, Mr. Meline received a sign-on bonus of $2,000,000 (50% vested on August 21, 2014 and determinationthe other 50% vested on July 21, 2015).

Mr. Graham’s Sign-On Bonus

To replace the pro-rata value of executive compensation,Mr. Graham’s 2015 bonus at his current employer, which was forfeited upon his leaving, and to induce Mr. Graham to accept the Company’s offer of employment and join the Company in July 2015, Mr. Graham received a sign-on bonus of $2,000,000 (50% was paid as an advance by August 13, 2015, and the other 50% will be paid by July 13, 2016, subject to continued service with us on that date). Mr. Graham will be required to repay the advance if he resigns his employment within two years.

2016 GMIP Company Performance Goals

In March 2016, the Compensation Committee retainedestablished GMIP Company performance goal categories for 2016 performance. While the overall goal categories remained the same as our 2015 Company performance goal categories (“Deliver Results” (70%) (which comprise “Revenues” (30%),

“Adjusted Net Income” (30%) and sought advice from Frederic W.“Execute Product/Delivery System Launches” (10%) goals) and “Progress Innovative Pipeline” (which comprise “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%) goals), the metrics and measures of the goals underlying the goal categories were progressed to reflect key focus areas for 2016. Based on Cook & Co., Inc., or Cook & Co., an independent consultant, throughout 2013’s recommendation and to date in 2014. George B. Paulin,align Mr. Bradway with the Chairman2015 Market Median, while continuing to emphasize compensation that is at risk and CEO of Cook & Co., worked directly withperformance-based, the Compensation Committee in the roles and undertaking the responsibilities described in the table above. In 2013, Cook & Co. also provided consultation regarding regulatory updates, selection of our peer group, market practices and recommendations for CEO compensation.

On a periodic basis, the Company purchases proprietary executive compensation survey data from Cook & Co. to inform the Compensation Committee’s decisions, but does not engage Cook & Co. for any other servicesapproved an increase to the Company. During 2013,target annual cash incentive award opportunity for 2016 for Mr. Bradway to 150% of base salary (from 140%). For our Executive Vice Presidents, to also align with the Compensation Committee,2015 Market Median, while continuing to emphasize compensation that is at risk and performance-based and to continue to treat our Executive Vice Presidents as a team, each Executive Vice President target annual cash incentive award opportunity for 2016 was increased to 100% of base salary (from 90%). To maintain Mr. Graham’s target annual cash incentive award opportunity in past years, had responsibilityalignment with the 2015 Market Median for engaging Cook & Co. and directed the naturehis role, his target annual cash incentive award opportunity was unchanged at 80% of the communications and interchange of data between Cook & Co. and management.base salary for 2016.

Peer Group

The Compensation Committee recognizes the unique demands of our industry, including its complex regulatory and reimbursement environment, and the challenges of running an enterprise focused on the discovery, development, manufacture and commercialization of novelinnovative treatments to address serious illness. The Compensation Committee believes that these unique demands require executive talent withthat has significant industry experience as well as, for certain key functions, unique scientific expertise to oversee research and development activities and the complex manufacturing requirements for biologic products. Further, the Compensation Committee believes that these very specific skills and capabilities limit the pool of talent from which we can recruit and also cause our employees to be highly valued and sought after in our industry. This makes it imperative that our peer group for compensation purposes include those companies with which we compete for new executives given the similarities in experience and knowledge that are developed at these companies.

Moreover, as evidenced by

the fact that 1311 of the 15 companies in our peer group (ten(eight U.S.-based companies) also list us as a peer, we believe that our peer group accurately reflects those companies with whom we compete for executive talent. The Compensation Committee compares our pay levels and programs to the peer group and uses this comparative data as a reference point in its review and determination of executive compensation. OurThe Compensation Committee’s approach also considers our performance, the individual’s performance and other relevant factors in setting pay.

In July 2013,On an annual basis, Cook & Co. reviewed the executive compensationreviews our peer group with the Compensation Committee to determine whether it remainedremains appropriate. Based on recommendations from Cook & Co., the Compensation Committee used theThe following objective criteria are typically applied in selecting its peer group from the universe of other pharmaceutical and biotechnology companies:review:

 

GICS codes of biotechnology (352010) and pharmaceuticals (352020);

 

12-month average market capitalization between 0.25 and 4.0x that of Amgen’s average market capitalization for the same period;

 

trailing four-quarter revenuerevenues between 0.25 and 4.0x that of Amgen’s revenue;revenues;

 

non-U.S. peers limited to those commonly identified as a “peer of peers;”peers”;

 

competitors for executive talent;

 

companies of comparable scope and complexity;

 

competitors for equity investor capital;

 

companies that identify us as their direct peer; and

 

companies with similar pay practices.

Abbott Laboratories, a memberIn March 2015, Allergan, Inc. was acquired by Actavis plc and, following the acquisition of Allergan, Inc., Actavis plc changed its name to Allergan plc. In July 2015, the Compensation Committee completed its annual review of the peer group and discussed the replacement of Allergan, Inc. with Allergan plc. The Compensation Committee determined that, based in part on recommendations from Cook & Co., this merged entity also met the criteria outlined above and should be added to our peer group for 2015 to replace Allergan, Inc. Further, based in 2012, spun off its pharmaceutical business into a new company called AbbVie Inc. Subsequently, Abbott Laboratories no longer satisfied our established objective criteria and was replaced with AbbVie Inc. for 2013. Ourpart on recommendations from Cook & Co., the Compensation Committee determined that the remainder of the peer group continueswas appropriate and continued to have 15 companies and our relative size position was not impacted withmeet the replacementcriteria from the universe of Abbott Laboratories with AbbVie Inc.other

 

 

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biotechnology and pharmaceutical companies given that our relative size and positioning remains generally the same as the prior year.

As a result, the Compensation Committee replaced Allergan, Inc. with Allergan plc and no other changes were made to the

peer group in 2015. It is the Compensation Committee’s view that this peer group is the most appropriate for benchmarking executive compensation as these companies are generally those with which we most closely compete for executive talent.

20132015 Peer Group

 

 

 

   Abbott Laboratories/AbbVie Inc.(1)

 

   Allergan Inc.plc

 

   AstraZeneca PLCplc

 

   Biogen Idec Inc.

 

   Bristol-Myers Squibb Company

 

   Celgene Corporation

 

   Eli Lilly and Company

 

   Gilead Sciences, Inc.

 

   GlaxoSmithKline plc(2)(1)

 

   Johnson & Johnson

 

   Merck & Co., Inc.

 

   Novartis AG

 

   Pfizer Inc.

 

   Roche Holding AG(2)(1)

 

   Sanofi S.A. (formerly Sanofi-Aventis)(2)(1)

 

 

 

The market capitalization of our peer group ranged between $28.2$68 billion and $194.3$293 billion determined as of the last trading day of 20122014 as provided by Bloomberg L.P.ThomsonONE™. The 20122014 revenues of our peer group ranged between $5.5$7.7 billion and $67.2$74.3 billion based on public filings. Amgen’s 20122014 market capitalization and revenues were $66.1$121 billion and $17.3$20.1 billion, respectively. The median 20122014 market capitalization and revenues of our peer group (not including Amgen) was $58.9$104 billion and $28.0$26.1 billion, respectively.

Although our revenues are below We were between the median value50th and 75th percentile for the peer group, our market capitalization is aboveand between the median values25th and 50th percentile for therevenues relative to our peer group and it is the Compensation Committee’s view that this peer group is the most appropriate for benchmarking executive compensation as these companies are generally those with which we most closely compete for executive talent.group.

Peer Group Data

Our primary data sources for evaluating all elements of compensation for our CEO is data compiled by Cook & Co. from proxy statement and Form 8-K filings filed with the SEC for our peer group. For our other NEOs’ againstNEOs, our primary data sources for evaluating all elements of compensation are the peer group in March 2013 were the 2012 Towers Watson Pharmaceutical Human Resources Association, or PHRA, Executive Compensation Survey (the Towers Survey), and the available data from proxy statements filed in 2012 with the SEC for our peer group. The Towers Watson PHRA Executive

Compensation Survey contains compensation information from pharmaceutical companies in

our peer group, but does not contain information on many biotechnology companies. Therefore, compensation information for the biotechnology companies within our peer group is compiled using proxy statement filings to provide additional data and to inform the Compensation Committee. The Towers Watson PHRA Executive Compensation Survey data and the peer group proxy data is compiled and presented by management to the Compensation Committee both individually and in the aggregate, including the ranking of each NEO against those in similar positions and an analysis of each element of direct compensation at the median and 75th percentile of the peer group for each NEO position, other than Mr. Bradway, as our CEO.aggregate. For Mr. Bradway, Cook & Co. provides data to the Compensation Committee of the median and a range between the 25th percentile, 50th and 75th percentile of the specific compensation elements paid to CEOs in our peer group.

In the tables below, in general, the “Market Median” is derived by averaging the values of the 2012 Towers Survey 50th percentile and the 2012 peer group proxy statement 50th percentile, except for Mr. Bradway, as our CEO. The Market Median shown for Mr. Bradway is the medianpercentiles of the specific compensation elements paid to CEOs in our peer group as reported by(and 85th percentile specifically in connection with LTI equity awards). For each of the other NEOs, the comparison of each NEO on a position or pay rank basis and an analysis of each element of direct compensation at the 50th and 75th percentile of the peer group for each NEO position is presented to the Compensation Committee. In addition to the sources provided previously, for the determination of LTI equity awards, we also provided the Cook & Co. from proxy statement filings and Form 8-K filings. No market comparable data is available for Mr. Balachandran because his position as Executive Vice President, Operations had no comparable position included in the 2012 Towers Survey or peer group proxy statementof Long-Term Incentives (Cook & Co. Survey).

 

 

(1)

Abbott Laboratories was used for purposes of setting 2013 total cash compensation for our NEOs. For purposes of the 2011-2013 performance award program, Abbott Laboratories and a weighted TSR for Abbott Laboratories and AbbVie starting on January 1, 2013 was used. This is described under “Long-Term Incentive Equity Awards–Performance Award Program–Performance Units Earned for the Performance Period Ending in 2013.”

(2) 

Revenues for GlaxoSmithKline plc, Roche Holding AG and Sanofi S.A. were converted into U.S. dollars using the average of daily exchange rates for 20122014 as provided by Bloomberg L.P.

 

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filings. We believeThe “Market Median” shown for Mr. Balachandran’s position is unique in that it includes global oversightBradway was the 50th percentile of the Company’s manufacturing operations, quality, product and process engineering, and capital projects. As such, this position is not fully represented in either the 2012 Towers Survey or proxy statement data because our peer group companies do not have individuals in similar positions. In addition, Mr. Hooper’s

position is not well-represented in either the 2012 Towers Survey or proxy statements of each companyspecific compensation elements paid to CEOs in our peer group, as compiled by Cook & Co. from proxy statement filings and accordingly,Form 8-K filings. The “Market Median” for the other NEOs is derived by averaging the values of the Towers Watson PHRA Executive Compensation Survey 50th percentile and the peer group proxy statement 50th percentile. For 2015 compensation decisions considered in March 2015, the 2014 Market Median was derived by averaging the 2014 Towers Watson PHRA Executive Compensation Survey (the 2014 Towers Survey) and 2014

proxy statement filings with the SEC. For 2016 compensation decisions considered in March 2016, the 2015 Market Median was derived by averaging the 2015 Towers Watson PHRA Executive Compensation Survey (the 2015 Towers Survey) and 2015 proxy statement filings with the SEC. Because Towers Watson PHRA Executive Compensation Survey data is only available for the previous calendar year, base pay data is aged forward to the current year based on his current position as Executive Vice President, Global Commercial Operationsexpected salary movement, consistent with generally accepted practice. Target annual cash incentive award and pay ranking within our Company, Mr. Hooper is matched to the median of the second highest paid NEOs of each of the companies in our peer group.LTI equity award market data are not adjusted for aging.

 

Elements of Compensation and Specific Compensation Decisions

 

Described below are our three primary elements of executive compensation in order of magnitude and alignment with pay for performance: LTI equity awards; annual cash incentive awards and base salaries.

 

Long-Term Incentive Equity Awards

Our compensation program aims to achieve the appropriate balance of compensation relative to the responsibilities of our staff members, with the result that the largest proportion of the compensation plansprogram for our CEO and the other executive officersNEOs is in the form of LTI equity awards.awards that are risk-based and closely aligned with the creation of long-term stockholder value. Equity-based compensation represents 70%73% of our CEO’s target compensation and 66%64% of target compensation for our other NEOs. In addition, we also grant LTI equity awards each year to nearly all of our approximately 20,000 staff members worldwide.worldwide to increase individual awareness of how our performance impacts stockholder value.

Company Continues to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards

Our compensation philosophy, practices and approach continue to be effective in balancing the use of equity to align employees with our stockholders while being mindful of the level of dilution that our stockholders experience. LTI equity award grant guidelines are established for each job level within the Company targeting the 50th percentile of our peer group, except at lower levels in the organization where equity

participation is less prevalent. For certain lower job levels where data is not as comprehensive, we have developed guidelines that trend in line with available data and that consider internal equity. The Compensation Committee sets an LTI equity award budget that isapproximately at the 50th percentile or median, of our peer group by job level as available. The Compensation Committee periodically reviews the Shareholder Value Transfer (SVT) associated with the aggregate LTI equity award grants to ensure that our SVT is aligned with our peer group practice because, while the Compensation Committee supports a broad-based equity plan to align our staff members with our stockholders, itthe Compensation Committee also strives to limit the amount of stockholder dilution to that which would be expected to be experienced by stockholders of our peer group.group would expect to experience. The rates at which we grant LTI equity award grant guidelines for each job level withinawards and the Companyresulting potential dilutive effect are then set based onconsistent with our peer group and have decreased over the size of the annual total LTI equity award budget. last five years.

We believe that our capacity to grant equity-based compensation in this manner has been a significant factor in achieving our growthstrategic objectives by rewarding stock price appreciation and execution of our strategy and stock price appreciation, aligning our NEOs’ and our staff members’ interests with stockholders and fostering long-term focus and retention.

2013 Amendment and Restatement of Our Long-Term Incentive Equity Award Plan

To maintain the Section 162(m) of the Internal Revenue Code, or Section 162(m), qualification of our LTI equity award plan to preserve federal tax deductibility of future awards through 2018, we asked our stockholders to approve an amendment and restatement of our LTI equity award plan at our 2013 annual meeting of stockholders. Given that we were seeking such approval and to be efficient in our plan

management, we also chose to use this opportunity to request stockholder approval of an increase in the number of shares authorized for grant under this plan as well as amendments to this plan to clarify certain areas including:

Ensuring that dividends and dividend equivalents payable in connection with performance-based awards will only be paid to the extent that the performance-based vesting conditions are satisfied and the underlying shares are earned and vest;

Narrowing performance criteria that may be used to award “performance-based compensation” under Section 162(m) to better target such criteria to our current and future strategic priorities; and

Expanding the clawback rights of the existing plan to expressly include the future requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Our stockholders granted all approvals sought for our amended and restated LTI equity award plan.

Company Continues to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards

The additional number of shares authorized for grant under our amended and restated LTI equity award plan has not resulted in a change in our compensation philosophy and has not changed our practices or approach to the grant of LTI equity awards to our employees. We have worked to appropriately balance the use of equity as an effective tool to align employees with our stockholders while being mindful of the level of dilution that our stockholders experience. The rates at which we grant LTI equity awards and its potential dilutive effect is consistent with our peer group levels and has decreased over the last four years. In making LTI equity award grants, the Compensation Committee

 

 

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considers our historical burn rates and the dilutive effect of our LTI equity award practices internally and as benchmarked against our peer group.

Long-Term Incentive Equity Award Composition

LTI equity awards granted to our NEOs in 2013 were2015 consisted of 80% performance units and 20% RSUs.

 

LOGOLOGO

This allocation results in the greater percentagesubstantial majority of equity compensation being earned under our performance units based solely on our performance achieved.achieved objective performance. We believe it is important to maintain a relatively small percentage of equity awards in the form of RSUs to provide retention incentives. This composition of LTI equity awards also facilitates a more efficient use of the shares available under our LTI equity award plan and minimizes dilution as fewer shares are used when granting performance units and RSUs in comparison to stock options.incentivize retention. Performance units are generally earned at the end of the three-year performance period based on(generally three years) to the extent to which the performance goals for the applicable period are met. Our

time-vested RSUs generally vest over four years, with no vesting in the first year and vesting in approximately three approximately equal annual installments on the second, third and fourth anniversaries of the grant date.date (instead of four equal annual installments commencing on the first anniversary of the grant date). This delay in the commencement of RSU vesting further emphasizes the long-term performance focus of our LTI equity award program and enhances retention.

Value of Long-Term Incentive Equity Awards Granted to Named Executive Officers in 20132015

To determine 2013In December 2014, the Compensation Committee considered executive LTI equity award compensation,grants for 2015. In its review, the Compensation Committee comparedconsidered a range between the proposed value25th and 85th percentile of the 2013 annual LTI equitypeer group for the CEO and, for proposed awards to NEOs other than the CEO, the Compensation Committee considered the recommendations

of our CEO and analyzed the 50th and 75th percentile of the peer group for each available NEO to the Market Median (as more specifically described above under “Peer Group Data”).position. The Compensation Committee also took into account the Company’s andperformance, the individual’s performance into accountin their role and historical grant levels when determining individual grants.

In December 2014, the Compensation Committee awarded Mr. Bradway a 2015 LTI equity award grant valued at $10.2 million, which is approximately 13% higher than 2014, to maintain median positioning against the 2014 Market Median (as the 2014 LTI equity award median for the CEO position increased over the prior year), while continuing to provide long-term performance incentives and at-risk compensation that aligns with stockholder interests. The 2014 Market Median reviewed in December 2014 supported greater differentiation of LTI equity grant values among Executive Vice President roles and, in contrast to prior years, provided market data that was more representative of Mr. Hooper’s position. In reviewing the 2014 Market Median data, the Compensation Committee noted the difference in LTI equity award median values between that of the Executive Vice President, Global Commercial Operations role compared to that of the Chief Financial Officer and Executive Vice President, Research and Development roles. As a result, the Compensation Committee approved a higher grant value for Mr. Hooper of $3.5 million that was matched to the 2014 Market Median for his role of Executive Vice President, Global Commercial Operations. The Compensation Committee determined that giventhis increase of approximately 16.7% was appropriate, not only because of its 2014 Market Median competitiveness, but also because of the general proximityscope and span of competitive market values for each position,Mr. Hooper’s responsibility and the same equity award grant value should be awardedlevel of importance of his role to each NEO at the Executive Vice President level.Company. The Compensation Committee believes that, givenapproved a $3 million grant value for Dr. Harper and Mr. Meline which approximates the changes2014 Market Median for each role and takes into account the similar strategic impact of their roles to the executive management team in 2012, internal parity among the NEO groupCompany. Mr. Graham commenced employment with us effective July 13, 2015 and was not an employee at the same level is valuable to incent a united and cohesive team and prioritized such alignment over solely benchmarking totime that the Market Median. The Compensation Committee awarded Mr. Bradway anannual LTI equity award grant valued at the Market Median compared to CEOs in our peer group.awards were determined.

 

 

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2015 Annual Long-Term Incentive Equity Awards

Given the design of our performance award program, there is no guarantee of any value realized from grants of performance units as they are dependent on our relative TSR. The Compensation Committee granteddetermined to grant the following LTI equity awards to our CEO and the other NEOs in December 2012,2014, with an effective grant date of January 2013.30, 2015, the third business day after the announcement of our earnings results. The 2015-2017 performance period runs from January 30, 2015 through January 30, 2018. The Compensation Committee approved the aggregate grant value, with the exact number of performance units and RSUs determined based on the fair value of such awards in the 80% performance units/20% RSUs proportion on the grant date. For more information regarding the determination of the 2014 Market Median, and the peer group data reviewed, see “Peer“How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data” above.Data” previously discussed.

 

Named Executive Officer  Performance
Units
($)
   Restricted
Stock
Units
($)
   Total Equity
Value
Granted
($)
   Market
Median
($)
   Difference vs.
Market Median
Over/ (Under)
(%)
   

Performance
Units

($)

   

Restricted
Stock
Units

($)

   

Total Equity
Value
Granted

($)

   

2014

Market
Median

($)

   Difference vs.
Market Median
Over/ (Under)
(%)
 

Robert A. Bradway

   6,400,000     1,600,000     8,000,000     8,027,000     (0.3  

 

 

 

 

8,160,000

 

 

  

 

  

 

 

 

 

2,040,000

 

 

  

 

  

 

 

 

 

10,200,000

 

 

  

 

  

 

 

 

 

10,235,000

 

 

  

 

  

 

 

 

 

(0.3

 

 

 

Anthony C. Hooper(1)

   2,560,000     640,000     3,200,000     3,712,000     (13.8  

 

 

 

 

2,800,000

 

 

  

 

  

 

 

 

 

700,000

 

 

  

 

  

 

 

 

 

3,500,000

 

 

  

 

  

 

 

 

 

3,574,394

 

 

  

 

  

 

 

 

 

(2.1

 

 

 

Jonathan M. Peacock

   2,560,000     640,000     3,200,000     3,156,000     1.4  

David W. Meline

  

 

 

 

 

2,400,000

 

 

  

 

  

 

 

 

 

600,000

 

 

  

 

  

 

 

 

 

3,000,000

 

 

  

 

  

 

 

 

 

2,971,892

 

 

  

 

  

 

 

 

 

0.9

 

 

  

 

Sean E. Harper

   2,560,000     640,000     3,200,000     3,236,000     (1.1  

 

 

 

 

2,400,000

 

 

  

 

  

 

 

 

 

600,000

 

 

  

 

  

 

 

 

 

3,000,000

 

 

  

 

  

 

 

 

 

2,921,167

 

 

  

 

  

 

 

 

 

2.7

 

 

  

 

Madhavan Balachandran(2)

   2,560,000     640,000     3,200,000     n/a     n/a  

Jonathan P. Graham(1)

  

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

(1)

See “Peer Group Data” above forMr. Graham commenced employment with the Company effective July 13, 2015 and was not an employee at the time that the annual LTI equity awards were determined. For a discussion regarding the market data for Mr. Hooper.

(2)

See “Peer Group Data” above for a discussion regarding the market data for Mr. Balachandran. In lightdescription of the lack of comparable data, it was considered appropriate to set Mr. Balachandran’snew hire LTI equity award level atawards granted to Mr. Graham in 2015 in connection with the same level ascommencement of his employment, see the other Executive Vice Presidents because of the similar scope of the Company’s Executive Vice Presidents’ leadership responsibilities.subsection “Mr. Graham’s New Hire Equity Grant” below.

 

48    LOGOï 2014 Proxy StatementMr. Graham’s New Hire Equity Grant


 COMPENSATION DISCUSSION AND ANALYSIS  
Mr. Graham was appointed to serve as our General Counsel and Secretary, effective July 13, 2015. In connection with his hiring, Mr. Graham received an RSU grant with a value of $8,600,000, largely to compensate Mr. Graham for equity forfeited as a result of leaving his previous employer, as well as to provide LTI equity awards that are in alignment with our stockholder interests and, to a lesser extent, to induce him to join us. To better align with the value forfeited by Mr. Graham, these new hire grant RSUs vest in equal 25% installments on each of the first four anniversaries of the grant date, subject to continued service with us.

Performance Units

The Compensation Committee grants performance units to tie actual compensation earned from LTI equity awards directly to our long-term performance. Performance units are rights to earn shares of our Common Stock, based on pre-established performance goals achieved over a performance period, generally three years. The number of performance units earned is determined by our performance as measured against the pre-established performance goals at the end of

the related performance period. Each performance unit earned entitles the participant to one share of the Company’sour Common Stock. Performance units granted to our NEOs in 20132015 represented 80% in value of their total LTI equity awards, ensuring that a significant proportion of equity compensation is earned based on the performance achieved by the Company.

Performance Award Program—Performance Units Awarded in 2013Earned for the 2013-2015 Performance Period

The Compensation Committee regularly reviews and updates the performance award goal design with input from management and Cook & Co. This is to ensure that the performance award program continues to align with the interests of our stockholders. In December 2012, after review of the recommendations by Cook & Co., the Compensation Committee approved a performance goal calculationPerformance units for the 2013-2015 performance period, based onwhich ended January 28, 2016, were earned, certified and converted into shares of Common Stock in March 2016, calculated as set forth below using a payout percentage of 150% which is the relative ranking ofTSR multiplier resulting from the Company’s three-year TSR results againstof 89.9% with a 85.5 percentile ranking relative to the three-year TSR resultsTSRs of the companies listed in the S&P 500 as of the grant date to allow comparison to broader marketbeginning of the performance and a more realistic depictionperiod (January 28, 2013). The number of our stockholders’ investment opportunities. For performance units granted in prior years, our relative TSR has been measured againstearned for performance at or above the average TSR of a comparator group generally based on our peer group companies as of the year of grant. We believe that the design change to use the S&P 500 as opposed to our comparator group:

Allows a comparison to broader market performance indicators which is a more realistic representation of our stockholders’ investment opportunities;

Addresses the challenges of using a single performance metric (TSR) against a small comparator group; and

Tests our performance against our competition for equity investor capital (versus our labor market competition).

The target payout of 100% of the units granted requires our TSR to rank at the 50th percentile, maximum payout of 150% is based on 75th percentile ranking or above, 50% payout is based

on 25th percentile ranking and 0% payout is based on bottom ranking, with linear interpolation between bottom ranking and 75th percentile ranking resulting in payouts ranging from 0% tocannot exceed 150% of the target units awards. Notwithstanding our ranking, however, in the event our absolute TSR is less than zero, the payout percentage shall not be greater than 100% to limit rewards in a performance period in which we perform in line with, or better than, the S&P 500 companies but investors do not recognize growth in their investments.

For example, assume that a participant in the 2013-2015 performance period grant has 1,500 target performance units and that at the end of the performance period, our TSR is at the 66.67th percentile of the TSRs of the S&P 500. The resulting payout percentage, applying the linear interpolation provisions, would be 133.3% of target. The participant would thus earn 1,999 performance units (or 1,999 shares of our Common Stock), equal to multiplying 1,500 performance units by the 133.3% payout percentage.

For 2013, the Compensation Committee moved up the grant date of LTI equity awards to our executive management (comprised of Senior Vice Presidents and above), including our NEOs, to the third business day after the announcement of our annual results in January (from after announcement of our first quarter results in April) and commenced the performance period on the grant date, instead of January 1. These changes reduce potential volatility of share price within the valuation model. Also, the stock price for TSR is determined using the 20 trading days starting on the grant date and the last 20 trading days of the performance period, which reduces the effect of random stock price volatility on a given day or over a shorter time period.

Performance Award Program—2014–2016 Performance Period

In December 2013, for the reasons discussed above, the Compensation Committee decided to retain the design of the performance goals for the performance units granted for the 2014-2016 performance period.

Performance Award Program—Performance Units Earned for the Performance Period Ending in 2013

Performance units for the 2011-2013 performance period were paid in March 2014, calculated using a payout percentage that is based upon our three-year TSR comparedgranted.

 

 

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   COMPENSATION DISCUSSION AND ANALYSIS  

2013-2015 Performance Period Program Design

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Payout Calculation for the 2013-2015 Performance Period

LOGO

2013-2015 Performance Period Performance Units Earned

Our actual performance results (the 85.5 percentile, or above the 75th percentile) for the 2013-2015 performance period that ended January 28, 2016 resulted in the following number of shares of Common Stock being earned under our performance award program for this performance period. Each earned performance unit converts to one share of Common Stock upon the payout date.

Named Executive Officer  

Performance Units
Value
Granted (Target)

($)

  

Number of
Performance
Units Granted

(#)

  

Number of
Shares
of our Common
Stock Earned(1)

(#)

 

 

Robert A. Bradway

 

  

 

 

 

 

6,400,000

 

 

  

 

 

 

 

 

 

71,309

 

 

  

 

 

 

 

 

 

106,963

 

 

  

 

 

Anthony C. Hooper

 

  

 

 

 

 

2,560,000

 

 

  

 

 

 

 

 

 

28,523

 

 

  

 

 

 

 

 

 

42,784

 

 

  

 

 

David W. Meline

 

  

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

 

Sean E. Harper

 

  

 

 

 

 

2,560,000

 

 

  

 

 

 

 

 

 

28,523

 

 

  

 

 

 

 

 

 

42,784

 

 

  

 

 

Jonathan P. Graham

 

  

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

    

 

 

(2) 

 

(1)

Excludes dividend equivalents earned on these amounts. The value of performance units earned was not determinable as of the date this proxy statement went to print.

(2)

Messrs. Meline and Graham commenced employment with the Company after the participants for the 2013-2015 performance period had been determined and, as such, they did not receive any performance units for the 2013-2015 performance period.

56    LOGOï 2016 Proxy Statement


      COMPENSATION DISCUSSION AND ANALYSIS  

 

Performance Award Program—Performance Units Granted in 2015 for the 2015-2017 Performance Period

To ensure that the performance award program continues to strongly align with the averageinterests of our stockholders, the Compensation Committee regularly reviews and considers whether to update the performance award goal design with input from management and Cook & Co. Based on such review, in December 2014, the Compensation Committee approved a performance goal design for the 2015-2017 performance period substantially identical to that of the previous two years’ performance awards (i.e., for the 2013-2015 and 2014-2016 performance periods) based on the

relative ranking of the Company’s three-year TSRsTSR results against the three-year TSR results of the companies in the S&P 500 as of the beginning of the performance period (January 30, 2015). The continued use of this design was based on the belief that a comparison to the S&P 500 companies:

Allows a comparison to a broader market performance indicator, and a realistic representation of our stockholders’ investment opportunities;

Addresses the challenges of using a single performance metric (TSR) with a broader comparator groupgroup; and

Tests our performance against our competition for thisequity investor capital.

2015-2017 Performance Period Performance Award Goal Design

LOGO

As depicted above, maximum payout of 150% is based on a 75th percentile ranking or above, the target payout of 100% of the units granted requires our TSR to rank at the 50th percentile, 50% payout is based on the 25th percentile ranking and 0% payout is based on a bottom ranking, with linear interpolation between the bottom ranking and the 75th percentile ranking (resulting in payouts ranging from 0% to 150% of the target performance units granted). In no event will the maximum payout exceed 150%. Further, in the event our absolute TSR is less than zero, the payout percentage will not be greater than 100%, notwithstanding our ranking, to limit rewards in a performance period in which we perform in-line with, or better than, the S&P 500 companies for the period, but investors do not recognize growth in their investment in our Company.

The grant date of LTI equity awards is generally the third business day after the announcement of earnings results and, for the 2015-2017 performance period, the performance period commences on the grant date. Thus, the

2015-2017 performance units were granted on January 30, 2015, subsequent to our fourth quarter 2014 earnings announcement. The stock prices for TSR measurements is determined using the average daily closing price for the 20 trading days starting on the grant date and the last 20 trading days of the performance period. The comparator group was

Change to Performance Award Program— 2016–2018 Performance Period

As part of its regular review and consideration of the performance award goal design of our performance award program, the Compensation Committee evaluated potential design options for the performance award goals for the 2016-2018 performance period (January 1, 2016 to December 31, 2018) and reviewed the performance award goal designs of members of our peer group at the time the performance goals were set in 2011. However, as previously discussed, as a result of the Abbott Laboratories spin-off, in compliance with pre-established performance goalsinput from management and

Section 162(m), AbbVie Inc. replaced Abbott Laboratories on a go-forward basis. Cook & Co. The Compensation Committee determined that we would use Abbott Laboratories TSR beforeconstructed the spin-off and a weighted TSR of 47.85% Abbott Laboratories and 52.15% AbbVie Inc. starting January 1, 2013, the effective date of the spin-off.2016-2018 performance period performance

 

 

2011-2013 Performance Award Program Results

The performance results and performance units earned for our 2011-2013 performance period are as follows:

Payout Percentage:

100%

+2 X(Amgen TSR (114.41%)  –  Peer Group Average TSR (103.05%)) = 122.7%

Payout Calculation for the 2011-2013 Performance Period:

Performance Units Earned

=Performance Units GrantedXPayout Percentage = 122.7%

2011-2013 Performance Award Program Payouts

Our actual performance results for the performance periods that ended in 2013 resulted in the following Common Stock being earned under our performance award program:

Named Executive Officer  Number of Units
Granted (Target)
   Number of Shares
of our Common
Stock Earned(2)
 

Robert A. Bradway

   42,000     51,534  

Anthony C. Hooper(1)

   35,185     52,777  

Jonathan M. Peacock

   31,500     38,650  

Sean E. Harper

   12,000     14,724  

Madhavan Balachandran

   9,000     11,043  
(1)

Mr. Hooper commenced employment with the Company after the participants for the 2011-2013 performance period had been determined. Mr. Hooper’s performance units were based solely upon our TSR performance as compared with the average of the TSRs of our peer group during the performance period from Mr. Hooper’s hire date of October 27, 2011 through December 31, 2013. The goal design for these performance unit awards is identical to the 2011-2013 performance period awards, except that Allergan, Inc. and Celgene Corporation were added to the peer group used to calculate the payout, resulting in a 15-company peer group for these awards and a payout percentage of 150% of target for his performance award.

(2)

Performance units were paid in March 2014.

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      COMPENSATION DISCUSSION AND ANALYSIS  

 

Value of Long-Term Incentive Equity Awards Grantedaward goal design to Named Executive Officersadd annual operating performance metrics to drive operating performance in 2014

In December 2013, the Compensation Committee considered executive LTI equityalignment with our 2018 operating performance commitments to our investors and to better harmonize our performance award grants for 2014. To determine 2014 executive LTI equity award grant compensation, the Compensation Committee compared the valuegoal design with that of the 2014 annual LTI equity awards for each NEO being recommended by management to the 50th and 75th percentilepractices of thea number of companies in our peer group for each NEO position (as more specifically described above under “Peer Group Data”).group. The Compensation Committee also tookretained our relative TSR performance against the Company’s andTSRs of the individual’scompanies in the S&P 500 for this performance into account when determining individual grants. In reviewingperiod as a modifier, consistent with the peer group market data, the

current performance period award goal design. The Compensation Committee notedselected the differencethree annual operating measures, composed of (i) adjusted earnings per share growth, (ii) adjusted operating margin and (iii) adjusted operating expense, weighted equally (one-third per measure) and each measured against targets for every year in LTI equity award value between the equivalent of our Executive Vice President roles. As a result,2016-2018 performance period; all such targets were set when the Compensation Committee approved different grant valuesthe performance award grants for Mr. Hooper and Dr. Harper than grantedsuch period. The three annual operating performance measure percentages are averaged resulting in a final annual operating performance percentage that can range from 50% to Mr. Balachandran because Mr. Hooper and Dr. Harper150% for maximum performance. At the end of the performance period, the final annual operating performance percentages for all three years are viewed as having comparable jobs whereas, for Mr. Balachandran, it was feltaveraged, resulting in a total operating measures score that he was better benchmarkedis then modified by an increase or decrease of up to 50 percentage points based on our TSR performance ranking relative to the Chief Financial Officer data, which was lower thanTSRs from the averagegrant date through the end of the performance period of the companies in the S&P 500 (the relative TSR modifier). The Compensation Committee

believes that the addition of these operating measures focuses our executives on the transformation of our business and our operating efficiency and profitability and addresses the challenges of a single performance metric for a full three-year period. Further, the Compensation Committee believes that retaining our relative TSR performance as a modifier supports the Compensation Committee’s goal of designing LTI equity awards that clearly tie to our market data for Mr. Hooperperformance and Dr. Harper.aligns best with stockholder interests.

The total operating measures score and the relative TSR modifier result in a payout range of 0% to 200% of target awards granted, representing an increase of 50% in the maximum payout from our current program where 0% to 150% of target awards can be earned. The Compensation Committee awarded Mr. Bradwayconsidered the increase in the maximum number of units that can be earned to be appropriate because it aligned more closely to the opportunities available under the performance-based compensation programs of our peer group, and further encourages our executives to reach for the maximum goals. Consistent with our current design, in the event our absolute TSR is less than zero, the TSR modifier shall not add any percentage points notwithstanding our ranking, to limit rewards in a LTI equity award grant valued approximately atperformance period in which we perform in-line with, or better than, the Market Median compared to CEOsS&P 500 companies for the period but investors do not recognize growth in their investment in our peer group.stock.

 

2014 Long-Term Incentive Equity2016-2018 Performance Period Performance Award GrantsGoal Design

The Compensation Committee approved the following LTI equity awards to our CEO and the other NEOs in December 2013 for grant in January 2014. For more information regarding the determination of Market Median and the peer group data reviewed, see “Peer Group Data” above.

 

Named Executive Officer(1)  Performance
Units
($)
   Restricted
Stock
Units
($)
   Total Equity
Value
Granted
($)
   Market Median
($)
   Difference vs.
Market
Median
Over/
(Under)
(%)
 

Robert A. Bradway

   7,200,000     1,800,000     9,000,000     8,875,000     1.4  

Anthony C. Hooper(2)

   2,400,000     600,000     3,000,000     3,754,503     (20.1

Sean E. Harper

   2,400,000     600,000     3,000,000     2,756,373     8.8  

Madhavan Balachandran(3)

   2,240,000     560,000     2,800,000     n/a     n/a  
(1)

Mr. Peacock ceased service as our Chief Financial Officer as of January 10, 2014 and is no longer an executive officer. The approval of the LTI equity awards allocated to Mr. Peacock in December 2013 in consideration and in anticipation of his continuing service as Chief Financial Officer was nullified by Mr. Peacock’s resignation from that role on January 10, 2014 such that no grant was made to Mr. Peacock in 2014.

LOGO

(2)

See “Peer Group Data” above for a discussion regarding the market data for Mr. Hooper.

(3)

See “Peer Group Data” above for a discussion regarding the market data for Mr. Balachandran. In light of the lack of comparable data, it was considered appropriate to set Mr. Balachandran’s LTI equity award level at the same level as that of the Chief Financial Officer role because of the similar scope of their leadership responsibilities. The Market Median for the Chief Financial Officer role was $2,839,588.

 

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      COMPENSATION DISCUSSION AND ANALYSIS  

 

Restricted Stock Units

Time-vested RSUs comprise only 20% of our LTI equity award grants for NEOs. They result in one share of Common Stock being delivered on the vesting of each RSU and serve as an important and cost-effective retention tool because RSUs have intrinsic value on the grant date of grant and going forward. Our RSUsannual RSU grants generally vest over four years in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date (instead of four equal annual installments commencing on the first anniversary of the grant date). This delayed vesting schedule further emphasizes the long-term performance focus of our LTI equity award program and enhances the retention of staff members.

Dividend Equivalents Added in 2012

In response to the Company’s payment of regular cash dividends to our stockholders, which commenced in September 2011, the Compensation Committee asked Cook & Co. to provide market data regarding dividend equivalent practices. Based on market prevalence, in March 2012, the Compensation Committee added dividend equivalent rights on RSUs and performance units commencing with grants in 2012.have dividend equivalent rights. Such dividend equivalents are payable only when, and to the extent, such awards are earned.earned and converted to shares of Common Stock. The dividend equivalents may be paid in stock (with cash paid for fractional shares) or in cash.

Long-Term Incentive Equity Awards Granted to Named Executive Officers in 2016

In its annual review of our LTI equity award practices, the Compensation Committee reviewed our LTI equity award mix with Cook & Co. Based on the Compensation Committee’s interest in aligning long-term executive compensation with stockholder interests through a balanced equity program, the Compensation Committee determined to re-introduce non-qualified stock options (stock options) into our LTI equity award mix at executive levels in 2016. The introduction of stock options, in addition to the new 2016-2018 performance period performance award goal design previously described, results in a diversified mix of performance-based equity measured on strategic operating goals and both relative and absolute TSR. The Compensation Committee believes that stock options are an important addition to available forms of performance-based LTI equity awards given the direct link between the value of stock price appreciation to our stockholders and the compensation value delivered by stock option awards to our executives. In making its determination to re-introduce stock options, the Compensation Committee also considered that six of our 15 peer group members (five of nine U.S.-based peer group members) offer stock option

awards, and concluded that the re-introduction of stock options was a competitive practice within our peer group.

On a value basis, in 2016 our performance-based LTI equity awards will comprise performance units (50%) and stock options (30%). Thus, performance-based LTI equity awards will remain at 80% of the annual equity award value and time-vested RSUs will continue to make up the remaining 20% of value. The Compensation Committee believes that this equity award mix presents a balanced approach to LTI equity award grants for executives of the Company and is appropriately aligned with stockholder interests and pay for performance. The Compensation Committee continued to align the value of the LTI equity awards granted in 2016 to approximate the 2015 Market Median, with the result that the 2016 grant value for our CEO was slightly above 2015 Market Median (3.5%) and the remaining NEOs grant values were slightly less than 2015 Market Median (from 0.4% to 7.1%).

Minimum Vesting Period of One Year

Mindful of stockholder concerns and best practices, we have amended our equity incentive plan to reflect our actual practices and to provide that 95% of all equity awards, including RSUs, restricted stock and stock options, granted to staff members (including NEOs) will be subject to a minimum vesting period of no less than one year.

Annual Cash Incentive Awards

Annual cash incentive awards to our NEOs are generally made under our stockholder-approved EIP, which employs a stockholder-approved formula that establishes a maximum award possible for each participant.participant based on our adjusted net income. Our EIP is an umbrella plan intended to satisfy the performance-based requirements of Section 162(m). The majority of our staff members participate in our GMIP or our Value Enhancement Program, or VEP, an annual cash incentive award program also based on our pre-established GMIP Company performance goals and results.the Internal Revenue Code. This year, and in the past, actual awards under the EIP

are determined by the Compensation Committee using their negative discretion under the EIP, generally based onemploying the pre-established Company performance goals under our GMIP. This approach is not purely formulaic, as the Compensation Committee also considers the contributions of each participantparticipant’s role to our success during the performance period. Historically, andThe majority of our staff members participate in 2013, the Compensation Committee has paid well below the maximum award permitted under the EIP, consistent with the results warranted by our performance under our GMIP or our Global Performance Incentive Plan, or GPIP, an annual cash incentive award program also based on our pre-established GMIP Company performance goals.

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  COMPENSATION DISCUSSION AND ANALYSIS  

No later than the first 90 days of the calendar year, the Compensation Committee determines the EIP participants, the EIP definition of adjusted net income, the maximum award payable to each participant under the EIP, the target annual cash incentive award opportunities under the EIP as a percentage of base salary, the GMIP Company performance goals and the weightings and the percentages payable for threshold, target and maximum performance under the GMIP.

For 2013,2015, Messrs. Bradway, Hooper, Meline and Dr. Harper were each of our NEOs was a participant in the EIP and the maximum award for each participant under the EIP continued to be based on a percentage of our adjusted net income, as defined in the EIP(1) (0.125% for our CEO and 0.075% for each of the Executive Vice President NEOs). Annual cash incentive awards are paidIn 2015, Mr. Graham was a participant in March of the year followingGMIP because he was not an employee at the time participants in the EIP were determined. Historically, and GMIP annual performance periods.in 2015, the Compensation Committee has paid well below the maximum award permitted under the EIP. In 2013,2015, the Compensation Committee continued its practice to exerciseof exercising negative discretion from the calculated EIP maximum award payable to each individual by using the GMIP Company performance goals score as applied to the participant’s target annual cash incentive award opportunity in making its determination of the actual award amount paid. Annual cash incentive awards are paid in March of the year following the annual performance period and certification of the resulting payouts by the Compensation Committee.

Consistent with last year, Mr. Bradway’sThe target annual cash incentive award opportunity for 20132015 for Mr. Bradway was 130%140%, and the target annual cash incentive award opportunity for each Executive Vice President for 2013 was 90%, of base salary. The target annual cash incentive award opportunity for Mr. Bradway was increased for 2015 from 130% to 140% as Mr. Bradway’s 2014 target total annual cash compensation approximated the 25th percentile of our peer group and the Compensation Committee wanted his target total annual cash compensation to more closely align with the 50th percentile of our peer group, while continuing to emphasize compensation that is at risk and performance-based. With this increase to Mr. Bradway’s target annual cash incentive award opportunity, such opportunity for Mr. Bradway and each

Executive Vice President aligns us competitively with the 2014 Market Median. Mr. Graham’s target annual cash incentive award opportunity was set upon his hiring at 80% of base salary, consistent with the target percentage we have maintained for this position and aligned with the 50th percentile for this role based on the 2014 Towers Survey. To induce Mr. Graham to accept employment with us, and given his July start date, Mr. Graham’s new hire package included a guaranteed minimum equivalent to a GMIP Company performance goals composite score of 130% (which minimum score was exceeded given the actual Company performance goals composite score of 176.1% for 2015).

2015 GMIP Company Performance Goals

The GMIP Company performance goal categories approved by the Compensation Committee for 2015 were “Deliver Results” (70% weighting) and “Progress Innovative Pipeline” (30% weighting). These goal categories were selected to retain the emphasis on financial performance (60%), while focusing the remaining goals on other factors that are relevant to the Company’s strategy and critical to our peer groupnear- and on average, falls slightly belowlonger-term clinical and commercialization success. While all of the median of our peer group.goals measure single-year performance, taken as a whole, they are intended to positively position us for both near- and longer-term success:

The 2015 “Deliver Results” goals (70%) comprise “Revenues” (30%), “Adjusted Net Income” (30%) and “Execute New Product/Delivery System Launches” (10%).

“Revenues” and “Adjusted Net Income” are equally focused on top- and bottom-line growth and were assigned the largest weighting of 30% each, consistent with the fundamental importance of financial performance to us and our stockholders over the longer-term.

“Execute New Product/Delivery System Launches” was assigned 10%. We executed on the launches of six innovative products in the oncology and cardiovascular disease therapeutic areas.

 

 

(1)

For 2013,2015, adjusted net income for purposes of the EIP was defined as net income determined under U.S. generally accepted accounting principles, adjusted for the following, net of tax: the adverse impact of changes in accounting principles; expenses and related costs incurred in connection with business combinations; non-cash interest expense on our convertible debt; stock option expense; losses and related costs incurred with respect to litigation, arbitration, investigations and legal and contractual settlements; losses or benefits on disputesnon-routine settlements with tax authorities; expenses incurred in connection with restructurings and related actions; asset impairment charges, inventory write-offs; adverse impact of changes in tax law, costs arising from a natural disaster and the impact of discontinued operations. Adjusted net income for purposes of the EIP is adjusted net income we reported in our Form 8-K dated as of January 28, 2014.

 

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      COMPENSATION DISCUSSION AND ANALYSIS  

 

2013 GMIP Company Performance Goals

The GMIP Company performance goals approved by the Compensation Committee for 2013 were “Deliver Financially” (60% weighting), “Deliver the Best Pipeline” (20% weighting), and “Deliver Strategic Priorities” (20% weighting). These goals were selected to retain the emphasis on financial performance, while focusing the remaining goals on other factors that are relevant to the Company’s strategy and critical to our near- and longer-term clinical and commercialization success. While all of these goals measure single-year performance, taken as a whole, they are intended to positively position us for both short- and longer-term success:

The 2013 “Deliver Financially” goals (Revenues and Adjusted Net Income) are equally focused on top- and bottom-line growth and were assigned the largest weighting of 30% each, consistent with the fundamental importance of financial performance to us and our stockholders over the longer-term. The use of adjusted net income instead of adjusted EPS, used in prior years, avoids the potential impact of any Company stock repurchases on adjusted EPS.

“Progress Innovative Pipeline” goals (30%) comprise “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%) and measured progress on both early- and later-stage product candidates to focus us on executing key clinical studies and delivering a robust product pipeline at all stages of the development continuum, which we believe is critical to our continued success over both the near- and longer-term. We executed clinical studies for Repatha®, Kyprolis®, AMG 334, Romosozumab, and IMLYGIC®, among others, and submitted regulatory filings, including those for Repatha®, Kyprolis®, Corlanor®, ABP 501 biosimilar adalimumab (Humira®), IMLYGIC® and Parsabiv™.

“Deliver the Best Pipeline” goals measured progress on both early- and later-stage product candidates to focus us on executing key clinical studies and delivering a robust product pipeline at all stages of the development continuum, which we believe is critical to our continued success over both the short- and longer-term.

“Deliver Strategic Priorities” was chosen as a 2013 goal category to highlight the importance of accomplishing a series of current-year objectives to expand our business internationally, seize biosimilars opportunities, develop devices and capture external innovation.

All of these goal categoriesgoals are intended to create stockholder value in the short-near- and longer-term. ThresholdThere are no payouts for below-threshold performance on the two financial metrics. Measurements of performance for the non-financial primary metrics, which are often expressed in milestones, are more subjective in nature than are the financial metrics and could result in a very small payout percentage (less than 1% of annual cash compensation). There are no payouts for below-threshold performance on the two financial metrics. Maximum performance under each metric results in earning 225% of target annual cash incentive award opportunity for that metric.

 

 

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 COMPENSATION DISCUSSION AND ANALYSIS  

20132015 GMIP Company Performance Goals and Results

The table below illustrates the weighting of each goal, the goals established and our actual performance for 2013:2015:

 

Deliver Financially (60%)—Results (70% weighting)Achieved 193.2%113.8% 
Financial Goals (60%)  Threshold   Target   Maximum   Achieved 

Revenues (30%)

   $17,12519,750 million     $18,00021,110 million     $19,07522,775 million     

 

$18,67621,662 million

Achieved169.1%135.1%

  

  

Adjusted Net Income(1) (30%)

   $5,2256,600 million     $5,5007,180 million     $5,8257,900 million     

 

$5,8147,868 million

Achieved217.3%218.3%

  

  

 

Execute New Product/

Delivery System Launches Goals (10%)

Results

Achieved

  Repatha®77.5%

  Corlanor®

  BLINCYTO®

  Neulasta® Onpro™ Kit

Progress Innovative Pipeline (30% weighting)Achieved 62.3%
GoalsResultsAchieved

Execute Key Clinical Studies and Regulatory Filings (20%)

  Executed clinical studies for Repatha®, AMG 334, Romosozumab, IMLYGIC®, Omecamtiv mecarbil, and Kyprolis®

199.0%

  Completed regulatory filings for Kyprolis®, Repatha®, ABP 501 biosimilar adalimumab (Humira®), Parsabiv™, Corlanor®, IMLYGIC®

Advance Early Pipeline (10%)

  Generated new product strategy teams, initiated first-in-human studies, and advanced programs through the early-to-late stage portal

225.0%

2015 GMIP Company Performance Goals Composite ScoreAchieved 176.1%
(1) 

Adjusted net income for purposes of the GMIP is adjusted net income as we reported in our Form 8-K dated as of January 28, 2014.

Deliver2016, excluding the Best Pipeline (20%)—Achieved 157.5%
ResultsAchieved
Execute Clinical Studies (15%)

Executed key clinical programs, including filings and obtaining approvals.175.0%
Advance the Early Pipeline (5%)

Generated new product strategy teams.103.0%

Initiated first-in-human studies.

Advanced programs through the early-to-late portal.
Deliver Strategic Priorities (20%)—Achieved 197.5%
ResultsAchieved
Devices (5%)Advanced devices to support lifecycle management and new product development.145.0%
Capture External Innovation (3%)Completed preclinical and clinical-stage inbound deals.225.0%
Completed out-license of preclinical programs.
Completed acquisition of Onyx Pharmaceuticals, Inc.
Japan (3%)Completed clinical trial application submissions to support product registration.225.0%
Signed deals, including for alliance.
Recruited leadership team with agreed governance oversight.
China and Emerging Markets (3%)Commenced research and development investment in China.225.0%
Commenced manufacturing investment in China.
Built Amgen’s organizational presence in China.
Advanced Amgen’s pipeline portfolio.
Signed deal to acquire rights to filgrastim and pegfilgrastim from distributor.
Advance Manufacturingbenefit of the Future (MoF)(3%)Integrated manufacturing of the future strategic plan submitted for reviewreinstated federal Research and approved.200.0%
Completed analytical drug substance comparability and agreement with health authorities.
Advanced manufacturing of the future commercial facility (engineering and construction).
Biosimilars (3%)Completed the necessary clinical and other activities required to launch target products at the desired time.191.7%
Developed and advanced ex-U.S. and ex-European Union biosimilars strategy.

Development tax credit.

2013 GMIP Company Performance Goals Composite Score186.9%

 

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      COMPENSATION DISCUSSION AND ANALYSIS  

 

20132015 Annual Cash Incentive Awards

As shown in the table above, our performance against the 20132015 GMIP Company performance goals yielded a composite score of approximately 186.9%176.1% and the Compensation Committee awarded actual annual cash incentive awards under the EIP to our NEOs, other than Mr. Graham, based on this composite score:score. No further discretion was employed.

 

Named Executive Officer  Target 2013
Award($)(1)
   Actual 2013
Award($)
   Target 2015
Award($)(1)
 Actual 2015
Award($)
 

Robert A. Bradway

   1,925,000     3,598,000    

 

 

 

 

2,180,769

 

 

  

 

 

 

 

 

 

3,841,000

 

 

  

 

Anthony C. Hooper

   897,241     1,677,000    

 

 

 

 

936,298

 

 

  

 

 

 

 

 

 

1,649,000

 

 

  

 

Jonathan M. Peacock

   810,447     1,515,000  

David W. Meline

  

 

 

 

 

841,169

 

 

  

 

 

 

 

 

 

1,482,000

 

 

  

 

Sean E. Harper

   802,921     1,501,000    

 

 

 

 

837,883

 

 

  

 

 

 

 

 

 

1,476,000

 

 

  

 

Madhavan Balachandran

   680,885     1,273,000  

Jonathan P. Graham(2)

  

 

 

 

 

    

 

 

(2) 

 

 

 

 

 

 

579,000

 

 

  

 

 

(1)

Calculated in accordance with GMIP.

(2)

Because Mr. Graham commenced employment with us in July 2015, he was not eligible to participate in the EIP. Mr. Graham received his 2015 eligible award under the GMIP based on the actual GMIP Company performance goals composite score. As part of Mr. Graham’s offer letter, we guaranteed a minimum payout based on a GMIP Company performance goals composite score of 130% for his 2015 GMIP award, which would have resulted in a minimum award for 2015 of $427,203.

 

Mr. Meline’s Vesting of Sign-On Bonus

To replace the pro-rata value of Mr. Meline’s 2014 bonus at his current employer, which was forfeited upon his leaving, and to induce Mr. Meline to accept the Company’s offer of employment and join the Company in 2014, Mr. Meline received a sign-on bonus of $2,000,000 (50% vested on August 21, 2014 and the other 50% vested on July 21, 2015).

Mr. Graham’s Sign-On Bonus

To replace the pro-rata value of Mr. Graham’s 2015 bonus at his current employer, which was forfeited upon his leaving, and to induce Mr. Graham to accept the Company’s offer of employment and join the Company in July 2015, Mr. Graham received a sign-on bonus of $2,000,000 (50% was paid as an advance by August 13, 2015, and the other 50% will be paid by July 13, 2016, subject to continued service with us on that date). Mr. Graham will be required to repay the advance if he resigns his employment within two years.

2016 GMIP Company Performance Goals

In March 2014,2016, the Compensation Committee established GMIP Company performance goal categories for 2016 performance. While the overall goal categories remained the same as our 2015 Company performance goal categories (“Deliver Results” (70%) (which comprise “Revenues” (30%),

“Adjusted Net Income” (30%) and “Execute Product/Delivery System Launches” (10%) goals) and “Progress Innovative Pipeline” (which comprise “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%) goals), the metrics and measures of the goals underlying the goal categories were progressed to reflect key focus areas for 2016. Based on Cook & Co.’s recommendation and to align Mr. Bradway with the 2015 Market Median, while continuing to emphasize compensation that is at risk and performance-based, the Compensation Committee approved GMIP Company goal categoriesan increase to the target annual cash incentive award opportunity for 2014 performance that are substantially consistent2016 for Mr. Bradway to 150% of base salary (from 140%). For our Executive Vice Presidents, to also align with the 2013 Company goal categories, except2015 Market Median, while continuing to emphasize compensation that “Deliver Strategic Priorities” was replaced with “Deliver Annual Priorities” (15%). The sub-goal under “Deliver the Best Pipeline”is at risk and performance-based and to execute key clinical studies and regulatory filings was raised 5% more than the similar goal in 2013continue to 25% because of the increasing importance of various late-stage trials and regulatory filings to successfully execute in 2014. “Deliver Financially” remains at 60%.

Special Retention Award

In March 2011, while Mr. Balachandran served astreat our SeniorExecutive Vice President, Manufacturing, the Compensation Committee approved a $1,000,000 special cash retention award to Mr. Balachandran, payable in installments of $330,000 on March 2, 2012 and 2013 and $170,000 on March 2, 2014 and 2015, subject to his continued employment through such dates (excluding terminations due to death or disability and involuntary termination by us not for cause). This special retention award was made in light of Mr. Balachandran’s valued performance in his then-current role and the Company’s desire to retain himPresidents as a succession candidate for the role ofteam, each Executive Vice President Operations. In August 2012,target annual cash incentive award opportunity for 2016 was increased to 100% of base salary (from 90%). To maintain Mr. BalachandranGraham’s target annual cash incentive award opportunity in alignment with the 2015 Market Median for his role, his target annual cash incentive award opportunity was promoted to Executive Vice President, Operations.unchanged at 80% of base salary for 2016.

Base Salaries

Generally, in March of each year, the base salaries for the NEOs are set based, in part, upon the Compensation Committee’s review of the peer group data compared with the Market Median as more specifically described under “Peer Group Data” above. In addition, the Compensation Committee considers our performance, market conditions and such other factors deemed relevant. Further, our CEO engages in a discussion with the Compensation Committee concerning his assessment of the performance of each of the other NEOs and his recommendations regarding any base salary adjustments for them. The Compensation Committee uses our CEO’s evaluation of the performance of the NEOs that report to the CEO, each NEO’s performance, information with respect to each NEO’s experience and other qualifications, the Market Median and any base salary adjustments recommended by the CEO in determining each NEO’s base salary.

In March 2013, each NEO received a base salary increase that was effective as of February 25, 2013. Mr. Bradway received a base salary increase of approximately 7.1% to $1,500,000 annually, which brought Mr. Bradway’s base salary towards the Market Median. Each of the other NEOs, other than Mr. Balachandran, received a base salary increase of 2.6%, which was intended to generally maintain their relative positioning as compared to the Market Median and was consistent with the increases granted to our U.S.-based staff members generally. Mr. Balachandran received a base salary increase of 10% to bring his base salary compensation closer to the other Executive Vice Presidents and provide increased internal parity among the Executive Vice Presidents.

 

 

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      COMPENSATION DISCUSSION AND ANALYSIS  

Committee’s review of the peer group data compared with the Market Median as previously described under “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data.” In addition, the Compensation Committee considers our performance, market conditions, retention and such other factors deemed relevant. Further, the Compensation Committee receives management’s, including our CEO’s, assessment of the performance of each of the other NEOs and recommendations regarding any base salary adjustments for them. The Compensation Committee uses our management’s and CEO’s evaluation of the performance of the NEOs that report to our CEO, each NEO’s performance, information with respect to each NEO’s

experience and other qualifications, the Market Median and environmental conditions in determining each NEO’s base salary. No increase in base salary is automatic or guaranteed.

In March 2015, the Compensation Committee determined that there would be no increase in base salaries for our NEOs. This was the second year in a row that our NEOs did not receive base salary increases. This is consistent with the Compensation Committee’s determination that, for 2015, base salaries for executive staff members would not be increased in recognition of our on-going transformation activities.

2015 Base Salary Market Position

The 2015 base salaries and 2014 Market Median position are shown in the table below.

Named Executive Officer  

2014 Base
Salary

($)

   Increase
(%)
   

2015 Base
Salary

($)

   

2014

Market
Median
($)

   Difference vs.
Market Median
Over/(Under)
(%)
 

 

Robert A. Bradway

 

  

 

 

 

 

1,500,000

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

1,500,000

 

 

  

 

  

 

 

 

 

1,654,000

 

 

  

 

  

 

 

 

 

(9.3

 

 

 

 

Anthony C. Hooper(1)

 

  

 

 

 

 

1,001,800

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

1,001,800

 

 

  

 

  

 

 

 

 

972,956

 

 

  

 

  

 

 

 

 

3.0

 

 

  

 

 

David W. Meline

 

  

 

 

 

 

900,016

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

900,016

 

 

  

 

  

 

 

 

 

983,184

 

 

  

 

  

 

 

 

 

(8.5

 

 

 

 

Sean E. Harper

 

  

 

 

 

 

896,500

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

896,500

 

 

  

 

  

 

 

 

 

940,989

 

 

  

 

  

 

 

 

 

(4.7

 

 

 

 

Jonathan P. Graham(2)

 

  

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

890,006

 

 

  

 

  

 

 

 

 

889,638

 

 

  

 

  

 

 

 

 

 

 

  

 

(1)

See “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data” previously described regarding the market data for Mr. Hooper.

(2)

Mr. Graham commenced employment with us in July 2015 and was not an employee at the time base salaries were determined. Mr. Graham’s base salary was targeted at the 50th percentile based on the 2014 Towers Survey in connection with his hiring.

2016 Base Salary Adjustments

In both 2014 and 2015, no base salary increases were made to the NEOs. Our expectations for the projected industry average base salary increases for 2016, based primarily on survey information for the biotechnology and pharmaceutical sectors provided by Pearl Meyer & Partners, are approximately 3%. In March 2016, the Compensation Committee reviewed the market competitiveness of each NEO’s base salary based on 2015 Market Median data and such executive officer’s performance as well as the Company’s overall performance. Based on the data provided to the Compensation Committee, including recommendations of Cook & Co., an overall merit increase of 3% was recommended for our NEOs, adjusted to align with the 2015

Market Median for each position. The Compensation Committee approved a 2016 base salary increase of 2% for Mr. Bradway based on recommendations from Cook & Co., to bring him closer to the 2015 Market Median for his position, while managing his target total annual cash compensation at the 2015 Market Median and continuing to retain the substantial majority of his compensation as at risk and performance-based. Consistent with our projections for 2015 industry average increases, Messrs. Hooper and Graham each received base salary increases of 3% which aligns them with the 2015 Market Median for their respective roles. Mr. Meline and Dr. Harper’s 2015 base salaries were significantly lower than the 2015 Market Median, in part, as a result of not having received base salary increases in the previous two years. To make progress in decreasing the

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   COMPENSATION DISCUSSION AND ANALYSIS  

 

2013 Base Salary Adjustments

Thedisparity between their base salary adjustments approvedsalaries and implemented in March 2013 are shown in the table below:

Named Executive Officer  2012 Base
Salary
($)
   Increase
(%)
   2013 Base
Salary
($)
   Market
Median
($)
   Difference vs.
Market Median
Over/(Under)
(%)
 

Robert A. Bradway

   1,400,000     7.1     1,500,000     1,510,000     (0.7

Anthony C. Hooper(1)

   976,500     2.6     1,001,800     1,054,180     (5.0

Jonathan M. Peacock

   882,000     2.6     904,900     994,913     (9.0

Sean E. Harper

   873,800     2.6     896,500     1,015,064     (11.7

Madhavan Balachandran(2)

   700,000     10.0     770,000     n/a     n/a  
(1)

See “Peer Group Data” above for a discussion regarding the market data for Mr. Hooper.

(2)

See “Peer Group Data” above for a discussion regarding the market data for Mr. Balachandran.

In March 2014,2015 Market Median for their positions, the Compensation Committee determined that base salaries for each NEO would not be increased as noapproved 2016 base salary increases were awarded to other senior managerial level staff membersfor Mr. Meline and above to attain better alignment withDr. Harper of 5.6% and 6%, respectively, which positions them at the peer group2015 Market Median for such levels.their respective roles.

Target Total Annual Cash Compensation

Target total annual cash is the sum of the NEO’s base salary and target annual cash incentive award. The Compensation Committee believes that reviewing our NEO’sNEOs’ target annual cash compensation as compared to the Market Median provides a useful check.

In March 2013,2015, the Compensation Committee reviewed target total annual cash compensation for each NEO

comparing it to the

2014 Market Median as set forth below.below and received historical target total annual cash compensation figures over the previous three years. Our target total annual cash compensation was generally below the 2014 Market Median, which the Compensation Committee considered appropriate. For more information regarding the determination of Market Median and the peer group data reviewed, see “Peer“How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data” above.Data” previously described. No material adjustments were made to target total annual cash compensation for any of our NEOs as a result of this review by the Compensation Committee as the comparisons demonstrated acceptable market alignment as well as appropriate internal pay equity among the NEOs, other than the CEO, given the similar scope of the overall leadership responsibilities for each Executive Vice President.Presidents.

 

 

20132015 Target Total Annual Cash Compensation

 

Named Executive Officer  2013 Amgen Target
Annual Cash
($)
   Market Median
($)
   Difference vs.
Market Median
Over/(Under)
(%)
   2015 Amgen Target
Total Annual Cash ($)
   

2014

Market Median
($)

   Difference vs.
Market Median
Over/(Under)
(%)
 

Robert A. Bradway

   3,450,000     3,605,000     (4.3  

 

 

 

 

3,600,000

 

 

  

 

  

 

 

 

 

3,750,000

 

 

  

 

  

 

 

 

 

(4.0

 

 

 

Anthony C. Hooper(1)

   1,903,420     2,042,000     (6.8  

 

 

 

 

1,903,420

 

 

  

 

  

 

 

 

 

1,934,567

 

 

  

 

  

 

 

 

 

(1.6

 

 

 

Jonathan M. Peacock

   1,719,310     1,949,000     (11.8

David W. Meline

  

 

 

 

 

1,710,030

 

 

  

 

  

 

 

 

 

1,970,957

 

 

  

 

  

 

 

 

 

(13.2

 

 

 

Sean E. Harper

   1,703,350     1,948,000     (12.6  

 

 

 

 

1,703,350

 

 

  

 

  

 

 

 

 

1,897,751

 

 

  

 

  

 

 

 

 

(10.2

 

 

 

Madhavan Balachandran(2)

   1,463,000     n/a     n/a  

Jonathan P. Graham(2)

  

 

 

 

 

1,602,011

 

 

  

 

  

 

 

 

 

1,601,348

 

 

  

 

  

 

 

 

 

 

 

  

 

 

(1)

See “Peer“How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data” above for a discussionData” previously described regarding the market data for Mr. Hooper. Mr. Hooper’s position is not well-represented in either the 2012 Towers Survey or proxy statements of each company in our peer group and, accordingly, based on his current position in pay ranking at our Company, he is matched to the median of the second highest paid NEO of each of the companies in our peer group.

(2)

See “Peer Group Data”Mr. Graham commenced employment with us in July 2015 and was not an employee at the time target total annual cash compensation was determined for the other NEOs. The amount shown above for a discussion regarding the market data for Mr. Balachandran.is annualized.

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 COMPENSATION DISCUSSION AND ANALYSIS  

 

Perquisites

Perquisites are limited in both type and monetary value. The Compensation Committee believes, however, that certain perquisites facilitate the efficient operation of our business, allowing our NEOs to better focus their time, attention and capabilities on our Company, permit them to be accessible to the business as required, alleviate safety and security concerns and assist us in recruiting and retaining key executives. The perquisites provided to our NEOs generally include an allowance for personal financial planning services, including tax preparation services (not to exceed $15,000 annually in aggregate), annual physical examinations, Company-paid moving and relocation expenses when our NEOs are required by uspaid on behalf of newly-hired and current executives who agree to move

relocate to a new locationwork on the Company’s behalf and, in limited instances, personal expenses when on business travel such as guests accompanying NEOs on business travel. Certain of our NEOs also have access to a Company car and driver and, subject to the approval of our CEO, the Company aircraft for personal use. Our CEO is encouraged to use our Company aircraft for all of his travel (business and personal) because the Compensation Committee believes that the value to us of making the aircraft available to our CEO, in terms of safety, security, accessibility and efficiency, is greater than the incremental cost that we incur.

No tax gross-up reimbursements are provided to NEOs, except in connection with reimbursement of moving and relocation expenses consistent with our other staff members

and our general relocation policy. We do not provide tax gross-ups

64    LOGOï 2016 Proxy Statement


  COMPENSATION DISCUSSION AND ANALYSIS  

for assistance with loss on sale of a home. We believe that providing tax gross-up reimbursements on the applicable moving and relocation expenses paid on behalf of newly-hired executives who agree to relocate on the Company’s behalf and current executives who agree to expatriate to another country to workrelocate on the Company’s behalf is appropriate because it treats these executives in a similar manner as non-executives under our Company-wide policy andwhich is designed to maximize allocation of our human resources in the best interest of the Company. It also assists in the attraction and retention of the executive talent necessary to compete successfully.

We have capslimits on moving and relocation expenses and on home sale loss assistance for Senior Vice Presidents and

above. Our Company-wide policy includes a repayment provision applicable to all staff members (including our NEOs) which requires a new staff member hired from outside the Company or staff members who accept an assignment and relocate, to repay us for moving and relocation expenses incurred by us in the event that the staff member does not complete the move, resigns or is discharged for cause from the Company within two years of the employment start date or relocation date, as applicable (with a pro-rata refund in the second year). For staff members (including our NEOs) who accept an expatriate assignment, the repayment provision has been one year from the assignment date and, starting in 2013, was extended to apply to anyone who does not complete the move, resigns or is discharged for cause within two years from the assignment date.

 

 

Compensation Policies and Practices

 

 

Clawback Policy

We have a clawback policy that requires our Board to consider recapturing past cash or equity compensation payouts awarded to our executive officers, including our NEOs, if it is subsequently determined that the amounts of such compensation were determined based on financial results that are later restated and the executive officer’s misconduct caused or partially caused such restatement.

Recoupment Provisions

In December 2012, the Compensation Committee approved amendments to ourOur cash incentive compensation plans (EIP, GMIP and VEP) toGPIP) expressly allow the Compensation Committee, or management, as appropriate, to consider employee misconduct that caused serious financial or reputational damage to the Company when determining whether an

employee has earned an annual cash incentive award or the amount of any such award. This provision is not intended to limit any other action that the Company could take against an employee, including other disciplinary actions (up to termination), ordinary course performance considerations, disclosure of wrongdoing to the government and pursuit of any other legal claims against such employees.

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 COMPENSATION DISCUSSION AND ANALYSIS  

Stock Ownership and Holding Guidelines

Our stock ownership guidelines require our executives to hold a meaningful amount of our Common Stock, promote a long-term perspective in managing the Company, further align the interests of our executives and stockholders and mitigate potential compensation-related risk. In March 2012, the

Stock Ownership Guidelines Requirements

The stock ownership requirementguidelines for 2015 were:

PositionStock Ownership Requirement

Chief Executive Officer

6x base salary

Executive Vice President

3x base salary

Senior Vice President

2x base salary

Vice President

1x base salary

The following holdings count towards satisfying these stock ownership requirements:

shares of our CEO was increased from five times base salaryCommon Stock that are not subject to six times base salary. forfeiture restrictions and are beneficially held;

shares of our Common Stock held through a 401(k) plan or other qualified pension or profit-sharing plan; and

shares purchasable with funds then allocated under our Employee Stock Purchase Plan.

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  COMPENSATION DISCUSSION AND ANALYSIS  

Executives are generally given five years following their placement into their current job level to comply with these guidelines. Executives who are promoted to a status with a

stock ownership level one level higher than the executive was previously required to satisfy, shall have three years to comply with the new ownership level if the executive has been subject to the stock ownership guidelines for five or more years. Once these ownership guidelines are met, executives are expected to maintain such ownership until they change job levels or are no longer employed by the Company. Officers are required to retain shares of our Common Stock acquired through the vesting of RSUs, the payout of performance units, or the exercise of stock options awarded on or after December 15, 2015, net of shares retained by us to satisfy tax withholding requirements attributable to vesting events and shares of Common Stock tendered to pay all or any portion of the exercise price of stock options, until they have reached the required stock ownership level.

Stock Ownership Guidelines Compliance Dates and Holdings

As of November 5, 2013,16, 2015, the effective date of our executive certification,certifications, all executive officers, including our NEOs, who were expected to meet such guidelines, were in compliance. NEOs promoted to a new position or commencing employment with the Company within the last five years have the following compliance dates forset forth below. With the exception of Messrs. Meline and Graham, who commenced employment with our Company on July 21, 2014 and July 13, 2015, respectively, all NEOs substantially exceed their new position.

Stock Ownership Guidelines Compliance Datesapplicable stock ownership requirements. Specifically, our CEO, Mr. Bradway, exceeds his ownership requirement and holds 24 times his base salary, or four times his stock ownership requirement.

 

NameNEO  Prior PositionCompliance Date
December 31st
 

Compliance Date

for New Position

Robert A. Bradway

  President and Chief Operating Officer

2017

Anthony C. Hooper

  December 31, 2017

2016

David W. Meline

2019

Sean E. Harper

Senior Vice President, Global Development & Corporate Chief Medical OfficerDecember 31, 2016

Madhavan Balachandran

  Senior Vice President, ManufacturingDecember 31, 2015

Stock Ownership Guidelines Requirements

Messrs. Bradway and Balachandran and Dr. Harper meet the stock ownership requirements applicable to their prior positions. The stock ownership guidelines for 2013(1) were as follows:

 

2016

PositionStock Ownership Requirement

Chief Executive Officer

Jonathan P. Graham

  Six times base salary

President or Chief Operating Officer

Three times base salary

Executive Vice President

2020

Three times base salary

Senior Vice President

13,500 shares

Vice President

4,500 shares

The following holdings count towards satisfying these stock ownership requirements:

shares of our Common Stock that are not subject to forfeiture restrictions and are beneficially held;

shares of our Common Stock held through a 401(k) plan or other qualified pension or profit-sharing plan; and

funds allocated under our Employee Stock Purchase Plan.

Insider Trading Policy and Practices

All staff members and our Board are prohibited from: (i) buying or selling our Common Stock while aware of any material nonpublic information; (ii) engaging in short sales with respect to our Common Stock; (iii) pledging or purchasing our Common Stock on margin (except the use of a margin account to purchase our Common Stock in connection with the exercise of Company-granted stock options) or (iv) entering into any derivative, hedging or similar transactions with respect to our Common Stock. We do not have any executive 10b5-1 plans.

(1)

Effective March 5, 2014, the officer stock ownership guidelines were amended to require that Senior Vice Presidents hold two times their base salary and Vice Presidents hold one time their base salary.

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Policies for Grants of Long-Term Incentive Equity Awards

In accordance with our Equity Awards Policy,equity awards policy, our regular annual LTI equity award grants are typically approved at an in-person or telephonic meeting of the Compensation Committee (for grants of equity awards to executive officers,management, including our NEOs) or the Equity Award Committee (for grants to all other staff members). with a grant date that is the third business day after the release of our next quarterly or annual earnings announcement after the date of determination by our Compensation Committee or Equity Award Committee, as applicable. In unusual circumstances, LTI equity awards may be approved by the Compensation Committee or Equity Award Committee by unanimous written consent.

Beginning in 2013, regular grants of annual LTI equity awards to our executive management (comprised of Senior Vice Presidents and above), including our NEOs, are approved in December with a grant date that is the third business day after the release of our fourth quarter earnings, in January of the following year, to align the grant date with the start of the performance period. Our NEOs may also receive special equity awards of stock options or RSUs on an ad hoc basis as determined by the Compensation Committee as new hires or for recognition and retention, promotions or other purposes, but generally also only on the third business day after the release of our quarterly or annual earnings after the date of determination by our Compensation Committee. The grant date for annual awards of stock options and RSUs to staff members other than our executive management is the third business day after the release of our first fiscal quarter earnings.

Tally Sheets

The Compensation Committee annually reviews tally sheets for each NEO, setting forth all components of compensation,

including compensation payable at termination, retirement or a change of control. These tally sheets summarize the number of shares and the value at a given price of the LTI equity awards held by each NEO, as well as each NEO’s individual cumulative account balances in our benefit plans. These tools are employed by the Compensation Committee as a useful check on total annual compensation and the cumulative impact of our long-term programs and are considered important to understand both the overall and longer-term impact of compensation decisions.

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Based on its review of the tally sheets, the Compensation Committee may increase or decrease certain individual elements of compensation to align total compensation with peer group market data and to promote internal equity among our NEOs, other than theour CEO. No material adjustments to total compensation for any of our NEOs were made as a result of the review of these tally sheets by the Compensation Committee in 2013.2015.

Executive Compensation Website

We have implemented a website, accessible atwww.amgen.com/executivecompensation, which provides a link to this proxy statement and invites our stockholders to fill out a survey to provide input and feedback to the Compensation Committee regarding our executive compensation policies and practices. All input from our stockholders is valuable and the Compensation Committee appreciates your time and effort in completing the survey.

 

 

Non-Direct Compensation and Payouts in Certain Circumstances

 

 

Offer Letter, Severance Arrangement and Change of Control Benefits

Our CEO and other NEOs are generally not covered by contractual arrangements that provide for severance or other payments in the event of termination, but all are participants in our Change of Control Severance Plan discussed below. In addition,However, for new hires, we typically enter into offer letters with new hires detailing their compensation and requirements to pay back certain elements of compensation.

To attract talented executives from outside the Company, our offer letters generally include severance terms that apply to terminations initiated by the Company and occur for reasons “other than cause” within three years from the date of hire. These benefits are sometimes provided to officer-level candidates to provide an incentive for them to join us by reducing the risks associated with making such a job change.

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 COMPENSATION DISCUSSION AND ANALYSIS  

Offer Letter—Anthony C. HooperDavid W. Meline

Mr. Hooper,Meline, who commenced employment as our Chief Financial Officer effective October 27, 2011,July 21, 2014, is currently subject to an offer letter that was negotiated in connection with his hiring and approved by the Compensation Committee. Mr. Hooper’sMeline’s offer letter included our standard relocation assistance and our standard severance protection for new executives. In addition, we agreed to compensatefacilitate Mr. Hooper for cancellations or forfeitures of previously earned or vested compensationMeline’s relocation from his former employer (or the denial of vesting of such compensation) arising out of his employment with us andMinnesota to indemnify him against claims relating to recoupment of such compensation.California. We agreed to provide Mr. HooperMeline with a base salary of $900,016, which was targeted at the median of the 2014 peer group proxy data, and a target annual cash incentive award opportunity of 90% of base salary, which was consistent with the target annual cash incentive award opportunity for each of the other Executive Vice Presidents at that time. We also agreed to provide Mr. Meline with a $2,000,000 sign-on bonus, with $1,000,000 payable within 30 days of his hire date and

$1,000,000 to be paid on the one-year anniversary of his hire date, or July 21, 2015, to replace the pro-rata value of Mr. Meline’s 2014 bonus with his former employer which was forfeited upon leaving his position. We also agreed to provide Mr. Meline with an RSU grant at a value of $6,800,000 to compensate Mr. Meline for equity forfeited as a result of his leaving his previous employer, to induce him to join the Company and to provide long-term incentives that tie a significant portion of Mr. Meline’s compensation to the value of our stock in alignment with the Company’s and its stockholders’ interests. To replace Mr. Meline’s forfeiture of certain pension benefits at his former employer, Mr. Meline was also provided with a contribution to his Deferred Compensation Plan of $1,600,000 which will vest at the rate of 12.5% per year from 2015 through 2022 so long as Mr. Meline remains actively and continuously employed by us. Approximately $5.4 million of Mr. Meline’s new hire offer amount was to replace Mr. Meline’s compensation at his previous employer and approximately $5 million was an inducement, in line with Cook & Co.’s projection on the amount necessary to attract Mr. Meline to the Company. We agreed to provide Mr. Meline with such compensation and benefits because Mr. Hooper’sMeline’s leadership talent, broad commercial operationsinternational experience, and his leadership rolesproven financial and strategic skills applied in developinggrowing and complex businesses were critical to the pharmaceutical business in Latin America, the Middle East, Africa, Canada, Japan and several countries in the Pacific Rim are important to implementingCompany as we execute our strategic visionstrategy for long-term growth and international expansionbring our pipeline of medicines toward commercialization in a number of new markets. Mr. Meline’s compensation and benefits were designed to attract him to our Company and California. Mr. Hooper’s compensationCalifornia, and benefits were designed and negotiated to facilitate a prompt, effective and fair process.

Mr. Hooper’sMeline’s offer letter provides for cash severance protection for three years following his hire date at a multiple of two timesequal to one year’s annual base salary and a target annual cash incentive

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  COMPENSATION DISCUSSION AND ANALYSIS  

award of 80%opportunity (currently 100% of his annual base salarysalary) plus up to 1812 months of Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, medical and dental coverage paid by us. Benefits of this type are sometimes provided to officer-level candidates to provide an incentive to them to join the Company by reducing the risk of making such a job change. These severance benefits will expire on October 27, 2014.July 21, 2017, and are payable only if Mr. Meline is terminated other than for “cause.”

Severance Arrangement—Offer Letter—Jonathan M. PeacockP. Graham

Mr. Peacock resignedGraham, who commenced employment as our Chief Financial OfficerSenior Vice President, General Counsel and Secretary effective January 10, 2014, at which time he continued to be employed in a non-executive officer capacity to assist in the transition of Mr. Kelly, our Acting Chief Financial Officer, which transition periodJuly 13, 2015, is currently expectedsubject to extend until May 2014. Uponan offer letter that was negotiated in connection with his termination fromhiring and approved by the Company,Compensation Committee. We agreed to provide Mr. Peacock will be entitled toGraham with a base salary of $890,006, which was targeted at the following severance benefits: (1) lump sum payment that is approximately equal to 1.5 times base pay salary plusmedian for his role based on the 2014 Towers Survey, and a target annual cash incentive award opportunity; (2) reimbursement for COBRA

medical coverage for upopportunity of 80% of base salary, which was also targeted at the median of the 2014 Towers Survey and is consistent with the target annual cash incentive award opportunity applicable to 18 months; (3) senior executive career transition services for upthe previous general counsel (for purposes of the 2015 target annual cash incentive award, payable in 2016, we agreed to 12 months; (4)guarantee a payment in an amount that is approximately equalminimum payout based on a GMIP Company performance goals composite score of 130%). We also agreed to provide Mr. Graham with a $2,000,000 sign-on bonus, with $1,000,000 payable within 30 days of his hire date and $1,000,000 to be paid by the one-year anniversary of his hire date, or July 13, 2016, to replace the pro-rata value of Mr. Graham’s 2015 bonus with his former employer which was forfeited upon leaving his position and to induce Mr. Graham to join the last unvested trancheCompany. We also agreed to provide Mr. Graham with an RSU grant at a value of $8,600,000, largely to compensate Mr. Graham for equity forfeited as a result of leaving his previous employer, as well as to provide LTI equity awards that are in alignment with the Company’s stockholder interests and, to a lesser extent, to induce him to join the Company. To replace Mr. Graham’s forfeiture of certain benefits at his former employer, Mr. Graham was also provided with a contribution to his Deferred Compensation Plan of $2,000,000 which will vest at the rate of 20% per year from 2016 through 2020 so long as Mr. Graham remains actively and continuously employed by us. Approximately $8.7 million of Mr. Graham’s new hire equity awards (stock optionsoffer amount was to replace Mr. Graham’s compensation at his

previous employer and RSUs) that would have vestedapproximately $3.9 million was an inducement, in October 2014, basedline with Cook & Co.’s projection on the total period of time that he is expectedamount necessary to be employed over the total vesting period ofattract Mr. Graham to our Company and to California. We agreed to provide Mr. Graham with such tranche (48 months) calculated on the date of his termination of employment withcompensation and benefits to attract him to our Company and California because Mr. Graham’s leadership talent and legal experience were important to the Company to navigate complex and usingvaried legal issues around the world, execute on important global business development transactions, promote and defend our intellectual property rights and enable the approval and launch of our pipeline of medicines and drug delivery devices. Mr. Graham’s compensation and benefits were designed and negotiated to facilitate a stock price equal to $113 per shareprompt, effective and (5) payment at an hourly rate of $1,200fair process.

Mr. Graham’s offer letter provides for any authorized time that he spends following the termination of his employment in further transitioning his responsibilities and with matters that arose during his tenure with the Company. In determining these benefits,our standard relocation package, plus the Compensation Committee considered that, until September 2013,approved extended temporary housing of 60 days, to facilitate the timing of the transition of Mr. Peacock was eligibleGraham’s family from Washington, D.C. to California. Mr. Graham’s offer letter provides for cash severance protection for three years following his hire date at a higher benefit multiple of two times annual base salary and a target annual cash incentive award opportunity (currently 80% of his annual base salary) plus up to 18 months of COBRA protection, that the pro-rata valuemedical and dental coverage paid by us. Benefits of the last unvested tranche of his new hire equity awards was made in partthis type are sometimes provided to compensate Mr. Peacock for value that he left behind at his former employer and that Mr. Peacock will have served (including by providing important transition services) nearly the full vesting period. The agreement betweenofficer-level candidates to provide an incentive to them to join the Company by reducing the risk of making such a job change. These severance benefits will expire on July 13, 2018, and Mr. Peacock includes a general release of all claims by Mr. Peacock and that Mr. Peacock forfeit and repay substantial benefits of this agreementare payable only if Mr. Peacock materially breaches any covenants or conditions in the agreement or the previously signed Proprietary Information and Inventions Agreement, including if Mr. Peacock fails to fulfill his post-termination obligations to cooperate, to maintain the confidentiality of our information and not to disparage the Company.Graham is terminated other than for “cause.”

Change of Control Benefits

Change of Control Severance Plan

In the event of a change of control and a qualifying termination, our Change of Control Severance Plan provides severance payments to 1,9501,580 U.S. staff members (as of December 31, 2013)2015), including each NEO. There are no tax gross-up payments provided under the plan. The plan was structured so that payments and benefits are provided only if there is both a change of control and a termination of employment, either by us other than for “cause” or

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 COMPENSATION DISCUSSION AND ANALYSIS  

“disability” “disability” or by the participant for “good reason” (as each is defined in the plan)—sometimes referred to as a “double-trigger”—because the intent of the plan is to provide appropriate severance benefits in the event of a termination following a change of control, rather than to provide a

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  COMPENSATION DISCUSSION AND ANALYSIS  

change of control bonus. The cash severance multiple for theour CEO and all other NEOs is two times annual cash compensation. The payments and benefit levels under the Change of Control Severance Plan do not influence and were not influenced by other elements of compensation. The Change of Control Severance Plan was adopted, and is continued by the Compensation Committee, to reinforce and encourage the continued attention and dedication of members of management to their assigned duties without the distraction arising from the possibility of a change of control, to enable and encourage management to focus their attention on obtaining the best possible deal for our stockholders and making an independent evaluation of all possible transactions, without being influenced by their personal concerns regarding the possible impact of various transactions on the security of their jobs and benefits, and to provide severance benefits to any participant who incurs a termination of employment under the circumstances described within a certain period following a change of control in recognition of their contributions to the Company.

Change of Control Treatment of Long-Term Incentive Equity Awards

Restricted Stock Restricted Stock Units and Stock Options

All LTI equity awardRSUs and stock option grants made on or after March 2, 2011that have yet to vest have “double-trigger” acceleration of vesting that requires a qualifying termination in connection with a change of control. Assuming the awards are continued or assumed, all unvestedRSUs and stock options and RSUs vest in full only if the grantee’s employment is involuntarily terminated other than for “cause” or “disability,” or, in the case of staff members subject to the Change of Control Severance Plan, voluntarily terminated with “good reason” within two years following a change of control.

Performance Units

The Compensation Committee has maintained change of control features for each of the performance periods under our performance award programs to ensure that these

programs reward participants for our performance until the successful closing of the change of control. In general, the performance units are earned based on a truncated performance period and our performance through the change of control, occurs. Payment calculation methods differ according toand provides for potential earn-out at the termsend of the award for each performance period and depending upon whether with the amount earned pro-rated for

a change of control that occurs inwithin the first six months of the performance period or thereafter. For additional information on the levels of payout, see “Potential Payments Upon Termination or Change of Control—Long-Term Incentive Equity Awards—Performance Units” in our Executive Compensation Tables.

Limited Retirement Benefits and Deferred Compensation Plan

Our health, retirement and other benefits programs are available to all of our U.S.-based staff members (excluding Puerto Rico), including our NEOs, and are typically targeted to align in value with our peer group on a total company basis. The primary survey used to make this total company comparison is the Aon Hewitt Benefit Index®, last updated as of May 20122014, using a sample group of 14 companies, chosen so as to have the greatest representation from our peer group. The data generated from this survey is used by the Compensation Committee and management in evaluating the competitive positioning and program design of ourthese health, retirement and other benefit programs that pertain to all U.S.-based staff members, including our NEOs.programs.

Retirement and Savings Plan, Supplemental Retirement Plan and Nonqualified Deferred Compensation Plan

Our Retirement and Savings Plan, or 401(k) Plan, is available to all regular U.S.-based staff members of the Company and participating subsidiaries. All 401(k) Plan participants are eligible to receive the same proportionate level of matching and core contributions from us.

We credit to our Supplemental Retirement Plan, or SRP, which is available to all 401(k) Plan participants, Company core and matching contributions on eligible compensation that cannot be made to the 401(k) Plan because they relate to compensation that is in excess of the maximum amount of recognizable compensation allowed under the Internal Revenue Code’s qualified plan rules. We also credit staff members in the SRP for lost 401(k) Plan Company match and core contributions resulting from making a deferral into the Nonqualified Deferred Compensation Plan, or NDCP. Earnings under the SRP are market-based — market-based—there are no “above

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 COMPENSATION DISCUSSION AND ANALYSIS  

market” or guaranteed rates of returns offered in this plan and this plan enables us to provide the same percentage of base salary and annual cash incentive award as a retirement contribution to U.S.-based staff members at all levels. SRP

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  COMPENSATION DISCUSSION AND ANALYSIS  

and NDCP participants can direct notional account investments using the 401(k) Plan investing structure (excluding self-direct brokerage and our Company stock) as well as a variety of target date funds. Unlike a traditional pension plan, which provides a lifetime annuity that replaces a significant portion of a participant’s final pay, retirement benefits from our 401(k) Plan and SRP are based on the investment return on the staff member’s own investment elections, with the participant bearing the investment risk. The NDCP offers all U.S.-based staff members (including Puerto Rico) at director level and above the opportunity to defer eligible base salary and annual cash incentive awards, up to maximum amounts typical at our peer group. We also have the discretion to make contributions to this plan, but we do not make such contributions on a regular basis. We believe that offering the NDCP is appropriate because it provides executives the opportunity to save for retirement in a tax-effective fashion that is not readily available without our sponsorship.

Health Savings Account, Retiree Medical Savings Account Plan and Retiree Health Access Plan for all U.S.-based Staff Members

Effective January 1, 2016, we offered a high deductible health plan, or HDHP, and a health savings account, or HSA,

that is available to all U.S.-based (excluding Puerto Rico) staff members. To encourage participation, we made a $1,000 Company contribution to U.S.-based (excluding Puerto Rico) staff members enrolled in the HDHP and HSA on January 1, 2016. We also maintain a Retiree Medical Savings Account Plan available to all U.S.-based (excluding Puerto Rico) staff members. The Retiree Medical Savings Account Plan allows all staff members to make after-tax deferrals to be used post-termination to reimburse them for eligible medical expenses. The Company

credits all eligible staff members with an annual contribution ($1,000) and makes a matching contribution equal to 50% of a staff member’s deferrals (up to a match of $1,500 per year). Company credits can be accessed to reimburse eligible medical expenses of staff members who terminate having fulfilled the Company’s retirement criteria. The permissible uses of such credits were expanded to include COBRA, individual and health insurance exchange-related premiums. We do not offer a traditional Company-paid retiree medical plan to our NEOs or other U.S.-based staff members. The Retiree Health Access Plan iswas available to U.S.-based staff members who retireretired after attaining age 55 and ten years of service and who arewere not eligible for Medicare. Our Retiree Health Access Plan is paid for entirely by a retiree’s contributions, unlike a traditional retiree medical plan that provides a company subsidy based on retirement status or years of service. Our intent is to terminateWe terminated the Retiree Health Access Plan wheneffective January 1, 2016 as our retirees now have access to health coverage through the health insurance exchange system becomes a viable health insurance option for our retirees.under the Affordable Care Act.

 

 

Taxes and Accounting Standards

 

 

Tax Deductibility Under Section 162(m) of the Internal Revenue Code

We developmaintain certain incentive compensation programs that are intended to provide for compensation that is tax deductible to us, but we recognize that the best interests of our stockholders may at times be better served by compensation arrangements that are not tax deductible. Section 162(m) places a $1,000,000 limit on the amount of compensation that we may deduct for tax purposes for any year with respect to the executive who serves as our CEO at year-end, and any of our three other most highly compensated employees who serve as executive officers at year-end, other than our Chief Financial Officer. The $1,000,000 limit does not apply to performance-based compensation, as defined under Section 162(m). Our executive compensation program is designed with the intent to maximizeprovide cash incentive compensation under our EIP and

the deductibility ofperformance units under our performance award program as qualifying performance-based compensation. When warranted, however, dueDue to competitive or other factors, the Compensation Committee may decide in certain circumstances to exceed the deductibility limit under Section 162(m) or to otherwise pay non-deductible compensation. These circumstances have included the following:

 

To maintain a competitive base salary, for the CEO position, the base salary provided to Mr.Messrs. Bradway and Hooper in 20132015 exceeded the tax-deductible limit.

 

The use of RSUs as part (20%) of the annual LTI equity award mix for executives and officers is focused primarily on the attraction and retention of the talent needed to drive our long-term success. This compensation, however, is not performance-based compensation under Section 162(m). The fiscal impact for 20132015 of the RSUs not being performance-based is approximately

 

 

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performance-based is approximately $975,000,$2.4 million assuming the Company’s U.S. combined effective tax rate for 2013.2015.

 

To attract highly qualified executives to join us and to promote their retention, we may offer other compensation elements that are not performance-based compensation under Section 162(m), such as retention bonuses or sign-on bonuses, as part of their initial employment offers, and bonuses paid under our GMIP to executives who are hired past the eligibility date of our EIP. Such sign-on bonuses were offered to Messrs. Meline and Graham in connection with their initial employment offers.

Accounting Standards

Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718 requires us to recognize an expense for the fair value of equity-based

compensation awards. Grants of stock options, RSUs and performance units under our LTI equity award plans are

accounted for under FASB ASC Topic 718. The Compensation Committee regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our LTI equity award plans and programs. For example, the Compensation Committee took these accounting standards into account when discontinuing grants of incentive stock options. In addition, we modified our Employee Stock Purchase Plan to make it non-compensatory under the “safe harbor” provisions of the accounting rules and therefore no longer recognize compensation expense under this plan. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.

 

 

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      EXECUTIVE COMPENSATION TABLES  

 

Executive Compensation Tables

Summary Compensation Table

 

The following table sets forth summary information concerning the compensation awarded to, paid to, or earned by each of our Named Executive Officers, or NEOs.

 

Name and Principal Position Year Salary
($)(1)
 Bonus
($)
 Stock
Awards
($)(2)
 Option
Awards
($)
 Non-Equity
Incentive Plan
Compensation
($)(3)
 All Other
Compensation
($)(4)
 Total
($)
   Year   Salary
($)(1)
   Bonus
($)
   Stock
Awards
($)(2)
   Non-Equity
Incentive Plan
Compensation
($)(3)
   All Other
Compensation
($)(4)
   Total
($)
 
       Performance
Units and
Restricted
Stock Units
 Stock
Options
 EIP                   Performance
Units and
Restricted
Stock Units
   EIP/GMIP         

Robert A. Bradway

Chairman of the Board, Chief Executive Officer and President

  

 

 

2013

2012

2011

  

  

  

  

 

 

1,490,769

1,262,308

1,023,692

  

  

  

  

 

 

0

0

0

  

  

  

  

 

 

7,999,917

8,571,724

3,147,900

  

  

  

  

 

 

0

0

833,850

  

  

  

  

 

 

3,598,000

3,316,000

1,860,000

  

  

  

  

 

 

561,121

420,059

259,522

  

  

  

  
 
 
13,649,807
13,570,091
7,124,964
  
  
  
  

 

 

 

 

 

2015

2014

2013

 

  

  

  

  

 

 

 

 

 

1,505,769

1,505,769

1,490,769

 

  

  

  

  

 

 

 

 

 

0

0

0

 

  

  

  

  

 

 

 

 

 

10,199,959

8,999,880

7,999,917

 

  

  

  

  

 

 

 

 

 

3,841,000

2,867,000

3,598,000

 

  

  

  

  

 

 

 

 

 

550,986

589,018

561,121

 

  

  

  

  

 

 

 

 

 

16,097,714

13,961,667

13,649,807

 

  

  

  

Anthony C. Hooper

Executive Vice President, Global Commercial Operations

  
 
 
2013
2012
2011
  
  
  
  
 
 
1,001,858
976,179
171,731
  
  
  
  

 
 

0

0
3,050,045

  

  
  

  
 
 
3,199,895
5,296,747
8,464,614
  
  
  
  

 

 

0

0

0

  

  

  

  
 
 
1,677,000
1,795,000
196,000
  
  
  
  
 
 
300,750
518,068
174,822
  
  
  
  
 
 
6,179,503
8,585,994
12,057,212
  
  
  
  

 

 

 

 

 

2015

2014

2013

 

  

  

  

  

 

 

 

 

 

1,005,653

1,005,653

1,001,858

 

  

  

  

  

 

 

 

 

 

0

0

0

 

  

  

  

  

 

 

 

 

 

3,499,865

2,999,960

3,199,895

 

  

  

  

  

 

 

 

 

 

1,649,000

1,325,000

1,677,000

 

  

  

  

  

 

 

 

 

 

260,211

291,341

300,750

 

  

  

  

  

 

 

 

 

 

6,414,729

5,621,954

6,179,503

 

  

  

  

Jonathan M. Peacock(5)

Executive Vice President and Chief Financial Officer

  
 
 
2013
2012
2011
  
  
  
  
 
 
904,945
878,931
833,846
  
  
  
  

 

 

0

0

0

  

  

  

  
 
 
3,199,895
3,542,911
2,363,499
  
  
  
  

 

 

0

0

625,388

  

  

  

  
 
 
1,515,000
1,615,000
1,211,000
  
  
  
  
 
 
266,967
240,588
245,158
  
  
  
  
 
 
5,886,807
6,277,430
5,278,891
  
  
  

Sean E. Harper(6)

Executive Vice President, Research and Development

  
 
2013
2012
  
  
  
 
896,543
835,038
  
  
  

 

0

0

  

  

  
 
3,199,895
3,542,911
  
  
  

 

0

0

  

  

  
 
1,501,000
1,535,000
  
  
  
 
265,228
176,814
  
  
  
 
5,862,666
6,089,763
  
  

Madhavan Balachandran(7)

Executive Vice President, Operations

  2013    762,461    330,000    3,199,895    0    1,273,000    203,354    5,768,710  

David W. Meline(5)

Executive Vice President and Chief Financial Officer

  

 

 

 

 

2015

2014

 

  

  

  

 

 

 

 

903,478

408,469

 

  

  

  

 

 

 

 

1,000,000

1,000,000

 

  

  

  

 

 

 

 

2,999,795

6,799,914

 

  

  

  

 

 

 

 

1,482,000

481,000

 

  

  

  

 

 

 

 

207,351

1,909,980

 

  

  

  

 

 

 

 

6,592,624

10,599,363

 

  

  

Sean E. Harper

Executive Vice President, Research and Development

  

 

 

 

 

 

2015

2014

2013

 

  

  

  

  

 

 

 

 

 

899,948

899,948

896,543

 

  

  

  

  

 

 

 

 

 

0

0

0

 

  

  

  

  

 

 

 

 

 

2,999,795

2,999,960

3,199,895

 

  

  

  

  

 

 

 

 

 

1,476,000

1,186,000

1,501,000

 

  

  

  

  

 

 

 

 

 

232,082

259,782

265,228

 

  

  

  

  

 

 

 

 

 

5,607,825

5,345,690

5,862,666

 

  

  

  

Jonathan P. Graham(6)

Senior Vice President, General Counsel and Secretary

  

 

 

 

2015

 

  

  

 

 

 

424,464

 

  

  

 

 

 

1,427,203

 

  

  

 

 

 

8,599,985

 

  

  

 

 

 

151,797

 

  

  

 

 

 

2,179,852

 

  

  

 

 

 

12,783,301

 

  

 

(1)

Reflects base salary earned in each bi-weekly pay period (or portion thereof) during each fiscal year before pre-tax contributions and, therefore, includes compensation deferred under our qualified deferred compensation plan and nonqualified deferred compensation plans.plan, or NDCP. Under payroll practices for salaried staff members of our U.S. entities, including our NEOs, base salary earned in a pay period is computed by dividing the annual base salary then in effect by 26, which is the number of full bi-weekly pay periods in a year.

(2)

For 2013,2015, reflects the grant date fair values of performance units for the 2015-2017 performance period and restricted stock units, or RSUs, granted during 20132015 determined in accordance with Accounting Standard Codification, or ASC, Topic 718 (see footnotes 5 and 6 to the “Grants of Plan-Based Awards” table for information on how these amounts were determined).

 

    

The single measure that determines the number of units to be earned for the performance unit awardsunits granted during 20132015 is our total shareholder return, or TSR, compared with the average ofrelative to the TSRs of the companies in the Standard & Poor’s 500 Index, or S&P 500, all computed over the performance period, which is a market condition as defined under Financial Accounting Standards Board principles regarding the measurement of stock-based compensation (ASC 718). Since these awards do not have performance conditions as defined under ASC 718, such awards have no maximum grant date fair values that differ from the grant date fair values presented in the table above.

(3)

ReflectsExcept for Mr. Graham, reflects amounts that were earned under our Executive Incentive Plan, or EIP, for 20132015 performance which were determined and paid in March 2014.2016. For a description of our EIP, see “Elements of Compensation and Specific Compensation Decisions—ELEMENTS OF COMPENSATION AND SPECIFIC COMPENSATION DECISIONS—Annual Cash Incentive Awards” in our Compensation Discussion and Analysis. For Mr. Graham, represents the portion of his incentive award earned under our Global Management Incentive Plan, or GMIP, that exceeded the amount guaranteed to Mr. Graham upon his hiring.

(4)

See the subsection “All Other Compensation—Perquisites and Other Compensation” immediately following these footnotes.

(5)

Mr. Peacock ceased service as our Chief Financial Officer as of January 10, 2014 and is no longer an executive officer.

(6)

Dr. Harper was not an NEO in 2011. Dr. Harper was appointed to serve as Executive Vice President, Research and Development effective February 13, 2012, but this table reflects his compensation earned for all of Fiscal 2012.

(7)

Mr. Balachandran was not an NEO in 2012 or 2011. Mr. Balachandran was appointed to serve as Executive Vice President, Operations effective August 13, 2012. The amount shown in the bonus column reflects the 2013 installment of the special retention bonus award to Mr. Balachandran in March 2011, with installments payable on March 2 of 2012, 2013, 2014 and 2015, subject to his continued employment through such dates (except for certain terminations of employment — see “ELEMENTS OF COMPENSATION AND SPECIFIC COMPENSATION DECISIONS—Annual Cash Incentive Award—Special Retention Award” in our Compensation Discussion and Analysis).

 

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      EXECUTIVE COMPENSATION TABLES  

 

(5)

Mr. Meline was hired to serve as Executive Vice President and Chief Financial Officer effective July 21, 2014. This table reflects his compensation earned beginning on that date. The amount shown in the bonus column for 2014 and 2015 reflects the two installments paid to Mr. Meline as a sign-on bonus to replace the value of Mr. Meline’s pro-rata 2014 bonus with his former employer which was forfeited upon leaving his position.

(6)

Mr. Graham was hired to serve as Senior Vice President, General Counsel and Secretary effective July 13, 2015. This table reflects his compensation earned beginning on that date. The amount shown in the bonus column includes: (i) the first of two $1,000,000 installments due to Mr. Graham as a sign-on bonus to replace the pro-rata value of Mr. Graham’s 2015 bonus at his current employer, which was forfeited upon his leaving, and to induce Mr. Graham to accept the Company’s offer of employment and (ii) $427,203 which is a portion of the bonus paid under the GMIP to Mr. Graham that was guaranteed in his offer letter (see footnote 2(a) to the “Grants of Plan-Based Awards” table for information on how this amount was determined).

All Other Compensation — Compensation—Perquisites and Other Compensation

 

Perquisites. The amounts reported reflect the aggregate incremental cost of perquisites and other personal benefits provided to our NEOs and are included in the “All Other Compensation” column of the “Summary Compensation Table.” The following table sets forth the perquisites provided to our NEOs in 2013.2015.

 

  Personal Use
of Company
Aircraft(1)
   Personal Use
of Company
Car and
Driver(2)
   Personal
Financial
Planning
Services
   Other(3)       Personal Use
of Company
Aircraft(1)
   Personal Use
of Company
Car and
Driver(2)
   Personal
Financial
Planning
Services
   Moving and Relocation
Expenses(3),(4)
   Other(5)     
Name  Aggregate
Incremental
Cost($)
   Aggregate
Incremental
Cost($)
   Aggregate
Incremental
Cost($)
   Aggregate
Incremental
Cost($)
   Total($)   Aggregate
Incremental
Cost($)
   Aggregate
Incremental
Cost($)
   Aggregate
Incremental
Cost($)
   Aggregate
Incremental
Cost($)
   Tax Gross-
Up($)
   Aggregate
Incremental
Cost($)
   Total($) 

Robert A. Bradway

   52,653     6,357     15,000     7,434     81,444    

 

 

 

 

83,720

 

 

  

 

  

 

 

 

 

2,306

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

7,491

 

 

  

 

  

 

 

 

 

108,517

 

 

  

 

Anthony C. Hooper

   0     1,449     15,000     5,108     21,557    

 

 

 

 

593

 

 

  

 

  

 

 

 

 

1,437

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

6,648

 

 

  

 

  

 

 

 

 

23,678

 

 

  

 

Jonathan M. Peacock

   35     1,897     11,579     1,906     15,417  

David W. Meline

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

943

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

34,528

 

 

  

 

  

 

 

 

 

8,617

 

 

  

 

  

 

 

 

 

6,700

 

 

  

 

  

 

 

 

 

65,788

 

 

  

 

Sean E. Harper

   0     2,451     15,000     5,063     22,514    

 

 

 

 

384

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

5,000

 

 

  

 

  

 

 

 

 

20,384

 

 

  

 

Madhavan Balachandran

   0     0     15,000     6,700     21,700  

Jonathan P. Graham

  

 

 

 

 

437

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

93,928

 

 

  

 

  

 

 

 

 

57,660

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

152,025

 

 

  

 

(1)

The aggregate incremental cost of use of our aircraft for personal travel by our NEOs is allocated entirely to the highest ranking NEO present on the flight.flight (except for on-board catering costs which are allocated to each NEO present). If each NEO present on the flight is the same level, the aggregate incremental costs of use of our aircraft for personal travel is allocated to each NEO present. The aggregate incremental cost for personal use of our aircraft is calculated based on our variable operating costs, which include the cost of crew travel expenses, on-board catering, landing fees, trip-related hangar/parking costs, fuel, trip specific maintenance and other smaller variable costs. In determining the incremental cost relating to fuel and trip-related maintenance, we applied our actual average costs. We believe that the use of this methodology for 20132015 is a reasonably accurate method for calculating fuel and trip-related maintenance costs. Because our aircraft are used primarily for business travel, we do not include the fixed costs that do not change based on usage, such as pilots’ salaries, our aircraft purchase costs and the cost of maintenance not related to trips.

(2)

The aggregate incremental cost for personal use of athe car and driver provided by us is calculated by allocatingdetermined as the costssum of operating the car and compensating the driver between personal and business use. The cost of operating the car is allocatedfuel, driver overtime costs allocable to personal use on the basis of miles drivenusage and maintenance costs for personal use to total miles driven. The cost of compensating the driver is allocated to personal use on the basis of driver hours related to personal use to the total number of personal miles driven. As the cars are used primarily for business travel, fixed costs that would be incurred by us to operate the company cars for business use such as car lease costs and driver hours.salaries are not included.

(3)

Mr. Meline agreed to relocate from Minnesota to Thousand Oaks, California to serve as our Executive Vice President and Chief Financial Officer in July 2014. The incremental cost of certain relocation benefits that were provided to Mr. Meline in 2015 in connection with this relocation in accordance with our relocation policies, include:

(a)

$15,182 for costs related to the sale of his prior residence;

(b)

$18,996 for costs to relocate household goods;

(c)

$350 for miscellaneous other relocation expenses; and

(d)

$8,617 of tax gross-up payments on moving and relocation benefits provided.

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  EXECUTIVE COMPENSATION TABLES  

(4)

Mr. Graham agreed to relocate from Washington, D.C. to Thousand Oaks, California to serve as Senior Vice President, General Counsel and Secretary in July 2015. The incremental cost of certain relocation benefits that were provided to Mr. Graham in 2015 in connection with this relocation in accordance with our relocation policies, include:

(a)

$73,835 for housing and living costs;

(b)

$8,969 transportation costs of relocation-related trips;

(c)

$2,805 for costs to relocate household goods;

(d)

$8,319 for miscellaneous other relocation expenses; and

(e)

$57,660 of tax gross-up payments on moving and relocation benefits provided.

(5)

Other expenses include Company contributions to non-profit charities designated by the executive in the amount of $4,800$4,992 for Mr. Bradway $4,992 forand Mr. Hooper and $5,000 for Mr. Meline and Dr. Harper and Mr. Balachandran, respectively.Harper. Other expenses also include the cost of executive physicals and expenses related to guests accompanying the NEOs on business travel and gifts.travel.

Other Compensation. The following table sets forth compensation for our NEOs in 20132015 incurred in connection with our 401(k) Retirement and Savings Plan, or 401(k) Plan, and our Supplemental Retirement Plan, or SRP. These amounts are included in the “All Other Compensation” column of the “Summary Compensation Table.” See “Nonqualified Deferred Compensation” below for a description of these plans.

 

Name  Company
Contributions
to 401(k)
Retirement
and Savings
Plan($)
   Company
Credits to
Supplemental
Retirement
Plan($)
   Total($)   Company
Contributions
to 401(k)
Retirement
and Savings
Plan($)
   Company
Credits to
Supplemental
Retirement
Plan($)
   

Company
Credits to
Nonqualified

Deferred
Compensation
Plan($)

 Total($) 

Robert A. Bradway

   25,500     454,177     479,677    

 

 

 

 

26,500

 

 

  

 

  

 

 

 

 

415,969

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

442,469

 

 

  

 

Anthony C. Hooper

   25,500     253,693     279,193    

 

 

 

 

26,500

 

 

  

 

  

 

 

 

 

210,033

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

236,533

 

 

  

 

Jonathan M. Peacock

   25,500     226,050     251,550  

David W. Meline

  

 

 

 

 

26,500

 

 

  

 

  

 

 

 

 

115,063

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

141,563

 

 

  

 

Sean E. Harper

   25,500     217,214     242,714    

 

 

 

 

26,500

 

 

  

 

  

 

 

 

 

185,198

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

211,698

 

 

  

 

Madhavan Balachandran

   25,500     156,154     181,654  

Jonathan P. Graham

  

 

 

 

 

13,250

 

 

  

 

  

 

 

 

 

14,577

 

 

  

 

  

 

 

 

 

2,000,000

 

 

(1) 

 

 

 

 

 

 

2,027,827

 

 

  

 

 

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(1)
 EXECUTIVE COMPENSATION TABLES  

Negotiated by Mr. Graham in connection with his hiring to replace forfeiture of certain benefits at his former employer. This contribution vests at the rate of 20% per year from 2016 through 2020 as long as Mr. Graham remains continuously employed by us, which vesting accelerates upon death, disability, termination of employment not for cause or a change of control consistent with the terms of the NDCP.

Narrative Description to the Compensation Tables—Performance Units

 

Long-term incentive performance units are granted to our NEOs annually during the first year of a three-yearthe performance period, generally three years, and are paid out atfollowing the end of the performance period based on our level of achievement of the applicable pre-established performance goals over the performance period, as determined by our Compensation and Management Development Committee, or Compensation Committee, for such performance period for each grant. The number of performance units earned are paid out in shares of our Common Stock at a ratio of one share of Common Stock for each performance unit earned.

Performance units are generally forfeited unless a participant is continuously employed through the last business day of the performance period. The underlying principle is that the participant needs to have been an active employee during

the entire performance period in order to have contributed to the results on which the earned awards are based. Exceptions to this treatment are a termination of employment in connection with a change of control or the death, disability or retirement of a participant as discussed under “Potential Payments Upon Termination or Change of Control” below.

Performance Goals and Formulas

For a description of the performance units for the 2011-2013 performance period that began on January 1, 2011 and ended on December 31, 2013 and for the 2013-2015 performance period that began on January 28, 2013 and ended on January 28, 2016 and for the 2015-2017 performance period that began on January 30, 2015 and will end on January 28, 2016,30, 2018, see ELEMENTS OF COMPENSATION AND SPECIFIC COMPENSATION DECISIONS“Elements of Compensation and Specific Compensation Decisions—Long-Term Incentive Equity Awards” in our Compensation Discussion and Analysis.

Performance goals for the 2012-2014 performance period that began on January 1, 2012 and will end on December 31, 2014 are based upon our TSR for the 2012-2014 performance period (or Amgen TSR) compared with the

average of the TSRs of our 15-company peer group for such period (Peer Group Average TSR). As discussed under “ELEMENTS OF COMPENSATION AND SPECIFIC COMPENSATION DECISIONSLong-Term Incentive Equity Awards” in our Compensation Discussion and Analysis, as a result of the Abbott Laboratories spin-off, AbbVie Inc. replaced Abbott Laboratories, effective January 1, 2013. The maximum number of performance units that may be earned is 150% of the target performance units granted for the 2012-2014 performance period. The payout percentage is derived in part from the difference between the Amgen TSR and the Peer Group Average, which can be a positive or negative number, and is determined in accordance with the following formula (subject to the 150% cap):

Payout Percentage:
100%+2 X(Amgen TSR – Peer Group Average TSR)

Performance Units for Mr. Hooper

To compensate Mr. Hooper for equity lost as a result of his leaving his previous employer, to induce him to join us and to provide long-term incentives that are in alignment with stockholder interests, he was granted three performance-based performance unit awards. The three performance periods for the performance unit awards each commenced on his hire date of October 27, 2011 and ended or will end on December 31, 2012, December 31, 2013 and December 31, 2014, respectively. The goal design for these performance unit awards is identical to the 2011-2013 performance period awards described under “ELEMENTS OF COMPENSATION AND SPECIFIC COMPENSATION DECISIONSLong-Term Incentive Equity Awards” in our Compensation Discussion and Analysis, except that Allergan, Inc. and Celgene Corporation were added to the peer group used to calculate the payout, resulting in a 15-company peer group for each of his awards.

 

 

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      EXECUTIVE COMPENSATION TABLES  

The structure of the performance goals for the outstanding 2014-2016 performance period that began on January 31, 2014 and will end on January 31, 2017 and the 2015-2017 performance period are substantially similar to the performance goals for the 2013-2015 performance period, and are based upon our TSR for the 2014-2016 and2015-2017 performance periods, respectively, relative to the

TSRs of the companies that are listed in the S&P 500, as defined (the Reference Group), over the performance period. If the rank of the TSR of our Common Stock is the 0th, 25th, 50th or 75th percentile or greater relative to the companies of the Reference Group, the percentage payout will be 0%, 50%, 100% or 150%, respectively, with linear interpolation between these percentiles.

 

Grants of Plan-Based Awards

 

The following table sets forth summary information regarding all grants of plan-based awards made to our NEOs for the year ended December 31, 2013.2015.

 

     

Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards($)(2)

 Estimated Future
Payouts Under Equity
Incentive Plan
Awards(# of units)(3)
 All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(#)(4)
  Grant Date
Fair Value
of Stock
and
Option
Awards($)
      

Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards($)(2)

 

Estimated Future
Payouts Under Equity
Incentive Plan
Awards(# of units)(3)

 All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(#)(4)
  Grant Date
Fair Value
of Stock
and
Option
Awards($)
 
Name Grant
Date
 Approval
Date(1)
 Threshold Target Maximum Threshold Target Maximum  Grant
Date
 Approval
Date(1)
 Threshold Target Maximum Threshold Target Maximum 
     EIP   Performance Units RSUs          EIP/GMIP Performance Units RSUs    

Robert A. Bradway

 3/6/13    3/6/13   (2) (2) 7,267,500        

 

 

 

3/4/15

 

  

 

 

 

 

3/4/15

 

  

 

 

(2)

 

 

(2)

 

 

 

 

9,960,000

 

  

     
 1/28/13   12/13/12      (3) 71,309   106,963     6,399,983(5)   1/30/15    12/17/14      (3)  51,179    76,768     8,159,980(5) 
 1/28/13   12/13/12         18,693    1,599,934(6)   

 

1/30/15

 

  

 

  

 

12/17/14

 

  

 

        

 

13,398

 

  

 

   

 

2,039,979

 

(6)  

 

Anthony C. Hooper

 3/6/13    3/6/13   (2) (2) 4,360,500        

 

 

 

3/4/15

 

  

 

 

 

 

3/4/15

 

  

 

 

(2)

 

 

(2)

 

 

 

 

5,976,000

 

  

     
 1/28/13   12/13/12      (3) 28,523   42,784     2,559,939(5)   1/30/15    12/17/14      (3)  17,561    26,341     2,799,926(5) 
 1/28/13   12/13/12         7,477    639,956(6)   

 

1/30/15

 

  

 

  

 

12/17/14

 

  

 

        

 

4,597

 

  

 

   

 

699,939

 

(6)  

 

Jonathan M. Peacock

 3/6/13    3/6/13   (2) (2) 4,360,500       

David W. Meline

 

 

 

 

3/4/15

 

  

 

 

 

 

3/4/15

 

  

 

 

(2)

 

 

(2)

 

 

 

 

5,976,000

 

  

     
 1/28/13   12/13/12      (3) 28,523   42,784     2,559,939(5)   1/30/15    12/17/14      (3)  15,052    22,578     2,399,891(5) 
 1/28/13   12/13/12         7,477    639,956(6)   

 

1/30/15

 

  

 

  

 

12/17/14

 

  

 

        

 

3,940

 

  

 

   

 

599,904

 

(6)  

 

Sean E. Harper

 3/6/13    3/6/13   (2) (2) 4,360,500        

 

 

 

3/4/15

 

  

 

 

 

 

3/4/15

 

  

 

 

(2)

 

 

(2)

 

 

 

 

5,976,000

 

  

     
 1/28/13   12/13/12      (3) 28,523   42,784     2,559,939(5)   1/30/15    12/17/14      (3)  15,052    22,578     2,399,891(5) 
 1/28/13   12/13/12         7,477    639,956(6)   

 

1/30/15

 

  

 

  

 

12/17/14

 

  

 

        

 

3,940

 

  

 

   

 

599,904

 

(6)  

 

Madhavan Balachandran

 3/6/13    3/6/13   (2) (2) 4,360,500       

Jonathan P. Graham

 

 

 

 

7/13/15

 

  

 

 

 

 

7/13/15

 

  

 

 

(2)

 

 

(2)

 

 

 

 

739,390

 

  

     
 1/28/13   12/13/12      (3) 28,523   42,784     2,559,939(5)   

 

8/4/15

 

  

 

  

 

5/14/15

 

  

 

        

 

49,199

 

  

 

   

 

8,599,985

 

(6)  

 

 1/28/13   12/13/12         7,477    639,956(6) 

 

(1)

Reflects the date on which the grants were approved by the Compensation Committee. See COMPENSATION POLICIES AND PRACTICES“Compensation Policies and Practices—Policies for Grants of Long-Term Incentive Equity Awards” in our Compensation Discussion and Analysis for a description of the timing of our annual equity award grants.

(2)

Represents awards to our NEOs made under our EIP, except for Mr. Graham, whose award was made under our GMIP since Mr. Graham commenced employment on July 13, 2015 and was thus not eligible to participate in the EIP. TheFor our EIP participants, the “maximum” amounts shown in the table above reflect the largest possible payments under our EIP for the 20132015 performance period, based on our adjusted net income, as defined for the EIP. There are no thresholds or targets under the EIP. The EIP provides that the Compensation Committee may use “negative discretion” to award any amount that does not exceed the maximum. Consistent with its practice since the EIP was approved by our stockholders, in 2002, the Compensation Committee employed the pre-established GMIP Company performance goals, established under our Global Management Incentive Plan, or GMIP, as illustrated in the table below, as well as each NEO’s contributions in determining the actual amounts awarded under the EIP in 2013.2015. Our GMIP for 20132015 was based on our performance against threetwo primary Company performance goals, weighted as follows: (1) Deliver Financially (60%); (2) Deliver the Best Pipeline (20%Results (70%) and (3) Deliver Strategic Priorities (20%(2) Progress Innovative Pipeline (30%). Threshold goals of 50% of target performance have been established only for the non-financial metrics. There are no threshold goals for the financial metrics. These non-financial metrics are often expressed in milestones or are more subjective in nature than are the financial metrics. If only one of the minor non-financial goals is accomplished, the payout percentage would be very small (less than 1% of a target annual cash incentive award) and, thusas such, no threshold amount is shown in the table below. The 20132015 GMIP-derived target and maximum payout levels, which are based on a multiple of salary, are shown in the table below. The actual amounts awarded under our EIP are based on achieving 186.9% performance against target under the 2013 GMIP and reported as “Non-Equity Incentive Plan Compensation” in our “Summary Compensation Table” and are shown in the table below. For a description of our Company performance goals and the use of the GMIP in the Compensation Committee’s exercise of negative discretion see “ELEMENTS OF COMPENSATION AND SPECIFIC COMPENSATION DECISIONSAnnual Cash Incentive Awards” in our Compensation Discussion and Analysis.

 

LOGOLOGO  ï 20142016 Proxy Statement    6775


      EXECUTIVE COMPENSATION TABLES  

 

shown in the table below. Mr. Graham’s maximum payout under the GMIP reflects his July 13, 2015 commencement of employment and includes the portion of the award guaranteed under his employment agreement (discussed in footnote (a) to the table below). The actual amounts awarded under our EIP and GMIP are based on achieving 176.1% performance against target under the 2015 GMIP and are reported as “Non-Equity Incentive Plan Compensation” in our “Summary Compensation Table” and are shown in the table below. See footnote (a) to the table below for more information on Mr. Graham’s award, including where it is reported in our “Summary Compensation Table.” For a description of our pre-established GMIP Company performance goals and the use of the GMIP in the Compensation Committee’s exercise of negative discretion see “Elements of Compensation and Specific Compensation Decisions—Annual Cash Incentive Awards” in our Compensation Discussion and Analysis.

 

  GMIP 

Non-Equity
Incentive Plan
Compensation($)

 
  GMIP   Non-Equity
Incentive Plan
Compensation($)
   Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards($)
 
  Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards($)
                 
Name  Threshold   Target   Maximum   Actual   Threshold Target Maximum Actual 

Robert A. Bradway

       1,925,000     4,331,250     3,598,000    

 

 

 

 

 

 

  

 

 

 

 

 

 

2,180,769

 

 

  

 

 

 

 

 

 

4,906,730

 

 

 ��

 

 

 

 

 

 

3,841,000

 

 

  

 

Anthony C. Hooper

       897,241     2,018,792     1,677,000    

 

 

 

 

 

 

  

 

 

 

 

 

 

936,298

 

 

  

 

 

 

 

 

 

2,106,671

 

 

  

 

 

 

 

 

 

1,649,000

 

 

  

 

Jonathan M. Peacock

       810,447     1,823,506     1,515,000  

David W. Meline

  

 

 

 

 

 

 

  

 

 

 

 

 

 

841,169

 

 

  

 

 

 

 

 

 

1,892,630

 

 

  

 

 

 

 

 

 

1,482,000

 

 

  

 

Sean E. Harper

       802,921     1,806,572     1,501,000    

 

 

 

 

 

 

  

 

 

 

 

 

 

837,883

 

 

  

 

 

 

 

 

 

1,885,237

 

 

  

 

 

 

 

 

 

1,476,000

 

 

  

 

Madhavan Balachandran

       680,885     1,531,991     1,273,000  

Jonathan P. Graham

  

 

 

 

 

 

 

 

(a) 

 

 

 

 

 

 

 

 

 

(a) 

 

 

 

 

 

 

739,390

 

 

(a) 

 

 

 

 

 

 

151,797

 

 

(a) 

 

 

(a)

Mr. Graham’s actual award under the GMIP for 2015 was based on the Company’s actual performance and his target annual cash incentive award opportunity applied to his eligible earnings since his employment commenced on July 13, 2015 (target annual cash incentive). As an inducement to join the Company, we guaranteed a minimum payout based on a GMIP Company performance goals composite score of 130% for his 2015 GMIP annual cash incentive award. The actual GMIP Company performance goals composite score of 176.1% exceeded this guarantee, and resulted in a payout for Mr. Graham of $579,000. Reflected in the table above is the maximum amount that Mr. Graham could earn under the GMIP without regard to the guarantee. The threshold amount is excluded as his guaranteed minimum award of 130% exceeded the 100% target percentage under the GMIP. Further, in accordance with SEC reporting rules, the guaranteed minimum award under the GMIP for 2015 of $427,203 (target annual cash incentive multiplied by 130%) is reported in the “Bonus” column of the “Summary Compensation Table” and the $151,797 of the GMIP award in excess of this amount is reported in the “Non-Equity Incentive Plan Compensation” in our “Summary Compensation Table”.

(3)

Reflects estimated payouts regarding performance units granted during 20132015 for the 2013-20152015-2017 performance period for NEOs. The number of units granted (which equals the target number of units of the award) will be multiplied by a payout percentage, which can range from 0% to 150%, to determine the number of units earned by the participant at the end of the performance period. Shares of our Common Stock will be issued on a one-for-one basis for each performance unit earned. The payout percentage for the 2013-20152015-2017 performance period performance units is earned based on how the TSR of our Common Stock ranks relative to the TSRs of the companies that are listed in the S&P 500, Index, as defined (the Reference Group), over the performance period. If the rank of the TSR of our Common Stock is the 0th, 25th, 50th or 75th percentile relative to companies in the Reference Group, the percentage payout will be 0%, 50%, 100% or 150%, respectively, with linear interpolation used to determine the payout percentage if the rank of the TSR of our Common Stock falls between these percentiles, as applicable. If the rank of the TSR of our Common Stock is above the 75th percentile, the percentage payout will be 150%. These performance units accrue dividend equivalents deemed reinvested in shares and that are payable in shares only to the extent and when the underlying performance units are earned. For more information, see ELEMENTS OF COMPENSATION AND SPECIFIC COMPENSATION DECISIONS“Elements of Compensation and Specific Compensation Decisions—Long-Term Incentive Equity Awards” in our Compensation Discussion and Analysis. Mr. Graham commenced employment with the Company after the participants for the 2015-2017 performance period had been determined and, as such, he did not receive any performance units.

(4)

Reflects RSUs granted during 2015, including the 2013 annual grant of RSUs to our NEOs.NEOs and RSUs granted to Mr. Graham in connection with the commencement of his employment with the Company on July 13, 2015. RSUs accrue dividend equivalents that are deemed reinvested in shares and payable only to the extent and when the underlying RSUs vest and are issued to the recipient.

(5)

Reflects the grant date fair values of the performance units granted during 20132015 for the 2013-20152015-2017 performance period determined in accordance with ASC 718 based on the number of performance units granted multiplied by the grant date fair value per unit of $89.75. The$159.44. Because the performance units are earned based solely on the market condition of relative TSR performance the grant date fair value per unit was determined using a payout simulation model with the following key assumptions: risk-free interest rate of 0.4%0.8%; volatility of the price of our Common Stock of 20.7%24%; the closing price of our Common Stock on the grant date of $85.59$152.26 per share; volatilities of the prices of the stocks of the Reference Group and the correlations of returns of our Common Stock and the stocks of the Reference Group to simulate TSRs and their resulting impact on the payout percentagepercentages based on the contractual terms of the performance units.

(6)

Reflects the grant date fair values of RSUs granted during 2015 determined in accordance with ASC 718 based on the number of RSUs granted multiplied by the grant date fair valuevalues per unit of $85.59.$152.26 and $174.80 for grants on January 30 and August 4, respectively. Because these RSUs accrue dividend equivalents during the vesting period, the grant date fair value per unit equals the closing price of our Common Stock on the grant date.

 

6876    LOGOLOGO  ï 20142016 Proxy Statement


      EXECUTIVE COMPENSATION TABLES  

 

Outstanding Equity Awards at Fiscal Year End

 

The following table sets forth summary information regarding the outstanding equity awards at December 31, 20132015 granted to each of our NEOs.

 

 Option Awards Stock Awards  Option Awards Stock Awards 
Name Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
 Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
 Option
Exercise
Price
($/
Option)
 Option
Expiration
Date(1)
 Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(4)
 Market Value
of Shares or
Units of Stock
That Have Not
Vested
($)(5)
 

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
($)(5)

  Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
 Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
 Option
Exercise
Price
($/
Option)
 Option
Expiration
Date(1)
 Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2)
 Market Value
of Shares or
Units of Stock
That Have Not
Vested ($)(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
($)(3)
 
 Stock Options Restricted Stock Units and
Dividend Equivalents
 Performance Units and Dividend
Equivalents
  

Stock Options(1)

 

 

Restricted Stock Units and
Dividend Equivalents

 

 

Performance Units and Dividend
Equivalents

 

 

Robert A. Bradway

  
 
 
 
 
24,255
95,250
84,000
84,000
65,000
  
  
  
  
  
  
 
 

 

 

49,245
31,750
0

0

0

  
  
  

  

  

  
 
 
 
 
54.69
58.43
50.44
42.13
62.55
  
  
  
  
  
  

 

 

 

 

4/25/21

4/26/20

4/28/16

4/29/15

4/26/14

(2) 

(3) 

  

  

  

  
59,215
  
  6,755,247    

 

 

106,886

129,669

51,534

(6) 

(7) 

(8) 

  

 

 

12,193,555

14,792,640

5,878,999

  

  

  

 

 

 

 

 

 

 

73,500

127,000

84,000

 

 

  

  

  

 

 

 

 

 

 

 

 

0

0

0

 

 

  

  

  

 

 

 

 

 

 

 

 

54.69

58.43

50.44

 

 

  

  

  

 

 

 

 

 

 

 

 

4/25/21

4/26/20

4/28/16

 

 

  

  

  

 

 

 

 

 

50,281

 

  

 

 

 

 

8,162,115

 

  

 

 

 

 

 

 

 

70,081

89,990

113,175

 

 

(4) 

(5) 

(6) 

 

 

 

 

 

 

 

 

11,376,249

14,608,077

18,371,698

 

 

  

  

  

 

Anthony C. Hooper

  0    0    n/a    n/a    40,483    4,618,301    

 

 

 

42,753

53,596

52,777

52,777

(6) 

(7) 

(9) 

(10) 

  
 
 
 
4,877,262
6,114,232
6,020,800
6,020,800
  
  
  
  
 

 

 

 

0

 

  

 

 

 

 

0

 

  

   

 

 

 

18,387

 

  

 

 

 

 

2,984,762

 

  

 

 

 

 

 

 

 

24,047

29,996

45,269

 

 

(4) 

(5) 

(6) 

 

 

 

 
 

 

 

 

3,903,550
4,869,251

7,348,517

 

 

  
  

  

 

Jonathan M. Peacock

  
 
18,191
131,250
  
  
  
 
36,934
43,750
  
  
  
 
54.69
57.27
  
  
  

 

4/25/21

10/28/20

(2) 

(3) 

  

 

52,131

 

  

 

  

 

5,947,104

 

  

 

  

 

 

42,753

53,596

38,650

(6) 

(7) 

(8) 

  
 
 
4,877,262
6,114,232
4,409,192
  
  
  

David W. Meline

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

   

 

 

 

 

45,801

 

 

  

 

 

 

 

 

 

7,434,876

 

 

  

 

 

 

 

 

 

20,611

 

 

(4) 

 

 

 

 

 

 

3,345,784

 

 

  

 

Sean E. Harper

  
 
6,930
8,000
  
  
  
 
14,070
8,000
  
  
  
 
54.69
58.43
  
  
  

 

4/25/21

4/26/20

(2) 

(3) 

  46,715    5,329,247    

 

 

42,753

53,596

14,724

(6) 

(7) 

(8) 

  
 
 
4,877,262
6,114,232
1,679,714
  
  
  
 

 

 

 

 

21,000

16,000

 

  

  

 

 

 

 

 

0

0

 

  

  

 

 

 

 

 

54.69

58.43

 

  

  

 

 

 

 

 

4/25/21

4/26/20

 

  

  

 

 

 

 

17,717

 

  

 

 

 

 

2,876,001

 

  

 

 

 

 

 

 

 

20,611

29,996

45,269

 

 

(4) 

(5) 

(6) 

 

 

 

 

 

 

 

 

3,345,784

4,869,251

7,348,517

 

 

  

  

  

 

Madhavan Balachandran

  

 

5,197

0

  

  

  
 
10,553
6,000
  
  
  
 
54.69
58.43
  
  
  

 

4/25/21

4/26/20

(2) 

(3) 

  41,443    4,727,817    

 

 

42,753

15,560

11,043

(6) 

(7) 

(8) 

  
 
 
4,877,262
1,775,085
1,259,785
  
  
  

Jonathan P. Graham

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

   

 

 

 

 

49,697

 

 

  

 

 

 

 

 

 

8,067,314

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

 

 

(1)

Stock options granted prior to April 26, 2010 expire on the seventh anniversary of their grant date. Stock options granted on or after April 26, 2010 expire on the tenth anniversary of their grant date. No stock options werehave been granted to NEOs in 2012 and 2013.subsequent to 2011.

(2)

Stock options vest at a rate of 33%, 33% and 34% on the second, third and fourth anniversaries of the April 25, 2011 grant date, respectively. Thus, of the remaining unvested options, approximately half are scheduled to vest in each of 2014 and 2015.

(3)

Stock options vest in equal installments of 25% on the first, second, third and fourth anniversaries of the grant date of April 26, 2010 for all NEOs other than Mr. Peacock whose grant date in 2010 occurred on October 28, 2010. Thus, the remaining unvested stock options were scheduled to vest in full in 2014.

(4)

The following table shows the vesting of RSUs and any related accrued dividend equivalents (rounded down to the nearest whole number of units) outstanding as of December 31, 2013. Commencing with grants made after March 2012,2015. RSUs accrue dividends that are deemed reinvested in shares and payable only when and to the extent the underlying RSUs vest and are issued to the participant.

 

LOGOï 2014 Proxy Statement69


 EXECUTIVE COMPENSATION TABLES  
  Granted on 
Name August 4,
2015(a)
  January 30,
2015(b)
  August 1,
2014(c)
  January 31,
2014(d)
  January 28,
2013(e)
  April 27,
2012(f)
 

 

Robert A. Bradway

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

13,671

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

15,723

 

 

  

 

 

 

 

 

 

13,252

 

 

  

 

 

 

 

 

 

7,635

 

 

  

 

 

Anthony C. Hooper

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

4,690

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

5,241

 

 

  

 

 

 

 

 

 

5,300

 

 

  

 

 

 

 

 

 

3,156

 

 

  

 

 

David W. Meline

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

4,020

 

 

  

 

 

 

 

 

 

41,781

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

Sean E. Harper

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

4,020

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

5,241

 

 

  

 

 

 

 

 

 

5,300

 

 

  

 

 

 

 

 

 

3,156

 

 

  

 

 

Jonathan P. Graham

 

 

 

 

 

 

49,697

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

Name Granted on
January 28,
2013(a)
  Granted on
July 31,
2012(a)
  Granted on
April 27,
2012(a)
  Granted on
January 31,
2012(b)
  Granted on
October 27,
2011(c)
  Granted on
April 25,
2011(d)
  Granted on
October 28,
2010(e)
  Granted on
April 26,
2010(e)
 

Robert A. Bradway

  19,034    0    21,611    0    0    14,070    0    4,500  

Anthony C. Hooper

  7,613    0    8,932    9,009    14,929    0    0    0  

Jonathan M. Peacock

  7,613    0    8,932    0    0    10,586    25,000    0  

Sean E. Harper

  7,613    0    8,932    0    0    4,020    0    26,150  

Madhavan Balachandran

  7,613    27,348    2,592    0    0    3,015    0    875  
 (a)

Scheduled to vest in approximately equal installments on the first four anniversaries of the grant date, subject to continued service with us, to better align with the value forfeited by Mr. Graham at his previous employer.

(b)Reflects total RSUs granted and related dividend equivalents accrued through December 31, 2013, which are scheduled

Scheduled to vest at a rate of approximately 33%, 33% and 34% of the amounts shown on the second, third and fourth anniversaries of the grant date, respectively.date.

(b)

Reflects RSUs granted to Mr. Hooper which vested in full on March 2, 2014.

 (c)

Reflects remaining unvested RSUs granted to Mr. Hooper, of which 7,690 units vested on March 2, 2014 and the remaining 7,239 units are scheduledScheduled to vest in approximately equal installments on March 2, 2015.the second, third and fourth anniversaries of the grant date.

 (d)

ReflectsApproximately 33% vested on January 31, 2016, and the remaining unvested RSUs which are scheduled to vest in approximately equal installmentsat a rate of 33% and 34% on the third and fourth anniversaries of the grant date.date, respectively.

 (e)

Reflects remaining unvested RSUs which areApproximately half vested on January 28, 2016 and the remainder is scheduled to vest on the fourth anniversary of the grant date, except with respect to 25,000 units outstanding for Dr. Harper which are scheduleddate.

(f)

Scheduled to vest on December 31, 2014.the fourth anniversary of the grant date.

(5)(3)

The market values of RSUs and performance units (and related dividend equivalents) were calculated by multiplying the number of RSUs outstanding or the number of performance units (as determined in accordance with Securities and Exchange Commission, or SEC, rules and footnotes 64 through 106 below), as applicable, by the closing price of our Common Stock on December 31, 20132015 ($114.08)162.33).

LOGOï 2016 Proxy Statement77


  EXECUTIVE COMPENSATION TABLES  

(6)(4)

Reflects the sum of the number of performance units granted for the 2013–20152015–2017 performance period and the related dividend equivalents accrued through December 31, 20132015 multiplied by the payout percentage of 147.2%, which is the relative TSR percentage multiplier of 134.2%. The relative TSR percentage multiplier is based on Amgen’sour TSR percentile rank relative to the TSRs of the companies in the Reference Group for the period from the January 28, 201330, 2015 grant date to December 31, 2013.2015. The number of dividend equivalents multiplied by the 147.2%134.2% payout percentage noted above (rounded down to the nearest whole number of units) included in the table above are as follows: 1,9191,399 units for Mr. Bradway; and 767Bradway, 480 units for Messrs.Mr. Hooper, Peacock and Balachandran411 units for Mr. Meline and Dr. Harper.

(7)(5)

Reflects the number of performance units granted for the 2012-20142014-2016 performance period and related dividend equivalents accrued through December 31, 20132015 multiplied by the maximum payout percentage of 150%. Because a payout percentage equal to 100% plus two times, which is the relative TSR percentage differencemultiplier based on our TSR percentile rank relative to the TSRs of the companies in the Reference Group for the two-year period endedfrom the January 31, 2014 grant date to December 31, 2013 exceeded the maximum payout percentage for the award, the maximum payout percentage was used for purposes of this table. (The determination of the TSR percentage difference is discussed below.)2015. The number of dividend equivalents multiplied by the 150% payout percentage noted above (rounded down to the nearest whole number of units) included in the table above are as follows: 4,0413,383 units for Mr. Bradway; 1,670 units for Messrs. HooperBradway and Peacock and Dr. Harper and 4851,127 units for Mr. Balachandran.Hooper and Dr. Harper.

(8)(6)

Reflects the actual number of performance units earned for the 2011-2013 performance period which equals the number of performance units granted multiplied byfor the actual payout percentage of 122.7%, which equals 100% plus two times the TSR percentage difference of approximately 11.36% over the three-year2013-2015 performance period (the TSR percentage difference equals the Amgen TSR of approximately 114.41% less the Peer Group Average TSR of approximately 103.05%). Noand related dividend equivalents were earned on these performance units.

(9)

Reflects the actual number of performance units earned by Mr. Hooper for the performance period that began on October 27, 2011 and ended onaccrued through December 31, 2013, based on the number of units granted2015 multiplied by the maximum payout percentage of 150%. Had, which is the payoutrelative TSR percentage not been limitedmultiplier based on our TSR percentile rank relative to the maximum percentage that may be earned forTSRs of the award,companies in the payout percentage would have equaled 159.6%, based on 100% plus two times the TSR percentage difference of approximately 29.79% for the performance period (the TSR percentage difference equals the Amgen TSR of approximately 116.74% less the PeerReference Group Average TSR of approximately 86.95%). No dividend equivalents were earned on these performance units.

(10)

Reflects the number of performance units for the remaining performance unit award granted to Mr. Hooper with a performance period beginning on the October 27, 2011 grant date and ending on December 31, 2014 multiplied by the maximum payout percentage of 150%. Because a payout percentage equal to 100% plus two times the TSR percentage difference for the period from the January 28, 2013 grant date throughto December 31, 2013 exceeded2015. The number of dividend equivalents multiplied by the maximum150% payout percentage noted above (rounded down to the nearest whole number of units) included in the table above are as follows: 6,212 units for Mr. Bradway and 2,484 units for Mr. Hooper and Dr. Harper. These awards, together with dividend equivalents accrued in 2016 prior to payout, will be reflected, as applicable, in the award, the maximum payout percentage was used“Options Exercises and Stock Vested” table in our proxy that reports executive compensation for purposes of this table.calendar year 2016.

The estimated payouts of the performance units described above are disclosed in the limited context of our executive compensation program and should not be understood to be statements of our expectations of our stock price or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.

Option Exercises and Stock Vested

The following table summarizes the option exercises, vesting of RSUs and the payment of performance units (and related dividend equivalents, as applicable) for each of our NEOs for the year ended December 31, 2015. The RSUs and performance units vested and converted to one share of our Common Stock for each vested RSU and performance unit. Performance units became payable as shares upon certification by our Compensation Committee and were paid in March 2015.

   Option Awards   Stock Awards 
Name  Number of
Securities
Acquired
on Exercise(#)
   Value
Realized on
Exercise($)(1)
   Number of
Shares
Acquired
on Vesting(#)
   Value
Realized on
Vesting($)(2)
 

 

Robert A. Bradway

 

  

 

 

 

 

84,000

 

 

  

 

  

 

 

 

 

9,279,537

 

 

  

 

  

 

 

 

 

153,553

 

 

  

 

  

 

 

 

 

24,748,863

 

 

  

 

 

Anthony C. Hooper

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

120,445

 

 

  

 

  

 

 

 

 

18,967,370

 

 

  

 

 

David W. Meline

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

13,787

 

 

  

 

  

 

 

 

 

2,434,798

 

 

  

 

 

Sean E. Harper

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

62,469

 

 

  

 

  

 

 

 

 

10,062,680

 

 

  

 

 

Jonathan P. Graham

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

(1)

The value shown is based on the stock options exercised multiplied by the difference between the prices at which they were valued on the date of exercise and the stock option exercise price.

(2)

The value shown is the closing price of a share of our Common Stock on the business days immediately prior to the vesting dates of RSUs and to the payment dates for the performance units, as applicable, multiplied by the number of units vested, including cash received in lieu of fractional dividend equivalents.

 

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      EXECUTIVE COMPENSATION TABLES  

 

Option Exercises and Stock Vested

The following table summarizes the option exercises and vesting of stock awards for each of our NEOs for the year ended December 31, 2013. For a description of the performance units and associated payout values of performance periods that ended on December 31, 2013 and that were earned as of that date, see the “Outstanding Equity Awards at Fiscal Year End” table and footnotes 8 and 9 to the table.

   Option Awards   Stock Awards 
Name  Number of
Securities
Acquired
on Exercise(#)
   Value
Realized on
Exercise($)(1)
   Number of
Shares
Acquired
on Vesting(#)
   Value
Realized on
Vesting($)(2)
 

Robert A. Bradway

   0     0     14,430     1,541,275  

Anthony C. Hooper

   0     0     16,434     1,521,460  

Jonathan M. Peacock

   0     0     30,214     3,455,105  

Sean E. Harper

   8,000     447,070     4,255     454,648  

Madhavan Balachandran

   24,000     1,295,069     3,210     343,022  
(1)

The value realized upon exercise of stock options reflects the price at which shares acquired upon exercise of the stock options were sold, net of the exercise price for acquiring shares.

(2)

The value realized on vesting of RSUs was calculated as the product of the closing price of a share of our Common Stock on the business day immediately prior to the vesting date, multiplied by the number of units vested.

Nonqualified Deferred Compensation

 

The following table sets forth summary information regarding aggregate contributions to and account balances under our SRP and Nonqualified Deferred Compensation Plan, or NDCP for and as of the year ended December 31, 2013.2015. There were no withdrawals by any of the NEOs in 2013.2015.

 

Name  2013
Employee
Contributions
($)(1)
   2013
Company
Contributions 
($)(2)
   
2013
Earnings
($)(3)
   


Balance as of

12/31/13($)(4)

   2015
Employee
Contributions
($)(1)
   2015
Company
Contributions
($)(2)
   

2015
Earnings

(Losses)
($)(3)

 

Balance as of

12/31/15($)(4)

 

Robert A. Bradway

   1,658,000     454,177     380,034     5,599,765    

 

 

 

 

430,050

 

 

  

 

  

 

 

 

 

415,969

 

 

  

 

  

 

 

 

 

(118,411

 

 

 

 

 

 

 

 

8,967,668

 

 

  

 

Anthony C. Hooper

   48,549     253,693     35,161     433,330    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

210,033

 

 

  

 

  

 

 

 

 

(13,893

 

 

 

 

 

 

 

 

912,111

 

 

  

 

Jonathan M. Peacock

   0     226,050     62,294     577,892  

David W. Meline

  

 

 

 

 

817,500

 

 

  

 

  

 

 

 

 

115,063

 

 

  

 

  

 

 

 

 

6,007

 

 

  

 

 

 

 

 

 

2,771,523

 

 

  

 

Sean E. Harper

   0     217,214     206,370     1,863,174    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

185,198

 

 

  

 

  

 

 

 

 

(92,588

 

 

 

 

 

 

 

 

2,261,670

 

 

  

 

Madhavan Balachandran

   0     156,154     53,505     3,273,058  

Jonathan P. Graham

  

 

 

 

 

37,654

 

 

  

 

  

 

 

 

 

2,014,577

 

 

  

 

  

 

 

 

 

(88,409

 

 

 

 

 

 

 

 

1,963,822

 

 

  

 

(1)

Reflects the portion of the annual cash incentive award deferred and contributed to the NDCP in the amount of $430,050 and $384,800 by Mr.Messrs. Bradway and Meline, respectively, that isare included in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” in 2012,2014, the year it wasthey were earned. Also reflects the portionportions of Mr. Hooper’s base salarysalaries deferred and contributed to the NDCP in the amount of $432,700 and $37,654 by Messrs. Meline and Graham, respectively, that isare included in the “Salary” column of the “Summary Compensation Table” in 2013,2015, the year it wasthey were earned.

(2)

Reflects credits to the SRP. Also reflects a credit of $2,000,000 to Mr. Graham’s NDCP account made in connection with his hiring, which will vest at a rate of 20% per year on each of the first five anniversaries of his date of hire as long as Mr. Graham remains employed with the Company, and which vesting accelerates upon: (i) death, (ii) disability, (iii) termination of employment not for Cause; or (iv) a change of control consistent with the terms of the NDCP. Credits to the SRP whichand NDCP are included in the “All Other Compensation” column of the “Summary Compensation Table.”

(3)

Reflects earnings (losses) in the NDCP and SRP for 2013.2015.

(4)

Reflects balances in the NDCP and SRP on December 31, 2013. A total2015. All amounts are vested, except amounts with respect to: (i) $1,434,827 for Mr. Meline and $1,911,647 for Mr. Graham related to Company contributions in their NDCP accounts and related earnings and losses and (ii) $32,619 for Mr. Meline and $10,768 for Mr. Graham of $379,627 of Mr. Hooper’stheir SRP balance is unvested and is scheduled to vest on October 27, 2014, the third anniversary of Mr. Hooper’s hire date.account balances. These balances include the following aggregate amounts that are reported as compensation in this proxy statement in the “Summary Compensation Table” in 2013, 20122015, 2014 and 2011: $3,542,5272013: $3,582,996 for Mr. Bradway; $393,982$755,155 for Mr. Hooper; $494,973$2,732,470 for Mr. Peacock; $350,291Meline; $616,162 for Dr. HarperHarper; and $156,154$2,052,231 for Mr. Balachandran.Graham.

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 EXECUTIVE COMPENSATION TABLES  

General Provisions of the Supplemental Retirement Plan and Nonqualified Deferred Compensation Plan

 

The SRP is designed to provide a “make-whole” benefit to 401(k) Plan participants who have eligible compensation in excess of the Internal Revenue Code’s qualified plan compensation limit. The Company credits to the SRP a 10% contribution on such compensation to represent the equivalent percentage of Company contributions that would have been made to the 401(k) Plan if the compensation had been eligible for deferral into the 401(k) Plan. For the same reason, the Company also credits to the SRP a 10% contribution on amounts deferred into the NDCP. No “above market” crediting rates are offered.offered under the SRP and employee contributions are not permitted.

The SRP and the NDCP are unfunded plans for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended. Deferred amounts are our general unsecured obligations and are subject to our on-going financial solvency. We have established a grantor

trust (a so-called “rabbi” trust) for the purpose of accumulating funds to assist us in satisfying our obligations under the NDCP. Earnings on amounts contributed to our SRP and NDCP, like our 401(k) Plan, are based on participant

selections among the investment options selected by a committee of our executives. This committee has the sole discretion to discontinue, substitute or add investment options at any time. Participants can select from among these investment options for purposes of determining the earnings or losses that we will credit to their plan accounts, but they do not have an ownership interest in the investment options they select. Unlike our 401(k) Plan, we do not offer the opportunity to invest through a brokerage window or in our Common Stock under our NDCP or SRP. The investment options in the NDCP and the SRP also differ in that they include six portfolios based on different target retirement dates, referred to as “Target Retirement Portfolios,” that have

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  EXECUTIVE COMPENSATION TABLES  

been created for use as default investment options. The investment options during 20132015 are described in the subsection Investment“Investment Options Under the Supplemental Retirement Plan and Nonqualified Deferred Compensation Plan

Plan” below. Invested amountscredits can be transferred among available plan investment options on any business day and effective at the close of business on that day (subject to the time of the request and the market being open).

 

 

Retirement and Savings Plan and Supplemental Retirement Plan

 

Our 401(k) Plan is a qualified plan that is available to regular U.S.-based staff members of the Company and participating subsidiaries. All 401(k) Plan participants, including our NEOs, are eligible to receive the same proportionate level of matching and nonelective or “core” contributions from us. Company contributions on eligible compensation earned above the Internal Revenue Code qualified plan compensation limit and on amounts that were deferred to the NDCP are credited to our SRP, a nonqualified plan that is available to all 401(k) Plan eligible staff members.

Contributions. We make a core contribution of 5% of eligible compensation to all regular U.S-based staff members under the 401(k) Plan, regardless of whether the staff members elect to defer any of their compensation to the 401(k) Plan. In addition, under the 401(k) Plan, participants are eligible to receive matching contributions of up to 5% of their eligible compensation.compensation that they contribute to the 401(k) Plan. Under our SRP, we credit 10% of each participant’s eligible compensation in excess of the maximum recognizable compensation limit for qualified

plans, which equals the combined percentage of our core contributions and maximum matching contributions under our 401(k) Plan. We also credit 10% of each participant’s compensation that is not eligible for deferral into our 401(k) Plan because the participant deferred it to the NDCP.

Distributions.Distributions. Participants receive distributions from the SRP following their termination of employment. Distributions for most participants are made in a lump sum payment in the first or second year following termination of employment, or, for balances in excess of a de minimis amount, in installments that commence in the year following termination. For our NEOs, Section 409A of the Internal Revenue Code generally requires that their distributions may not occur earlier than six months following our NEO’s termination of employment.

Vesting.Vesting. Participants in the 401(k) Plan are immediately vested in participant and Company contributions and related earnings and losses on such amounts. Participants in the

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 EXECUTIVE COMPENSATION TABLES  

SRP are immediately vested in contributions that are made with respect to amounts the participants deferred under the NDCP and related earnings and losses on such amounts, and are fully vested in the remainder of their accounts upon the earlier of: (i) three continuous years of their service to us; (ii) termination of their employment on or after their normal

retirement date (as defined in the 401(k) Plan); (iii) their disability (as defined in the 401(k) Plan); (iv) their death or (v) a change of control and termination of their employment as described below in “Potential Payments Upon Termination or Change of Control—Amended and Restated Change of Control Severance Plan.”

 

 

Nonqualified Deferred Compensation Plan

 

Our NDCP allows participants to defer receipt of a portion of their eligible compensation to a future date, with an opportunity to earn tax-deferred returns on the deferrals. Members of our Board of Directors, or Board, and our U.S.- and Puerto Rico-based staff members at the director level or above, who include our NEOs, are eligible to participate in this plan. Our NEOs may participate in this plan on the same basis as the other participants in the plan.

Contributions. Participants who are staff members may elect to defer up to a maximum of 50% of their eligible base salary, up to a maximum of 100% of their annual cash incentive award and up to 100% of sales commissions.Non-employee members of our Board may defer all or a

portion of their fees, including retainers and meeting fees. In addition, we may, in our sole discretion, contribute additional amounts to any participant’s account at any time, such as contributing sign-on bonuses to the accounts of newly-hired staff members or for retention purposes.

Distributions.Distributions.Participants may elect to receive distributions as a lump sum or, for balances in excess of a de minimis amount, in annual installments for up to ten years. For most participants, distributions commence in the first or second year following the participant’s termination of employment. For our NEOs, Section 409A of the Internal Revenue Code generally requires that distributions may not occur earlier than six months following our NEO’s termination of

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  EXECUTIVE COMPENSATION TABLES  

employment. Participants may also elect to receive an in-service distribution of an elective deferral (called a short-term deferral) that is paid no earlier than three full years after the end of the plan year in which the deferral was made. Participants canmay also petition for a distribution due to an unforeseeable financial hardship.

Vesting. Participants are at all times 100% vested in the amounts that they elect to defer and related earnings and losses on such amounts. As part of his initial hire package, and to replace the forfeiture of certain pension benefits at his former employer, we contributed $1,600,000 to Mr. Meline’s NDCP account. This contribution and related earnings and losses thereon vest at the rate of 12.5% per year from 2015

through 2022 as long as Mr. Meline remains continuously employed by us, which vesting accelerates upon a change of control consistent with the terms of the NDCP. As part of his initial hire package and to replace forfeiture of certain benefits at his former employer and to induce Mr. Graham to accept the Company’s offer of employment, Mr. Graham was provided with a contribution to his NDCP account of $2,000,000 which will vest at the rate of 20% per year from 2016 through 2020 as long as Mr. Graham remains actively and continuously employed by us, which vesting accelerates upon death, disability, termination of employment not for cause or a change of control consistent with the terms of the NDCP.

 

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 EXECUTIVE COMPENSATION TABLES  

 

Investment Options Under the Supplemental Retirement Plan and Nonqualified Deferred Compensation Plan

 

The investment options under the SRP and the NDCP and their annual rates of return for 20132015 are contained in the tables below. The 401(k) Plan offers the same investment options as the SRP and the NDCP except: (i) the 401(k) Plan also allows investments in our Common Stock and offers a brokerage window and (ii) the 401(k) Plan does not offer the six portfolios based on different target retirement dates, referred to as “Target Retirement Portfolios” below. The

Target Retirement Portfolios are designed to provide an all-in-one investment option for creating a diversified portfolio. Each portfolio is an asset allocation strategy built around a combination of investments from the plan’s investment options (provided below) and is adjusted over time to gradually become more conservative as the target maturity date of the portfolio approaches. We retain the right to change, at our discretion, the available investment options.

 

 

Name of Investment Option  

Rate of Return

for 2013

   Name of Investment Option  Rate of Return
for 2013
   

Rate of Return

for 2015

   Name of Investment Option  Rate of Return
for 2015
 

Amgen Target Retirement Portfolio Income

   9.82%    Capital Preservation   1.69%    

 

 

 

 

(1.11%)

 

 

  

 

  

 

Capital Preservation

 

  

 

 

 

 

1.57%

 

 

  

 

Amgen Target Retirement Portfolio 2010

   12.13%    Fixed Income   (2.05)%    

 

 

 

 

(1.05%)

 

 

  

 

  

 

Fixed Income Index

 

  

 

 

 

 

0.55%

 

 

  

 

Amgen Target Retirement Portfolio 2020

   15.21%    Large Cap Value   36.71%    

 

 

 

 

(1.43%)

 

 

  

 

  

 

Fixed Income

 

  

 

 

 

 

0.98%

 

 

  

 

Amgen Target Retirement Portfolio 2030

   21.63%    Large Cap Index   32.41%    

 

 

 

 

(2.29%)

 

 

  

 

  

 

High Yield

 

  

 

 

 

 

(2.16%)

 

 

  

 

Amgen Target Retirement Portfolio 2040

   25.41%    Large Cap Growth   35.42%    

 

 

 

 

(3.35%)

 

 

  

 

  

 

Inflation-Protection

 

  

 

 

 

 

(1.40%)

 

 

  

 

Amgen Target Retirement Portfolio 2050

   28.20%    Small-Mid Cap Value   41.71%    

 

 

 

 

(3.73%)

 

 

  

 

  

 

Large Cap Value

 

  

 

 

 

 

(7.44%)

 

 

  

 

    Small-Mid Cap Index   38.00%      

 

Large Cap Index

 

  

 

 

 

 

1.37%

 

 

  

 

    Small-Mid Cap Growth   38.76%      

 

Large Cap Growth

 

  

 

 

 

 

5.38%

 

 

  

 

    International Value   24.09%      

 

Small-Mid Cap Value

 

  

 

 

 

 

(9.73%)

 

 

  

 

    International Growth   22.32%      

 

Small-Mid Cap Index

 

  

 

 

 

 

(3.49%)

 

 

  

 

    High Yield   8.03%      

 

Small-Mid Cap Growth

 

  

 

 

 

 

(0.08%)

 

 

  

 

    Inflation-Protection   (8.67)%      

 

International Value

 

  

 

 

 

 

(5.56%)

 

 

  

 

    Emerging Markets   (2.09)%      

 

International Index

 

  

 

 

 

 

(5.54%)

 

 

  

 

    REIT Index   2.39%      

 

International Growth

 

  

 

 

 

 

(1.86%)

 

 

  

 

    

 

Emerging Markets

 

  

 

 

 

 

(16.56%)

 

 

  

 

    

 

REIT Index

 

  

 

 

 

 

2.36%

 

 

  

 

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  EXECUTIVE COMPENSATION TABLES  

 

Potential Payments Upon Termination or Change of Control

 

Amended and Restated Change of Control Severance Plan

 

Our Amended and Restated Change of Control Severance Plan, or Change of Control Severance Plan, provides a lump sum payment and certain other benefits for each participant in the plan who separates from employment with us in connection with a change of control. Our Compensation Committee periodically reviews the terms of the Change of Control Severance Plan, which was originally adopted in 1998, to ensure it is aligned with current governance best practices.

If a change of control occurs and a participant’s employment is terminated by us other than for cause or disability or by the

participant for good reason within two years after the change of control, a participant under the Change of Control Severance Plan would be entitled to:

 

a lump sum cash payment in an amount equal to:

 

 

the product of:

 

Ÿ

a benefits multiple of one or two based on the participant’s position (each of our NEOs has a benefits multiple of two); and

 

74    LOGOï 2014 Proxy Statementthe sum of (i) the participant’s annual base salary immediately prior to termination or, if higher, immediately prior to the change of control, plus (ii) the participant’s targeted annual cash incentive award for the year in which the termination occurs;


 EXECUTIVE COMPENSATION TABLES  

Ÿ

the sum of (i) the participant’s annual base salary immediately prior to termination or, if higher, immediately prior to the change of control, plus (ii) the participant’s targeted annual cash incentive award for the year in which the termination occurs;

 

if, as a result of the participant’s termination of employment, the participant becomes entitled to, and timely elects to continue, healthcare (including any applicable vision benefits) and/or dental coverage under the Consolidated Omnibus Reconciliation Act of 1985, or COBRA Company-paid group health and dental insurance continuation coverage for the participant and his or her dependents under COBRA until the earlier of (i) the expiration of a participant’s eligibility for coverage under COBRA or (ii) the expiration of the 18-month period immediately following the participant’s termination (whichever occurs earlier);

 

fully-vested benefits accrued under our 401(k) Plan and our SRP;

 

either a lump-sum cash payment or a contribution to our SRP, as determined by us in our sole discretion, in an amount equal to the sum of (1) the product of $2,500 and the participant’s benefits multiple and (2) the product of (x) 10%, (y) the sum of (i) the participant’s annual base salary as in effect immediately prior to the participant’s termination or, if higher, as in effect immediately prior to the change of control, plus (ii) the participant’s targeted annual cash incentive award for the year in which the termination occurs (which equals the participant’s annual base salary multiplied by the participant’s target annual cash incentive award percentage, each as in effect immediately prior to the termination or, if higher, as in effect immediately prior to the change of control) and (z) the benefits multiple; and

the participant’s benefits multiple and (2) the product of (x) 10%, (y) the sum of (i) the participant’s annual base salary as in effect immediately prior to the participant’s termination or, if higher, as in effect immediately prior to the change of control, plus (ii) the participant’s targeted annual cash incentive award for the year in which the termination occurs (which equals the participant’s annual base salary multiplied by the participant’s target annual cash incentive award percentage, each as in effect immediately prior to the termination or, if higher, as in effect immediately prior to the change of control) and (z) the benefits multiple; and

 

indemnification and, if applicable, directors’ and officers’ liability insurance provided by us for four years following the participant’s termination (each of our NEOs would receive such liability insurance benefits, which would result in no additional cost to us).

No tax gross-up payments are provided under the Change of Control Severance Plan. If all payments or benefits received under the Change of Control Severance Plan or any other plan, arrangement or agreement would cause the participant to be subject to excise tax, then the payments will be

reduced to the extent necessary to avoid the excise tax, provided that the reduced payments, net of federal, state and local income taxes, are greater than the payments without such reduction, net of federal, state and local income taxes and excise tax.

The plan provides that the benefits described above would be provided in lieu of any other severance benefits that may be payable by us (other than accrued vacation and similar benefits otherwise payable to all staff members upon a termination). The plan also provides that the benefits described above may be forfeited if the participant discloses our confidential information or solicits or offers employment to any of our staff members during a period of years equal to the participant’s benefits multiple following the participant’s termination.

The plan expires on December 31, 2014 and is subject to automatic one-year extensions unless we notify participants no later than November 30 of the year prior to the expiration date that the term will not be extended. If a change of control occurs prior toduring the plan’s expiration,term of the plan, the plan will continue in effect for at least 24 months following the change of control. Prior to a

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  EXECUTIVE COMPENSATION TABLES  

change of control, we can terminate or amend the plan at any time. After a change of control, the plan may not be terminated or amended in any way that adversely affects a participant’s interests under the plan, unless the participant consents in writing.

“Change of Control” is defined in the plan as the occurrence of any of the following:

 

any person, entity or group has acquired beneficial ownership of 50% or more of (i) our then outstanding common shares or (ii) the combined voting power of our then outstanding securities entitled to vote in the election of directors;

 

individuals making up the incumbent Board (as defined in the plan) cease for any reason to constitute at least a majority of our Board;

 

immediately prior to our consummation of a reorganization, merger or consolidation with respect to which persons who were the stockholders of the Company immediately prior to such transaction do not, immediately thereafter, own more than 50% of the then outstanding shares of the reorganized, merged or consolidated company entitled to vote generally in the election of directors;

 

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 EXECUTIVE COMPENSATION TABLES  

a liquidation or dissolution of the Company or the sale of all or substantially all of the assets of the Company; or

 

any other event which the incumbent Board (as defined in the plan), in its sole discretion, determines is a change of control.

“Cause” is defined in the plan as (i) conviction of a felony or (ii) engaging in conduct that constitutes willful gross neglect or willful gross misconduct in carrying out the participant’s duties, resulting in material economic harm to us, unless the participant believed in good faith that the conduct was in, or not contrary to, our best interests.

“Disability” under the plan is determined based on our long-term disability plan as is in effect immediately prior to a change of control.

“Good reason” is defined in the plan as (i) an adverse and material diminution of a participant’s authority, duties or responsibilities, (ii) a material reduction in a participant’s base salary, (iii) an increase in a participant’s daily commute by more than 100 miles roundtrip or (iv) any other action or inaction by the Company that constitutes a material breach of

the agreement under which the participant provides services. In order to terminate with “good reason,” a participant must provide written notice to the Company of the existence of the condition within the required period, the Company must fail to remedy the condition within the required time period and the participant must then terminate employment within the required time period.

Long-Term Incentive Equity Awards

Stock Options and Restricted Stock Units

Our stock plans (or the related grant agreements approved for use under such stock plans) provide for accelerated vesting or continued vesting of unvested stock options and RSUs in the circumstances described below.

Change of Control/Qualifying Termination in Connection with a Change of Control. With respect to Unvested stock options and RSUs made prior to March 2, 2011, all such unvested awards will vest in full upon a Change of Control (as defined in the stock plans or the related grant agreements approved for use under such stock plans), irrespective of the scheduled vesting dates for these awards. With respect to stock options and RSUs made on or after March 2, 2011, all such awards

will vest in full only if, within 24 months following the change of control, the grantee’s employment is involuntarily terminated other than for “cause” or “disability,” and, in the case of staff members subject to the Change of Control Severance Plan, voluntarily terminated with “good reason” (as each is defined in the grant agreements). With respect to stock optionsoption and RSUsRSU grants made on or after March 6, 2013, Change of Control no longer includes any other event which the incumbent Board (as defined in the related grant agreements), in its sole discretion, determines is a change of control.

Death or Disability. In general, unvested stock options and RSUs granted in calendar years prior to the year death or disability occurs vest in full upon the occurrence of such event. For unvested stock options and RSUs granted in the calendar year death or disability occurs, a pro-rata amount of these stock options and RSUs immediately vests based on the number of completed months of employment during the calendar year such event occurs. Under our stock plans, a disability has the same meaning as under Section 22(e)(3) of the Internal Revenue Code and occurs where the disability has been certified by either the Social Security Administration, the comparable government authority in another country with respect to non-U.S. staff members or an independent medical advisor appointed by us.

Retirement.Retirement. In general, unvested stock options and RSUs granted in calendar years prior to the year in which an employee retires continue to vest on their original vesting

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  EXECUTIVE COMPENSATION TABLES  

schedule following the retirement of the holder if the holder has been continuously employed for at least ten years and is age 55 or older or is age 65 or older, regardless of service (a retirement-eligible participant). If a retirement-eligible participant receives a grant of stock options or RSUs in the calendar year such retirement occurs, the participant will vest in a pro-rata amount of the award he or she would be otherwise entitled to based upon the number of complete months of employment during the calendar year such retirement occurs. Holders have the lesser of five years from the date of retirement or the remaining period before expiration to exercise any vested stock options. Mr. Balachandran was retirement eligible as of December 31, 2013 and he would have received this benefit, other than with respect to RSUs granted to him on July 31, 2012, had he retired on December 31, 2013. No other NEOs would have received this benefit because they did not meet the above-mentioned retirement requirements.

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 EXECUTIVE COMPENSATION TABLES  

Performance Units

Our performance award program provides for a potential payoutearn-out of outstanding performance units upon a Change of Control (as defined in our Change of Control Severance Plan) or uponbased on a truncated performance period and our performance through the change of control, and provides for potential earn-out at the end of the performance period in the event of a termination of employment due to death, disability or retirement.retirement subject to the proration provisions described below. With respect to grants of performance units made on or after March 6, 2013, Change of Control no longer includes any other event which the incumbent Board (as defined in the performance award program), in its sole discretion, determines is a change of control.

Change of Control. With respect to grants of outstanding performance units, in the event of a change of control that occurs after the sixth month of the performance period and before the end of the performance period, the performance period terminates as of the last business day of the last completed quarter before the change of control (or, with respect to the 2013-2015 performance period only, the last business day before the change of control) and the participant is entitled to a payment equal to the amount the participant would have received for the performance period based onon: (A) our TSR performance for which our ending Common Stock price is computed on the greater of (i) the average daily closing price of our Common Stock for the last sixty (60) trading days (or, with respect to the 2013-2015 performance period only, the last twenty (20) trading days)days of such shortened period or (ii) the value of consideration paid for a share of our Common Stock in the change of control (whether such consideration is paid in cash, stock or other property, or any combination thereof) and (B) the TSR performance of the companies in the applicable comparator or reference group based on such companies’ average daily closing stock

price for the last sixty (60) trading days (or, with respect to the 2013-2015 performance period only, the last twenty (20) trading days)days of such shortened performance period. In the event of a change of control that occurs during the first six months of the performance period, the participant is entitled to a payment equal to an amount calculated in the manner described in the preceding sentence pro-rated for the number of complete months elapsed during the shortened performance period.

Death or Disability. For all performance unit grants made in calendar years prior to the year death or disability occurs, the participant will be paid the full amount of the award he or she would be otherwise entitled to, if any, as determined at the end of the performance period. For a performance unit

grant made in the calendar year in which death or disability occurs, a participant will be paid a pro-rata amount of the award he or she would otherwise be entitled to, if any, as determined at the end of the performance period, based upon the number of complete months of employment in the calendar year such event occurs.

Retirement.Retirement. In the event of retirement of a participant who has been continuously employed with us for at least ten years and is age 55 or older or is age 65 or older, regardless of service (a retirement-eligible participant), for performance unit grants made in calendar years prior to the year in which retirement occurs, the participant will be paid the full amount of the award he or she would be otherwise entitled to, if any, as determined at the end of the performance period. If a retirement-eligible participant receives a performance unit grant in the calendar year such retirement occurs, the participant will be paid a pro-rata amount of the award he or she would be otherwise entitled to, if any, as determined at the end of the performance period, based upon the number of complete months of employment during the calendar year such retirement occurs. Mr. Balachandran would have received this benefit had he retired on December 31, 2013. No other NEOs would have received this benefit because they did not meet the above-mentioned retirement requirements.

Mr. Hooper’sMeline’s Offer Letter

We entered into an offer letter with Mr. HooperMeline in connection with his initial hiring in October 2011as Chief Financial Officer effective July 21, 2014, which provides for limited severance benefits in the event of termination of employment by us, other than for cause. TheSpecifically, the offer letter provides for severance protection for three years following the hire date at a benefit multipleequal to one year of two timesbase salary and target bonus, as defined, plus up to 1812 months of COBRA medical and dental coverage paid by

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  EXECUTIVE COMPENSATION TABLES  

us. Benefits of this type are sometimes provided to officer-level candidates in order to provide an incentive to them to join the Company by reducing the risk of making such a job change. These severance benefits will expire on October 27, 2014,July 21, 2017, the third anniversary of the commencement of his employment with the Company.

For purposes of the offer letters, “cause” is defined as: (i) unfitness for service, inattention to or neglect of duties, or incompetence; (ii) dishonesty; (iii) disregard or violation of the policies or procedures of the Company; (iv) refusal or failure to follow lawful directions of the Company; (v) illegal, unethical or immoral conduct; or (vi) breach of our Proprietary

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 EXECUTIVE COMPENSATION TABLES  

Information and Inventions Agreement or (vii) any other reason set forth in California Labor Code Section 2924, in all cases, as determined by us.Agreement.

Mr. Balachandran’s Special Retention AwardGraham’s Offer Letter

We entered into an arrangementoffer letter with Mr. BalachandranGraham in March 2011connection with his initial hiring as Senior Vice President, General Counsel and Secretary effective July 13, 2015, which providedprovides for specified annual cash installment payments commencing in March 2012 in order to promote his continued employment with us. Payments made under this arrangement are subject to Mr. Balachandran’s continued employment until each installment date, exceptlimited severance benefits in the event of his death, disability or involuntary termination of employment notby us, other than for “Cause”. For purposes of this arrangement, “cause” is defined incause. Specifically, the same manner as it is in Mr. Hooper’s offer letter described above. Pursuant to this arrangement Mr. Balachandran received a cash payment of $330,000 on each of March 2, 2012 and 2013, a payment of $170,000 on March 2, 2014, and he is scheduled to receive a final installment payment of $170,000 on March 2, 2015, for a total of $1,000,000.

Mr. Peacock’s Severance Arrangement

Mr. Peacock resigned as our Chief Financial Officer effective January 10, 2014, at which time he continued to be employed in a non-executive officer capacity to assist in the transition of Michael A. Kelly, our Acting Chief Financial Officer, which transition period is currently expected to extend until May 2014. Upon his termination from the Company, Mr. Peacock will be entitled to the following severance benefits: (1) lump sum payment that is approximately equal to 1.5 times base pay salary plus target annual cash incentive award opportunity; (2) reimbursement for COBRA medical coverage for up to 18 months; (3) senior executive career transition services for up to 12 months; (4) a payment in an amount that is approximately equal to the pro-rata value of the last unvested tranche of his new hire equity awards (stock options and RSUs) that would have vested in October 2014, based on the total period of time that he is expected to be employed over the total vesting period of such tranche (48 months) calculated on the date of his termination of employment with the Company, and using a stock price equal to $113 per share and (5) payment at an hourly rate of $1,200 for any authorized time that he spends following the termination of his employment in further transitioning his responsibilities and with matters that arose during his tenure with the Company. In determining these benefits, the

Compensation Committee considered that, until September 2013, Mr. Peacock was eligibleprovides for severance protection at a higher benefit multiplefor three years following the hire date equal to two years of two times annual base salary and target annual cash incentive award opportunitybonus, as defined, plus up to 18 months of COBRA protection, thatmedical and dental coverage paid by us. Benefits of this type are sometimes provided to officer-level candidates in order to provide an incentive to them to join the pro-rata valueCompany by reducing the risk of making such a job change. These severance benefits will expire on July 13, 2018, the third anniversary of the last unvested tranchecommencement of his new hire equity awards was made in part to compensate Mr. Peacock for value that he left behind at his former employer and that Mr. Peacock will have served (including by providing important transition services) nearly the full vesting period. The agreement between the Company and Mr. Peacock includes a general release of all claims by Mr. Peacock and that Mr. Peacock forfeit and repay substantial benefits of this agreement if Mr. Peacock materially breaches any covenants or conditions in the agreement or the previously signed Proprietary Information and Inventions Agreement, including if Mr. Peacock fails to fulfill his post-termination obligations to cooperate, to maintain the confidentiality of our information and not to disparageemployment with the Company.

“Cause” is defined as discussed above in Mr. Meline’s offer letter.

Estimated Potential Payments

The tables below set forth the estimated current value of payments and benefits: (i) to each of our NEOs upon a change of control, upon a qualifying termination within two years following a change of control, or upon death or disability and (ii) to Messrs. HooperMeline and Balachandran,Graham, upon termination without cause; (iii) to Mr. Balachandran, upon his retirement (Mr. Balachandran is the only retirement-eligible NEO) and (iv) to Mr. Peacock upon his termination of employment. The amounts shown payable to Mr. Peacock upon his termination of employment are based on the terms set forth in his Agreement and General Release of Claims dated January 9, 2014.cause. All other amounts shown in the tables below assume that the triggering events occurred on December 31, 20132015 and do not include: (i) the 2011-2013 performance unit awards and the 20132015 EIP payouts, which were earned as of December 31, 2013;2015; (ii) other benefits earned during the term of our NEO’s employment that are available to all salaried staff members, such as accrued vacation; (iii) benefits paid by insurance providers under life and disability policies and (iv) benefits previously accrued and vested under the SRP and the NDCP. For information on the accrued amounts payable under these plans, see the “Nonqualified Deferred Compensation” table above. The actual amounts of payments and benefits that would be provided can only be determined at the time of a change of control and/or the NEO’s separation from the Company. In

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 EXECUTIVE COMPENSATION TABLES  

accordance with SEC rules, the value of accelerated equity awards (and the value of equity awards that would continue to vest after retirement) shown in the tables below was calculated using the closing price of our Common Stock on December 31, 20132015 ($114.08)162.33). The value of stock options is

the aggregate spread between the applicable closing price and the exercise prices of the stock options, while the value per unit of accelerated RSUs and performance units, including the related accrued dividend equivalents (rounded down to the nearest whole number of units), equals the applicable closing price.price multiplied by the number of units and dividend equivalents vested or earned, as applicable, as a result of such event.

 

 

Estimated Payments to Robert A. Bradway

   Triggering Event 
Estimated Potential Payment or Benefit  Change in
Control($)
  Change in
Control and
Termination($)
  Death or
Disability($)
 

Lump sum cash severance payment

   0    6,900,000    0  

Intrinsic value of accelerated unvested options

   1,766,888    4,691,548    4,691,548  

Intrinsic value of accelerated unvested RSUs

   513,360    6,755,247    6,755,247  

Value of 2013-2015 performance units

   12,334,444(1)   12,334,444(1)   12,193,555(2) 

Value of 2012-2014 performance units

   14,792,640(1)   14,792,640(1)   14,792,640(2) 

Continuing health care benefits for 18 months(3)

   0    37,969    0  

Continuing retirement plan contributions for two years(4)

   0    695,000    0  

    Total

   29,407,332    46,206,848    38,432,990  

Estimated Payments to Anthony C. Hooper

   Triggering Event 
Estimated Potential Payment or Benefit  Change in
Control($)
  Change in
Control and
Termination($)
  Termination
Without
Cause($)(5)
   Death or
Disability($)
 

Lump sum cash severance payment

   0    3,806,840    3,606,480     0  

Intrinsic value of accelerated unvested options

   0    0    0     0  

Intrinsic value of accelerated unvested RSUs

   0    4,618,301    0     4,618,301  

Value of 2013-2015 performance units

   4,933,618(1)   4,933,618(1)   0     4,877,262(2) 

Value of 2012-2014 performance units

   6,114,232(1)   6,114,232(1)   0     6,114,232(2) 

Value of 2011-2014 performance units

   6,020,800(1)   6,020,800(1)   0     6,020,800(2) 

Continuing health care benefits for 18 months(3)

   0    25,738    25,738     0  

Continuing retirement plan contributions for two years(4)

   0    385,684    0     0  

Acceleration of unvested balance of SRP

   0    379,627    0     379,627  

    Total

   17,068,650    26,284,840    3,632,218     22,010,222  

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  EXECUTIVE COMPENSATION TABLES  

Estimated Payments to Robert A. Bradway

   

Triggering Event

 

 
Estimated Potential Payment or Benefit  Change in
Control($)
  Change in
Control and
Termination($)
  Death or
Disability($)
 

 

Lump sum cash severance payment

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

7,200,000

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

Intrinsic value of accelerated unvested RSUs

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

8,162,115

 

 

  

 

 

 

 

 

 

8,162,115

 

 

  

 

 

Value of 2015-2017 performance units

 

  

 

 

 

 

11,376,249

 

 

(1) 

 

 

 

 

 

 

11,376,249

 

 

(1) 

 

 

 

 

 

 

11,376,249

 

 

(2) 

 

 

Value of 2014-2016 performance units

 

  

 

 

 

 

14,608,077

 

 

(1) 

 

 

 

 

 

 

14,608,077

 

 

(1) 

 

 

 

 

 

 

14,608,077

 

 

(2) 

 

 

Value of 2013-2015 performance units

 

  

 

 

 

 

18,371,698

 

 

(1) 

 

 

 

 

 

 

18,371,698

 

 

(1) 

 

 

 

 

 

 

18,371,698

 

 

(2) 

 

 

Continuing health care benefits for 18 months(3)

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

38,871

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

Continuing retirement plan contributions for two years(4)

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

725,000

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

    Total

 

  

 

 

 

 

44,356,024

 

 

  

 

 

 

 

 

 

60,482,010

 

 

  

 

 

 

 

 

 

52,518,139

 

 

  

 

Estimated Payments to Anthony C. Hooper

   

Triggering Event

 

 
Estimated Potential Payment or Benefit  Change in
Control($)
  Change in
Control and
Termination($)
  Death or
Disability($)
 

 

Lump sum cash severance payment

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

3,806,840

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

Intrinsic value of accelerated unvested RSUs

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

2,984,762

 

 

  

 

 

 

 

 

 

2,984,762

 

 

  

 

 

Value of 2015-2017 performance units

 

  

 

 

 

 

3,903,550

 

 

(1) 

 

 

 

 

 

 

3,903,550

 

 

(1) 

 

 

 

 

 

 

3,903,550

 

 

(2) 

 

 

Value of 2014-2016 performance units

 

  

 

 

 

 

4,869,251

 

 

(1) 

 

 

 

 

 

 

4,869,251

 

 

(1) 

 

 

 

 

 

 

4,869,251

 

 

(2) 

 

 

Value of 2013-2015 performance units

 

  

 

 

 

 

7,348,517

 

 

(1) 

 

 

 

 

 

 

7,348,517

 

 

(1) 

 

 

 

 

 

 

7,348,517

 

 

(2) 

 

 

Continuing health care benefits for 18 months(3)

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

26,293

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

Continuing retirement plan contributions for two years(4)

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

385,684

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

    Total

 

  

 

 

 

 

16,121,318

 

 

  

 

 

 

 

 

 

23,324,897

 

 

  

 

 

 

 

 

 

19,106,080

 

 

  

 

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   EXECUTIVE COMPENSATION TABLES  

Estimated Payments to David W. Meline

   

Triggering Event

 

 
Estimated Potential Payment or Benefit  Change in
Control($)
  Change in
Control and
Termination($)
  Termination
Without
Cause($)(5)
   Death or
Disability($)
 

 

Lump sum cash severance payment

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

3,420,061

 

 

  

 

 

 

 

 

 

1,710,030

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

Intrinsic value of accelerated unvested RSUs

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

7,434,876

 

 

  

 

 

 

 

 

 

0

 

 

  

 

  

 

 

 

 

7,434,876

 

 

  

 

 

Value of 2015-2017 performance units

 

  

 

 

 

 

3,345,784

 

 

(1) 

 

 

 

 

 

 

3,345,784

 

 

(1) 

 

 

 

 

 

 

0

 

 

  

 

  

 

 

 

 

3,345,784

 

 

(2) 

 

 

Value of 2014-2016 performance units

 

  

 

 

 

 

n/a

 

 

  

 

 

 

 

 

 

n/a

 

 

  

 

 

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

 

Value of 2013-2015 performance units

 

  

 

 

 

 

n/a

 

 

  

 

 

 

 

 

 

n/a

 

 

  

 

 

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

 

Continuing health care benefits for applicable period(3)

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

38,871

 

 

  

 

 

 

 

 

 

25,255

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

Continuing retirement plan contributions for two years(4)

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

347,006

 

 

  

 

 

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

Acceleration of unvested balance of SRP account

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

32,619

 

 

  

 

 

 

 

 

 

0

 

 

  

 

  

 

 

 

 

32,619

 

 

  

 

 

Acceleration of unvested balance of DCP account

 

  

 

 

 

 

1,434,827

 

 

  

 

 

 

 

 

 

1,434,827

 

 

  

 

 

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

    Total

 

  

 

 

 

 

4,780,611

 

 

  

 

 

 

 

 

 

16,054,044

 

 

  

 

 

 

 

 

 

1,735,285

 

 

  

 

  

 

 

 

 

10,813,279

 

 

  

 

Estimated Payments to Sean E. Harper

   

Triggering Event

 

 
Estimated Potential Payment or Benefit  Change in
Control($)
  Change in
Control and
Termination($)
  Death or
Disability($)
 

 

Lump sum cash severance payment

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

3,406,700

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

Intrinsic value of accelerated unvested RSUs

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

2,876,001

 

 

  

 

 

 

 

 

 

2,876,001

 

 

  

 

 

Value of 2015-2017 performance units

 

  

 

 

 

 

3,345,784

 

 

(1) 

 

 

 

 

 

 

3,345,784

 

 

(1) 

 

 

 

 

 

 

3,345,784

 

 

(2) 

 

 

Value of 2014-2016 performance units

 

  

 

 

 

 

4,869,251

 

 

(1) 

 

 

 

 

 

 

4,869,251

 

 

(1) 

 

 

 

 

 

 

4,869,251

 

 

(2) 

 

 

Value of 2013-2015 performance units

 

  

 

 

 

 

7,348,517

 

 

(1) 

 

 

 

 

 

 

7,348,517

 

 

(1) 

 

 

 

 

 

 

7,348,517

 

 

(2) 

 

 

Continuing health care benefits for 18 months(3)

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

38,871

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

Continuing retirement plan contributions for two years(4)

 

  

 

 

 

 

0

 

 

  

 

 

 

 

 

 

345,670

 

 

(6) 

 

 

 

 

 

 

0

 

 

  

 

 

    Total

 

  

 

 

 

 

15,563,552

 

 

  

 

 

 

 

 

 

22,230,794

 

 

  

 

 

 

 

 

 

18,439,553

 

 

  

 

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      EXECUTIVE COMPENSATION TABLES  

 

Estimated Payments to Jonathan M. PeacockP. Graham

 

   Triggering Event 
Estimated Potential Payment or Benefit  Change in
Control($)
  Change in
Control and
Termination($)
  Termination($)(6)   Death or
Disability($)
 

Lump sum cash severance payment

   0    3,438,620    7,200,000     0  

Intrinsic value of accelerated unvested options

   2,485,438    4,678,948    0     4,678,948  

Intrinsic value of accelerated unvested RSUs

   2,852,000    5,947,104    0     5,947,104  

Value of 2013-2015 performance units

   4,933,618(1)   4,933,618(1)   0     4,877,262(2) 

Value of 2012-2014 performance units

   6,114,232(1)   6,114,232(1)   0     6,114,232(2) 

Continuing health care benefits for 18 months(3)

   0    37,969    37,969     0  

Continuing retirement plan contributions for two years(4)

   0    348,862    0     0  

Career transition services

   0    0    20,000     0  

  Total

   16,385,288    25,499,353    7,257,969     21,617,546  

Estimated Payments to Sean E. Harper

   Triggering Event 
Estimated Potential Payment or Benefit  Change in
Control($)
  Change in
Control and
Termination($)
  Death or
Disability($)
 

Lump sum cash severance payment

   0    3,406,700    0  

Intrinsic value of accelerated unvested options

   445,200    1,280,817    1,280,817  

Intrinsic value of accelerated unvested RSUs

   2,983,192    5,329,247    5,329,247  

Value of 2013-2015 performance units

   4,933,618(1)   4,933,618(1)   4,877,262(2) 

Value of 2012-2014 performance units

   6,114,232(1)   6,114,232(1)   6,114,232(2) 

Continuing health care benefits for 18 months(3)

   0    37,969    0  

Continuing retirement plan contributions for two years(4)

   0    345,670    0  

    Total

   14,476,242    21,448,253    17,601,558  

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 EXECUTIVE COMPENSATION TABLES  

Estimated Payments to Madhavan Balachandran

  Triggering Event 
Estimated Potential Payment or Benefit Change in
Control($)
  Change in
Control and
Termination($)
  Termination
Without
Cause($)
  Retirement($)  Death or
Disability($)
 

Lump sum cash severance payment

  0    2,926,000    0    0    0  

Intrinsic value of accelerated unvested options

  333,900    960,643    0    960,643    960,643  

Intrinsic value of accelerated unvested RSUs

  99,820    4,727,817    0    1,607,958(8)   4,727,817  

Value of 2013-2015 performance units

  4,933,618(1)   4,933,618(1)   0    4,877,262(2)   4,877,262(2) 

Value of 2012-2014 performance units

  1,775,085(1)   1,775,085(1)   0    1,775,085(2)   1,775,085(2) 

Continuing health care benefits for 18 months(3)

  0    37,969    0    0    0  

Continuing retirement plan contributions for two years(4)

  0    297,600    0    0    0  

Special retention award(7)

  0    340,000    340,000    0    340,000  

    Total

  7,142,423    15,998,732    340,000    9,220,948    12,680,807  

   

Triggering Event

 

 
Estimated Potential Payment or Benefit  Change in
Control($)
   Change in
Control and
Termination($)
  Termination
Without
Cause($)(6)
   Death or
Disability($)
 

 

Lump sum cash severance payment

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

3,204,022

 

 

  

 

 

 

 

 

 

3,204,022

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

Intrinsic value of accelerated unvested RSUs

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

8,067,314

 

 

  

 

 

 

 

 

 

0

 

 

  

 

  

 

 

 

 

3,361,357

 

 

(7) 

 

 

Value of 2015-2017 performance units

 

  

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

 

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

 

Value of 2014-2016 performance units

 

  

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

 

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

 

Value of 2013-2015 performance units

 

  

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

 

 

 

 

 

n/a

 

 

  

 

  

 

 

 

 

n/a

 

 

  

 

 

Continuing health care benefits for applicable period(3)

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

38,871

 

 

  

 

 

 

 

 

 

38,871

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

Continuing retirement plan contributions for two years(4)

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

325,402

 

 

  

 

 

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

Acceleration of unvested balance of SRP account

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

10,768

 

 

  

 

 

 

 

 

 

0

 

 

  

 

  

 

 

 

 

10,768

 

 

  

 

 

Acceleration of unvested balance of DCP account

 

  

 

 

 

 

1,911,647

 

 

  

 

  

 

 

 

 

1,880,366

 

 

(8) 

 

 

 

 

 

 

1,911,647

 

 

  

 

  

 

 

 

 

1,911,647

 

 

  

 

 

    Total

 

  

 

 

 

 

1,911,647

 

 

  

 

  

 

 

 

 

13,526,743

 

 

  

 

 

 

 

 

 

5,154,540

 

 

  

 

  

 

 

 

 

5,283,772

 

 

  

 

(1)

In the event of a change of control occurring after the first six months of the 2015-2017 performance period, the number of performance units that would have been earned is the sum of the number of performance units granted and related dividend equivalents accrued through December 31, 2015 multiplied by a payout percentage of 134.2%, which is the relative TSR percentage multiplier based on our TSR percentile rank relative to the TSRs of the companies in the Reference Group for the period from the January 30, 2015 grant date through December 30, 2015, the last business day before the change in control.

In the event of a change of control occurring during the second year of the 2014-2016 performance period, the number of performance units that would have been earned is the sum of the number of performance units granted and related dividend equivalents accrued through December 31, 2015 multiplied by a payout percentage of 150%, which is the relative TSR percentage multiplier based on our TSR percentile rank relative to the TSRs of the companies in the Reference Group for the period from the January 31, 2014 grant date through December 30, 2015, the last business day before the change in control.

In the event of a change of control during the third year of the 2013-2015 performance period, the number of performance units that would have been earned is the sum of the number of performance units granted and related dividend equivalents accrued through December 31, 20132015 multiplied by athe maximum payout percentage of 148.9%,150% which is the relative TSR percentage multiplier based on our TSR percentile rank relative to the TSRs of the companies in the Reference Group for the period from the January 28, 2013 grant date through December 30, 2013,2015, the last business day before the change in control.

In the event of a change of control during the second year of the 2012-2014 performance period, the number of performance units that would have been earned is the sum of the number of performance units granted and related dividend equivalents accrued through December 31, 2013 multiplied by the maximum payout percentage of 150% because the payout percentage equal to 100% plus two times the TSR percentage difference for the period from January 1, 2012 through September 30, 2013 exceeded the maximum payout percentage for the award.

In the event of a change of control with respect to the performance unit award granted to Mr. Hooper for the performance period that began on the October 27, 2011 grant date, the number of performance units that would have been earned is the number of performance units granted multiplied by a payout percentage of 150% because the payout percentage equal to 100% plus two times the TSR percentage difference for the period from October 27, 2011 through September 30, 2013 exceeded the maximum payout percentage for the award.

 

  

Our TSRs for purposes of determining the payout percentages of these awards would be based on the higher of: (i) the average closing price of our Common Stock for a 60 day averaging period that ended on September 30, 2013, or, with respect to the 2013-2015 performance period only, the last 20 trading days of the shortened performance period ended on December 30, 2013,2015 and (ii) the value of consideration the acquirer paid for a share of our Common Stock in the change of control. For purposes of the payout values shown in the tables, the TSRs for our Common Stock were based on the respective actual TSRs over the respective averaging periods. The resulting number of units that would have been earned was multiplied by $114.08,$162.33, the closing price of our Common Stock on December 31, 2013.2015.

 

  

For information on the actual number of units to be earned for these performance unit grants, see ELEMENTS OF COMPENSATION AND SPECIFIC COMPENSATION DECISIONS“Elements of Compensation and Specific Compensation Decisions—Long-Term Incentive Equity Awards” in our Compensation Discussion and Analysis, and “Summary Compensation Table—Narrative“Narrative Description to the Compensation Tables—Performance UnitsUnits” above.

(2)

In the event death or disability occurs, the participant is entitled to the number of performance units that would have been earned by the NEO if he had remained employed for the entire performance period. The number of performance units that would have been earned and the resulting payouts are calculated in the same manner and using the same assumptions as the values shown for these awards in the “Outstanding Equity Awards At Fiscal Year End” table (see footnotes 4, 5 6, 7 and 106 to that table) and discussed above in footnote 1 to this table. In the event of actual death or disability, payout of shares in satisfaction of amounts earned for grants for the 2013-20152015-2017, 2014-2016 and 2012-20142013-2015 performance periods and the performance units granted to Mr. Hooper on October 27, 2011 would not occur until after the end of the performance periods. For more information, see ELEMENTS OF COMPENSATION AND SPECIFIC COMPENSATION DECISIONS“Elements of Compensation and Specific Compensation Decisions—Long-Term Incentive Equity Awards” in our Compensation Discussion and Analysis, and “Summary Compensation Table—Narrative“Narrative Description to the Compensation Tables—Performance UnitsUnits” above.

As Mr. Balachandran was retirement-eligible as of December 31, 2013, the retirement payout amounts for the performance units for the 2013-2015 and 2012-2014 performance periods were calculated in the same manner as the respective death and disability payout amounts.

(3)

Reflects the estimated cost of medical and dental insurance coverage based on rates charged to our staff members for post-employment coverage provided in accordance with COBRA for the first 18 months following termination adjusted for(for the last sixfirst 12 months of this period by a 10% inflation factor for medical coverage and a 6% inflation factor for dental coverage.following termination without cause with

 

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      EXECUTIVE COMPENSATION TABLES  

 

respect to Mr. Meline), adjusted for the last six months of this period by an 8% inflation factor for medical coverage and a 6% inflation factor for dental coverage.

(4)

Reflects the value of retirement plan contributions for two years calculated as two times the sum of: (i) $2,500 and (ii) the product of: (a) 10% and (b) the sum of the NEO’s annual base salary as of December 31, 20132015 and the NEO’s targeted annual cash incentive award for 20132015 (which equals the NEO’s annual base salary as of December 31, 20132015 multiplied by the NEO’s target annual cash incentive award percentage).

(5)

Reflects amounts that would be paid to Mr. HooperMeline pursuant to his offer letter in the event Mr. HooperMeline was terminated without “cause,” including one year of annual salary and annual target incentive bonus, as defined, and the cost of providing continuing medical and dental insurance coverage for 12 months in accordance with COBRA calculated in the same manner as described in footnote 3 above. The terms of Mr. Meline’s offer letter relating to these benefits expire at the end of the third year of his employment on July 21, 2017.

(6)

Reflects amounts that would be paid to Mr. Graham pursuant to his offer letter in the event Mr. Graham was terminated without “cause,” including two yearsyear of annual salary and annual target incentive bonus, as defined, and the cost of providing continuing medical and dental insurance coverage for 18 months in accordance with COBRA calculated in the same manner as described in footnote 3 above. The terms of Mr. Hooper’sGraham’s offer letter relating to these benefits expire at the end of the third year of his employment in October 2014.

(6)

Reflects amounts payable to Mr. Peacock pursuant to his Agreement and General Release of Claims, entered into as of January 9, 2014, as follows: (i) lump sum payment that is approximately equal to 1.5 times base pay salary plus target annual cash incentive award opportunity, totaling $2,600,000, plus a $4,600,000 lump sum payment that is approximately equal to the pro-rata value of the last unvested tranche of Mr. Peacock’s new hire equity awards (stock options and RSUs) that vest in October 2014 based on the total period of time that he has been employed over the total vesting period of such tranche (48 months) calculated on the expected date of his termination of employment with the Company in May 2014, and using a stock price equal to $113 per share; (ii) reimbursement for COBRA medical coverage for up to 18 months, totaling $37,969 and (iii) senior executive career transition services for up to 12 months, totaling $20,000.July 13, 2018.

(7)

Reflects cash installment payments that are payable to Mr. Balachandran in 2014 and 2015 pursuant to a retention bonus arrangement entered into in March 2011 to promote his continued employment with us. The payments are accelerated inpro-rata reduction of the event of involuntary termination not for “Cause,” death and disability.

(8)

Excludes the value of 27,348 RSUs (including related accrued dividend equivalents rounded down to the nearest whole number of units) granted to Mr. BalachandranGraham in connection with the commencement of his employment based on July 31, 2012the number of complete months of service provided by Mr. Graham in 2015 since death and disability is assumed to have occurred in the year the awards were granted.

(8)

The unvested portion of Mr. Graham’s NDCP account would become vested in certain circumstances. Pursuant to the terms of the NDCP, the amount that would become vested upon a Change of Control and termination was reduced by $31,281 to avoid the excise tax that would otherwise be imposed upon Mr. Graham for payments or benefits he would forfeit were he to voluntarily retire.receive under the Change of Control Plan in this circumstance.

 

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      DIRECTOR COMPENSATION  

 

Director Compensation

 

 

The compensation program for our non-employee directors is intended to be competitive and fair so that we can attract the best talent to our Board of Directors, or Board, and recognize the time and effort required of a director given the size and complexity of our operations. In addition to cash compensation, we provide equity grants and have stock

ownership guidelines to align the directors’ interests with all of our stockholders’ interests and to motivate our directors to focus on our long-term growth and success. Directors who are our employees are not paid any fees for serving on our Board or for attending Board meetings.

In December 2012, based on recommendations made by the Governance and Nominating Committee and Frederic W. Cook & Co., Inc. and to implement certain prevailing market practices in U.S. director compensation, the Board approved

the following changes to non-employee director compensation to be effective as of January 1, 2013:

Eliminate Board meeting fees and increase the Board retainer and committee meeting fees;

Increase retainers for certain committee chairs;

Implement a lead director retainer;

Eliminate the inaugural full grant of equity awards for new directors;

Eliminate stock options in the annual equity grant and replace with restricted stock units, or RSUs; and

Change the stock ownership guidelines from a fixed share amount to a multiple of the annual cash retainer.

 

 

20132015 Director Compensation

 

 

Cash Compensation. Each non-employee director receives an annual cash retainer of $100,000. In addition, chairs of our Board committees receive additional annual retainers as follows: (i) Audit Committee, $20,000; (ii) Compensation and Management Development Committee, $20,000; (iii) Corporate Responsibility and Compliance Committee, $20,000 and (iv) Governance and Nominating Committee, $20,000. The lead independent director receives an additional $35,000 annual retainer. Directors are not additionally compensated for Board meeting attendance. Directors are compensated $2,000 for each committee meeting they attend ($1,000 for telephonic attendance). Directors are also compensated for attending meetings of committees of which they are not members or special meetings if they are invited to attend by the Chairman of the Board or the committee chair. Directors are entitled to reimbursement of their expenses in accordance with our policy, incurred in connection with attendance at Board and committee meetings and conferences with our senior management. We make tax gross-up payments to our directors to reimburse them for additional income taxes imposed when we are required to impute income on perquisites that we provide.

Equity Incentives. Under the provisions of our revised Director Equity Incentive Program, each non-employee director

receives an automatic annual grant of restricted stock units, or RSUs, on the third business day after the release of our first fiscal quarter earnings, with a grant date fair market value of $200,000, based on the closing price of our Common Stock on the grant date of grant (rounded down to the nearest whole number). The RSUs vest immediately, and earn dividend equivalents, including if the director choosesmay choose to defer receipt of the award.shares. Directors that elect to defer receipt of the shares accrue dividend equivalents on the vested RSUs during the deferral period.

Deferred Compensation and Other Benefits. Non-employee directors are eligible to participate in the Nonqualified Deferred Compensation Plan, or NDCP, that we maintain for our staff members (see “Nonqualified Deferred Compensation” in our Executive Compensation Tables above for more information). Earnings under this plan are market-based — market-based—there isare no “above market” or guaranteed rates of returns.

Through The Amgen Foundation, Inc., the Company maintains a charitable contributions matching gift program for all eligible staff members and non-employee directors. Our directors participate in the program on the same terms as our staff members. The Amgen Foundation, Inc. matches, on a dollar-for-dollar basis, qualifying donations made by directors and staff members to eligible organizations, up to $20,000 per person, per year.

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 DIRECTOR COMPENSATION  

Guests of our Board members are occasionally invited to Board events, and we may pay or reimburse travel expenses and may provide transportation on our aircraft for both the director and his or her guest.

Director Stock Ownership Guidelines. All non-employee directors are expected to hold the equivalent of five times the Board annual cash retainer (currently $500,000) in our Common Stock while serving as a non-employee director. Subsequent to joining the Board, Board members are prohibited from engaging in short sales with respect to the Company’s securities, purchasing or pledging the Company’s stock on margin (with the exception of the use of a margin account to purchase the Company’s Common Stock in connection with the exercise of Company granted stock

options) or entering into any derivative or similar transactions with respect to the Company’s securities.

All non-employee directors are expected to comply with the stock ownership guidelines on or before December 31st of the calendar year in which the fifth anniversary of their date of election by stockholders or the Board falls. For purposes of the Board stock ownership guidelines, issued and outstanding shares of our Common Stock held beneficially or of record by the non-employee director, issued and

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  DIRECTOR COMPENSATION  

outstanding shares of our Common Stock held in a qualifying trust (as defined in the guidelines) and vested RSUs that are deferred will count towards satisfying the stock ownership guidelines.

Board members are subject to our insider trading policy that prohibits them from engaging in short sales with respect to

the Company’s securities, purchasing or pledging the Company’s stock on margin or entering into any hedging, derivative or similar transactions with respect to the Company’s securities.

 

 

Director Stock Ownership Guidelines Compliance Dates

All directors with compliance dates that were on or prior to December 31, 20132015 met the stock ownership guidelines as of December 31, 2013.2015. Directors elected to the Board within the last five years have the following compliance dates:

 

Director Compliance Date

François de Carbonnel

December 31, 2014

Robert A. Eckert

 

December 31, 2018

Greg C. Garland

December 31, 2019

Rebecca M. Henderson

 

December 31, 20152019

Tyler Jacks

Fred Hassan

 

December 31, 2021

Tyler Jacks

December 31, 2017

Ronald D. Sugar

 

December 31, 2016

R. Sanders Williams

December 31, 2020

 

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      DIRECTOR COMPENSATION  

 

Director Compensation Table

 

The following table shows compensation of the non-employee members of our Board for 2013.2015. Robert A. Bradway, our Chairman of the Board, Chief Executive Officer and President is not included in the table as he is an employee and thus receives no compensation for his service as a director.

 

Director  Fees Earned
or Paid in
Cash($)(3)
   Stock
Awards($)(4)(6)
   Option
Awards($)(5)(6)
   All Other
Compensation($)(7)
   Total($) 
Non-Employee Director  Fees Earned
or Paid in
Cash($)(3)
   Stock
Awards($)(4)(5)
   All Other
Compensation($)(6)
     Total($) 

David Baltimore

   124,000     199,961     0     20,242     344,203    

 

 

 

 

124,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

21,015

 

 

  

 

    

 

 

 

 

344,996

 

 

  

 

Frank J. Biondi, Jr.

   142,000     199,961     0     38,061     380,022    

 

 

 

 

144,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

47,148

 

 

  

 

    

 

 

 

 

391,129

 

 

  

 

François de Carbonnel

   124,000     199,961     0     13,863     337,824    

 

 

 

 

123,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

17,462

 

 

  

 

    

 

 

 

 

340,443

 

 

  

 

Vance D. Coffman

   177,000     199,961     0     31,822     408,783    

 

 

 

 

181,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

41,491

 

 

  

 

    

 

 

 

 

422,472

 

 

  

 

Robert A. Eckert(1)

   124,000     199,961     348,502     735     673,198    

 

 

 

 

124,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

20,204

 

 

  

 

    

 

 

 

 

344,185

 

 

  

 

Greg C. Garland(2)

   30,000     49,901     0     0     79,901    

 

 

 

 

124,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

    

 

 

 

 

343,981

 

 

  

 

Fred Hassan(1)

  

 

 

 

 

59,000

 

 

  

 

  

 

 

 

 

99,986

 

 

  

 

  

 

 

 

 

7,550

 

 

  

 

    

 

 

 

 

166,536

 

 

  

 

Rebecca M. Henderson

   118,000     199,961     0     17,438     335,399    

 

 

 

 

120,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

25,814

 

 

  

 

    

 

 

 

 

345,795

 

 

  

 

Frank C. Herringer(1)

   144,000     199,961     0     37,538     381,499  

Frank C. Herringer(2)

  

 

 

 

 

146,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

51,627

 

 

  

 

    

 

 

 

 

397,608

 

 

  

 

Tyler Jacks

   120,000     199,961     0     12,100     332,061    

 

 

 

 

120,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

19,136

 

 

  

 

    

 

 

 

 

339,117

 

 

  

 

Gilbert S. Omenn

   124,000     199,961     0     31,192     355,153  

Judith C. Pelham

   124,000     199,961     0     21,313     345,274    

 

 

 

 

124,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

1,195

 

 

  

 

    

 

 

 

 

325,176

 

 

  

 

J. Paul Reason(2)

   56,000     199,961     0     12,281     268,242  

Leonard D. Schaeffer(2)

   63,000     199,961     0     26,260     289,221  

Ronald D. Sugar

   123,000     199,961     0     22,368     345,329    

 

 

 

 

138,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

337,981

 

 

  

 

R. Sanders Williams

  

 

 

 

 

120,000

 

 

  

 

  

 

 

 

 

199,981

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

    

 

 

 

 

334,981

 

 

  

 

(1)

All cash fees were deferred by Messrs. Eckert and Herringer under our NDCP.

(2)

Mr. GarlandHassan was appointed to our Board on October 16, 2013, and Admiral Reason and Mr. Schaeffer left our Board on May 22 and July 8, 2013, respectively.28, 2015. Accordingly, fees earned by Messrs. Garland and Schaeffer and Admiral ReasonMr. Hassan in 20132015 consist of a pro-rata amount of the annual retainer fee (pro-rated on a quarterly basis) and fees for committee meetings attended in 2013.2015.

(2)

All cash fees were deferred by Mr. Herringer under our NDCP.

(3)

Reflects all fees paid toearned by members of our Board for participation in regular, telephonic and special meetings of Board committees retainer fees and fees paid for services provided to our management by certain members of the Board in connection with special meetings,annual retainers, as applicable.

(4)

Reflects the grant date fair values of RSUs granted during 20132015 determined in accordance with ASC 718 consisting of 1,8451,191 RSUs granted on April 26, 201324, 2015 to each director named above, except for Mr. GarlandHassan who was not yet a member of our Board. Mr. GarlandHassan was granted 429572 RSUs on October 25, 2013August 4, 2015 based on a pro-rated value consistent with the length of service on the Board during 2013. Because these RSUs accrue dividend equivalents during the vesting period, as applicable, the2015. The grant date fair values of all these awards are based on the closing prices of our Common Stock on the grant dates of $108.38$167.91 and $116.32$174.80 on April 2624 and October 25, 2013,August 4, 2015, respectively, multiplied by the number of RSUs granted.

(5)

Reflects Directors that elect to defer receipt of the grant date fair value of stock options grantedshares accrue dividend equivalents on the vested RSUs during 2013 determined in accordance with ASC 718. In connection with his appointment to our Board on December 13, 2012, Mr. Eckert received an inaugural stock option grant to purchase 20,000 shares of our Common Stock on January 28, 2013, with a grant date fair value of approximately $17.43 per stock option. The grant date fair value per stock option was determined using a stock option valuation model with the following assumptions:deferral period.

 

Grant Date  Risk-Free Interest
Rate(%)
   Expected Life   Expected
Volatility(%)
   Dividend Yield(%)   Exercise Price($) 

January 28, 2013

   1.7     8.1 years     23.1     2.2     85.59  

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      DIRECTOR COMPENSATION  

 

(6)(5)

All of the RSUs granted to directors in 20132015 were fully vested upon grant. The stock options granted to Mr. Eckert vested on January 28, 2014, the first anniversary of the grant date.

 

  

The table below shows the aggregate numbers of stock awards and stock option awards outstanding for each non-employee director as of December 31, 2013.2015. Stock awards consist of vested RSUs for which receipt of the underlying shares of our Common Stock has been deferred (vested/deferred RSUs) and dividends paid on vested/deferred RSUs deemed automatically reinvested to acquire additional vested/deferred RSUs (rounded down to the nearest whole number of units). Upon vesting and the passage of any applicable deferral period, the RSUs are paid in shares of our Common Stock on a one-for-one basis. Directors may elect to defer paymentissuance of shares until a later date, which would result in a deferral of taxable income to the director.director until the stock issuance date. Upon the passage of any applicable deferral period, the vested/deferred RSUs are paid in shares of our Common Stock on a one-for-one basis. Option awards consist of fully exercisable and unexercisable stock options.options granted prior to 2015.

 

Director  Aggregate Stock Awards
Outstanding as of December 31, 2013(#)
   Aggregate Option Awards
Outstanding as of December 31, 2013(#)
 
   

Restricted Stock Units and

Dividend Equivalents

   Stock Options 

David Baltimore

   0    30,000 

Frank J. Biondi, Jr.

   13,256    15,000 

François de Carbonnel

   2,077    20,000 

Vance D. Coffman

   8,226    45,000 

Robert A. Eckert

   1,869    20,000 

Greg C. Garland

   0    0 

Rebecca M. Henderson

   5,549    28,000 

Frank C. Herringer

   14,655    30,000 

Tyler Jacks

   0    20,000 

Gilbert S. Omenn

   4,563    25,000 

Judith C. Pelham

   0    0 

J. Paul Reason

   6,357    0 

Leonard D. Schaeffer

   3,120    0 

Ronald D. Sugar

   5,195    30,000 

Non-Employee Director  Aggregate Stock Awards
Outstanding as of December 31, 2015(#)
   Aggregate Option Awards
Outstanding as of December 31, 2015(#)
 
   

Restricted Stock Units and

Dividend Equivalents

 

   

Stock Options

 

 

 

David Baltimore

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

 

Frank J. Biondi, Jr.

 

  

 

 

 

 

16,839

 

 

  

 

  

 

 

 

 

15,000

 

 

  

 

 

François de Carbonnel

 

  

 

 

 

 

2,158

 

 

  

 

  

 

 

 

 

5,000

 

 

  

 

 

Vance D. Coffman

 

  

 

 

 

 

8,547

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

 

Robert A. Eckert

 

  

 

 

 

 

5,007

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

 

Greg C. Garland

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

Fred Hassan

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

Rebecca M. Henderson

 

  

 

 

 

 

8,830

 

 

  

 

  

 

 

 

 

8,000

 

 

  

 

 

Frank C. Herringer

 

  

 

 

 

 

18,293

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

 

Tyler Jacks

 

  

 

 

 

 

3,064

 

 

  

 

  

 

 

 

 

20,000

 

 

  

 

 

Judith C. Pelham

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

Ronald D. Sugar

 

  

 

 

 

 

8.463

 

 

  

 

  

 

 

 

 

30,000

 

 

  

 

 

R. Sanders Williams

 

  

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

 

86    LOGOLOGO  ï 20142016 Proxy Statement93


      DIRECTOR COMPENSATION  

 

(7)(6)

The table below provides a summary of amounts paid by the Company for perquisites and other special benefits.

 

 Matching of
Charitable
Contributions
($)(a)
  Personal Use of
Company Aircraft(b)
 Personal Expenses While
on Business Travel and
Expenses in Connection
with Guests
Accompanying
Directors on Business
Travel(c)
 Other(d) Dividends
Accrued  on
Vested/
Deferred
RSUs($)(e)
  Total($)  Matching of
Charitable
Contributions
($)(a)
  Personal Use of
Company
Aircraft(b)
 Reimbursement of
Expenses in

Connection
with Guests
Accompanying
Directors

on Business
Travel(c)
 Personal Expenses
While on
Business Travel(c)
 Other Dividends
Accrued on
Vested/
Deferred
RSUs($)(e)
  Total($) 
Director Aggregate
Incremental
Amounts($)
 Tax
Gross-
Up($)
 Aggregate
Incremental
Amounts ($)
 Tax
Gross-
Up($)
 Aggregate
Incremental
Amounts ($)
 Tax
Gross-
Up($)
 
Non-Employee
Director
 Matching of
Charitable
Contributions
($)(a)
  Aggregate
Incremental
Amounts($)
 Tax
Gross-
Up($)
 Aggregate
Incremental
Amounts($)
 Tax
Gross-
Up($)
 Aggregate
Incremental
Amounts($)
 Tax
Gross-
Up($)
 Aggregate
Incremental
Amounts($)
 Dividends
Accrued on
Vested/
Deferred
RSUs($)(e)
  Total($) 

David Baltimore

 20,000   73   169   0   0   0   0   0   20,242   

 

 

 

 

19,000

 

 

  

 

 

 

 

 

 

1,043

 

 

  

 

 

 

 

 

 

972

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

21,015

 

 

  

 

Frank J. Biondi, Jr.

 20,000   0   3,125   0   0   0   0   14,936   38,061   

 

 

 

 

20,000

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

919

 

 

  

 

 

 

 

 

 

127

 

 

  

 

 

 

 

 

 

59

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

26,043

 

 

  

 

 

 

 

 

 

47,148

 

 

  

 

François de Carbonnel

 10,000   0   0   0   0   0   0   3,863   13,863   

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

92

 

 

  

 

 

 

 

 

 

54

 

 

  

 

 

 

 

 

 

10,581

 

 

(d) 

 

 

 

 

 

 

6,735

 

 

  

 

 

 

 

 

 

17,462

 

 

  

 

Vance D. Coffman

 20,000   0   0   0   0   0   0   11,822   31,822   

 

 

 

 

20,000

 

 

  

 

 

 

 

 

 

205

 

 

  

 

 

 

 

 

 

249

 

 

  

 

 

 

 

 

 

290

 

 

  

 

 

 

 

 

 

134

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

20,613

 

 

  

 

 

 

 

 

 

41,491

 

 

  

 

Robert A. Eckert

 0   0   0   503   232   0   0   0   735   

 

 

 

 

20,000

 

 

  

 

 

 

 

 

 

55

 

 

  

 

 

 

 

 

 

149

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

20,204

 

 

  

 

Greg C. Garland

 0   0   0   0   0   0   0   0   0   

 

 

 

 

20,000

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

20,000

 

 

  

 

Fred Hassan

 

 

 

 

 

7,500

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

50

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

7,550

 

 

  

 

Rebecca M. Henderson

 13,500   0   0   0   604   0   0   3,334   17,438   

 

 

 

 

20,000

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

5,814

 

 

  

 

 

 

 

 

 

25,814

 

 

  

 

Frank C. Herringer

 20,000   0   0   0   0   0   0   17,538   37,538   

 

 

 

 

20,000

 

 

  

 

 

 

 

 

 

274

 

 

  

 

 

 

 

 

 

774

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

30,579

 

 

  

 

 

 

 

 

 

51,627

 

 

  

 

Tyler Jacks

 12,100   0   0   0   0   0   0   0   12,100   

 

 

 

 

19,075

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

61

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

19,136

 

 

  

 

Gilbert S. Omenn

 20,000   354   1,470   623   258   0   0   8,487   31,192  

Judith C. Pelham

 20,000   0   1,313   0   0   0   0   0   21,313   

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

1,195

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

1,195

 

 

  

 

J. Paul Reason

 0   0   0   0   0   314   145   11,822   12,281  

Leonard D. Schaeffer

 20,000   0   0   0   0   312   144   5,804   26,260  

Ronald D. Sugar

 20,000   154   1,758   312   144   0   0   0   22,368   

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

R. Sanders Williams

 

 

 

 

 

15,000

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

0

 

 

  

 

 

 

 

 

 

15,000

 

 

  

 

 (a)

These are charitable contributions of The Amgen Foundation, Inc. that matched the directors’ charitable contributions made in 2013.2015.

 (b)

Where we have invited guests to accompany directors on our aircraft or where the director, for non-business purposes, accompanies executives using our aircraft for business purposes, we typically incur no incremental cost for transporting the guest,that person, but we are required to impute income to the director for his or her income tax purposes. We reimburse the director for the additional income taxes imposed on the director in these circumstances. The aggregate incremental cost of use of our aircraft is calculated based on our variable operating costs, which include the cost of crew travel expenses, on-board catering, landing fees, trip-related hangar/parking costs, fuel, trip specific maintenance and other smaller variable costs. In determining the incremental cost relating to fuel and trip-related maintenance, we applied our actual average costs. We believe that the use of this methodology is a reasonably accurate method for calculating fuel and trip-related maintenance costs. Because our aircraft are used primarily for business travel, we do not include the fixed costs that do not change based on usage, such as pilots’ salaries, our aircraft purchase costs and the cost of maintenance not related to trips.

 (c)

These amounts reflect the incremental costs of personal expenses incurred while on business travel and related imputed income to the director for his or her income tax purposes. We reimburse the director for the additional income taxes imposed on the director in these circumstances. Where we have invited guests accompanying directors for business purposes, we may incur incremental costs for the guest and may be required to impute income to the director for his or her income tax purposes. We reimburse the director for the additional income taxes imposed on the director in these circumstances.

 (d)

Amounts reflectMr. de Carbonnel, a resident of Switzerland, incurred penalties in connection with California taxes that we did not withhold. The Company reimbursed for such penalties in the costamount of other expenses and related imputed income to$10,581, which amount is included as “All Other Compensation” in the director for his or her income tax purposes. We reimburse the director for the additional income taxes imposed on the director in these circumstances.“Director Compensation Table.”

 (e)

Amounts reflect dividends accrued on vested/deferred RSUs granted prior to 2011 as the impact of dividends was not considered in determining the grant date fair values of these awards for purposes of reporting compensation in the “Stock Awards” column in the “Director Compensation Table” in the Company’s proxy statements in prior years.

 

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      AUDIT MATTERS  

 

Audit Matters

Audit Committee Report

 

 

The Audit Committee has reviewed and discussed with management the Company’s audited consolidated financial statements as of and for the year ended December 31, 2013.2015.

The Audit Committee has also discussed with Ernst & Young LLP, or Ernst & Young, the matters required to be discussed by the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16,Communications with Audit Committees.

The Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young required by the

the applicable requirements of the PCAOB regarding Ernst & Young’s communication with the Audit Committee concerning independence and has discussed with Ernst & Young their independence.

Based on the reviews and discussions referred to above, the Audit Committee has recommended to the Board of Directors that the audited consolidated financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20132015 for filing with the Securities and Exchange Commission, or SEC.Commission.

 

 

Audit Committee of the Board of Directors

Frank J. Biondi, Jr., Chairman

David Baltimore

François de Carbonnel

Robert A. Eckert

Greg C. Garland

Gilbert S. OmennFred Hassan

Judith C. Pelham

 

88    LOGOLOGO  ï 20142016 Proxy Statement95


      AUDIT MATTERS  

 

Independent Registered Public Accountants

 

The following table presents fees for professional services provided or to be provided by Ernst & Young for audits of the years ended December 31, 20132015 and December 31, 2012,2014, and fees for other services rendered by Ernst & Young during these periods.

 

  2013   2012   2015   2014 

Audit

  $6,425,000    $5,926,000    

 

$

 

 

7,266,940

 

 

  

 

  

 

$

 

 

6,894,000

 

 

  

 

Audit-Related

   371,000     342,000    

 

 

 

 

439,000

 

 

  

 

  

 

 

 

 

385,000

 

 

  

 

Tax

   367,000     205,000    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

136,000

 

 

  

 

All Other Fees

   0     0    

 

 

 

 

0

 

 

  

 

  

 

 

 

 

0

 

 

  

 

Total Fees

  $7,163,000    $6,473,000    

 

$

 

 

7,705,940

 

 

  

 

  

 

$

 

 

7,415,000

 

 

  

 

 

Included in Audit fees above are professional services associated with the integrated audit of our consolidated financial statements and our internal control over financial reporting and the statutory audits of various subsidiaries of the Company. Audit-Related fees are primarily attributable to audits of our affiliated companies and our retirement plans. Tax fees are primarily attributable to various U.S. and international tax compliance and planning services. The Audit Committee has considered whether the Audit-Related and Tax services provided by Ernst & Young are compatible with maintaining that firm’s independence.

From and after the effective date of the SEC rule requiring Audit Committee pre-approval of all audit and permissible non-audit services provided by independent registered public accountants, theThe Audit Committee has approved all audit and permissible non-audit services prior to such services being provided by Ernst & Young. The Audit Committee, or one or more of its designated members that have been granted authority by the Audit Committee, meets to approve each audit or non-audit service prior to the engagement of Ernst & Young for such service. Each such service approved by one or more of the authorized and designated members of the Audit Committee is presented to the entire Audit Committee at a subsequent meeting.

 

 

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      ANNUAL REPORT AND FORM 10-K  

 

Annual Report and Form 10-K

 

The Company’s Annual Report for fiscal 2013,2015, which contains the consolidated financial statements of the Company for fiscal 2013,2015, accompanies this proxy statement, but is not a part of the Company’s soliciting materials.

Stockholders may obtain, without charge, a copy of the Company’s Annual Report on Form 10-K for fiscal 2013,2015, filed with the Securities and Exchange Commission, including the financial statements and schedules thereto, without the accompanying exhibits, by writing

to: Investor Relations, Senior Manager, Amgen Inc., One Amgen Center Drive, Thousand Oaks, CA 91320-1799, Mail Stop 28-1-C, or contact Investor Relations by telephone at (805) 447-1060 or email at investor.relations@amgen.com. The Company’s Annual Report on Form 10-K is also available online at the Company’s website atwww.amgen.com. A list of exhibits is included in the Form 10-K and exhibits are available from the Company upon the payment to the Company of the cost of furnishing them.

 

 

      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  

Certain Relationships and Related Transactions

 

Under our written Approval of Related Party Transactions policy, a related party transaction (as defined below) may be consummated or may continue only if the Audit Committee approves or ratifies the transaction in accordance with the guidelines set forth in the policy. The policy applies to: (1) any person who is, or at any time since the beginning of our last fiscal year was, a member of our Board of Directors, or Board, one of our executive officers or a nominee to become a member of our Board; (2) any person who is known to be the beneficial owner of more than 5% of any class of our voting securities; (3) any immediate family member, as defined in the policy, of, or sharing a household with, any of the foregoing persons and (4) any firm, corporation or other entity in which any of the foregoing persons is employed, or is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest.

All potential related party transactions are presented to the Audit Committee for its consideration and, if the Audit Committee deems it appropriate, approval. The Audit Committee considers all relevant facts and circumstances available to it, including the recommendation of management. No member of the Audit Committee participates in any review, consideration or approval of any related party transaction involving such member or any of his or her immediate family members, except that such member is required to provide all material information concerning the related party transaction to the Audit Committee.

Related party transactions may be preliminarily entered into by management subject to ratification by the Audit Committee; provided that if ratification shall not be forthcoming, management shall make all reasonable efforts to cancel or annul such transaction. At each scheduled meeting of the Audit Committee, management shallis required to update the Audit Committee as to any material changes to any approved or ratified related party transaction. A “Related Party Transaction” is defined in the policy as a transaction, arrangement or relationship, or series of similar transactions, arrangements or relationships (including but not limited to any indebtedness or guarantee of indebtedness), between us and any of the persons listed in the first paragraph of this section. A related party transaction also includes any material amendment or modification to an existing related party transaction.

The Audit Committee has excluded each of the following related party transactions under the terms of our Approval of Related Party Transactions policy:

 

1.

any matters related to compensation or benefits to the extent such compensation or benefits would not be required to be disclosed under Item 404 of Regulation S-K under the Securities Act of 1933;

 

2.

transactions involving less than $120,000 (or such different amount as may require disclosure or approval under any future amendment to the rules and regulations of the Securities and Exchange Commission, including

 

 

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      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  

 

 

Item 404 of Regulation S-K, or the listing requirements of The NASDAQ Stock Market LLC, including Rule 5630) when aggregated with all similar transactions; or

 

3.

transactions approved by another independent committee of the Board.

In deciding whether to approve or ratify a related party transaction, the Audit Committee will consider the following factors:

 

whether the terms of the transaction are (i) fair to the Company and (ii) at least as favorable to the Company as would apply if the transaction did not involve a related party;

whether there are demonstrable business reasons for the Company to enter into the transaction;

 

whether the transaction would impair the independence of an outside director; and

 

whether the transaction would present an improper conflict of interest for any director or executive officer, taking into account the size of the transaction, the overall financial position of the related party, the direct or indirect nature of the related party’s interest in the transaction and the ongoing nature of any proposed relationship, and any other factors the Audit Committee deems relevant.

 

 

Transactions with Related Persons

 

 

Keith Jones, who is the brother-in-law of Brian M. McNamee, an executive officer of the Company, is employed by the Companyus as Manager District Sales.National Account Senior Manager. Mr. Jones’ compensation earned in 20132015 consisted of $118,839$143,005 in base salary, $36,288$48,186 in annual cash incentive awards and

bonuses and a grant of 11357 restricted stock units and 11350 performance units,

each valued at $12,247,$9,571 and $9,479, respectively, on the date of grant.grant date. This transaction did not require the review or approval of the Audit Committee pursuant to the Company’sour Approval of Related Party Transactions policy.policy because it was reviewed by our Compensation and Management Development Committee.

 

 

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      OTHER MATTERS  

 

Other Matters

Section 16(a) Beneficial Ownership Reporting Compliance

 

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, or Exchange Act, requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities (collectively, Reporting Persons), to file reports of ownership and changes in ownership with the Securities and Exchange Commission, or SEC. Copies of the Section 16 reports are also required to be supplied to the Company and such reports are available on our website atwww.amgen.comwww.amgen.com..

Based solely on our review of the reports filed by Reporting Persons and written representations from certain Reporting

Persons that no other reports were required for those persons, during the year ended December 31, 2013,2015, the Reporting Persons met all applicable Section 16(a) filing requirements.requirements other than Robert A. Eckert. Due to an administrative error, Mr. Eckert did not include 435 shares of our Common Stock held through two living revocable trust accounts on his Form 3 filed with the SEC on December 20, 2012. These shares were acquired by Mr. Eckert prior to his appointment as a director of Amgen. A Form 5 reporting this ownership interest was filed with the SEC on January 15, 2016.

 

 

Stockholder Proposals for 2017 Annual Meeting

 

 

Stockholder Proposals and Director Nominees for Inclusion in our 2017 Proxy Statement

Proposals Pursuant to Rule 14a-8. Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in our proxy statement and for consideration at our 20152017 annual meeting of stockholders. To be eligible for inclusion in our 20152017 proxy statement, your proposal must be received by usour Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799, no later than December 4, 2014,8, 2016, and must otherwise comply with Rule 14a-8.14a-8 under the Exchange Act. While theour Board of Directors, or Board, will consider stockholder proposals, we reserve the right to omit from our proxy statement stockholder proposals that we are not required to include under the Exchange Act, including Rule 14a-8.

Business Proposals andDirector Nominations Pursuant to ourOur Bylaws. UnderWe recently amended the Amended and Restated Bylaws of Amgen Inc., or Bylaws, to permit an eligible stockholder, or group of up to 20 eligible stockholders, owning Amgen stock continuously for at least three years and shares representing an aggregate of at least 3% of our outstanding shares, to nominate and include in Amgen’s proxy materials director nominees constituting up to the greater of 20% of the Board or two directors, provided that the stockholder(s) and nominee(s)

satisfy the requirements of the Bylaws (“Proxy Access”). To nominate a director or bring any other business before the stockholderspursuant to Proxy Access at the 20152017 annual meeting of stockholders, that will not be included in our proxy statement pursuant to Rule 14a-8, you must comply with all of the procedures, information requirements, qualifications and conditions set forth in our Bylaws, including those summarized below. In addition,Bylaws. A fully compliant nomination notice must be received by us no earlier than November 8, 2016 and no later than December 8, 2016 assuming the date of the 20152017 annual meeting of stockholders is not more than thirty days before and not more than seventy days after the anniversary date of the 20142016 Annual Meeting of Stockholders, or Annual Meeting, you must notify us in writing and such nomination notice must be delivered to our Secretary no earlier than January 15, 2015at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799.

Stockholder Proposals and no later than February 14, 2015. Moreover, as further described below, certain information requiredNominees Brought at the 2017 Annual Meeting without Inclusion in our 2017 Proxy Statement

Business Proposals and Nominations Pursuant to our Bylaws.To nominate a director or bring any other business before the stockholders at the 2017 annual meeting of stockholders that will not be included in such noticeour 2017 proxy statement pursuant to Rule 14a-8 or the Proxy Access provisions of our Bylaws, you must be updated ascomply with all of the record date of the meeting at which the nomination or other proposal is to be presented

not later than ten days after such record date. In addition,procedures, information requirements, qualifications and conditions set forth in our Bylaws provide that if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders to present a nomination or other business proposal, the nomination will be disregarded and the proposed business will not be transacted, notwithstanding that proxies in respect of the vote on the nomination or other business proposal may have been received by the Company.

Our Bylaws provide that a stockholder’s advance notice of a nomination must contain the following as to each person whom the stockholder proposes to nominate for election as a director: (1) the information relating to the nominee that is required by paragraphs (a), (e) and (f) of Item 402 of Regulation S-K adopted by the SEC (or the corresponding provisions of any rule or regulation subsequently adopted by the SEC applicable to the Company); (2) such nominee’s written consent to being named in the proxy statement as a nominee and serving as a director if elected; (3) whether such nominee, the stockholder or the beneficial owner, if any, on whose behalf the nomination is being made has received any financial assistance, funding or other consideration from any other person (Stockholder Associated Person) in respect of the nomination and the details thereof and (4) whether any nominee is eligible for consideration as an independent director under the relevant standards contemplated by Item 407(a) of Regulation S-K adopted by the SEC (or any corresponding provisions subsequently adopted by the SEC and applicable to the Company). Our

 

 

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      OTHER MATTERS  

 

Bylaws provide that a stockholder’s advance notice of a proposed business item (other than a nomination) must include: (1) a brief descriptionBylaws. In addition, assuming the date of the business desired to be brought2017 annual meeting of stockholders is not more than thirty days before and not more than seventy days after the meeting; (2) the textanniversary date of the proposal or business (including the text of any resolutions proposed for considerationAnnual Meeting, you must notify us in writing and in the event that such business includes a proposal to amend our Bylaws, the language of the proposed amendments); (3) the reasons why the stockholder favors the proposal and (4) whether the stockholder or the beneficial owner, if any, on whose behalf the proposal is being made has received any financial assistance, funding or other consideration from any other person (also a Stockholder Associated Person) in respect of the proposal (and the details thereof) and any material interest in such business of the stockholder, such beneficial owner or any Stockholder Associated Person.

In addition, our Bylaws provide that a stockholder giving advance notice of a nomination or a proposed business item must include the following information, as to such stockholder and the beneficial owner, if any, on whose behalf the nomination or proposal is made, in the notice: (1) the name and address of the stockholder, as they appear on the Company’s books, and of such beneficial owner, if any; (2) a representation setting forth the class or series and number of shares of our capital stock which are owned beneficially and of record by the stockholder, and any such beneficial owner, nominee or Stockholder Associated Person; (3) a description of any agreement, arrangement or understanding with respect to the nomination or proposal between or among such stockholder and any such beneficial owner, nominee and Stockholder Associated Person, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing; (4) a representation whether and the extent to which any hedging, derivative or other transaction or agreement is in place or has been entered into with respect to the Company or its securities (whether or not such transaction shall be subject to settlement in underlying shares of capital stock of the Company), bank debt or credit ratings, within the past six months by, or for the benefit of, such stockholder and any such beneficial owner, nominee or Stockholder Associated Person, the effect or intent of which

is to give rise to gain or loss as a result of changes in the trading price of the Company’s securities or bank debt or changes in the credit ratings for the Company, its securities or bank debt (or, more generally, changes in the perceived creditworthiness of the Company) or to increase or decrease the voting power of such stockholder and any such beneficial owner, nominee or Stockholder Associated Person, and if so, a summary of the material terms thereof; (5) a representation that the stockholder is a holder of record of our stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination or other business item; (6) a representation whether the stockholder or beneficial owner, if any, intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to stockholders of at least the percentage of our outstanding capital stock required to approve or adopt the proposal or elect the nominee, and/or (b) otherwise to solicit proxies from stockholders in support of such nomination or proposed business item and (7) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder. Moreover, the information described in subsections (2), (3) and (4) of this paragraph that is required to be included in the notice must be updated by the stockholderdelivered to our Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799 no earlier than January 19, 2017 and beneficial owner, if any, presenting the nomination or other business proposal notno later than 10 days after the record date of the meeting at which the nomination or other business proposal is to be presented to disclose such information as of such record date.February 18, 2017.

You may write to our Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799, Mail Stop 38-5-A, to deliver the notices discussed above and for a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates pursuant to our Bylaws. Also, our Bylaws are filed with the SEC as an exhibit to our Exchange Act reports and can be accessed through the SEC’s EDGAR system.

 

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 OTHER MATTERS  

Householding of Proxy Materials

 

 

The SEC has adopted rules that permit companies and intermediaries (such as brokers and banks) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” is also permissible under the General Corporation Law of the State of Delaware and potentially means extra convenience for stockholders and cost savings for companies.

This year, a number of banksbrokers and brokersbanks with account holders who are our stockholders will be householding our proxy materials. A single Notice of Annual Meeting of

Stockholders or proxy statement will be delivered to multiple

stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or bank that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your broker or bank.

Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request householding of their communications should contact their broker or bank.

 

No Incorporation by Reference

 

 

To the extent that this proxy statement is incorporated by reference into any other filing by us under the Securities Act of 1933 or the Exchange Act, the sections of this proxy statement entitled “Audit Committee Report” or “Compensation Committee Report” to the extent permitted by the rules of the SEC will not be deemed incorporated, unless specifically provided otherwise in such filing.

In addition, references to our website are not intended to function as a hyperlink and the information contained on our website is not intended to be part of this proxy statement. Information on our website, other than our proxy statement, Notice of Annual Meeting of Stockholders and form of proxy, is not part of the proxy soliciting material and is not incorporated herein by reference.

 

 

Disclaimer

 

 

This proxy statement contains statements regarding future individual and Company performance targets and Company performance goals. These targets and Company performance goals are disclosed in the limited context of our compensation

compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.

 

 

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  OTHER MATTERS  

Forward-Looking Statements

 

 

This proxy statement contains forward-looking statements that are based on management’s current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described.beliefs. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including estimates of revenues, operating margins, other financial metrics, expected regulatory or clinical results or practices and other such estimates and results. Forward-looking statements involve significant risks and uncertainties, including those discussed below and more fully described in the SEC reports

filed by Amgen, including Amgen’s annual report on Form 10-K for the year ended December 31, 20132015 and any subsequent periodic reports on Form 10-Q and Form 8-K. Please refer to the Form 10-K and any subsequent Forms 10-Q and 8-K for additional information on the uncertainties and risk factors related to our business. Unless otherwise noted, Amgen is providing this information as of March 17, 201421, 2016 and expressly disclaimsdoes not undertake any dutyobligation to update informationany forward-looking statements contained in this proxy statement.statement as a result of new information, future events or otherwise. No forward-looking statement can be guaranteed and actual results may differ materially from those we project. Our results may be affected by our ability to successfully market both new and existing

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 OTHER MATTERS  

products domestically and internationally, clinical and regulatory developments (domestic or foreign) involving current and future products, sales growth of recently launched products, competition from other products (domestic or foreign) andincluding biosimilars, difficulties or delays in manufacturing our products.products and global economic conditions. Discovery or identification of new product candidates or development of new indications for existing products cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate or development of a new indication for an existing product will be successful and become a commercial product. Further, preclinical results do not guarantee safe and effective performance of product candidates in humans. The complexity of the human body cannot be perfectly, or sometimes, even adequately modeled by computer or cell culture systems or animal models. The length of time that it takes for us to complete clinical trials and obtain regulatory approval for product marketing has in the past varied and we expect similar variability in the future. Even when clinical trials are successful, regulatory authorities may question the sufficiency for approval of the trial endpoints we have selected. We develop product candidates internally and through licensing collaborations, partnerships and joint ventures and acquisitions.ventures. Product candidates that are derived from

relationships or acquisitions may be subject to disputes between the parties or may prove to be not as effective or as safe as we may have believed at the time of entering into such relationship. In addition, salesAlso, we or others could identify safety, side effects or manufacturing problems with our products after they are on the market. Sales of our products are affected by pricing pressure, political and public scrutiny and reimbursement policies imposed by third-party payers, including governments, private insurance plans and managed care providers and may be affected by regulatory, clinical and guideline developments and domestic and international trends toward managed care and healthcare cost containment as well as U.S. legislation affecting pharmaceutical pricing and reimbursement. Government and others’ regulations and reimbursement policies may affect the development, usage

and pricing of our products.containment. Furthermore, our research, testing, pricing, marketing and other operations are subject to extensive regulation by domestic and foreign government regulatory authorities. We or others could identify safety, side effects or manufacturing problems with our products after they are on the market. Our business may be impacted by government investigations, litigation and productsproduct liability claims. In addition, our business may be impacted by the adoption of new tax legislation or exposure to additional tax liabilities. If we fail to meet the compliance obligations in the corporate integrity agreement between us and the U.S. government, we could become subject to significant sanctions. Further, while we routinely obtain patents for our products and technology, the protection offered by our patents and patent applications may be challenged, invalidated or circumvented by our competitors.competitors, or we may fail to prevail in present and future intellectual property litigation. We perform a substantial amount of our commercial manufacturing activities at a few key facilities and also depend on third parties for a significant portion of our manufacturing capacity for the supply of certain of our current and future productsactivities, and limits on supply may constrain sales of certain of our current products and product candidate development. In addition, we compete with other companies with respect to somemany of our marketed products as well as for the discovery and development of new products. Our products may compete against products that have lower prices, established reimbursement, superior performance, are easier to administer, or that are otherwise competitive with our products. Further, some raw materials, medical devices and component parts for our products are supplied by sole third-party suppliers. The discovery of significant problems with a product similar to one of our products that implicate an entire class of products could have a material adverse effect on sales of the affected products and on its business and results of operations. Our efforts to acquire other companies or products and to integrate the operations of companies we have acquired may not be successful. We may not be able to

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  OTHER MATTERS  

access the capital and credit markets on terms that are favorable to us, or at all. We are increasingly dependent on information technology systems, infrastructure and data security. Our stock price is volatile and may be affected by a

number of events. Our business performance could affect or limit the ability of our Board of Directors to declare a dividend or our ability to pay a dividend or repurchase our Common Stock.

 

Other Matters

 

The Board knows of no matters other than those listed in the attached Notice of Annual Meeting of Stockholders that are likely to be brought before the Annual Meeting. However, if any other matter properly comes before the Annual Meeting, the persons named on the enclosed proxy card will vote the proxy in accordance with their best judgment on such matter.

By Order of the Board of Directors

LOGO

LOGO

David J. ScottJonathan P. Graham

Secretary

April 3, 20147, 2016

 

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      APPENDIX A  

 

Appendix A

Amgen Inc. Board of Directors

Guidelines for Director Qualifications and Evaluations

 

These guidelines set forth (1) the minimum qualifications that the Governance and Nominating Committee of the Board of Directors (the “Committee”) of Amgen Inc. (“Amgen”) believes are important for directors to possess, and (2) a description of the Committee’s process for identifying and evaluating nominees for director, including nominees recommended by stockholders. These guidelines are only guidelines and may be waived and/or changed by the Committee and/or the Board of Directors as appropriate.

1. Candidate Qualifications

In seeking individuals to join the Board of Directors or to fill director vacancies on the Board of Directors, the Committee considers the following to be minimum qualifications that a candidate must possess:

 

Demonstrated breadth and depth of management and leadership experience, preferably in a senior leadership role in a large or recognized organization;

 

Financial and/or business acumen or relevant industry or scientific experience;

 

Integrity and high ethical standards;

 

Sufficient time to devote to Amgen’s business as a member of the Board;

 

Ability to oversee, as a director, Amgen’s business and affairs for the benefit of Amgen’s stockholders;

 

Ability to comply with the Board’s Code of Conduct; and

 

Demonstrated ability to think independently and work collaboratively.

In addition, the Committee may consider the following where necessary and appropriate:

 

A candidate’s independence, as defined by The NASDAQ Stock Market, Inc.;

 

A candidate’s ability to satisfy the composition requirements for the Audit Committee and the Compensation and Management Development Committee;

 

Maintaining a Board that reflects diversity; and

 

The Board’s overall size, structure and composition.

2. Candidate Identification and Evaluation Process

(a) For purposes of identifying nominees for the Board of Directors, the Committee relies on professional and personal contacts of the Committee, other members of the Board of Directors and senior management, as well as candidates recommended by independent search firms retained by the Committee from time to time. The Committee also will consider candidates recommended by stockholders. Any director nominations submitted by stockholders will be evaluated in the same manner that nominees suggested by Board members, management or other parties are evaluated.

(b) In evaluating potential candidates, the Committee will determine whether the candidate is qualified for service on the Board of Directors by evaluating the candidate under the guidelines set forth above and by determining if any individual candidate suits the Committee’s and the Board of Director’s overall objectives at the time the candidate is being evaluated.

 

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LOGOLOGO

 

LOGO Printed on recycled paper ©20142016 Amgen Inc. All Rights Reserved            


 

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SAMPLE

    

NO POSTAGE

NECESSARY

IF MAILED

IN THE

UNITED STATES

 
     

 

LOGO

 
  

BUSINESS REPLY MAIL

FIRST-CLASS MAIL   PERMIT NO. 67   THOUSAND OAKS  CA

    
  POSTAGE WILL BE PAID BY ADDRESSEE    
      
  

ANNUAL MEETING

AMGEN

    
  

PO BOX 2605

    
  

SEAL BEACH CA 90740-9906

    

 

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SAMPLE

 

 

Only Amgen Inc. stockholders with admittance tickets will be admitted to the 20142016 Annual Meeting of Stockholders. Each stockholder is entitled to one admittance ticket. If you come to the meeting and do not have an admittance ticket, you will be admitted only upon presentation of proper identification and evidence of stock ownership as of March 17, 2014.21, 2016. Ensuring the 2016 Annual Meeting of Stockholders is safe and productive is our top priority. As such, failure to follow these admission procedures may result in being denied admission or being directed to view the meeting in an overflow room. Because seating in the main meeting room is limited, and in order to be able to address security concerns, we reserve the right to direct attendees to view the meeting in an overflow room.

 

 ¨

Please send me an admittance ticket for the Amgen Inc. 20142016 Annual Meeting of Stockholders to be held on Thursday, May 15, 201419, 2016 at 11:00 A.M., local time, in Westlake Village, California.

 

 

 

Name

   (Please print) 

 

Address    
    

(      )

 

City                 State                 Zip                 Email                                          Telephone No.
(Please provide)            

YOU DO NOT NEED TO RETURN THIS CARD IF YOU DO NOT PLAN TO ATTEND

THE 20142016 ANNUAL MEETING OF STOCKHOLDERS.

 

 

 

 

 


SAMPLE

LOGOLOGO

ANNUAL MEETING OF STOCKHOLDERS OF

AMGEN INC.

May 15, 2014 19, 2016

GO GREEN

e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 15, 2014: 19, 2016:

The Notice of 20142016 Annual Meeting of Stockholders, Proxy Statement,

Form Proxy Card and 20132015 Annual Report are available at

http://www.astproxyportal.com/ast/Amgen.

If you wish to attend the Annual Meeting, please visit https://starcite.smarteventscloud.com/AnnualMeeting2014

[the website address has been provided to stockholders directly] to register.

Please sign, date and mail your proxy card in the envelope provided as soon as possible.

Please detach along perforated line and mail in the envelope provided.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x

The Board of Directors recommends a vote “FOR” each listed nominee in item #1.

1. To elect twelvethirteen directors to the Board of Directors of Amgen Inc. for a term of office expiring at the 20152017 annual meeting of stockholders. The nominees for election to the Board are:

FOR AGAINST ABSTAIN

Dr. David Baltimore

Mr. Frank J. Biondi, Jr.

Mr. Robert A. Bradway

Mr. François de Carbonnel Dr. Vance D. Coffman

Mr. Robert A. Eckert

Mr. Greg C. Garland FOR AGAINST ABSTAIN Dr. Rebecca M. Henderson

Mr. Frank C. Herringer Dr. Tyler Jacks Ms. Judith C. Pelham Dr. Ronald D. Sugar The Board of Directors recommends a vote “FOR” each of items #2 and #3. 2. To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2014. 3. Advisory vote to approve our executive compensation. The Board of Directors recommends a vote “AGAINST” Stockholder Proposal #1 in item #4. 4. Stockholder Proposal #1 (Vote Tabulation) Fred Hassan

To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.

FOR AGAINST ABSTAIN

Dr. Rebecca M. Henderson

Mr. Frank C. Herringer

Dr. Tyler Jacks

Ms. Judith C. Pelham

Dr. Ronald D. Sugar

Dr. R. Sanders Williams

The Board of Directors recommends a vote “FOR” each of items #2 and #3.

2. To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2016.

3. Advisory vote to approve our executive compensation.

The Board of Directors recommends a vote “AGAINST” the Stockholder

Proposal in item #4.

4. Stockholder proposal to change the voting standard applicable to non-binding proposals submitted by stockholders.

Signature of Stockholder Date: Signature of Stockholder Date:

Note: Please sign exactly as your name or names appear on this Proxy Card. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney-in-fact, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.


SAMPLE

LOGOLOGO

This Proxy Card will be voted as specified or, if no choice is specified, will be voted FOR the election of the named director nominees, FOR ratification of the selection of Ernst & Young LLP, FOR the advisory vote to approve our executive compensation and AGAINST the Stockholder Proposal #1. Proposal.

As of the date hereof, the undersigned hereby acknowledges receipt of the 20142016 Proxy Statement and accompanying Notice of 20142016 Annual Meeting of Stockholders to be held on May 15, 2014,19, 2016, Form Proxy Card and the 20132015 Annual Report.

In their discretion, the Proxy Holders (as defined below) are authorized to vote upon such other matters as may properly come before the 20142016 Annual Meeting of Stockholders and at any continuation, postponement or adjournment thereof. The Board of Directors, at present, knows of no other business to be presented at the 20142016 Annual Meeting of Stockholders.

By signing this proxy you revoke all prior proxies. This proxy will be governed by the laws of the State of Delaware and federal securities laws.

0

AMGEN INC.

ONE AMGEN CENTER DRIVE, THOUSAND OAKS, CA 91320-1799

PROXY SOLICITED BY THE BOARD OF DIRECTORS

FOR THE 20142016 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 2014 19, 2016

Robert A. Bradway, Michael A. KellyDavid W. Meline and David J. ScottJonathan P. Graham (the “Proxy Holders”), or any of them, each with the power of substitution, hereby are authorized to represent the undersigned, with all powers which the undersigned would possess if personally present, to vote the shares of Amgen Inc. Common Stock of the undersigned at the 20142016 Annual Meeting of Stockholders of Amgen Inc., to be held on Thursday, May 15, 2014,19, 2016, at 11:00 A.M., local time, at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, CA 91362, and at any continuation, postponement or adjournment of that meeting, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other business that may properly come before the meeting.

You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors’ recommendations. PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE. (Continued

(Continued and to be signed on the reverse side)

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SAMPLE

LOGOLOGO

ANNUAL MEETING OF STOCKHOLDERS OF

AMGEN INC.

May 15, 2014 19, 2016

PROXY VOTING INSTRUCTIONS

INTERNET - Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page.

TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call.

Vote online/phone until 11:59 PM ESTET the day before the meeting.

MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible.

IN PERSON - You may vote your shares in person by attending the Annual Meeting.

GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.

If you wish to attend the Annual Meeting, please visit https://starcite.smarteventscloud.com/AnnualMeeting2014[the website address has been provided to stockholders directly] to register.

COMPANY NUMBER

ACCOUNT NUMBER

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 15, 2014: 19, 2016:

The Notice of 20142016 Annual Meeting of Stockholders, Proxy Statement, Form Proxy Card and 20132015 Annual Report are available at http://www.astproxyportal.com/ast/Amgen.

Please detach along perforated line and mail in the envelope provided IF you are not voting by telephone or the Internet.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x

The Board of Directors recommends a vote “FOR” each listed nominee in item #1.

1. To elect twelvethirteen directors to the Board of Directors of Amgen Inc. for a term of office expiring at the 20152017 annual meeting of stockholders. The nominees for election to the Board are:

FOR AGAINST ABSTAIN

Dr. David Baltimore

Mr. Frank J. Biondi, Jr.

Mr. Robert A. Bradway

Mr. François de Carbonnel Dr. Vance D. Coffman

Mr. Robert A. Eckert

Mr. Greg C. Garland

Mr. Fred Hassan

FOR AGAINST ABSTAIN

Dr. Rebecca M. Henderson

Mr. Frank C. Herringer

Dr. Tyler Jacks

Ms. Judith C. Pelham

Dr. Ronald D. Sugar

Dr. R. Sanders Williams

The Board of Directors recommends a vote “FOR” each of items #2 and #3.

2. To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2014. 2016.

3. Advisory vote to approve our executive compensation.

The Board of Directors recommends a vote “AGAINST” the Stockholder Proposal #1 in item #4.

4. Stockholder Proposal #1 (Vote Tabulation) proposal to change the voting standard applicable to non-binding proposals submitted by stockholders.

To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.

Signature of Stockholder Date: Signature of Stockholder Date:

Note: Please sign exactly as your name or names appear on this Proxy Card. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney-in-fact, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.


SAMPLE

LOGOLOGO

This Proxy Card will be voted as specified or, if no choice is specified, will be voted FOR the election of the named director nominees, FOR ratification of the selection of Ernst & Young LLP, FOR the advisory vote to approve our executive compensation and AGAINST the Stockholder Proposal #1. Proposal.

As of the date hereof, the undersigned hereby acknowledges receipt of the 20142016 Proxy Statement and accompanying Notice of 20142016 Annual Meeting of Stockholders to be held on May 15, 2014,19, 2016, Form Proxy Card and the 20132015 Annual Report.

In their discretion, the Proxy Holders (as defined below) are authorized to vote upon such other matters as may properly come before the 20142016 Annual Meeting of Stockholders and at any continuation, postponement or adjournment thereof. The Board of Directors, at present, knows of no other business to be presented at the 20142016 Annual Meeting of Stockholders.

By signing this proxy you revoke all prior proxies. This proxy will be governed by the laws of the State of Delaware and federal securities laws.

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AMGEN INC.

ONE AMGEN CENTER DRIVE, THOUSAND OAKS, CA 91320-1799

PROXY SOLICITED BY THE BOARD OF DIRECTORS

FOR THE 20142016 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 2014 19, 2016

Robert A. Bradway, Michael A. KellyDavid W. Meline and David J. ScottJonathan P. Graham (the “Proxy Holders”), or any of them, each with the power of substitution, hereby are authorized to represent the undersigned, with all powers which the undersigned would possess if personally present, to vote the shares of Amgen Inc. Common Stock of the undersigned at the 20142016 Annual Meeting of Stockholders of Amgen Inc., to be held on Thursday, May 15, 2014,19, 2016, at 11:00 A.M., local time, at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, CA 91362, and at any continuation, postponement or adjournment of that meeting, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other business that may properly come before the meeting.

You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors’ recommendations. PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE. (Continued

(Continued and to be signed on the reverse side)

1.1

14475