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
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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)
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2017 Proxy Statement and
Notice of
Annual Meeting of
Stockholders
Robert A. Bradway | ||
Chairman of the Board, Chief Executive Officer and President | ||
| ||
Amgen Inc. One Amgen Center Drive Thousand Oaks, CA 91320-1799 |
April 2, 20156, 2017
Dear Fellow Stockholder:
You are invited to attend the 20152017 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc. to be held on Thursday,Friday, May 14, 2015,19, 2017, at 11:00 A.M., local time, at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362.
Our Company:At Amgen, our mission is to serve patients; this year’smission guides our unwavering commitment to deliver breakthrough treatments for unmet medical needs. We are a values-based company, deeply rooted in science and innovation to transform new ideas and discoveries into medicines for patients with serious illnesses. We believe that innovative medicines offer the best hope to reduce both the human and financial burden that serious diseases, such as cancer and heart disease, place on people, their families and our society. Six therapeutic areas form the core of our business – cardiovascular, oncology/hematology, bone health, neuroscience, inflammation and nephrology.
Business Strategy:At the core of our strategy is a commitment to innovation in these six therapeutic areas. To capitalize fully on our innovation, we have identified a set of strategic priorities, including continuing our transformation efforts, expanding our global reach, deploying next-generation biomanufacturing technology, advancing new drug delivery systems, and developing branded biosimilars, that enable multiple approaches to creating stockholder value. In the Compensation Discussion and Analysis section of this proxy, we further outline our strategy and discuss our progress against our strategic priorities in 2016.
Stockholder Engagement:We value the perspectives of our stockholders as expressed at our Annual Meeting you will be asked to: (i) elect 13 directorsand through direct conversations with us throughout the year. Since our 2016 annual meeting of stockholders, in addition to serve for the ensuing year; (ii) ratify the selectionour outreach by our executives and our Investor Relations department to investors, we have engaged in governance-focused outreach activities and discussions with stockholders comprising approximately 52% of our independent registered public accountants; (iii) hold an advisory voteoutstanding shares. Topics discussed included our business and financial performance, our governance and executive compensation programs, including the direct link to approve our executive compensation; (iv) consider one stockholder proposal, if properly presentedbusiness strategy, and our corporate responsibility and sustainability initiatives. Feedback received during these meetings was shared with the full Board of Directors, informing Board decisions. The conversations held with our stockholders are beneficial, and we look forward to continuing our dialogue in the coming year.
I look forward to sharing more about our Company at the Annual MeetingMeeting. In addition to the business to be transacted and (v) transact such other business as may properly come beforedescribed in the Annual Meeting or any continuation, postponement or adjournment thereof. The accompanying Notice of Annual Meeting of Stockholders and proxy statement, describe these matters. We urge you to read this information carefully.
The Board of Directors unanimously believes thatI will discuss recent developments during the election of its nominees for directors,past year, 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 13 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, management will speaksubstantial progress we made on our developments of the past yearstrategic priorities for 2016, 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 16, 2015. Please read “INFORMATION CONCERNING VOTING AND SOLICITATION—Attendance at the Annual Meeting” in the accompanying proxy statement.
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 use the Securities 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 on the Internet, you may submit your proxy electronically via the Internet by following the 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. If 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.interest.
On behalf of the Board of Directors, I thank you for your participation.participation and investment in Amgen. We look forward to seeing you on May 14.19. As a final note and also on behalf of the Board of Directors, I would like to thank Frank J. Biondi, Jr. and Judith C. Pelham, who are not standing forre-election, for their counsel and guidance.
Sincerely,
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 14, 201519, 2017
To the Stockholders of Amgen Inc.:
NOTICE IS HEREBY GIVEN that the 2015 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc., a Delaware corporation, will be held on Thursday, May 14, 2015, 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:
Date and Time: | Friday, May 19, 2017 at 11:00 A.M., local time | |||
Location: | Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362 | |||
Record Date: | March 20, 2017. Amgen stockholders of record at the close of business on the record date are entitled to receive notice of, and vote at, the 2017 Annual Meeting of Stockholders, or Annual Meeting, and any continuation, postponement or adjournment thereof. | |||
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 6, 2017 to our stockholders of record on the record date. | |||
| Items of Business: | ||||
1. | To elect 13 directors to the Board of Directors of Amgen for a term of office expiring at the | |||
2. | To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, | |||
3. | To hold an advisory vote to approve our executive compensation; | |||
4. | To hold an advisory vote on the frequency of future stockholder advisory votes to approve executive compensation; | |||
5. | To consider one stockholder proposal to adopt majority votes cast standard for matters presented by stockholders described in the proxy statement, if properly | |||
| To transact such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof. | |||
Attendance: 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 20, 2017. Please read “INFORMATION CONCERNING VOTING AND SOLICITATION—Attendance at the Annual Meeting” in the accompanying proxy statement. | ||||
The foregoing itemsVoting:Your vote is important, regardless of business are more fully describedthe number of shares that you own. Whether or not you plan to attend the Annual Meeting in person, it is important that your shares be represented and voted. Please read the proxy statement accompanying this Notice of Annual Meeting of Stockholders.
The Board of Directors has fixed the close of business on March 16, 2015 as the record date for the determination of stockholders entitled to notice of,Stockholders and to vote at, this Annual Meetingproxy statement with care 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 infollow the voting instruction form providedinstructions to you or (iii) by signing, dating and returning any proxy card or instruction form provided to you.ensure that your shares are represented. By submitting your proxy promptly, you will save the Company the expense of further proxy solicitation. We encourage you to submit your proxy as soon as possible by Internet, by telephone or by signing, dating and returning all proxy cards or instruction forms provided to you.
By Order of the Board of Directors
David J. ScottJonathan P. Graham
Secretary
Thousand Oaks, California
April 2, 20156, 2017
| TABLE OF CONTENTS |
ï 20152017 Proxy Statement
| PROXY STATEMENT SUMMARY |
This summary contains highlights about our Company and the upcoming 20152017 Annual Meeting of 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.
20152017 Annual Meeting of Stockholders
Date and Time: |
| |
Location: | Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362 | |
Record Date: | March | |
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 | |
Voting Matters and Board Recommendations
| Matter | Our Board Vote Recommendation | |||
Item 1: | Election of 13 Nominees to the Board of Directors (page | FOR each Director Nominee | ||
Item 2: | Ratification of Selection of Independent Registered Public Accountants (page | FOR | ||
Item 3: | Advisory Vote to Approve Our Executive Compensation (page | FOR | ||
| ||||
2014 Performance Highlights
Item 4:
Our stock price increased from $114.08 to $159.29 per share during 2014, reflecting appreciation of 40% with a one-year total shareholder return, or TSR, of 42%, including our dividends, and a three-year TSR of 157%.
We returned $1.9 billion of cash to our stockholders through dividends in 2014, with an increase in quarterly dividend to $0.61 per share in 2014 from $0.47 per share in 2013. Since the initiation of our first dividend in July 2011 through 2014, we have raised the dividend three times over the previous quarterly amount by an average of 30% and returned a total of $4.9 billion of cash to our stockholders through dividends.
We repurchased 0.9 million shares of our Common Stock in 2014.
We grew revenues by 7% over 2013 to $20.1 billion in 2014.
Advisory Vote on the Frequency of Future Stockholder Advisory Votes to | ONE YEAR |
Item 5: |
Stockholder Proposal to Adopt Majority Votes Cast Standard for Matters Presented by |
AGAINST |
We effectively advanced our pipeline, the highlights of which include that six of our medicines generated positive registration-enabling data and four were submitted for regulatory approval. In December 2014, the Food and Drug Administration approved BLINCYTO™ (blinatumomab) less than three months after submission.
|
ï 20152017 Proxy Statement 1
| PROXY STATEMENT SUMMARY |
Item 1: Election of 13 Nominees to the Board of Directors (Page 16)
| Nominee | Age | | Director Since |
| Audit(1) | | Governance and Nominating |
| Executive | | Compensation and Management Development(1) |
| | Equity Award(1) |
| | Corporate Responsibility and Compliance |
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David Baltimore
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79
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1999
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X
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X
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Robert A. Bradway
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54
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2011
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C
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X
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François de Carbonnel
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70
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2008
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X
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X
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Robert A. Eckert
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62
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2012
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X
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X
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X
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Greg C. Garland
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59
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2013
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C
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X
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X
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X
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Fred Hassan
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71
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2015
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X
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X
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Rebecca M. Henderson
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56
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2009
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X
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X
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Frank C. Herringer
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74
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2004
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X
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X
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C
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C
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Charles M. Holley, Jr.
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60
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2017
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X
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X
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Tyler Jacks
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56
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2012
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X
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X
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Ellen J. Kullman
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61
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2016
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X
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X
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Ronald D. Sugar
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68
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2010
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X
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X
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C
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R. Sanders Williams
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68
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2014
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X
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X
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| “C” | indicates Chair of the committee. |
| (1) | Reflects current committee composition. Mr. Biondi is currently Chair of the Audit Committee, but is not standing forre-election at the Annual Meeting. Effective following Mr. Biondi’s retirement from the Board at the Annual Meeting, Mr. Herringer has been appointed Chair of the Audit Committee and Mr. Eckert has been appointed Chair of the Compensation and Management Development Committee and the Equity Award Committee, subject to their respectivere-election to the Board of Directors, or Board, by our stockholders at the Annual Meeting. |
Our Board possesses a deep and broad set of skills and experiences that facilitate strong oversight and strategic direction for a leading global innovator in biomedicine:
2 ï 2017 Proxy Statement
| PROXY STATEMENT SUMMARY |
Corporate Governance Highlights
We continuously monitor developments and best practices in corporate governance and consider stockholder feedback when enhancing our governance structures.
| ✓ | Proxy Access. Based on stockholder feedback, we adopted a proxy access bylaw, which provides that 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 Amended and Restated Bylaws of Amgen Inc., or 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. (page 44) |
| ✓ | Majority Voting Standard.Our Bylaws provide for a majority voting standard for uncontested director elections. (page 44) |
| ✓ | Highly Independent Board and Committees. 12 of our 13 director nominees (all directors except our Chief Executive Officer), and all members of the Audit Committee, Compensation and Management Development Committee, Corporate Responsibility and Compliance Committee and Governance and Nominating Committee are independent. (pages 46 and 50) |
| ✓ | Commitment to Board Refreshment. We are committed to Board refreshment and a robust Director nominee selection process. Since 2012, seven new directors have been added to our Board. |
| ✓ | Engaged in Strategy.Our Board is engaged in determining and overseeing the Company’s strategy and strategic priorities. |
| ✓ | Director Qualifications and Evaluations. All directors meet the candidate qualifications in our Board of Directors Guidelines for Director Qualifications and Evaluations included in this proxy statement asAppendix A. |
| ✓ | Lead Independent Director. The independent members of our Board elected Robert A. Eckert as our lead independent director. We have active participation by all directors, including the 12 independent director nominees. (pages 44 and 46) |
| ✓ | Stock Ownership Requirements. We have significant stock ownership requirements for our directors and officers. (pages 82 and 107) |
| ✓ | Corporate Responsibility and Compliance Committee. 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 53) |
| ✓ | Enterprise Risk Management. 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. (page 47) |
| * | For our director nominees. |
ï 2017 Proxy Statement3
| PROXY STATEMENT SUMMARY |
Stockholder Engagement Program
Throughout 2016, in addition to our outreach by our executives and our Investor Relations department to investors, we contacted stockholders representing approximately 52% of our outstanding shares seeking governance-focused engagement meetings. Topics discussed included Amgen’s business and financial performance, the Company’s governance and executive compensation programs, including the direct link to our business strategy, and our corporate responsibility and sustainability initiatives. Feedback received during these meetings was shared with the full Board and subsequently incorporated into Board decisions. We believe the conversations held with our stockholders are very beneficial and look forward to continued dialogue.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF
THE 13 NAMED NOMINEES.
Item 2: Ratification of Selection of Independent Registered Public Accountants (Page 30)
The Audit Committee of the Board has selected Ernst & Young LLP, or Ernst & Young, as our independent registered public accountants for the fiscal year ending December 31, 2017.
Ernst & Young has served as our independent registered public accounting firm since the Company’s inception in 1980.
Each year, the Audit Committee evaluates the qualifications and performance of the Company’s independent registered public accountants and determines whether tore-engage the current independent registered public accountants.
Based on this evaluation, the Audit Committee believes that the continued retention of Ernst & Young is in the best interests of the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.
4 ï 2017 Proxy Statement
| PROXY STATEMENT SUMMARY |
Item 3: Advisory Vote to Approve Our Executive Compensation (Page 31)
2016 Performance Highlights
Executive Compensation Aligned With Business Strategy
The focus of our strategy is to develop innovative medicines that meet important unmet medical needs. Six therapeutic areas form the core of our business (cardiovascular, oncology/hematology, bone health, neuroscience, inflammation, and nephrology). Our strategy to execute in these therapeutic areas is multifaceted, with seven strategic priorities that allow us to drive long-term growth, while also delivering on our short- and medium-term goals.
Strategic Priorities
We Delivered Strong Financial Performance and Made Progress on Our Strategic Priorities
We delivered strong financial results while making significant progress on our 2016 performance goals, which facilitate execution of our strategic priorities.
We grew revenues by 6% over 2015 to $23 billion in 2016.
| • | Our U.S. Generally Accepted Accounting Principles, or GAAP, net income increased 11% to $7.7 billion and ournon-GAAP net income(1) grew 10% to $8.8 billion in 2016. |
We continued to execute on the transformation and process improvement efforts announced in 2014 and, since that time, have realized approximately $1.2 billion of transformation and process improvement savings the majority of which was reinvested in product launches, clinical programs and external business development.
| (1) | Non-GAAP net income is reported and reconciled inAppendix B to this proxy statement. |
ï 2017 Proxy Statement5
| PROXY STATEMENT SUMMARY |
We Executed Product and Delivery System Launches
2016 was the first full year that we have been able to provide patients with six innovative products launched in 2015 (Repatha®, Kyprolis®, BLINCYTO®, IMLYGIC®, Neulasta®On-Pro® Kit, and Corlanor®).
| • | For Repatha®, we have focused on competing effectively, including capturing approximately 60% of share of new to brand prescriptions in the U.S., as of January 2017. |
| - | Supportive of our Repatha® launch, we also announced the results from three significant Phase 3 studies that demonstrate (1) significant low-density lipoprotein reductions for patients with high cholesterol treated with Repatha® who cannot tolerate statins, (2) that Repatha® regresses atherosclerosis in patients with coronary artery disease, and (3) that Repatha® reduces the risk of cardiovascular events in patients with clinically evident atherosclerotic disease. |
| • | For Kyprolis®, we reported strong unit growth driven by increased share and ex-U.S. launches. |
| • | We |
We Significantly Advanced Our long-term incentive, or LTI, equity award pay mix is primarily performance-based with 80% performance units and 20% time-vested restricted stock units.
Performance units under our LTI performance award program are earned and paid in shares based strictly on our TSR performance as compared to our comparator group (beginning with the 2013-2015 performance
|
Annual cash incentive award payments for 2014 were earned based on our financial and operational performance against targets. Financial goals of revenues and adjusted net income were each weighted 30%, and various operational goals relating to “Deliver the Best Pipeline” and “Deliver Annual Priorities” were each weighted 25% and 15%, respectively.
Corporate Governance HighlightsPipeline
The independent members of our Board of Directors, or Board, re-elected Vance D. Coffman as our lead independent director with specific and significant duties. We have active participation by all directors, including the 12 independent director nominees. We believe that the current structure of our Board best positions us to benefit from the respective strengths of our Chief Executive Officer, or CEO, and lead independent director. (page 30)
12 of our 13 director nominees (all directors except our CEO), 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. (pages 30 and 33)
All directors meet our Board of Directors Guidelines for Director Qualifications and Evaluations included in this proxy statement asAppendix A.
Our independent directors meet privately on a regular basis. (page 30)
Our Amended and Restated Bylaws provide for a majority voting standard for uncontested director elections. (page 28)
We hold an annual advisory vote to approve our executive compensation. (page 18)
We have significant stock ownership requirementscontinued our focus on developing innovative, breakaway medicines to address important unmet needs.
| - | We reported the results of many important clinical trials including, three positive phase 3 trials in our bone health therapeutic area (two of which supported our EVENITY™* Biologics License Application with the FDA(1)) and three successful pivotal studies in our neuroscience area, and we have a number of programs nearing key regulatory milestones. |
| - | We also reported that the European Commission approved Parsabiv™ (etelcalcetide) for the treatment of secondary hyperparathyroidism in adult patients with chronic kidney disease on hemodialysis. |
| • | In our biosimilars portfolio, we received FDA approval for AMJEVITA™ (biosimilar adalimumab (HUMIRA®)), and submitted applications to both the FDA and European Medicines Agency for ABP 215(2) (biosimilar bevacizumab (Avastin®)). We are in Phase 3 for three other biosimilars. |
We Invested for Long-Term Growth While Returning Substantial Capital to Our Stockholders
Our strong cash flows and balance sheet (along with our directorssuccessful execution of our transformation efforts) allowed continued investment for long-term growth through internal research and for vice presidentsdevelopment and above. (pages 61 and 86)external business development transactions, while simultaneously providing substantial returns to stockholders.
We haveIn 2016,while investing $3.8 billion in research and development, we also returned a Company-wide Enterprise Risk Management Programtotal of $6 billion 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 31)stockholders:
Our staff members and the 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 62)
| - | We returned$3 billion of cash to our stockholders in the form of dividends in 2016, with a 27% per share increase in our quarterly dividend over 2015. Our dividend has increased over 257% since its inception in 2011. |
| - | Werepurchased approximately 20 million shares of our Common Stock at an aggregate cost of $3 billion in 2016. |
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 37)
| (1) | U.S. Food and Drug Administration. |
| (2) | Developed in collaboration with Allergan plc. |
| * | FDA provisionally approved trade name. |
26 ï 20152017 Proxy Statement
| PROXY STATEMENT SUMMARY |
Executive Compensation Highlights
We pay for performance, and pay outcomes reflect the achievements of our NEOs against our strategic priorities.
We target compensation at the 50th percentile, or median, of our peer group for all elements of compensation.
2016 Target Total Direct Compensation Mix
Our compensation program is directly linked to our strategy. Each year, our Compensation and Management Development Committee, or Compensation Committee, approves Company performance goals that are designed to focus our staff on delivering on our financial and operational objectives to drive annual performance, facilitate the execution of our strategic priorities, and position us for longer-term success.
| • | Performance units for the 2014-2016 performance period were based on an earned payout percentage of 112.5% reflecting the Company’s three-year TSR performance at the 56.2nd percentile relative to the TSRs of the companies in the Standard & Poor’s 500 Index, or S&P 500, for this performance period. The Compensation Committee approved the continued use of this relative comparison to the S&P 500 as it allows a comparison to a broader market performance indicator; a realistic representation of our stockholders’ investment opportunities. |
ï 2017 Proxy Statement7
| PROXY STATEMENT SUMMARY |
2016 Award Allocation and Performance
2016 Annual Cash Incentive Program
| Goal | Weighting | % of Target Earned | ||||||
1. Financial Performance |
| |||||||
Revenues | 30% | 139.7% | ||||||
Non-GAAP Net Income(1) | 30% | 147.5% | ||||||
2. Execute Product and Delivery System Launches |
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Execute Product and Delivery System Launches | 10% | 127.8% | ||||||
3. Progress Innovative Pipeline |
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Execute Key Clinical Studies and Regulatory Filings | 20% | 190.0% | ||||||
Advance Early Pipeline | 10% | 225.0% | ||||||
Composite Score | Achieved 159.5% | |||||||
Long-Term Incentive Performance Award Program
| Long-Term Incentive Program | Weighting | % of Target | ||||||
Performance Units (2014-2016 performance period) | 80% | 112.5% | ||||||
| (1) | Non-GAAP net income for purposes of the 2016 Company performance goals of our annual cash incentive award program is reported and reconciled inAppendix B to this proxy statement, excluding the incremental benefit ($95 million) of excess tax benefits recognized arising from the adoption of a new accounting standard on share-based payments. |
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.
8 ï 2017 Proxy Statement
| PROXY STATEMENT SUMMARY |
Item 4: Advisory Vote on the Frequency of Future Stockholder Advisory Votes to Approve Executive Compensation (Page 37)
Stockholders are being asked to vote on the frequency of future stockholder advisory votes to approve executive compensation.
The Board believes annual votes facilitate the highest level of accountability to, and communication with, our stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS ELECT TO HAVE
ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY “ONE YEAR” FOR THE
REASONS STATED ABOVE.
Item 5: Stockholder Proposal (Page 38)
Stockholders have informed the Company that they intend to present a proposal at our Annual Meeting.
The proposal requests a change in the Company’s governing documents to adopt majority votes cast standard for matters presented by stockholders.
The Board has thoroughly considered the proposal and believes that it is NOT in the Company or stockholders’ best interests for the reasons identified starting on page 39 of the proxy statement, which include the following:
| - | Our stockholder approval standard and vote counting methodology of including abstentions adheres to Delaware law and applies identically to management-sponsored proposals and stockholder-sponsored proposals; |
| - | Since stockholders are made aware of the treatment and effect of abstentions, counting abstention votes effectively honors the intent of our stockholders; and |
| - | Faced with similar proposals in 2016, stockholders overwhelmingly did not support the adoption of the proposed vote counting methodology. |
THE BOARD STRONGLY AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST”
THE STOCKHOLDER PROPOSAL ON MAJORITY VOTES CAST STANDARD.
ï 2017 Proxy Statement9
| 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 20152017 Annual Meeting of Stockholders, or Annual Meeting, to be held on Thursday,Friday, May 14, 2015,19, 2017, 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, 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 2, 20156, 2017 to all stockholders entitled to notice of and to vote at the Annual Meeting.
Important Notice Regarding the Availability of Proxy Materials for the 20152017 Stockholder Meeting to Be Held on May 14, 2015.19, 2017.
This proxy statement, our 20142016 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 2015 annual meeting2017 Annual Meeting of stockholders;Stockholders; proxy statement; 20142016 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 the 13 directorsdirector nominees named herein to serve on our Board for a term of office expiring at the 20162018 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, 2015;2017;
The advisory vote to approve our executive compensation;
The advisory vote on the frequency of future stockholder advisory votes to approve executive compensation;
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| INFORMATION CONCERNING VOTING AND SOLICITATION |
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 16, 201520, 2017 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, $.0001
ï 2015 Proxy Statement3
par value per share, or Common Stock, as of the close of business on March 16, 2015.20, 2017. 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 in the records of the Company’s transfer agent, 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 16, 2015,20, 2017, there were 757,913,499735,890,171 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:
youYou are present in person at the Annual Meeting; or
yourYour 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 thepre-addressed, postage-paid envelope provided to you.
ï 2017 Proxy Statement11
| INFORMATION CONCERNING VOTING AND SOLICITATION |
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 13, 2015.18, 2017. 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 providers and that these costs must be
4 ï 2015 Proxy Statement
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 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 16, 201520, 2017 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 13 nominees listed in this proxy statement to serve on our Board for a term of office expiring at the 20162018 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, 2015;2017;
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FOR the advisory vote to approve our executive compensation;
FOR holding the advisory vote on the frequency of future stockholder advisory votes to approve executive compensation every “ONE YEAR”; and
AGAINST the one stockholder proposal to adopt majority votes cast standard for matters presented by stockholders, if properly presented.
A “brokernon-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 brokernon-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 brokernon-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 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, the advisory vote on the frequency of future advisory votes to approve executive compensation or on any stockholder proposals.
ï 2015 Proxy Statement5
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 (that was not subsequently withdrawn or excluded) was received on a timely basis, 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 brokernon-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 brokernon-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. 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. Brokernon-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.
Ratificationï 2017 Proxy Statement13
| INFORMATION CONCERNING VOTING AND SOLICITATION |
Management Proposals (Ratification of Auditors.Ernst & Young LLP, Advisory Vote to Approve Our Executive Compensation and Advisory Vote on the Frequency of Future Stockholder Advisory Votes to Approve Executive Compensation) and Stockholder Proposal to Adopt Majority Votes Cast Standard for Matters Presented by Stockholders.The ratification of the selection of Ernst & Young LLP, requiresthe approval of the advisory vote to approve our executive compensation, the approval of the advisory vote on the frequency of future stockholder advisory votes to approve 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” each proposal. With respect to the ratification. advisory vote on the frequency of future stockholder advisory votes to approve executive compensation, if none of the frequency alternatives (one year, two years or three years) receive a majority vote, we will consider the frequency that receives the highest number of votes by stockholders to be the frequency that has been selected by our stockholders on an advisory basis.
Because brokers have discretionary authority to vote on the ratification of the selection of Ernst & Young LLP, we do not expect any brokernon-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 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 proposal. Brokers do not have discretionary authority to vote on this proposal. Broker non-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 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” such proposal. Brokers do not have discretionary authority to vote on the proposal.advisory vote to approve our executive compensation, the advisory vote on the frequency of future stockholder advisory votes to approve executive compensation or on the stockholder proposal to adopt majority votes cast standard for matters presented by stockholders. Brokernon-votes, therefore, will have no effect on the advisory votes to approve our executive compensation, the advisory vote on the frequency of future stockholder advisory votes to approve 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.
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Solicitation of Proxies
We will bear the entire cost of solicitation of proxies, including preparation, assembly and mailing of this proxy 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 D.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 16, 2015. 20, 2017. 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 toincluded in this proxy statement. If you received electronic delivery of this proxy statement, you will receive ane-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
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| INFORMATION CONCERNING VOTING AND SOLICITATION |
were a record holder of our Common Stock as of the close of business on March 16, 2015. A “record holder”20, 2017. See “Difference Between a Stockholder 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,Record and the broker, bank, trust or other nominee is the record holder instead.a ‘Street Name’ Holder” previously discussed.
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 16, 2015.20, 2017.
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 16, 2015,20, 2017, then in addition to the applicable items above, 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 16, 2015.20, 2017; and
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 16, 2015.
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 20, 2017. |
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 16, 201520, 2017 or (3) a brokerage account statement indicating that you owned shares of our Common Stock as of the close of business on March 16, 2015.20, 2017.
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 16, 2015,20, 2017, 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 16, 2015.20, 2017.
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| ITEM 1 — ELECTION OF DIRECTORS |
Election of Directors
Under 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 1315 authorized directors and 13 directors serving on our Board. OnEllen J. Kullman was appointed on October 17, 2014, R. Sanders Williams14, 2016 and Charles M. Holley, Jr. was appointed on February 1, 2017 to serve on our Board. The Board has fixed the authorized number of directors at 13 to continue to be effective as of the 2015 Annual Meeting of Stockholders, or Annual Meeting. The independent members of our Board re-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 forre-election, or in the case of Dr. WilliamsMs. Kullman and Mr. Holley to stand for initial election by our stockholders, in each case for aone-year term expiring at our 20162018 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. Frank J. Biondi, Jr. and Judith C. Pelham will retire from our Board and have not been nominated forre-election at the 2017 Annual Meeting of Stockholders, or Annual Meeting. The Board has fixed the authorized number of directors at 13 to be effective as of the close of the Annual Meeting and the election by stockholders of the nominees standing for election. The independent members of the Board have elected Robert A. Eckert to continue to serve as our lead independent director, subject to hisre-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 | 77 | 1999 | X | X | ||||||||||||||||
Frank J. Biondi, Jr. | 70 | 2002 | C | X | X | |||||||||||||||
Robert A. Bradway | 52 | 2011 | C | X | ||||||||||||||||
François de Carbonnel | 68 | 2008 | X | X | ||||||||||||||||
Vance D. Coffman | 71 | 2007 | C | X | X | X | ||||||||||||||
Robert A. Eckert | 60 | 2012 | X | X | ||||||||||||||||
Greg C. Garland | 57 | 2013 | X | X | ||||||||||||||||
Rebecca M. Henderson | 54 | 2009 | X | X | ||||||||||||||||
Frank C. Herringer | 72 | 2004 | X | X | C | C | ||||||||||||||
Tyler Jacks | 54 | 2012 | X | X | ||||||||||||||||
Judith C. Pelham | 69 | 1995 | X | X | ||||||||||||||||
Ronald D. Sugar | 66 | 2010 | X | X | C | |||||||||||||||
R. Sanders Williams | 66 | 2014 | X | X | ||||||||||||||||
Our Board possesses a deep and broad set of skills and experiences that facilitate strong oversight and strategic direction for a leading global innovator in biomedicine:
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| ITEM 1 — ELECTION OF DIRECTORS |
Nominees to the Board of Directors
| Nominee | Age | Director Since | Audit(1) | Governance and Nominating | Executive | Compensation and Management Development(1) | Equity Award(1) | Corporate Responsibility and Compliance | ||||||||||||
David Baltimore
| 79 | 1999 | X | X | ||||||||||||||||
Robert A. Bradway
| 54 | 2011 | C | X | ||||||||||||||||
François de Carbonnel
| 70 | 2008 | X | X | ||||||||||||||||
Robert A. Eckert
| 62 | 2012 | X | X | X | |||||||||||||||
Greg C. Garland
| 59 | 2013 | C | X | X | X | ||||||||||||||
Fred Hassan
| 71 | 2015 | X | X | ||||||||||||||||
Rebecca M. Henderson
| 56 | 2009 | X | X | ||||||||||||||||
Frank C. Herringer
| 74 | 2004 | X | X | C | C | ||||||||||||||
Charles M. Holley, Jr.
| 60 | 2017 | X | X | ||||||||||||||||
Tyler Jacks
| 56 | 2012 | X | X | ||||||||||||||||
Ellen J. Kullman
| 61 | 2016 | X | X | ||||||||||||||||
Ronald D. Sugar
| 68 | 2010 | X | X | C | |||||||||||||||
R. Sanders Williams
| 68 | 2014 | X | X | ||||||||||||||||
| “C” | indicates Chair of the committee. |
| (1) | Reflects current committee composition. Mr. Biondi is currently Chair of the Audit Committee, but is not standing forre-election at the Annual Meeting. Effective following Mr. Biondi’s retirement from the Board at the Annual Meeting, Mr. Herringer has been appointed Chair of the Audit Committee and Mr. Eckert has been appointed Chair of the Compensation and Management Development Committee and the Equity Award Committee, subject to their respectivere-election to the Board by our stockholders at the Annual Meeting. |
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.
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| ITEM 1 — ELECTION OF DIRECTORS |
THE BOARD OF DIRECTORS 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 2007, serving on its Compensation Committee and chairing its Nominating and Governance Committee. Dr. Baltimore has also been a member of the board of directors of Immune Design Corp. (formerly Vaccsys), a vaccine company, since 2008, chairing its Nominating and Governance Committee. 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. In 2008, Dr. Baltimore became a founder of Calimmune, Inc., a privately-held company developing a stem-cell HIV/AIDS therapy, and serves as Chairman of the board of directors.
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, a member of the Human Genome Organisation and a member of the scientific advisory board of Immune Design Corp.
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. 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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Director since:1999 Age:79 Committees: • Corporate Responsibility and Compliance • Governance and Nominating Other Public CompanyBoards: • Regulus Therapeutics Inc. • Immune Design Corp. | 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 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 philanthropicnon-profit organizations, having been President of the American Association for the Advancement of Science and currently serving as a director and member of the Board of Scientific Counselors of the Broad Institute of MIT and Harvard. He isco-chair of The National Academy of Sciences Committee on Science, Technology and Law. Dr. Baltimore received an undergraduate degree from Swarthmore College and a doctorate from The Rockefeller University. Qualifications 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 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. |
Frank J. Biondi
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; Seagate Technology plc, a manufacturer of hard disk drives, since 2005, serving on its Compensation Committee and chairing its Finance Committee; and 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. Mr. Biondi has been a director of Hasbro, Inc., a toy and games company, since 2002, serving on its Compensation and Nominating, Governance and Social Responsibility Committees. Hasbro has announced that Mr. Biondi will not stand for election at Hasbro’s annual meeting of stockholders in May 2015.
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 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.
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 and Head of International Banking at Morgan Stanley in London since 2001 where he had responsibility for the firm’s banking department and corporate finance activities in Europe and focused on healthcare.
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.
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.
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François de CarbonnelRobert A. Bradway
François de Carbonnel is a director of corporations and corporate advisor. Mr. de Carbonnel has been a director of Solocal Group (formerly known as Pages Jaunes S.A.), a French company which offers online content, advertising solutions and transactional services, since 2004 and serves as chairman of the Remuneration and Appointments Committee. Mr. de Carbonnel has been a supervisory board member of Mazars Group, a privately-held international organization specializing in audit, accountancy, tax, legal and advisory services since December 2011.
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, and as non-executive Chairman of the Board from April 2008 to April 2009. Mr. de Carbonnel was a director of Quilvest S.A., a Luxembourg company which provides wealth management and private equity services, from 2006 to 2013.
Mr. de Carbonnel was a Senior Advisor of the Global Corporate and Investment Bank of Citigroup from 2004 to
2006, and a 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 is a member emeritus of the Business Board of Advisors of the Carnegie Mellon Tepper School of Business. Mr. de Carbonnel is a French citizen and resides in Europe.
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 firms 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.
Director since:2011 Age:54 Committees: • Equity Award • Executive (Chair) Other Public Company Boards: • The Boeing Corporation • Norfolk Southern Corporation | 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. 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, and The Boeing Corporation, an aerospace company and manufacturer of commercial airplanes, defense, space and securities systems, since October 2016, serving on its Audit and Finance 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. Qualifications 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. |
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Vance D. CoffmanFrançois de Carbonnel
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 Compensation Committee and chairs the Finance 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. Dr. Coffman received an undergraduate degree from Iowa State University and a doctorate from Stanford University.
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.
Director since:2008 Age:70 Committees: • Audit • Corporate Responsibility and Compliance Audit Committee financial expert 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, and asnon-executive Chairman of the Board from April 2008 to April 2009. Mr. de Carbonnel was a director of Quilvest S.A., a Luxembourg company which provides wealth management and private equity services, from 2006 to 2013. Mr. de Carbonnel was a Senior Advisor of the Global Corporate and Investment Bank of Citigroup from 2004 to 2006, and a 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 is a member emeritus of the Business Board of Advisors of the Carnegie Mellon Tepper School of 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. Qualifications 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 firms 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. Robert A. EckertRobert 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, 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 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 was a director of Smart & Final Stores, Inc., awarehouse store, 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 and serves on the Eller College National Board of Advisors at the University of Arizona.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.1220 ï 20152017 Proxy Statement ITEM 1 — ELECTION OF DIRECTORS
Robert A. Eckert
Lead Independent Director Director since:2012 Age:62 Committees: • Compensation and Management Development • Executive • Governance and Nominating Other Public CompanyBoards: • McDonald’s Corporation | Robert A. Eckert is our lead independent director. Mr. 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, 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 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 Public Policy and Strategy Committee and a member of the Executive and Governance Committees. Mr. Eckert was a director of Smart & Final Stores, Inc., a warehouse store, 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 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. Qualifications 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. |
Greg C. Garland
Greg C. 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.
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.
Director since:2013 Age:59 Committees: • Compensation and Management Development • Equity Award • Executive • Governance and Nominating (Chair) Other Public CompanyBoards: • Phillips 66 Greg C. Garland is the Chairman 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. Qualifications 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. Rebecca M. HendersonRebecca M. Henderson has been the John and Natty McArthur University Professor at Harvard University since 2011 and is the Co-Director of the Business and Environment 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 develops and commercializes 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 chipmanufacturer, and was 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. Dr. Henderson received an undergraduate degree from MIT 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. ï 20152017 Proxy Statement 1321 ITEM 1 — ELECTION OF DIRECTORS
Fred Hassan
Director since:2015 Age:71 Committees: • Audit • Compensation and Management Development Other Public CompanyBoards: • Intrexon Corporation • Time Warner Inc. Audit Committeefinancial expert | 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 Nominating and Governance and Compensation and Human Development Committees; and Intrexon Corporation, a synthetic biology company, since June 2016. 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. Qualifications 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. |
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Rebecca M. Henderson
Director since:2009 Age:56 Committees: • Audit • Corporate Responsibility and Compliance Other Public CompanyBoards: • IDEXX Laboratories, Inc. | Rebecca M. Henderson has been the John and Natty McArthur University Professor at Harvard University since 2011. 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 provides diagnostic and information technology-based products and services for veterinary, food and water applications, since 2003, chairing its Finance Committee and serving on 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. Dr. Henderson has published articles, papers and reviews in a range of scholarly journals. Dr. Henderson received an undergraduate degree from MIT and a doctorate from Harvard University. Qualifications 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. |
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Frank C. Herringer
Frank C. Herringer has been Chairman of the Board of Transamerica Corporation, a financial services company, since 1995. 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 currently a director of Aegon U.S. Holding Corporation, a position he has held since 1999. Mr. Herringer has been a director of The Charles Schwab Corporation, a brokerage and banking company, since 1996, serving on its Compensation, Nominating and Corporate Governance Committees, and a director of Cardax, Inc., a biotechnology company, since 2014, serving on its Compensation Committee and chairing its Governance and Nominating Committee, and has been a director of its parent company, Cardax Pharmaceuticals, Inc., since 2006. Mr. Herringer is 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, since 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. 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 of 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.
Director since:2004 Age:74 Committees: • Compensation and Management Development (Chair) • Executive • Equity Award (Chair) • Governance and Nominating Other Public Company Boards: • The Charles Schwab Corporation | Frank C. Herringer has been a director of the Board of Transamerica Corporation, a financial services company, since 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. Mr. Herringer was a director of Aegon U.S. Holding Corporation 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 Committee and chairing its Nominating and Corporate Governance Committee. Mr. Herringer is a member of the Board of Trustees of the California Pacific Medical Center Foundation, anot-for-profit organization which develops philanthropic resources for the California Pacific Medical Center, a privately-held,not-for-profit academic medical center, since 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’s degree in business administration from Dartmouth College. Qualifications 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. |
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Charles M. Holley, Jr.
Director since:2017 Age:60 Committees: • Audit • Corporate Responsibility and Compliance Audit Committeefinancial expert | Charles M. Holley, Jr. has served as a director of the Company since February 1, 2017. Mr. Holley was first identified to the Governance and Nominating Committee as a potential director candidate by the Company’s outside search firm. Mr. Holley is the former Executive Vice President and Chief Financial Officer forWal-Mart Stores, Inc., or Walmart, where he served from November 2010 to December 2015 and as Executive Vice President between January 1, 2016 and January 31, 2016. Prior to this, Mr. Holley served as Executive Vice President, Finance and Treasurer of Walmart from 2007 to November 2010. From December 2005 through December 2006, he served as Senior Vice President. Prior to that, Mr. Holley was Senior Vice President and Controller from 2003 to 2005. Mr. Holley served various roles inWal-Mart International from 1994 through 2002. Prior to this, Mr. Holley served in various roles at Tandy Corporation. He spent more than ten years with Ernst & Young LLP. Mr. Holley is an Independent Senior Advisor, U.S. CFO Program, Deloitte LLP, a privately-held provider of audit, consulting, tax, and advisory services, since July 2016. Mr. Holley serves on the Dean’s Advisory Board for the McCombs School of Business at the University of Texas at Austin and the University of Texas Presidents’ Development Board. Qualifications The Board concluded that Mr. Holley should serve on the Board due to his experience as a Chief Financial Officer and financial acumen, his global experience as a public company Chief Financial Officer, and his management and leadership skills, all of which provide valuable insight into the operations of our Company. Given his financial and leadership experience, Mr. Holley has been determined to be an Audit Committee financial expert by our Board. |
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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, 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. In 2006, he co-founded T2 Biosystems, Inc., a biotechnology company, and served on its scientific advisory board until 2013. Dr. Jacks has been a consultant scientific advisor to Epizyme, Inc., a biopharmaceutical company, since 2007. Dr. Jacks served on the scientific advisory board of Aveo Pharmaceuticals Inc., a cancer therapeutics company, from 2001 until 2013. 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 MIT’s
Center for Cancer Research from 2001 to 2007 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.
Director since:2012 Age:56 Committees: • Audit • Compensation and Management Development Other Public Company Boards: • Thermo Fisher Scientific, Inc. | 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, 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. In 2006, heco-founded T2 Biosystems, Inc., a biotechnology company, and served on its scientific advisory board until 2013. Dr. Jacks has been a consultant scientific advisor to Epizyme, Inc., a biopharmaceutical company, since 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 biopharmaceutical company, from 2001 until 2013. In 2015, Dr. Jacks founded Dragonfly Therapeutics, Inc. (formerly known as Equipoise Therapeutics), a privately-held biopharmaceutical company, in 2015 and serves asco-Chair of its scientific advisory board. 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. In April 2016, Dr. Jacks was named to a blue ribbon panel of scientists and advisors established as a working group of the National Cancer Advisory Board and served asco-Chair advising the Cancer MoonshotSM Task Force. Dr. Jacks was a director of MIT’s Center for Cancer Research from 2001 to 2007 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 and received the MIT Killian Faculty Achievement Award in 2015. Dr. Jacks received an undergraduate degree from Harvard University and his doctorate from the University of California, San Francisco. Qualifications 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. |
1426 ï 20152017 Proxy Statement
| ITEM 1 — ELECTION OF DIRECTORS |
Judith C. PelhamEllen J. Kullman
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 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, Buildings and Grounds, and Libraries Committees and chairs the Audit and Information Technology 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.
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.
Director since:2016 Age:61 Committees: • Audit • Governance and Nominating Other Public Company Boards: • Goldman Sachs Group, Inc. • United Technologies Corporation Audit Committeefinancial expert | Ellen J. Kullman has served as a director of the Company since October 14, 2016. Ms. Kullman was first identified to the Governance and Nominating Committee as a potential director candidate by the Company’s outside search firm. Ms. Kullman is the former President, Chair and Chief Executive Officer of E.I. du Pont de Nemours and Company, or DuPont, a science and technology-based company, where she served from January 2009 to October 2015. Prior to this, Ms. Kullman served as President of DuPont from October 2008 to January 2009. From June 2006 through September 2008, she served as Executive Vice President of DuPont. Prior to that, Ms. Kullman was Group Vice President, DuPont Safety and Protection. Ms. Kullman has been a director of United Technologies Corporation, a technology products and services company, since 2011, serving on its Committee on Compensation and Executive Development and Chairing its Committee on Governance and Public Policy. Ms. Kullman has been a director of Goldman Sachs Group, Inc., an investment banking firm, since December 2016, serving on its Compensation, Corporate Governance and Nominating, and Risk Committees. Ms. Kullman served as a director of General Motors, from 2004 to 2008, serving on its Audit Committee. Ms. Kullman has also served as a director of Carbon3D, Inc., a privately-held 3D printing company, since April 2016. Ms. Kullman has served on the Board of Trustees of Northwestern University since 2016 and on the Board of Overseers of Tufts University School of Engineering since 2006. She served as Chair of theUS-China Business Council from 2013 to 2015. In 2016, Ms. Kullman joined the board of directors of Dell Technologies, a privately-held technology company, and the Temasek Americas Advisory Panel of Temasek Holdings (Private) Limited, a privately-held investment company based in Singapore. Ms. Kullman received a bachelor of science in mechanical engineering degree from Tufts University and a master’s degree from the Kellogg School of Management at Northwestern University. Qualifications The Board concluded that Ms. Kullman should serve on the Board due to her recent and long-tenured global experience as a public company chief executive officer, her management and leadership skills, and her experience with scientific operations, all of which provide valuable insight into the operations of our Company. Given her leadership and financial experience, Ms. Kullman has been determined to be an Audit Committee financial expert by our Board. |
ï 20152017 Proxy Statement 1527
| ITEM 1 — ELECTION OF DIRECTORS |
Ronald D. Sugar
Director since:2010 Age:68 Committees: • Corporate Responsibility and Compliance (Chair) • Executive • Governance and Nominating Other Public CompanyBoards: • Air Lease Corporation • Apple Inc. • Chevron Corporation | 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. Dr. Sugar has been a director of Chevron Corporation, a petroleum, exploration, production and refining company, since 2005, serving as the lead director and 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, chairing the Compensation Committee and serving on the Governance Committee. Since 2010, he has been a senior advisor to Ares Management LLC, a privately-held asset manager and registered investment advisor. 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 Advisors, director of the Los Angeles Philharmonic Association and national trustee of the Boys and Girls Clubs of America. Qualifications The Board concluded that Dr. Sugar should serve on our Board because Dr. Sugar’s board and senior executive-level expertise, including his 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. |
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 a director of Apple Inc., a manufacturer and seller of, among other things, personal computers, mobile communication and media devices since28 ï 2017 Proxy Statement
2010 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, chairs the Compensation Committee of Air Lease, and serves on the Air Lease Governance Committee. In 2014, Dr. Sugar joined the Temasek Americas Advisory Panel of Temasek Holdings (Private) Limited, a private 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 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.
| ITEM 1 — ELECTION OF DIRECTORS |
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, technology and finance.
R. Sanders Williams
R. Sanders Williams has served as a director of the Company since October 17, 2014. Dr. Williams was first identified to the Governance and Nominating Committee as a potential director candidate by Vance D. Coffman, our lead independent director, and Robert A. Bradway, our Chairman of the Board and Chief Executive Officer. Dr. 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. Dr. Williams was a director of Bristol-Meyers 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 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.
Director since:2014 Age:68 Committees: • Corporate Responsibility and Compliance • Governance and Nominating Other Public Company Boards: • Laboratory Corporation of America Holdings | R. Sanders Williams is President of Gladstone Institutes, anon-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 theDuke-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, anon-profit institution that is distinct from Gladstone Institutes, since 2012 and on the board of directors of Exploratorium, anon-profit science museum and learning center located in San Francisco, since 2011. Dr. Williams was elected to the National Academy of Medicine in 2002. Dr. Williams received his undergraduate degree from Princeton University and his doctorate from Duke University. Qualifications 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 13 NAMED NOMINEES.
16 ï 20152017 Proxy Statement29
| ITEM 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS |
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, 2015,2017, and the Board has directed that management submit this selection for ratification by the stockholders at our 20152017 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. TheEach year, the Audit Committee evaluates the qualifications and performance of the Company’s independent registered public accountants and determines whether tore-engage the current independent registered public accountants. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the independent registered public accountants, their technical expertise and knowledge of our operations and industry. Based on this evaluation,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. The process for selection of Ernst & Young’s lead engagement partner involves a meeting between the Audit Committee’s chairperson and the candidate, as well as an assessment by the full Audit Committee and management. 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.
30 ï 20152017 Proxy Statement17
| ITEM |
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 56 through 87) and related compensation tables and the narrative in this proxy statement.statement (pages 88 through 106).
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- andshort-and long-term measurable performance.
Drive implementation of our business strategy and position our staff to execute on our strategy in thenear-and longer-term.
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 20142016 Executive Compensation Was Aligned With Our Strategy and Performance
AAs discussed more fully in our Compensation Discussion and Analysis starting on page 56, a significant majority of each NEO’s compensation is dependent on our performance and our execution of our strategic priorities. In 2014, we delivered strong performance,priorities and the highlightscompensation objectives discussed above.
The focus of which include:our strategy is to develop innovative medicines that meet important unmet medical needs. Six therapeutic areas form the core of our business (cardiovascular, oncology/hematology, bone health, neuroscience, inflammation, and nephrology). Our strategy to execute in these therapeutic areas is multifaceted, with seven strategic priorities that allow us to drive long-term growth, while also delivering on our short- and medium-term goals.
Strategic Priorities
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Stock Price Appreciation
of 40%in 2014
Our stock price increased from $114.08 to $159.29 per share during 2014, reflecting appreciation of 40%. This 2014 stock price performance contributed to our strong three-year stock price performance. Since 2012, our stock price has increased 148% versus 103% for our peer group and 64% for the Standard & Poor’s 500, or S&P 500.
One-Year TSR of 42%
in 2014
Our one-year total shareholder return, or TSR, of 42%, including our dividends, outperforms the TSRs of our peer group and the S&P 500 for the same period of 24% and 14%, respectively. Our three-year TSR of 157% also outperforms the TSRs of our peer group and the S&P 500 for the same period of 111% and 75%, respectively.
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18 ï 20152017 Proxy Statement31
| ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION |
Our annual cash incentive award program compensation is tied directly to our performance based onpre-established financial and operating performance goals that support execution of our strategic priorities
| Goal | Weighting | % of Target Earned | ||||||
1. Financial Performance
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Revenues
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30%
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139.7%
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Non-GAAP Net Income(1)
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30%
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147.5%
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2. Execute Product and Delivery System Launches
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Execute Product and Delivery System Launches
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| 10%
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| 127.8%
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3. Progress Innovative Pipeline
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Execute Key Clinical Studies and Regulatory Filings
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| 20%
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| 190.0%
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Advance Early Pipeline
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10%
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225.0%
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Composite Score
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Achieved 159.5%
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Below is a summary discussion of our key accomplishments for 2016. For further discussion of these accomplishments, the achievement of which aligns our NEO pay with performance and supports the execution of our strategic priorities, please see pages 57 through 61 of our Compensation Discussion and Analysis.
1. We delivered on our financial performance goals.
In 2016, our financial performance was strong, and we delivered on our financial performance goals.
We grew revenues by 6% over 2015 to $23 billion in 2016.
| • | Our U.S. Generally Accepted Accounting Principles, or GAAP, net income increased 11% to $7.7 billion and ournon-GAAP net income(1) grew 10% to $8.8 billion in 2016. |
 | Our commitment tore-shape the expense base of the business delivered results once more in 2016 as we continued |
to execute on the transformation and process improvement efforts announced in 2014. Our transformation and process improvement efforts across Amgen are enabling us to reallocate resources to fund many of our innovative pipeline and growth opportunities that deliver value to patients and stockholders.
Operating leverage from the changes we have made enables us to drive net income growth in the near-term while our longer-term investments have laid the foundation for growth beyond this period.
Since 2014, we have realized approximately $1.2 billion of transformation and process improvement savings the majority of which was reinvested in product launches, clinical programs and external business development.
2. We executed on product and delivery system launches.
This is the first full year that we have been able to provide patients with our six innovative products launched in 2015 (Repatha®, Kyprolis®, BLINCYTO®, IMLYGIC®, Neulasta®On-Pro® Kit, and Corlanor®). Repatha® and Kyprolis® both represent substantial opportunities as they address serious diseases impacting large patient populations with significant unmet medical needs.
For Repatha® (our medicine for certain patients who are unable to get theirlow-density lipoprotein (bad cholesterol) under control with current treatment options), we have focused on competing effectively, including capturing approximately 60% of share of new to brand prescriptions in the U.S., as of January 2017. Our focus remains on enabling Repatha® for appropriate patients as hurdle rates for access and reimbursement for prescribers and patients remain high. Supportive of our Repatha® launch, we also announced the results from three significant Phase 3 studies that demonstrate (1) significant low-density lipoprotein reductions for patients with high cholesterol treated with Repatha® who cannot tolerate statins, (2) that Repatha® regresses atherosclerosis in patients with coronary artery disease, and (3) that Repatha® reduces the risk of cardiovascular events in patients with clinically evident atherosclerotic disease.
| (1) | Non-GAAP net income is reported and reconciled inAppendix B to this proxy statement.Non-GAAP net income for purposes of the 2016 Company performance goals of our annual cash incentive award program is reported and reconciled inAppendix B to this proxy statement, excluding the incremental benefit ($95 million) of excess tax benefits recognized arising from the adoption of a new accounting standard on share-based payments. |
32 ï 2017 Proxy Statement
| ITEM |
In our oncology therapeutic area for Kyprolis® (our medicine for patients with relapsed or refractory multiple myeloma), we reported strong unit growth driven by increased share andex-U.S. launches.
 |
|
$1.9 billion
in dividends in 2014
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|
We |
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Our Annual Cash Incentive Award Program is Tied Directly
During the last five years, we have expanded our reach to Our Performance Basedapproximately 100 countries. In 2016, capitalizing on Pre-Established Performance Goals.our expansion activities, we had 94 product country launches.
| ||
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Our pipeline continued to advance in 2016. In addition to announcing the approval of Parsabiv™ (etelcalcetide) in the E.U., we reported the results of several important clinical trials, including the Phase 3 trials discussed above for Repatha®, as well as successful Phase 3 trials in EVENITY™* (romosuzumab)(1), Prolia®, XGEVA®, and erenumab(2). We have programs nearing key regulatory milestones, including the Biologics License Application under review with the FDA(3) for EVENITY™*. Also, in our nephrology therapeutic area, we reported that the European Commission approved Parsabiv™ (etelcalcetide) for the treatment of secondary hyperparathyroidism in adult patients with chronic kidney disease on hemodialysis. |
|
|
In |
The payout under our annual cash incentive award programbiosimilars portfolio in 2016, we reported we received FDAapproval for all measures after weighting was 147% of target bonus opportunity.AMJEVITA™ (biosimilar adalimumab (HUMIRA®)) and submitted applications to the FDA and EMEA(4) for ABP 215(5) (biosimilar bevacizumab (Avastin®)) and are in Phase 3 for ABP 980(5) (biosimilar trastuzumab (Herceptin®)), ABP 798(5) (biosimilar rituximab (Rituxan®/Mabthera®)), and ABP 710 (biosimilar infliximab (REMICADE®)).
| (1) |
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| (2) | Jointly developed in collaboration with Novartis AG. |
| (3) | U.S. Food and |
| (4) | European Medicines Agency. |
| (5) | Developed in |
| * | FDA provisionally approved trade name. |
ï 20152017 Proxy Statement 1933
| ITEM |
In 2016, we also made strong progress on executing against our other strategic priorities:
➣ 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.
In 2016, we invested $3.8 billion in research and development while also returning $6 billion of capital to our stockholders through the payment of dividends and stock repurchases.
| - | We returned a total of $3 billion of cash to our stockholders in the form of dividends. |
| - | We increased our dividend per share 27% over 2015 (to $1.00 per share for 2016). |
We repurchased approximately 20 million shares of our Common Stock during 2016 at an aggregate cost of $3 billion.
We made investments in next-generation biomanufacturing that dramatically reduces the scale and costs of making biologics while maintaining a reliable, high-quality, compliant supply of medicines.
Our Long-Term Incentive Program Results
Our long-term incentive, or LTI, equity award compensation is tied directly to our stock performance and aligns with the interests of our stockholders.
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.
Payout under our LTI performance award program for our 2014-2016 performance period at 112.5% reflects our three-year total shareholder return, or TSR, performance at the 56.2nd percentile relative to the TSRs of the companies in the Standard & Poor’s 500 Index for this performance period.
Positive 20142016 Say on Pay Vote Outcome and Engagement With Our Stockholders
97% stockholder support
on our 2014 say on pay
In 2014,2016, we received overapproximately 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 have found these interactions highly valuable and informative and will continue to engage with our stockholders to further enhance our understanding of the perspectives of our investors. The compensation relatedcompensation-related feedback from our stockholders is reviewed by our Compensation and Management Development Committee, or Compensation Committee, and weCommittee. We have made a number of compensation changes in response to past discussions with our stockholders.stockholders and have implemented the compensation best practices discussed below.
Since our 20142016 annual meeting of stockholders, in addition to our outreach by our executives and our Investor Relations department to investors, we have engaged ingovernance-focused outreach activities and discussions with stockholders comprising approximately 50%52% of our outstanding shares. In 2014, our predominant feedback from investors with respect to our compensation practices 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 any concerns of our stockholders. OurFor more detail regarding 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) initiated in 2008 that invites stockholders to provide feedback directly to the Compensation Committee regarding our executive compensation program.engagement, see page 62.
34 ï 2017 Proxy Statement
| ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION |
We Have Implemented Compensation Best Practices
We are mindful of compensation and governance best practices and have implemented the following practices, among others:as demonstrated below:
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 later restated and the NEOs’ misconduct is determined by the Board to have caused the restatement.
What we do
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.
Our LTI equity award grants are primarily performance-based with 80% of LTI equity awards granted as performance units.
We have robust stock ownership guidelines, with a six times base salary ownership requirement for our CEO.
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 with respect to our Common Stock.
Target median:We target compensation at the 50th percentile, or median, of our peer |
We do not provide tax gross-ups, except for business related payments such as reimbursement of certain moving and relocation expenses.
| ✓ | Clawback policy: 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 later restated and the NEOs’ misconduct is determined by the Board to have caused the restatement. |
We do not have “single-trigger” equity vesting acceleration upon a change of control for restricted stock units 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.
| ✓ | Recoupment: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. |
| ✓ | Robust stock ownership and retention guidelines: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. |
| ✓ | Minimum vesting periods: Our equity incentive plan provides that equity awards are subject to a minimum vesting period of no less than one year on 95% of equity awards granted and our grants generally vest over four years, with no vesting in the first year and vesting in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date. |
| ✓ | Double-trigger in the event of a change of control, No taxgross-ups: We do not have “single-trigger” equity vesting acceleration upon a change of control for restricted stock units, or RSUs, or stock options, and our double-trigger cash severance is limited to a multiple of two times target annual cash compensation, without taxgross-ups. Any performance awards are earned based on a truncated performance period. |
| ✓ | Performance-based equity. Our LTI equity award grants are primarily (80%) performance-based. |
We
What we don’t do not have any defined benefit pension or supplemental executive retirement plan benefits or “above-market” interest on deferred compensation.
× | No hedging or pledging: With respect to our Common Stock, our staff members and Board are prohibited from engaging in short sales, purchasing or pledging our Common Stock on margin, or entering into any hedging, derivative or similar transactions. | |
× | Nore-pricing or backdating:Our LTI equity award plans and policies prohibitre-pricing or backdating of equity awards. | |
× | No special taxgross-ups: We do not provide taxgross-ups, except for business related payments such as reimbursement of certain moving and relocation expenses. | |
× | No excessive perks: Our perquisites are limited to those with a clear business-related rationale. | |
× | No employment agreements:We do not have employment contracts or guaranteed bonuses, other than in countries where they are required by law. | |
× | No dividends paid on unvested equity: Dividends accrue on our performance units and RSUs, but are paid only when and to the extent the underlying award is earned and vested. | |
× | No defined benefit pension or supplemental executive retirement plan (SERP) benefits: We do not have any defined benefit pension or SERP benefits or “above-market” interest on deferred compensation. |
20 ï 20152017 Proxy Statement35
| ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE 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, advance our strategy 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 20162018 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.
36 ï 2017 Proxy Statement
| ITEM 4 — ADVISORY VOTE ON THE FREQUENCY OF FUTURE STOCKHOLDER ADVISORY VOTES TO APPROVE EXECUTIVE COMPENSATION |
Advisory Vote on the Frequency of Future Stockholder Advisory Votes to Approve Executive Compensation
In connection with the advisory vote on our executive compensation, Item 3, stockholders are also being asked to vote on the frequency of future stockholder advisory votes to approve executive compensation, as required by Securities and Exchange Commission rules. Stockholders may vote whether an advisory vote to approve our executive compensation should be held every year, every two years or every three years. Our current practice is to provide advisory votes on executive compensation every year.
We believe that it is important to give our stockholders the opportunity to provide input on our executive compensation in a consistent and meaningful manner. As such, the Board believes that our stockholders should have the opportunity to voice their approval or disapproval of our executive compensation each year. The Board believes that annual votes will facilitate the highest level of accountability to, and communication with, our stockholders. Further, an annual
vote clearly ties the advisory vote on executive compensation to the current year’s compensation disclosure and avoids the potential for confusion as to which year stockholders are being asked to evaluate and vote on that might exist with a biennial or triennial vote.
This vote is advisory and is not binding. However, the Board values the opinions expressed by our stockholders and will consider the outcome of the vote when determining the frequency with which advisory votes on executive compensation should be held. Stockholders are not being asked to approve or disapprove of the Board’s recommendation of an advisory vote on executive compensation every year, but rather to indicate their own choice among the frequency options for an advisory vote on executive compensation of every one year, every two years or every three years.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS ELECT TO HAVE ADVISORY VOTES TO APPROVE EXECUTIVE COMPENSATION EVERY “ONE YEAR” FOR THE REASONS STATED ABOVE.
ï 20152017 Proxy Statement 2137
| ITEM |
Stockholder Proposal
A stockholder and co-filerStockholders have informed the Company that they intend to present the proposal to adopt majority votes cast standard for matters presented by stockholders set forth below at our 20152017 Annual Meeting of Stockholders, or Annual Meeting. If the stockholderstockholders (or itstheir respective “qualified representative” as determined under our Amended and Restated Bylaws) isBylaws of Amgen Inc.) are 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 andstockholders, 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’S RESPONSE,BOARD OF DIRECTOR’S, OR BOARD, RESPONSES, WHICH FOLLOWSFOLLOW THE STOCKHOLDER PROPOSAL, THE BOARD STRONGLY AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST” THE STOCKHOLDER PROPOSAL.
Stockholder Proposal
MichaelSarah F. Rutherford and M. Burke Stansbury, and Francie Rutherford, each the owner of a purported 50 shares of our Common Stock as of December 9, 2014,5, 2016, along with aco-filer and appointing Investor Voice, SPC as their representative, with an address of 10033 12th Avenue NW,111 Queen Anne Ave N, Suite 500, Seattle, WA 98177,98109, have notified us of their intentionthe Company that they intend to submit the following proposal at ourthe Annual Meeting. Walden Asset Management, owner of a purported 25,63627,018 shares of our Common Stock as of December 3, 2014,7, 2016, has notified us that they areco-filing the proposal.
RESOLVED: Shareholders of Amgen, Inc. (“Amgen”) hereby requestshareholders ask the Board of Directors to take or initiate the steps necessary to amend Amgen’sCompany governing documents to provide that all non-binding matters presented toby shareholders other than the election of directors, shall be decided by a simple majority of the shares voted
votes cast FOR and AGAINST an item. This policy shallwould apply to all such matters unless shareholders have approved higher thresholds, or applicable laws or stock exchange regulations dictate otherwise.
SUPPORTING STATEMENT:STATEMENT:
This proposal is needed because Amgen counts votes two different ways in its proxy – a practice we feel is confusing, inconsistent, does not fully honor voter intent,seeks greater transparency, clarity, and harmsunderstanding around how informed stockholders vote on shareholder best-interest.proposals
Vote Calculation Methodologies, a CalPERS / GMI Ratings report, studied companies in the S&P 500 and Russell 1000 and found that 48% employ simple majority vote-counting as requested by this Proposal. See http://www.calpers-governance.org/docs-sof/provyvoting/calpers-russell-1000-vote-caculation-methodology-final-v2.pdf
Recently, Cardinal Health, ConAgra Foods, Plum Creek Timber, and Smucker’s each implemented the request of this Proposal.
The Securities and Exchange Commission dictates a specific vote-countingA democratic “simple majority” formula for the purpose of establishing eligibility for resubmission of shareholder-sponsored proposals. This formula – which we will call the “Simple Majority Vote” – is theincludes votes cast FOR dividedand AGAINST but not abstentions. It provides the most clear and accurate picture of the intent of shareowners who are both informedand decided, while not including in the formula the votes of abstaining voters who, bytwo categories of vote, the: definition, have chosen not to express an opinion.
|
|
However, Amgen doesWhen abstaining voters choose to not uniformly follow theSimple Majority Vote. With respectexpress an opinion and mark ABSTAIN (whether they are confused, disinterested, agnostic, or lack time to adopting a shareholder-sponsored proposal (versus determining its eligibility for resubmission)become fully informed), Amgen’s proxy statesit is apparent that abstentions “will have the same effecttheir votes should be regarded as votes against”.neither FOR nor AGAINST an item.
Thus, results are determined by theInstead of this, Amgen counts ABSTAIN votes cast FOR a proposal, divided by not two, butthree categories of vote:as if AGAINST every shareholder sponsored proposal.
|
|
|
AtAmgen has implied that it must use the same time as Amgen appliesDelaware “default standard” (which includes abstentions). However, this more restrictive formulanominal ‘standard’ is not mandated – it is what Delaware assigns to companies thatincludes abstentions to shareholder-sponsored items (and other management ones), it employs do not proactively choose “simple majority” voting.
Research has demonstrated that the Simple Majority Vote andso-called ‘default standard’ systematically disadvantages shareholders:
excludeshttp://bit.ly/Voting-Research_Corporate-Secretary abstentions for management’s Proposal 1 (in uncontested director elections), saying they “will not count”.
2238 ï 20152017 Proxy Statement
| ITEM |
How does it do this?
| · | By depressing the appearance of support for shareholder concerns. |
The math is simple: When abstaining shareholders elect to not express an opinion, but then are treated as if having voted AGAINST a proposal, management benefits. This is because shareholder proposals normally appear in proxies only when management disagrees with the proposal or would rather avoid the subject.
| · | By subverting vote outcomes. |
Historically, these practices have allowed management teams to describe numerous true majority votes on shareholder items as, instead, having ‘failed’.
| · | By distorting communication. |
Annual meeting votes offer the sole opportunity for most shareholders to communicate with Boards. Counting abstentions as de facto votes AGAINST
These practices boostshareholder proposals, management changes how outcomes are reported and how the public perceives support for shareholder concerns.
In contrast to how shareholder items are treated, we note that Amgen’s Director Election (where management benefits from the appearance of support for management’s Proposal 1, but depressstrong support), does not count abstentions.Thus, management items and shareholder items donot receive equal treatment; though the calculated level of support for other items – including every shareholder proposal.Company has complete discretion to cure these inconsistencies in its voting policies.
Invariably, abstaining voters havenot followedTo avert such discrepancies, a Board’s typical recommendation to vote AGAINST every shareholder-sponsored item. Despite this, Amgen counts every abstain vote – without exception – as if the voter agreed with the Board’s AGAINST recommendation.Council of Institutional Investors policy states: “...abstentions should be counted only for purposes of a quorum.”
In our view, Amgen’s use of two vote-counting formulas is confusing, inconsistent, does not fully honor voter intent, and harms shareholder best-interest.
Therefore, please vote FOR good governance andSimple Majority Voting at Amgen.
| THEREFORE: | Support accuracy, fairness, and good governance at Amgen by voting FOR simple majority vote-counting on shareholder-sponsored proposals. |
~ ~ ~
Board Response to the Stockholder Proposal
The Board of Directors recommends a vote “AGAINST” the Stockholder Proposal 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 lawlaw.. 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.
Our vote counting methodology applies identically to management-sponsored proposalsand stockholder proposalsproposals.. 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 proponent’s vote-counting methodology favors stockholder proposals over management-sponsored proposals.
ï 2017 Proxy Statement39
| ITEM 5 ��� STOCKHOLDER PROPOSAL |
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,
ï 2015 Proxy Statement23
be it management or a stockholder, bears the burden of persuading a majority of stockholders to affirmatively vote in favor of the item. Contrary to the proponent’s perception, we believe that our stockholders are fully informed (and not “confused, disinterested, agnostic, or lack time to become fully informed”) when they choose to abstain. Consistent with conversations we have had with some of our stockholders, the proponent’s own cited sourcea CalPERS report 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)(1) We therefore do not believe it would be in our stockholders’ best interest or effective corporate governance to disregard these views.
Our Board of 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” 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 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.
Faced with similar proposals in 2014,2016, stockholders overwhelmingly did not support the adoption of the proposed vote counting methodology. In 2014, three2016, eight companies, including Amgen, included a similar proposal from Investor Voicerelated to a majority vote counting methodology in their 20142016 annual meeting proxy statements. Each of those proposals received less than 13% support from stockholders. The proponent’s supporting statement claims that ConAgra Foods has implemented the request of thisAdditionally, Investor Voice (then known as Newground Social Investment, SPC) included a similar proposal yet ConAgra Food’s 2014in our 2016 annual meeting proxy statement proposal on this topic received just 12.6% of its stockholders’ support and we have found no evidence in public filings that ConAgra Foods has indeed implemented the subject of this proposal. Additionally, Investor Voice failed to attend our 2014 Annual Meeting of Stockholders to properly present the proposal and so it was not properly placed before the meeting. However, had it been presented, based on voting information as of immediately prior to our meeting, it would havewhich received very low support (approximately 5.4%6.5%) from our stockholders. Moreover, this proposal has been in our proxy statement for a number of years and has consistently received very low support (well under 10%), a clear indication that stockholders are informed about our vote counting methodology and approve of our current practice.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THE STOCKHOLDER PROPOSAL.PROPOSAL ON MAJORITY VOTES CAST STANDARD.
| (1) | Vote Calculation Methodologies |
2440 ï 20152017 Proxy Statement
| 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 16, 201520, 2017 by: (i) each current director and nominee; (ii) our Named Executive Officers, or NEOs (as specified on page 39)56) and (iii) all of our current directors and executive officers as a group. There were 757,913,499735,890,171 shares of our Common Stock outstanding as of March 16, 2015.20, 2017. 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 | 51,159 | 20,000 | * |
|
48,629 |
|
|
15,000 |
|
|
* |
| ||||||||||||
Frank J. Biondi, Jr. | 31,696 | 15,000 | * |
|
31,696 |
|
|
15,000 |
|
|
* |
| ||||||||||||
François de Carbonnel | 22,051 | 5,000 | * |
|
16,382 |
|
|
0 |
|
|
* |
| ||||||||||||
Vance D. Coffman | 48,709 | 20,000 | * | |||||||||||||||||||||
Robert A. Eckert | 0 | 20,000 | * |
|
20,435 |
|
|
20,000 |
|
|
* |
| ||||||||||||
Greg C. Garland | 2,224 | 0 | * |
|
4,694 |
|
|
0 |
|
|
* |
| ||||||||||||
Fred Hassan |
|
4,861 |
|
|
0 |
|
|
* |
| |||||||||||||||
Rebecca M. Henderson | 8,000 | 8,000 | * |
|
8,000 |
|
|
8,000 |
|
|
* |
| ||||||||||||
Frank C. Herringer(3) | 44,467 | 20,000 | * |
|
42,722 |
|
|
15,000 |
|
|
* |
| ||||||||||||
Charles M. Holley, Jr. |
|
30 |
|
|
0 |
|
|
* |
| |||||||||||||||
Tyler Jacks | 21,819 | 20,000 | * |
|
21,890 |
|
|
20,000 |
|
|
* |
| ||||||||||||
Ellen J. Kullman |
|
410 |
|
|
0 |
|
|
* |
| |||||||||||||||
Judith C. Pelham | 15,734 | 0 | * |
|
10,002 |
|
|
0 |
|
|
* |
| ||||||||||||
Ronald D. Sugar | 30,000 | 30,000 | * |
|
30,000 |
|
|
30,000 |
|
|
* |
| ||||||||||||
R. Sanders Williams | 309 | 0 | * |
|
2,779 |
|
|
0 |
|
|
* |
| ||||||||||||
Named Executive Officers | ||||||||||||||||||||||||
Robert A. Bradway | 585,405 | 298,940 | * |
|
519,217 |
|
|
200,500 |
|
|
* |
| ||||||||||||
Anthony C. Hooper | 177,141 | 3,016 | * |
|
177,032 |
|
|
0 |
|
|
* |
| ||||||||||||
David W. Meline | 0 | 0 | * |
|
14,769 |
|
|
0 |
|
|
* |
| ||||||||||||
Sean E. Harper | 123,812 | 42,056 | * |
|
72,614 |
|
|
37,000 |
|
|
* |
| ||||||||||||
Madhavan Balachandran(4) | 87,755 | 24,155 | * | |||||||||||||||||||||
Michael A. Kelly(5) | 34,775 | 2,969 | * | |||||||||||||||||||||
Jonathan M. Peacock(6) | 46,124 | 0 | * | |||||||||||||||||||||
All current directors and executive officers as a group (22 individuals)(7) | 1,647,980 | 675,826 | * | |||||||||||||||||||||
Jonathan P. Graham |
|
6,018 |
|
|
0 |
|
|
* |
| |||||||||||||||
All current directors and executive officers as a group (24 individuals)(4)
|
|
1,388,369 |
|
|
417,467 |
|
|
* |
| |||||||||||||||
| * | 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. |
ï 20152017 Proxy Statement 2541
| (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 |
| Name | RSUs and Dividend Equivalents Included | Stock Options Included | RSUs and Dividend Equivalents Excluded | RSUs and Dividend Equivalents Included | Stock Included | RSUs and Dividend Equivalents Excluded Because of Deferrals | ||||||||||||||||||
David Baltimore | 0 | 20,000 | 0 |
|
0 |
|
|
15,000 |
|
|
0 |
| ||||||||||||
Frank J. Biondi, Jr. | 0 | 15,000 | 15,396 |
|
0 |
|
|
15,000 |
|
|
18,709 |
| ||||||||||||
François de Carbonnel | 0 | 5,000 | 2,125 |
|
0 |
|
|
0 |
|
|
2,229 |
| ||||||||||||
Vance D. Coffman | 0 | 20,000 | 8,419 | |||||||||||||||||||||
Robert A. Eckert | 0 | 20,000 | 3,741 |
|
0 |
|
|
20,000 |
|
|
6,485 |
| ||||||||||||
Greg C. Garland | 0 | 0 | 0 |
|
0 |
|
|
0 |
|
|
0 |
| ||||||||||||
Fred Hassan |
|
0 |
|
|
0 |
|
|
0 |
| |||||||||||||||
Rebecca M. Henderson | 0 | 8,000 | 7,507 |
|
0 |
|
|
8,000 |
|
|
10,435 |
| ||||||||||||
Frank C. Herringer | 0 | 20,000 | 16,828 |
|
0 |
|
|
15,000 |
|
|
20,211 |
| ||||||||||||
Charles M. Holley, Jr. |
|
0 |
|
|
0 |
|
|
0 |
| |||||||||||||||
Tyler Jacks | 0 | 20,000 | 1,828 |
|
0 |
|
|
20,000 |
|
|
4,478 |
| ||||||||||||
Ellen J. Kullman |
|
0 |
|
|
0 |
|
|
0 |
| |||||||||||||||
Judith C. Pelham | 0 | 0 | 0 |
|
0 |
|
|
0 |
|
|
0 |
| ||||||||||||
Ronald D. Sugar | 0 | 30,000 | 7,176 |
|
0 |
|
|
30,000 |
|
|
10,056 |
| ||||||||||||
R. Sanders Williams | 0 | 0 | 0 |
|
0 |
|
|
0 |
|
|
0 |
| ||||||||||||
Robert A. Bradway | 14,440 | 284,500 | 0 |
|
0 |
|
|
200,500 |
|
|
0 |
| ||||||||||||
Anthony C. Hooper | 3,016 | 0 | 0 |
|
0 |
|
|
0 |
|
|
0 |
| ||||||||||||
David W. Meline | 0 | 0 | 0 |
|
0 |
|
|
0 |
|
|
0 |
| ||||||||||||
Sean E. Harper | 5,056 | 37,000 | 0 |
|
0 |
|
|
37,000 |
|
|
0 |
| ||||||||||||
Madhavan Balachandran | 2,405 | 21,750 | 0 | |||||||||||||||||||||
Michael A. Kelly | 1,192 | 1,777 | 0 | |||||||||||||||||||||
Jonathan M. Peacock | 0 | 0 | 0 | |||||||||||||||||||||
Jonathan P. Graham |
|
0 |
|
|
0 |
|
|
0 |
| |||||||||||||||
| (3) | Includes 17,152 shares held by family trusts. |
| (4) | Includes |
|
|
|
2642 ï 20152017 Proxy Statement
| 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, 2014, except as noted,March 20, 2017, 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 16, 2015.20, 2017.
| Common Stock Beneficially Owned | ||||||||
| Name and Address of Beneficial Owner | Number of Shares | Percent of Total(1) | ||||||
Capital Research Global Investors(2) 333 South Hope Street Los Angeles, CA 90071 | 93,166,375 | 12.29% | ||||||
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10022 | 48,285,295 | 6.37% | ||||||
The Vanguard Group(4) 100 Vanguard Blvd. Malvern, PA 19355 | 40,918,008 | 5.40% | ||||||
| Common Stock Beneficially Owned | ||||||||
| Name and Address of Beneficial Owner | Number of Shares | Percent of Total(1) | ||||||
Capital Research Global Investors(2) 333 South Hope Street Los Angeles, CA 90071
|
| 65,482,167
|
|
| 8.9%
|
| ||
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055
|
| 50,485,583
|
|
| 6.9%
|
| ||
The Vanguard Group(4) 100 Vanguard Blvd. Malvern, PA 19355
|
| 48,096,649
|
|
| 6.5%
|
| ||
FMR LLC(5) 245 Summer Street Boston, MA 02210
|
| 40,789,786
|
|
| 5.5%
|
| ||
| (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 |
| (2) | The amounts shown and the following information was provided by Capital Research Global Investors pursuant to a Schedule |
| (3) | The amounts shown and the following information was provided by BlackRock, Inc. pursuant to a Schedule |
| (4) | The amounts shown and the following information was provided by The Vanguard Group pursuant to a Schedule |
| (5) | The amounts shown and the following information was provided by FMR LLC pursuant to a Schedule 13G filed with the SEC on February 14, 2017. FMR LLC reports that it has sole voting power over 3,363,623 of these shares and sole dispositive power over 40,789,786 shares. |
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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.com and are available in print upon written request to the Company’s Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799, Mail Stop 38-5-A.91320-1799. The Board’s corporate governance practices include the following:
| • | Proxy Access. The Amended and Restated Bylaws of Amgen Inc., or Bylaws, permit 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. |
| • | Regular Executive Sessions of Independent Directors.Our independent directors meet privately on a regular basis. |
| • | Majority Approval Required for Director Elections. If an incumbent director up forre-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 |
| • | 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. |
| • | Director Tenure. Our average Board tenure of approximately 6.2 years for our director nominees is substantially less than the average board tenure of the companies in the Standard & Poor’s 500 |
| • | 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 72nd birthday. After due consideration, the Board has waived the retirement age |
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with respect to 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 |
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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 RequirePre-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. |
| • | 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 |
| • | 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 62. |
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. 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
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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.
ï 2015 Proxy Statement29
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 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 servesMr. Eckert has served as the lead independent director.director since the May 19, 2016 annual meeting of stockholders, or 2016 Annual Meeting. Prior to this, Vance D. Coffman served as the lead independent director until his retirement from the Board.
Corporate Governance Structure. 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.
Director Independence. At least annually, the Governance Committee reviews the independence of eachnon-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.
12 out of the 13 director nominees (over(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. CoffmanMr. Eckert has servedbeen elected as the lead independent director effective since January 1, 2012. His termthe 2016 Annual Meeting and was extendedre-elected by theour Board on March 7, 2017 to continue to serve as lead independent members ofdirector subject to hisre-election to the Board in December 2014 and he was re-elected to serve for an additional term by our stockholders at the independent members of the Board in March 2015. 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 annualself-assessment;
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.
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
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management. In addition, the Compensation Committee has an effective process for monitoring and evaluating Mr. Bradway’s compensation and performance. Each committee chair provides 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 annualself-evaluation process, the Board reviews its leadership structure and whether combining or separating the roles of
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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’sday-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 positionsposition 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.
The strength and effectiveness of the communications between Mr. Bradway as our Chairman and Dr. CoffmanMr. Eckert 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 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 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.
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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 | •Overseesnon-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, 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-wideour Company performance 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 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
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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. |
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.
We require that each officer who has not met their required ownership guidelines retain shares of our Common Stock acquired through the vesting of restricted stock units, the payout of performance units, and the exercise of stock options awarded on or after December 15, 2015, net of shares retained by us to satisfy associated tax withholding requirements and exercise price amounts, until such officer has reached his or her required stock ownership level.
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.
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 or purchasing of our Common Stock on margin and hedging the economic risk of our Common Stock.
Codes 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 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 codes of ethics in 2014.2016.
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Director Independence
At least annually, the Governance Committee reviews the independence of eachnon-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 ournon-employee directors, as well as Dr. Coffman, who served as a director during part of 2016, 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
ï 2015 Proxy Statement33
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 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.
the last three years as a professor, trustee, director, or member of a board, council or committee for one or more colleges, universities ornon-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 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 consulting services.
|
Drs. Baltimore, Rebecca M. Henderson, Tyler Jacks and R. Sanders Williams currently serve as professors for universities to which Amgen has made payments for certain business transactions such as symposiums, conferences, internships, clinical trials, training and research and development expenses, software licenses and maintenance fees, as well as for 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 sevensix meetings in 20142016 and all of the directors attended at least 75% of the total number of meetings of the Board and committees on which they served. Dr. WilliamsEllen J. Kullman was appointed to the Board in October 20142016 and attended all meetings of the Board and committees on which heshe served in 2014 after the date of hisher appointment. The independent directors meet in executive session without management, including Mr. Bradway, present at all regularlyIt is the Company’s policy
scheduled meetings of the Board. Dr. Coffman, our lead independent director, presided at such meetings. We and the Board expectthat 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 Drs.Dr. Baltimore, and Coffman, were present at our 2014 annual meeting of stockholders.2016 Annual Meeting.
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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.
34 ï 2015 Proxy Statement
Audit Committee
The Audit Committee met nineten times in 2014.2016. Throughout 20142016 and currently, Mr.Frank J. Biondi, Jr. serves as chairman and Ms. Pelham, Dr. Baltimore and Messrs.François de Carbonnel, Eckert and GarlandFred Hassan serve as members of the Audit Committee.Committee, with Drs. Henderson and Jacks joining the Audit Committee on the date of the 2016 Annual Meeting and Ms. Kullman and Charles M. Holley, Jr. joining upon their appointments to the Board. Dr. Gilbert S. OmennBaltimore, Mr. Eckert and Greg C. Garland served on the Audit Committee in 2016 until his retirement from the Board in May 2014.2016 Annual Meeting. 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 Ms. Kullman and Messrs. Biondi, de Carbonnel, EckertHassan, and GarlandHolley 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 Form10-K and earnings press releases.
Compensation and Management Development Committee
The Compensation Committee met sixfive times in 2014.2016. Throughout 20142016 and currently, Mr. Herringer serves as
chairman and Ms. Pelham, Mr.and Messrs. Biondi and Dr. CoffmanHassan serve as members of the Compensation Committee.Committee, with Dr. Coffman retiring and Messrs. Eckert and Garland and Dr. Jacks joining the Compensation Committee on the date of the 2016 Annual Meeting. 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.
The processes and procedures of the Compensation Committee for considering and determining compensation for 20142016 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 of the prior year 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.
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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 2014,2016, 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.
ï 2015 Proxy Statement35
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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, which 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, practices of our peer group and recommendations for the CEO position.
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 our peer group and 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 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 2014.2016.
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.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, 2014.2016.
Equity Award Committee
The Equity Award Committee met four times in 2014.2016. Throughout 20142016 and currently, Mr. Herringer serves as chairman and Dr. Coffman and Mr. Bradway serveserves as membersa member of the Equity Award Committee.Committee, with Mr. Garland joining the Equity Award Committee after Dr. Coffman’s retirement at the 2016 Annual Meeting. 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
52 ï 2017 Proxy Statement
| CORPORATE GOVERNANCE |
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 fourfive times in 2014. Throughout 2014 and currently, Dr. Coffman2016. Currently, Mr. Garland serves as chairman, having served on the Governance Committee throughout 2016 and as chairman since Dr. Coffman’s retirement at the 2016 Annual Meeting. Throughout 2016 and currently, Drs. Baltimore, Henderson, Jacks and Sugar and Messrs. de Carbonnel, GarlandWilliams, and Mr. Herringer serve as members of the Governance Committee, with Dr. WilliamsMr. Eckert joining the Governance Committee effective October 2014.at the 2016 Annual Meeting and Ms. Kullman joining upon her appointment to the Board. Messrs. de Carbonnel and Drs. Henderson and Jacks served on the Governance Committee until the 2016 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.
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
36 ï 2015 Proxy Statement
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—Stockholder Proposals”Proposals for the 2018 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.” Among the Governance Committee’s responsibilities, the Governance Committee evaluates and makes recommendations to our Board regarding compensation fornon-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.
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 2014.
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 2014.2016.
Corporate Responsibility and Compliance Committee
The Compliance Committee met five times in 2014.2016. Throughout 20142016 and currently, Dr. Sugar serves as chairman and Drs. Henderson and Jacks and Mr. EckertWilliams serve as members of the Compliance Committee.Committee, with Dr. Omenn served onBaltimore and Mr. de Carbonnel joining the Compliance Committee untilon the date of the 2016 Annual Meeting and Mr. Holley joining upon his retirement fromappointment to the Board in May 2014. Dr. Williams joined the Compliance Committee effective October 2014.Board.
ï 2017 Proxy Statement53
| CORPORATE GOVERNANCE |
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 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
ï 2015 Proxy Statement37
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 2014.2016. Throughout 20142016 and currently, Mr. Bradway serves as chairman and Messrs. Biondi and Herringer and Drs. Coffman andDr. Sugar serve as members of the Executive Committee.Committee, with Dr. Coffman retiring and Mr. Garland joining on the date of the 2016 Annual Meeting and Mr. Eckert joining in July 2016, respectively. 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.
For information on our engagement with our stockholders since the 2016 Annual Meeting, please see page 62 of our Compensation Discussion and Analysis.
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| CORPORATE GOVERNANCE |
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 20152017 Annual Meeting proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K.10-K for the year ended December 31, 2016.
Compensation Committee of the Board of Directors
Frank C. Herringer, Chairman
Frank J. Biondi, Jr.
Vance D. CoffmanRobert A. Eckert
Greg C. Garland
Fred Hassan
Tyler Jacks
Judith C. Pelham
38 ï 20152017 Proxy Statement55
| COMPENSATION DISCUSSION AND ANALYSIS |
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 2014:2016 below:
Table of Contents
| Name | ||
Robert A. Bradway | Chairman of the Board, Chief Executive Officer and President | |
Anthony C. Hooper | Executive Vice President, Global Commercial Operations | |
David W. Meline | Executive Vice President and Chief Financial Officer | |
Sean E. Harper | Executive Vice President, Research and Development | |
| Senior Vice President, General Counsel and Secretary | |
56 ï 2017 Proxy Statement
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| COMPENSATION DISCUSSION AND ANALYSIS |
Six therapeutic areas form the core of our business—cardiovascular, oncology/hematology, bone health, neuroscience, inflammation, and nephrology. Our strategy to execute in these therapeutic areas is multifaceted, with seven strategic priorities that allow us to drive long-term growth, while also delivering on our short- and medium-term goals. As a result, our strategy enables multiple approaches to creating stockholder value. Key 2016 activities that align our NEO pay with performance and support the execution of these strategic priorities are summarized in the following pages.
Our Strategic Priorities
Strategic Priorities | Description | |
| Our focus on developing innovative, breakaway medicines to address important unmet needs guides how we allocate resources across internal and external program possibilities. This results in a productive balance of internal development and external programs and collaborations reflected in our current product portfolio and pipeline. | |
| We continue to improve our business and operating model through significant transformation and process improvement efforts. Among these programs, we have reduced the time it takes to bring new medicines to market, reengineered internal processes to make them more efficient, and explored new technologies with potential to further enhance the value we deliver to patients. | |
| Biologic medicines are, for the most part, injected subcutaneously or administered intravenously, which often means that patients need to visit a doctor’s office or hospital to receive treatment. Innovations that make the delivery of our medicines easier and less costly offer important opportunities for differentiation, are good for patients and also have positive economic benefits to the healthcare system overall. | |
| We believe our deep experience in biologics development and unparalleled capabilities in biotechnology manufacturing make entry into the emerging biosimilars market attractive and position us for leadership. | |
| We have been actively expanding our presence by opening new affiliates and locations around the world, pursuing smart acquisitions and acquiring global rights to market our products. Amgen medicines are now available to patients in approximately 100 countries worldwide. | |
| We recognize that stockholders who support investment in developing innovative medicines require an appropriate return on the capital they commit to Amgen. | |
| Our first next-generation biomanufacturing facility in Singapore has been constructed in less than half the time, at a quarter of the cost of a traditional facility while using 80% less space and having a much smaller impact on the environment. |
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| COMPENSATION DISCUSSION AND ANALYSIS |
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Selected 2014 Business HighlightsAligning Pay With Performance and Pay for PerformanceExecution of Our Strategic Priorities
A significant majority of each NEO’s compensation is dependent on our performance and our execution of our strategic priorities. Our annual cash incentive and long-term equity incentive programs together promote focus on both near- and long-term stockholder value creation by providing incentive compensation that is earned based on our financial, operating, and stock price performance and is “at risk.” In 2014,2016, we delivered strong financial results while making significant progress on our 2016 operating performance the highlightsgoals and advancing our strategic priorities, which facilitate execution of which include:our strategy.
Annual Cash Incentive Program Results
Our annual cash incentive compensation program is tied directly to our performance based onpre-established financial goals of revenues (30%) andnon-GAAP net income(1) (30%), and operating performance goals tied to executing product and delivery system launches (10%) and progressing innovative pipeline (30%):
| Goal | Weighting | % of Target Earned | ||||||
1. Financial Performance
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Revenues
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30%
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139.7%
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Non-GAAP Net Income(1)
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30%
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147.5%
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2. Execute Product and Delivery System Launches
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Execute Product and Delivery System Launches
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| 10%
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| 127.8%
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3. Progress Innovative Pipeline
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Execute Key Clinical Studies and Regulatory Filings
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| 20%
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| 190.0%
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Advance Early Pipeline
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10%
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225.0%
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Composite Score
|
| Achieved 159.5%
|
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1. We delivered on our financial performance goals.
Revenues increased 6% to $23 billionin 2016
In 2016, our financial performance was strong and we delivered on our financial performance goals.
We grew revenues by 6% over 2015 to $23 billion in 2016.
| • |
|
Our commitment tore-shape the expense base of the business delivered results once more in 2016 as we continued to execute on the transformation and process improvement efforts announced in 2014. Our transformation and process improvement efforts across Amgen are enabling us to reallocate resources to fund many of our innovative pipeline and growth opportunities that deliver value to patients and stockholders.
Stock Price Appreciation
of 40%Operating leverage from the changes we have made enables us to drive net income growth in 2014the near-term while our longer-term investments have laid the foundation for growth beyond this period.
Our stock price increased from $114.08 to $159.29 per share during
Since 2014, reflecting appreciationwe have realized approximately $1.2 billion of 40%. This 2014 stock price performance contributed to our strong three-year stock price performance. Since 2012, our stock price has increased 148% versus 103% for our peer grouptransformation and 64% forprocess improvement savings, the Standard & Poor’s 500, or S&P 500.majority of which was reinvested in product launches, clinical programs and external business development.
| (1) | Non-GAAP net income is reported and reconciled inAppendix B to this proxy statement.Non-GAAP net income for purposes of the 2016 Company performance goals of our annual cash incentive award program is reported and reconciled inAppendix B to this proxy statement, excluding the incremental benefit ($95 million) of excess tax benefits recognized arising from the adoption of a new accounting standard on share-based payments. |
58 ï 20152017 Proxy Statement39
| COMPENSATION DISCUSSION AND ANALYSIS |
One-Year TSR of 42%
in 2014
Our one-year total shareholder return, or TSR, of 42%, including our dividends, outperforms the TSRs of our peer group2. We executed on product and the S&P 500 for the same period of 24% and 14%, respectively. Our three-year TSR of 157% also outperforms the TSRs of our peer group and the S&P 500 for the same period of 111% and 75%, respectively.delivery system launches.
This is the first full year that we have been able to provide patients with our six innovative products launched in 2015 (Repatha®, Kyprolis®, BLINCYTO®, IMLYGIC®, Neulasta®On-Pro® Kit, and Corlanor®). Repatha® and Kyprolis® both represent substantial opportunities as they address serious diseases impacting large patient populations with significant unmet medical needs.
Cardiovascular disease is the most costly disease for society today. In the absence of new therapies to reduce the risk of cardiovascular events for the millions of high risk patients in the U.S. and around the world, the burden of this disease is set to rapidly rise.
|
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$1.9 billion
in dividends in 2014
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*represents annualized dividend
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We have built leading patient- and provider-friendly device capabilities. |
| • | In 2016, we reported strong performance from the Neulasta®On-Pro® Kit, including |
| • | We launched the Repatha®Pushtronex™ system, the first and only single monthly injection for a PCSK9 inhibitor, in |
During the last five years, we have expanded our reach to approximately 100 countries. In 2016, capitalizing on our expansion activities, we had 94 product country launches.
| (1) | Goal Achievement After Utilizing an Anti-PCSK9 Antibody in Statin IntolerantSubjects-3. |
| (2) | GLobal Assessment of Plaque ReGression with a PCSK9 AntibOdy as Measured by IntraVascular Ultrasound. |
| (3) | Further Cardiovascular OUtcomes Research with PCSK9 Inhibition in Subjects with Elevated Risk. |
| (4) | RandomizEd, OpeN Label, Phase 3 Study of Carfilzomib Plus DExamethAsone Vs Bortezomib Plus DexamethasOne in Patients With Relapsed Multiple Myeloma. |
ï 2017 Proxy Statement59
| COMPENSATION DISCUSSION AND ANALYSIS |
3. We significantly advanced our pipeline.
Our pipeline continued to advance in 2016. In addition to the Repatha® trials and Kyprolis® E.U. approval discussed above, we reported the results of many important clinical trials, and we also have a number of programs nearing key regulatory milestones. A selected summary of these developments is contained below. (For complete information of all of our material pipeline advancements, please refer to our Form10-K for the year ended December 31, 2016.)
In our bone health therapeutic area in 2016, we reported that:
| • | We submitted a BLA(1) to |
| • | Our Phase 3 study evaluating the |
Also, in 2016 in our oncology therapeutic area, we reported that our Phase 3 study evaluating XGEVA® in the prevention of skeletal-related events, or SREs, in patients with multiple myeloma met its primary endpoint ofnon-inferiority compared with zoledronic acid in delaying the time to firston-study SRE.
In our neuroscience therapeutic area, we reported three positive pivotal studies for erenumab(4)(our medicine designed for the treatment of migraine):
A Phase 2b chronic migraine study showed that erenumab statistically significantly reduces patients’ monthly migraine days; and
Two Phase 3 episodic migraine studies demonstrated statistically significant reductions in monthly migraine days in patients treated with erenumab.
In our nephrology therapeutic area, we reported that the European Commission approved Parsabiv™ (etelcalcetide) for the treatment of secondary hyperparathyroidism in adult patients with chronic kidney disease on hemodialysis.
| In our biosimilars portfolio in 2016, we reported: |
| • | We received FDA approval for AMJEVITA™ (biosimilar adalimumab (HUMIRA®)) and submitted applications to both the FDA and EMEA(5) for ABP 215(6) (biosimilar bevacizumab (Avastin®)). |
| • | We are in Phase 3 for ABP 980(6) (biosimilar trastuzumab (Herceptin®)), ABP 798(6) (biosimilar rituximab (Rituxan®/Mabthera®)), and ABP 710 (biosimilar infliximab (REMICADE®)). |
In 2016, we also made strong progress on executing against our other strategic priorities:
| ➣ | We invested for long-term growth while returning substantial capital to our stockholders. |
Our Annual Cash Incentive Award Program is Tied Directlystrong cash flows and balance sheet allowed continued investment for long-term growth through internal research and development ($3.8 billion in 2016) and external business development transactions, while simultaneously providing substantial returns to Our Performance Based on Pre-Established Performance Goals.stockholders.
In 2016, whileinvesting $3.8 billion in research and development, we alsoreturned$6 billion of capital to our stockholders ($3 billion in dividends and ~20 million shares in stock repurchases)
| (1) | Biologics License Application. |
| (2) | U.S. Food and Drug Administration. |
| (3) | Developed in collaboration with UCB. |
| (4) | Jointly developed in collaboration with Novartis AG. |
| (5) | European Medicines Agency. |
| (6) | Developed in collaboration with Allergan plc. |
| * | FDA provisionally approved trade name. |
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| COMPENSATION DISCUSSION AND ANALYSIS |
Annual Dividend Increases
|
| * |
|
We increased our dividend per share 27% over 2015 (to $1.00 per share for 2016). We made investments in next-generation biomanufacturing that build on our existing competitive advantage in manufacturing. This next-generation biomanufacturing dramatically reduces the scale and costs of making biologics while maintaining a reliable, high-quality, compliant supply of medicines. Final preparations are underway for licensure of our new Singapore facility. At this facility, the next-generation biomanufacturing approach is environmentally responsible, vastly reducing water use and requiring less energy. Performance Under Our Long-Term Incentive 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. |
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. Our performance units that were earned based on the three year performance period ending January 31, 2017 were earned based on our relative total shareholder return, or TSR.
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The payoutPayout under our annual cash incentiveLTI performance award program for all measures after weighting was 147%our 2014-2016 performance period at 112.5% reflects our three-year TSR performance at the 56.2nd percentile relative to the TSRs of target bonus opportunity.the companies in the S&P 500 for this performance period.
An investor who had invested in our Company Common Stock on January 1, 2014 would have earned a TSR of 37% as of December 31, 2016 versus 29% for the S&P 500 for the same period as depicted above.
Our 2014ï 2017 Proxy Statement61
| COMPENSATION DISCUSSION AND ANALYSIS |
Positive 2016 Say on Pay Vote Outcome and Engagement With Our Stockholders
97% stockholder support
on our 2014 say on pay
In 2014,2016, we received overapproximately 97% stockholder support on our say on pay advisory vote. We have engaged consistently in broad direct stockholder outreach over the past several yearsyears. Since our 2016 annual meeting of stockholders, in addition to our outreach by our executives and our Investor Relations department to investors, we have found these interactions highlyengaged in governance-focused outreach activities and discussions with stockholders comprising approximately 52% of our outstanding shares. These discussions have been valuable and informative and we will continue to engage with our stockholders to further enhance our understanding of the perspectives of our investors. The compensation relatedcompensation-related feedback from our stockholders is reviewed by our Compensation and Management Development Committee, or Compensation Committee, and we have made a number of compensation changes in response to past discussions with our stockholders.
stockholders, including changes to our long-term incentive equity award design described below. Governance-related feedback is reviewed by our Governance and
SinceNominating Committee and has also been a source of governance changes, including our 2014 annual meetingadoption of stockholders, we have engaged in outreach activities and discussions with stockholders comprising approximately 50%proxy access for director nominations. Insights from investors are reported to the full Board of our outstanding shares. Directors, or Board.
In 2014,2016, 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 any concerns of our stockholders. 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) initiated in 2008 that invites stockholders to provide feedback directly to the Compensation Committee regarding our executive compensation program.
LTI Equity Award Design Changes in 2016
In 2016, the Compensation Committee made the following LTI equity award design changes which take into account feedback from dialogue with our stockholders and are designed to drive operating performance and increase performance hurdles.
Weaddednon-GAAP financial measures of earnings per share, operating margin and operating expense, and maintained the relative TSR measure as a modifier forour 2016-2018 performance period performance award goal design. The new operating performance measures were chosen to drive operating performance in alignment with our operating performance commitments to stockholders through 2018, focus our executives on the transformation of our business and our operating efficiency and profitability, and address the challenges of a single performance metric for a full three-year period.
To better align our performance award program with those of our peers and to further encourage our executives to drive performance, we increased the maximum amount that can be earned for the 2016-2018 performance period from 150% to 200%.
To emphasize the importance of long-term growth and stock appreciation, we reintroducednon-qualified stock options, or stock options, into our LTI equity award mix. Like our restricted stock units, or RSUs, stock options generally vest in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date. Stock options directly align with stockholder interests as they only have value if the Company’s stock price increases after grant. The addition of stock options results in a more diversified mix of performance-based equity.
We revised our equity incentive plan design to require aminimum vesting period of no less than one year on 95% of equity awards granted.
62 ï 2017 Proxy Statement
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| COMPENSATION DISCUSSION AND ANALYSIS |
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Our 2016 Compensation Program Highlights and Objectives
ï 20152017 Proxy Statement 4163
| COMPENSATION DISCUSSION AND ANALYSIS |
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.
The vast majority of compensation for each NEO is “at risk” and based solely on our performance, with 88% of our CEO’s direct compensation and 81% of direct compensation of our other NEOs, earned solely based on our performance and paid in the form of performance units and annual cash incentives.
LTI Equity Awards (at risk and the largest component of compensation for our NEOs)(“At Risk”)
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OurequityPerformance Units. The Compensation Committee establishes the performance award grants are primarily performance-basedwith80%goal design at the commencement of LTI equity awards granted in the form of performance units and the remaining 20% in restricted stock units, or RSUs.
42 ï 2015 Proxy Statement
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| Performance Period | Relative TSR Multiplier | Absolute TSR | Payout as a % of Target | |||||||||
2012-2014 performance period | n/a | 185.7% | 150.0% | |||||||||
2011-2013 performance period | n/a | 114.4% | 122.7% | |||||||||
2010-2012 performance period(1) | 133.7% | 60.9% | 144.1% | |||||||||
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Beginning with the 2013-2015 performance period of ourthe performance award program,we measure our TSR compared withprogram. There is no guarantee of any value realized from the TSR of the S&P 500, a broad-based and realistic measure of our stockholders’ investment opportunities.If our absolute TSR is less than zero, the payout percentage shall not be greater than 100% to limit rewards in agrants as they are earned only if specific long-term 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 investment in our Company.goals are achieved.
Our RSUs are designedStock Options. Aligned with stockholder interests as they only have value if the Company’s stock price increases after grant.
Restricted Stock Units. Designed to encourage retention and long-term value creationas they generallycreation.
Stock options and RSUs vest over four years, with no vesting in the first year and vesting inthree approximately three equal annual installments on the second, third and fourth anniversaries of the grant date.
Performance Units Earned for the 2014-2016 Performance Period
| • | Our payout for the most recent 2014-2016 performance period was at 112.5% of target because our absolute TSR for this performance period (36.2%) resulted in our 56.2nd percentile ranking relative to the TSRs of the companies in the S&P 500 since the beginning of the performance period (January 31, 2014). |
Annual Cash Incentive Awards (at risk)(“At Risk” and Designed to Drive Execution of Our Strategic Priorities)
In 2016, we delivered strong financial results while making significant progress on our 2016 operating objectives and advancing our strategic priorities, which facilitate execution of our strategy. Our Compensation Committee annually approves Company performance goals for our Global Management Incentive Plan, or GMIP,that are designed to focus the Company’sour staff on delivering on our financial performance, operational objectives and rewardspecific priorities to drive annual performance againstand position us to execute on our strategy in the results of such goals.near- and longer-term. 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 thepre-established GMIP Company performance goals. Each year, the GMIP goals are tailored to focus on our financial performance, operational objectives and specific priorities.
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cash incentive awards at 159.5% of target bonus opportunity. | |||
ï 2015 Proxy Statement43
OurIncreased target bonus opportunities in 2016, to more closely approximate the Market Median, to have a greater proportion of cash compensation performance-based and “at risk,” and to foster a team approach. For 2016, we increased our Chief Executive Officer’s, or CEO’s, target annual cash incentives are earned based on achieving our financial growth and operational objectives that drive long-term growth and stockholder value. In 2014, we establishedincentive award opportunity from 140% to 150% of base salary for target total annual cash incentives based on our performance against our measuresand, each Executive Vice President target annual cash incentive award opportunity was increased to 100% of revenues (30%base salary (from 90%) and adjusted net income (30%) and a number of operational objectives designed to drive delivery of the best pipeline (25%) and delivery of specific annual priorities (15%).for 2016.
Base Salaries (the smallest component of compensation for our NEOs)
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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 3 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. Messrs. Meline, Kelly and Peacock are not included in the pie charts because Mr. Meline commenced employment with our Company on July 21, 2014, Mr. Kelly served in an NEO capacity for only a portion of 2014 and Mr. Peacock ceased service as our Chief Financial Officer as of January 10, 2014.
Our compensation practices are designed to be competitive and balanced.
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We have objective criteria for selection of our peer group and review our peer group annually. We draw our peers from biotechnology and pharmaceuticals companies as we believe they are our direct competitors for executive talent and have comparable enterprise requirements and complexity.
| (1) | Non-GAAP net income is reported and reconciled inAppendix B to this proxy statement, excluding the incremental benefit ($95 million) of excess tax benefits recognized arising from the adoption of a new accounting standard on share-based payments. |
4464 ï 20152017 Proxy Statement
| COMPENSATION DISCUSSION AND ANALYSIS |
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What we do
| ✓ | ||||
Target Median:We |
| ✓ | Clawback policy:Our Board is required 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. |
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| 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. | |||
| ✓ | ||||
Robust stock ownership and retention guidelines:We have | ||||
| ✓ | Minimum vesting periods:Our equity incentive plan provides that our equity awards are subject to a minimum vesting period of no less than one year on 95% of equity awards granted and our grants generally vest over four years, with no vesting in the first year and vesting in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date. |
| ✓ | Double-trigger in the event of a change of control, No taxgross-ups:We do not have “single-trigger” equity vesting acceleration upon a change of control for RSUs and stock options. |
| ✓ | Performance-based equity: Our LTI equity award grants are primarily (80%) performance-based. |
What we don’t do
× |
| |||
× | Nore-pricing or backdating:We have strong LTI equity award plans and policies that prohibitre-pricing or backdating of equity awards. | |||
| ||||
× | ||||
No special taxgross-ups:We do not provide taxgross-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. | ||||
| ||||
× | ||||
| ||||
| ||||
| No excessive perks:Our perquisites are limited to those with a clear business-related rationale. | |||
× | No employment agreements:We do not have employment contracts or guaranteed bonuses,other than in countries where they are required by law. | |||
× |
| |||
× | No defined benefit pension or supplemental executive retirement plan (SERP) benefitsor “above market” interest on deferred | |||
ï 20152017 Proxy Statement 4565
| COMPENSATION DISCUSSION AND ANALYSIS |
How Compensation Decisions Are Made For Our Named Executive Officers
Roles and Responsibilities | ||||
Compensation Committee
directors and reports to the | ||||
• | 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. | |||
• | Discusses succession plans for our CEO and other Senior Management annually. • 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. •Oversees the Board’s relationship with and response to stockholders on executive compensation matters and the Compensation Discussion and Analysis. | |||
| ||||
Consultant to the Compensation Committee
retained directly by the Compensation Committee
| ||||
• | Regularly attends Compensation Committee meetings, including meeting in executive session with the Compensation Committee. | |||
• | Provides advice and studies on the appropriateness and competitiveness of our compensation program relative to market practice | |||
• | Consults on executive compensation trends and developments. | |||
• | Consults and makes recommendations, when requested, on various compensation matters and | |||
• |
| |||
• | Works with management to assess the potential risks arising from our compensation policies and practices. |
CEO
President, Human Resources and other Company staff | |||
• | Conducts performance reviews | ||
• | Provides recommendations on the development of and succession planning for the members of Senior Management other than himself. |
4666 ï 20152017 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 2014 and to date in 2015.consultant. 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 forFor Our Named Executive Officers” and specifically provided consultation regarding regulatory updates, selection of our peer group, consultation on design changes for our LTI equity awards, 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 2014,2016, 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, uniquespecific scientific expertise to oversee research and development activities and the complex manufacturing requirements for biologic products. Further, the Compensation Committee believes that these very specificparticular 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 13 of the 15 companies in our peer group (10 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.
In July 2014,On an annual basis, Cook & Co. reviewedreviews our peer group with the Compensation Committee to determine whether it remainedremains appropriate. Based in part on recommendations from Cook & Co., as well as a review of the objective criteria described in the chart below, the Compensation Committee determined that no changes were necessary in 2016 as the peer group remained appropriate and continued to meet the following objective criteria from the universe of other pharmaceutical and biotechnology companies given that our relative size and positioning remains generally the same as the prior year:
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.
Therefore, no changes were made to the peer group in 2014 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.criteria.
ï 20152017 Proxy Statement 4767
| COMPENSATION DISCUSSION AND ANALYSIS |
2014How We Establish Our Peer Group
2016 Peer Group Companies Biotechnology and pharmaceutical companies with which we compete for executive talent. | ||||
| Objective Criteria Considered | 2016 Peer Group (Companies in blue also list Amgen as a peer) | |||
• 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(1); • Trailing four-quarter revenues between 0.25 and 4.0x that of Amgen’s revenues(1); • 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. | • AbbVie Inc. • Allergan plc • AstraZeneca plc • Biogen Inc. • Bristol-Myers Squibb Company • Celgene Corporation • Eli Lilly and Company • Gilead Sciences, Inc. • GlaxoSmithKline plc • Johnson & Johnson • Merck & Co., Inc. • Novartis AG • Pfizer Inc. • Roche Holding AG • Sanofi S.A. | |||
| (1) | For purposes of the 2016 peer group analyses: |
| 2015 Market Capitalization | 2015 Revenues(a) | |||||||||
Amgen
|
$122.5 billion | $ | 21.7 billion |
| ||||||
Relative Peer Group Position | 3rd Quartile (above median) |
| 2nd Quartile |
|
| |||||
The market capitalization of our peer group ranged between $33 billion and $258 billion determined as of the last trading day of 2013 as provided by ThomsonONE™. The 2013 revenues of our peer group ranged between $6.3 billion and $71.3 billion based on public filings. Amgen’s 2013 market capitalization and revenues were $86 billion and $18.7 billion, respectively. The median 2013 market capitalization and revenues of our peer group (not including Amgen) was $115 billion and $25.7 billion, respectively. We were between the 25th percentile and median relative to all of our peer group and in the range of median relative to our U.S. peers.
Peer Group Data
Our primary data sources for evaluating all elements of compensation for our CEO and other NEOs’ against the peer group in March 2014 were the 2013 Towers Watson Pharmaceutical Human Resources Association, or PHRA, Executive Compensation Survey (the 2013 Towers Survey), and the available data from proxy statements filed in 2013 with the SEC for our peer group. The 2013 Towers 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 2013 Towers 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 comparison of each NEO on a position or pay rank basis 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. For Mr. Bradway, Cook & Co. provides data to the Compensation Committee of the median and a range between the 25th percentile and 75th percentile of the specific compensation elements paid to CEOs in our peer group. In addition to the sources provided previously, for the determination of LTI equity awards, we also considered the Cook & Co. 2013 Survey of Long-Term Incentives.
In general, the “Market Median” is derived by averaging the values of the 2013 Towers Survey 50th percentile and the 2013 peer group proxy statement 50th percentile, except for Mr. Bradway as our CEO. The Market Median shown for Mr. Bradway was the median of the specific compensation elements paid to CEOs in our peer group, as reported by Cook & Co. from proxy statement filings and Form 8-K filings. Mr. Hooper’s position was not well-represented in either the 2013 Towers Survey or peer group proxy statements and, accordingly, based on his position as Executive Vice President, Global Commercial Operations with its global scope and span as well as degree of importance to the
|
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 |
Our market capitalization as of July 22, 2016 (the date on which the Compensation Committee considered our peer group) was as follows:
4868 ï 20152017 Proxy Statement
| COMPENSATION DISCUSSION AND ANALYSIS |
Company, Mr. Hooper was matched to the medianPeer Group Data Sources
Our primary data sources for evaluating all elements of the second highest paid NEOs in the 2013 Towers Survey. No market comparable positioncompensation for our CEO is data was available for Mr. Balachandran because his position as Executive Vice President, Operations had no comparable position included in the 2013 Towers Survey or peer group proxy statementcompiled by Cook & Co. from SEC filings asof our peer group for the 25th, 50th and 75th percentiles of the specific compensation elements paid to CEOs in our peer group (and the 85th percentile for LTI equity awards). For our other NEOs, our primary data sources for evaluating all elements of compensation are the Willis Towers Watson Pharmaceutical Human Resources Association Executive Compensation Survey, or PHRA Survey, which provides peer company pharmaceutical data, augmented by the available data from proxy statements filed with the SEC for biotechnology companies did not have individualsin our peer group.
in similarly global positions. Mr. Balachandran’sSolely for the determination of LTI equity awards, we also provide data from the Cook & Co. Survey of Long-Term Incentives (Cook & Co. Survey). Based on this data, the Compensation Committee is presented with a comparison of each NEO on a position was unique, as compared to positions reported inor pay rank basis with an analysis of each element of direct compensation for such NEO at the 2013 Towers50th and 75th percentile of the peer group. Because PHRA Survey and proxy statement data is only available for the peer group proxy statements, because it includes global oversight of all ofprevious calendar year, consistent with generally accepted practice, base pay data is aged forward to the Company’s manufacturing operations, qualitycurrent year based on expected salary movement. Annual cash incentive award and product and process engineering.LTI equity award market data are not adjusted for aging.
The “Market Median” is determined for our CEO and our other NEOs by the Compensation Committee in March of each year as follows:
| Market Median | ||||
CEO(compiled by Cook & Co.) | Other NEOs | |||
• 50th percentile of each compensation element paid to | • Average of the 50th percentile of each compensation element of our peer group from the PHRA Survey (pharmaceutical peers) and proxy statements (biotechnology peers) in the previous year (with base pay data aged forward to the current year). | |||
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:magnitude: 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 elements 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 executive officersNEOs 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 72%75% of our CEO’s target compensation and 64% of target compensation for our other NEOs. In addition, while being mindful of dilution (see below), 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. 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.
Company Continues to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards – Monitoring Dilution and Annual Equity Usage
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
ï 2017 Proxy Statement69
| COMPENSATION DISCUSSION AND ANALYSIS |
within the Company targeting the 50th percentile of our peer group for levels for which equity data is broadly available. For certain lower job levels where data is not as comprehensive, we have developed guidelines that trendin-line with available data and consider internal equity. The Compensation Committee sets an LTI equity award budget that isat approximately at the 50th percentile or median, of our peer group. 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 practices because, while the Compensation Committee supports a broad-based equity plan to align our staff members with our stockholders, based on the rates at which we grant LTI equity awards the Compensation Committee also strives to limit the amount of stockholder dilution to that which stockholders would be expectedexpect to be experienced by stockholders ofexperience with our peer group. TheWe regularly review dilution and the rates at which we grant LTI equity awards and itsthe resulting potential dilutive effect is consistent with our peer group levels and has decreased over the last five years.
LTI equity award grant guidelines for each job level within the Company are then set based on the size of the annual total LTI equity award budget. We believeyears and is consistent with 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.peer group.
Long-Term Incentive Equity Award Composition
As part of its annual evaluation 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 diversified equity program, the Compensation Committee determined tore-introduce stock options into our LTI equity award mix at executive levels in 2016. The Compensation Committee believes that stock options are an important addition to available forms of performance-based LTI equity awards grantedgiven the direct link between the value of stock
price appreciation to our NEOs in 2014 consisted of 80% performance unitsstockholders and 20% RSUs.the compensation value delivered by stock option awards to our executives.
LTI Equity Award Allocation
This allocation resultsOn a value basis, in the substantial majority2016 80% of our annual equity compensation being earned based on our achieved performance. We believe it is importantaward value continued to maintain a relatively small percentage of equity awardsbe delivered in the form of RSUs to incentivize retention. This composition ofperformance-based LTI equity awards also facilitates a more efficient useconsisting of 50% in the shares available under our LTI equity award plan and minimizes dilution as fewer shares are used when grantingform of performance units and RSUs as compared to stock options. Performance units are generally earned(earned at the end of a generally three year performance period) and 30% in the three-yearform of stock options. Previously performance periodunits comprised 80% of the equity mix. Time-vested RSUs, designed to incentivize retention, continued to make up the extent to which the performance
ï 2015 Proxy Statement49
goals for the applicable period are met. Ourremaining 20% of value. Both stock options and our time-vested RSUs generally vest over four years, with no vesting in the first year and vesting in three 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). Thisdate. The delay in the commencement of RSU vesting further emphasizes the long-term performance focus of our LTI equity award program and enhances retention.
The Compensation Committee believes that this equity award mix presents a balanced approach to executive LTI equity awards and is well aligned with stockholder interests and pay for performance.
Value of Long-Term Incentive Equity Awards Granted to Named Executive Officers in 20142016
In December 2013,March 2016, the Compensation Committee considered executive LTI equity award grants for 2014. To determine 2014determined executive LTI equity award grant compensation,values for 2016. In its review, the Compensation Committee comparedconsidered a range between the value of the 2014 annual LTI equity awards for each NEO being recommended by management to the 5025th and 7585th 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 range between 50th and 75th percentiles of our peer group for each available NEO position (as previously described under “Peer Group Data”).position. The Compensation Committee also took into account the Company’s performance, the
70 ï 2017 Proxy Statement
| COMPENSATION DISCUSSION AND ANALYSIS |
individual’s performance in their role and historical grant levels into account when determining individual grants.
The Compensation Committee continued to consider the value of the LTI equity awards granted in 2016 relative to the Market Median with the result that the 2016 grant value for our CEO
In reviewingwas slightly above Market Median (3.5%) to increase the peer groupproportion of the CEO’s compensation “at risk” and the remaining NEO grant values were slightly less than Market Median (from -0.4% to -7.1%).
2016 Annual Long-Term Incentive Equity Awards
Based on a review of Company and executive performance and market data, the Compensation Committee took into accountdetermined to grant the reductionfollowing LTI equity awards to our CEO and the other NEOs in March 2016, with an effective grant date of May 3, 2016, the median valuesthird business day after the announcement of our peer group. Also,first quarter 2016 earnings results. The Compensation Committee approved the aggregate LTI equity award grant value, with the exact number of performance units, stock options and RSUs determined based on the fair value of such awards in proportion to the 50% performance units/30% stock options/20% RSUs value allocation on the grant date. For more information regarding the determination of the Market Median, see “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources” previously discussed.
| Named Executive Officer | Performance Units(1) ($) | Stock Options ($) | Restricted Stock Units ($) | Total Equity Value Granted ($) | 2015 Market Median ($) | Difference vs. Market Median Over/ (Under) (%) | ||||||||||||||||||
Robert A. Bradway
|
|
5,500,000
|
|
|
3,300,000
|
|
|
2,200,000
|
|
|
11,000,000
|
|
|
10,632,000
|
|
|
3.5
|
| ||||||
Anthony C. Hooper
|
|
2,000,000
|
|
|
1,200,000
|
|
|
800,000
|
|
|
4,000,000
|
|
|
4,016,624
|
|
|
(0.4
|
)
| ||||||
David W. Meline
|
|
1,750,000
|
|
|
1,050,000
|
|
|
700,000
|
|
|
3,500,000
|
|
|
3,769,094
|
|
|
(7.1
|
)
| ||||||
Sean E. Harper
|
|
1,750,000
|
|
|
1,050,000
|
|
|
700,000
|
|
|
3,500,000
|
|
|
3,552,994
|
|
|
(1.5
|
)
| ||||||
Jonathan P. Graham
|
|
1,150,000
|
|
|
690,000
|
|
|
460,000
|
|
|
2,300,000
|
|
|
2,378,426
|
|
|
(3.3
|
)
| ||||||
| (1) | The 2016-2018 performance period runs from January 1, 2016 through December 31, 2018. |
Based on the March 2016 Compensation Committee review of the Market Median, the Compensation Committee awarded Mr. Bradway a 2016 LTI equity award grant valued at $11 million, which is approximately 7.8% higher than the value of his grant in 2015 and slightly above the Market Median. After considering the effect of the 2016 LTI equity award grant on Mr. Bradway’s target total direct compensation, the Compensation Committee determined that awarding a grant value for 2016 LTI equity slightly above the Market Median was appropriate as it retains the substantial majority of Mr. Bradway’s compensation as “at risk” and performance-based and also achieved the intent of the Compensation Committee for the CEO’s target total direct compensation to approximate the Market Median withinthree-to-five years of Mr. Bradway’s promotion to that role in May 2012.
The March 2016 Compensation Committee review of the Market Median also supported increased 2016 LTI equity award values for Executive Vice President roles as Market
Median LTI equity award grant values had increased for these roles. While the Compensation Committee believes that internal equity is an important consideration for building a team approach, in reviewing the Market Median data, the Compensation Committee noted the difference inhigher LTI equity award Market Median values for ourthe Executive Vice President, roles (or their equivalents).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 reduced valuesa higher grant value for LTI equity award grants made in 2014 from those made in 2013Mr. Hooper that was matched to the Market Median for all NEOs, other thanhis role of Executive Vice President, Global Commercial Operations. The Compensation Committee determined that this increase of approximately 14% was appropriate, not only because of its Market Median competitiveness, but also because of the CEO,scope and span of Mr. Hooper’s responsibility and the level of importance of his role to respond to lower median values among our peer group for those roles. Also, the Company. The Compensation Committee approved slightly higherequal grant values for Mr. HooperMeline and Dr. Harper than granted to Mr. Balachandran because Mr. Hooper and Dr. Harper are viewed as having positions that have comparable impact totake into account the execution of the Company’s strategy, whereas Mr. Balachandran’s role was viewed to be more comparable to the Chief Financial Officer market data available shown in the table below. The Compensation Committee awarded Mr. Bradway a LTI equity award grant valued higher than in 2013 to maintain median positioning against our peer group for this position as the 2013 median for the CEO position increased over the prior year.similar
2014 Long-Term Incentiveï 2017 Proxy Statement71
| COMPENSATION DISCUSSION AND ANALYSIS |
strategic impact of their roles to the Company. These values are slightly less than the Market Median for each role and reflects Mr. Meline’s relative newness in this position at Amgen. Mr. Graham’s relatively lower LTI equity award reflects his Senior Vice President role and is also slightly less than Market Median for his position given his relative newness to this position at Amgen.
Performance Units (50% of LTI Equity AwardsAwards)
Performance units are rights to earn shares of our Common Stock, based onpre-established performance goals achieved over a performance period of generally three years. The number of performance units earned is determined by our performance as measured against thepre-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. Given the design of our performance award program, there is no guarantee of any value realized from grants of performance units.
Performance Award Program—Performance Units Earned for the 2014-2016 Performance Period
Performance units as they are dependent on our relative TSR. The Compensation Committee determined to grantfor the following LTI equity awards to our CEO2014-2016 performance period, which ended January 31, 2017, were earned, certified and the other NEOsconverted into shares of Common Stock in December 2013, with an effective grant date in January 2014. The Compensation Committee approves the aggregate grant value, with the exact number of performance units and RSUs determinedMarch 2017 based on an earned payout percentage of 112.5% resulting from the fair valueCompany’s three-year absolute TSR of such awards36.2% ranking in the 80%56.2nd percentile relative to the TSRs of the companies in the S&P 500 as of the beginning of the performance units/20% RSUs proportion on the date of grant. For more information regarding the determination of Market Median and the peer group data reviewed, see “Peer Group Data” previously discussed.period (January 31, 2014).
2014-2016 Performance Period Program Design*
| Named Executive Officer | Performance ($) | Restricted ($) | Total Equity ($) | 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 | 2,400,000 | 600,000 | 3,000,000 | 3,754,503 | (20.1 | ) | ||||||||||||||
David W. Meline | (1) | (1) | (1) | (1) | n/a | |||||||||||||||
Sean E. Harper | 2,400,000 | 600,000 | 3,000,000 | 2,756,373 | 8.8 | |||||||||||||||
Madhavan Balachandran | 2,240,000 | 560,000 | 2,800,000 | 2,839,588 | (1.4 | ) | ||||||||||||||
Michael A. Kelly | 280,000 | (2) | 1,370,000 | (2) | 1,650,000 | (2) | n/a | n/a | ||||||||||||
Jonathan M. Peacock | n/a | (3) | n/a | (3) | n/a | (3) | (3) | n/a | ||||||||||||
|
5072 ï 20152017 Proxy Statement
| COMPENSATION DISCUSSION AND ANALYSIS |
|
|
Mr. Meline’s New Hire Equity Grant
Mr. Meline was appointed to serve as the Company’s Chief Financial Officer effective July 21, 2014. Mr. Meline received an RSU grant with 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 LTI equity awards that are in alignment with the Company’s stockholder interests.
Mr. Kelly’s Equity Grants
Mr. Kelly was appointed to serve as the Company’s Acting Chief Financial Officer on January 10, 2014. In connection with Mr. Kelly being asked to serve in this important capacity while the Company recruited a Chief Financial Officer, Mr. Kelly received a special RSU grant the value of which was $1,000,000 to compensate Mr. Kelly for his service as Acting Chief Financial Officer for the amount of time it was anticipated the search for a Chief Financial Officer would take. The first 50% of such grant vested on June 30, 2014 and the remaining 50% will vest on June 30, 2015, subject to Mr. Kelly’s continued service with the Company. In April 2014, in connection with our annual LTI equity award grants to all staff members, Mr. Kelly received his annual grant valued at $350,000 (with performance units valued at $280,000 and RSUs valued at $70,000), commensurate with Vice President job level LTI equity award values. Mr. Kelly served as Acting Chief Financial Officer until Mr. Meline’s appointment to Chief Financial Officer in July 2014 and assisted in the transition of Mr. Meline.
After Mr. Meline’s appointment to Chief Financial Officer, Mr. Kelly was appointed to lead Global Business Services as a Vice President. In October 2014, Mr. Kelly was promoted to Senior Vice President, Global Business Services effective January 5, 2015. Based on the scope and strategic importance of Mr. Kelly’s new position, he received a promotion RSU grant valued at $300,000 in October 2014. This grant, when coupled with his 2014 annual grant of $350,000, brought his total annual grant level commensurate with typical Senior Vice President job level LTI equity award values.
Performance Units
The Compensation Committee grants performance units to tie actual compensation earned from LTI equity awards directly to our long-term performance. Performance units are rights to earn shares of our Common Stock, based on pre-established performance goals achieved over a performance period, generally three years. Each performance unit earned entitles the participant to one share of the Company’s Common Stock. Performance units granted to our NEOs in 2014 represented 80% in value of their total LTI equity awards, ensuring that a significant proportion of equity compensation is earned based on the performance achieved by the Company.
Performance Award Program—Performance Units Granted in 2014Payout Calculation for the 2014-2016 Performance Period
The
2014-2016 Performance Period Performance Units Earned
Our actual performance results (the 56.2nd percentile, or above the median) for the 2014-2016 performance period that ended January 31, 2017 resulted in the following number of shares of Common Stock being earned under our performance award program for this performance period. Each earned performance unit converts to one share of Common Stock upon the payout date of March 24, 2017.
| Named Executive Officer | | Performance Units Value Granted (Target) ($) |
| | Number of Performance Units Granted (#) |
| | Number of Shares of our Common Stock Earned (#) | (1)
| |||
Robert A. Bradway
|
|
7,200,000
|
|
|
57,738
|
|
|
69,727
|
| |||
Anthony C. Hooper
|
|
2,400,000
|
|
|
19,246
|
|
|
23,241
|
| |||
David W. Meline
|
|
|
(2)
|
|
|
(2)
|
|
|
(2)
| |||
Sean E. Harper
|
|
2,400,000
|
|
|
19,246
|
|
|
23,241
|
| |||
Jonathan P. Graham
|
|
|
(2)
|
|
|
(2)
|
|
|
(2)
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| (1) | Includes dividend equivalents earned on these amounts rounded down to the nearest whole number of shares (excluding fractional shares paid in cash). |
| (2) | Messrs. Meline and Graham commenced employment with the Company after the participants for the 2014-2016 performance period had been determined and, as such, they did not receive any performance units for the 2014-2016 performance period. |
ï 2017 Proxy Statement73
| COMPENSATION DISCUSSION AND ANALYSIS |
New Performance Award Goal Design—Performance Units Granted in 2016 for the 2016–2018 Performance Period
To ensure that the performance award program continues to strongly align with the interests of our stockholders and motivates management to long-term value creation, the Compensation Committee regularly reviews and considers whether to update the performance award goal design with input from management and Cook & Co. This is to ensure thatBased on review and deliberation in December 2015 and March 2016, and having considered the performance award program continues to strongly align with the interestsgoal designs of our stockholders. Based on such review, in December 2013,peer group and stockholder feedback, the Compensation Committee approved athe 2016-2018 performance period performance award goal design that retained relative TSR as a modifier to continue to tie these awards to our market performance and stockholder interests while adding the following operating performance measures to drive operational performance and increase performance hurdles:
| • | Non-GAAP earnings per share(1) (EPS) growth; |
| • | Non-GAAP operating margin(1); and |
| • | Non-GAAP operating expense(1). |
The new operating performance measures were chosen to:
Drive operating performance in alignment with our operating performance commitments to stockholders through 2018;
Focus our executives on the transformation of our business and our operating efficiency and profitability; and
Address the challenges of a single performance metric for a full three-year period.
The three operating measures are weighted equally(one-third per measure) and calculated againstpre-established targets for each year in the 2014-20162016-2018 performance period. All operating goals (for each year) are established at the commencement of the three year performance period. At the end of the performance period, substantially identicalthe final average operating measure percentages for each of the three years are averaged, resulting in a total operating measures score that can range from 50% to that of last year’s performance awards (i.e.,150% for the 2013-2015 performance period)maximum performance. The total operating measures score is then modified up or down by up to 50 percentage points based on our TSR performance ranking relative to the relative rankingTSRs from the grant date through the end of the Company’s three-year TSR results against the three-year TSR resultsperformance period of the companies listed in the S&P 500 as(the relative TSR modifier) resulting in a payout range of the grant date.0% to 200% of target awards granted. The continued use of this designTSR modifier is based on the belief thatlimited to target (zero) where our absolute TSR is less than zero to limit reward in a comparison toperformance period in which we perform better than the S&P 500 companies:for the period but investors do not recognize stock price growth.
Allows comparison to broader market performance indicators which is a realistic representation of our stockholders’ investment opportunities;
Addresses the challenges of using a single performance metric (TSR) given the broad comparator group; and
| (1) | Non-GAAP EPS,Non-GAAP operating margin andNon-GAAP operating expense for purposes of 2016 for the 2016-2018 performance period are reported and reconciled inAppendix B to this proxy statement.Non-GAAP for purposes of each of the years of the 2016-2018 performance period was defined as earnings per share, operating margin and operating expense under GAAP, excluding certain items, net of tax, related to acquisitions, restructuring and certain other items. |
74 ï 2017 Proxy Statement
Tests our performance against our competition for equity investor capital.
| COMPENSATION DISCUSSION AND ANALYSIS |
2016-2018 Performance Period Performance Award Goal Calculation
| (1) | Non-GAAP EPS,Non-GAAP Operating Margin andNon-GAAP Operating Expense for purposes of 2016 with respect to the 2016-2018 performance period are as reported and reconciled inAppendix B to this proxy statement. |
ï 20152017 Proxy Statement 5175
| COMPENSATION DISCUSSION AND ANALYSIS |
Change to Performance Award Goal Design—2017–2019 Performance Period
The target payoutAs part 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 rankingits regular review and 0% payout is based on bottom ranking, with linear interpolation between bottom ranking and 75th percentile ranking resulting in payouts ranging from 0% to 150% of the target performance units granted. However, in the event our absolute TSR is less than zero, the payout percentage shall 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 but investors do not recognize growth in their investment in our Company.
The grant date of LTI equity awards to our executive management (comprised of Senior Vice Presidents and above), including our NEOs, is the third business day after the announcement of our annual results in January and the performance period commences on the grant date. The stock prices for TSR measurements is determined using the 20 trading days starting on the grant date and the last 20 trading daysconsideration 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—2015–2017 Performance Period
In December 2014,award program, the Compensation Committee decided to retain the design of theevaluated potential performance goalsaward goal designs for the performance units granted for the 2015-20172017-2019 performance period as previously described.
Performance Award Program—Performance Units Earned for the Performance Period Ending in 2014
Performance units for the 2012-2014 performance period were earned(January 1, 2017 to December 31, 2019) and converted into shares of Common Stock in March 2015, calculated as set forth in the table below using a payout percentage resulting from the comparison of our three-year TSR (185.7%) to the average three-year TSR of the companies in the comparator group for this performance period (125.8%). The comparator group for this performance period was our peer group at the time the performance goals were set in 2012. However, Abbott Laboratories, a memberreviewed those of our peer group with input from management and Cook & Co. in 2012, spun off its pharmaceutical business into a new company called AbbVie Inc. in 2013. As a result of the Abbott Laboratories spin-off, in compliance with pre-established performance goalsDecember 2016 and Section 162(m) of the Internal Revenue Code, or Section 162(m), theMarch 2017. The Compensation Committee determined that AbbVie Inc. should replace Abbott Laboratories on a go-forward basis and that we would use a weighted TSR of 47.85% Abbott Laboratories (the proportion ofconstructed the 2017-2019 performance period before the spin-off) and 52.15% AbbVie Inc. starting January 1, 2013, the effective date of the spin-off.
For the awards granted in 2012 whose performance period ended December 31, 2014, the payout percentage equals 100% plus two times the TSR percentage difference of our TSR less the average of the TSRs of our comparator group companies which may be a positive or negative amount, with actual results shown in the table below. The number of performance units earned at the end of the performance period ranges from 0% to a maximum of 150% of the target performance units granted.
52 ï 2015 Proxy Statement
2012-2014 Performance Award Program Results and Payouts
The performance results and performance units earned for our 2012-2014 performance period are as follows:
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Our actual performance results for the performance periods that ended in 2014 resulted in the following value of Common Stock being earned under our performance award program for the 2012-2014 performance period:
| Named Executive Officer | Performance Units ($) | Shares (#) | Shares (#) | |||||||||
Robert A. Bradway | 6,000,000 | 83,752 | 125,628 | |||||||||
Anthony C. Hooper | 2,480,000 | 34,617 | 51,925 | |||||||||
David W. Meline | (2) | (2) | (2) | |||||||||
Sean E. Harper | 2,480,000 | 34,617 | 51,925 | |||||||||
Madhavan Balachandran | 720,000 | 10,050 | 15,075 | |||||||||
Michael A. Kelly(3) | 405,312 | 4,800 | 7,200 | |||||||||
Jonathan M. Peacock(4) | 2,480,000 | 34,617 | 0 | |||||||||
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Initial Hire Performance Units for Mr. Hooper
To compensate Mr. Hooper for equity forfeited 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, certain performance units were awarded upon his hiring in October 2011. The last of these new hire performance unit awards had a performance period running from his hire date of October 27, 2011 and ending on December 31, 2014 with a grant of 35,185 performance units. The performance award goal design for this
to leverage the 2016-2018 performance unit award is identical to thatperiod goal design, retaining most of the 2012-2014elements of the 2016-2018 performance period previously discussed, including a maximum payout of 150%. These performance units were calculated using a payout percentage that is based upon our three-year TSR (204.2%)goal design but changing one operating measure for the period compared to the average three-year TSRlast year of the companies inthree year performance period. The Compensation Committee retained the comparator groupsame threenon-GAAP operating measures (EPS growth, operating margin and operating expense) for the first and second years of the 2017-2019 performance period. For the third year of this performance period, (139.5%) and resulted in a payout percentage that was limited to the maximum of 150%, or 52,777 performance units.
ï 2015 Proxy Statement53
Value of Long-Term Incentive Equity Awards Granted to Named Executive Officers in 2015
In December 2014, the Compensation Committee considered executivereplacednon-GAAP operating expense withnon-GAAP return on investment of capital, or ROIC. The Compensation Committee’s replacement ofnon-GAAP operating expense withnon-GAAP ROIC in the third year of the 2017-2019 performance period is designed to support our transformation strategic priority to deliver an efficient, disciplined business model beyond 2018. The operating measures continue to be weighted equally(one-third per measure) and are measured against targets for each year in the 2017-2019 performance period. All operating goals are established at the commencement of the three year performance period.
Stock Options
Commencing with 2016, stock options comprise 30% of our LTI equity award grants for 2015NEOs to emphasize the importance of achieving long-term growth and compared the proposedalign with stockholder interests as stock options only have value of the 2015 annual LTI equity awards for each NEO being recommended by management to the 50th and 75th percentile of the peer group for each NEO position and between the 35th and 85th percentile ofif the Company’s peer group with respect to our CEO (as previously described under “Peer Group Data”). The Compensation Committee also tookstock price increases after the Company’s and the individual’s performance into account when determining individual grants. In reviewing the peer group market data, the Compensation Committee determined that the peer group data supported greater differentiation among LTI equity award values in 2015 for Executive Vice President roles. As such, Mr. Hooper received an increased LTI equity award for 2015 in response to the higher Market Median based on the second highest paid NEOs in 2014 peer group proxy statements andgrant.
Mr. Hooper’s role in the 2014 Towers Survey. Dr. Harper received the same LTI equity award grant as the prior year, consistent with the Market Median for his role. Mr. Meline also received an LTI equity award grant approximately at the Market Median for his role. Additionally, although more data was available for the 2015 LTI equity award for Mr. Balachandran than at the time of the 2014 LTI equity award, management and the Compensation Committee believe that Mr. Balachandran’s position continues to be unique because it includes global oversight of all of the Company’s manufacturing operations, quality, and product and process engineering. As such, this position is still not well-represented in either the peer group proxy statements or the 2014 Towers Survey because this data does not have individuals in similarly global positions. Accordingly, given his strategic importance and pay ranking within our Company, the Compensation Committee determined to set Mr. Balachandran’s LTI equity award level equal to his grant from the previous year.
2015 Long-Term Incentive Equity Award Grants
The Compensation Committee approved the following LTI equity award values to our CEO and the other NEOs in December 2014 for grant in January 2015. Mr. Peacock ceased service as our Chief Financial Officer as of January 10, 2014 and terminated employment prior to the December 2014 grant decisions. For more information regarding the determination of Market Median and the peer group data reviewed, see “Peer Group Data” previously described.
| Named Executive Officer | Performance Units ($) | Restricted Stock Units ($) | Total Equity Value Granted ($) | 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(1) | 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 | (4) | 0.9 | ||||||||||||||
Sean E. Harper | 2,400,000 | 600,000 | 3,000,000 | 2,921,167 | (4) | 2.7 | ||||||||||||||
Madhavan Balachandran(2) | 2,240,000 | 560,000 | 2,800,000 | 2,158,919 | (4) | 29.7 | ||||||||||||||
Michael A. Kelly(3) | 560,000 | 140,000 | 700,000 | n/a | n/a | |||||||||||||||
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54 ï 2015 Proxy Statement
Restricted Stock Units
Time-vestedConsistent with our focus on performance-based equity, 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 offor each vested 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 RSUs 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
WeRSUs and performance units have dividend equivalent rights on RSUs and performance units.rights. Such dividend equivalents are payable only when, and to the extent, such awardsthe underlying RSUs and performance units 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. Stock options do not have dividend equivalent rights.
Minimum Vesting Period of One Year
Mindful of stockholder concerns and best practices, our equity incentive plan requires that at least 95% of all equity awards, including RSUs, restricted stock, stock options, performance awards, and dividend equivalents granted to staff members (including NEOs) will be subject to a minimum vesting period of no less than one year. Our annual stock option and RSU grants generally vest over four years in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date. This delayed vesting schedule further underscores the long-term focus of our LTI equity award program and enhances the retention of staff members.
Long-Term Incentive Equity Awards Granted to Named Executive Officers in 2017
In March 2017, the Compensation Committee reviewed the LTI equity award grant values proposed to be granted to NEOs in 2017. The Compensation Committee determined to continue to align the value of the LTI equity awards granted in 2017 to approximate the Market Median. The Compensation Committee determined to increase Mr. Bradway’s LTI equity award from $11 million to $12 million which is slightly above the Market Median (4.3%) and positions Mr. Bradway’s target total direct compensation slightly (1%) above Market Median and retains the highest proportion of compensation in “at risk” and performance-based compensation. The Compensation Committee granted Messrs. Hooper and Meline the same LTI equity award values that they had received in 2016 as this aligned them with the Market Median. The Compensation Committee determined to increase Dr. Harper’s LTI equity award value from
76 ï 2017 Proxy Statement
| COMPENSATION DISCUSSION AND ANALYSIS |
$3.5 million in 2016 to $3.7 million in 2017 and Mr. Graham’s LTI equity award value from $2.3 million in 2016 to $2.5 million in 2017 as these increases positioned such grant values at and closer to the Market Median for their respective roles.
Annual Cash Incentive Awards
Executive Incentive Plan
Annual cash incentive awards to our NEOs are generally made under our stockholder approvedstockholder-approved EIP, which employs a stockholder approved formula that establishes a maximum award possible for each participant based on our adjustednon-GAAP net income.income(1). 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 based on thepre-established Company performance goals underfor the year designed to advance our GMIP. Thisstrategic priorities. In confirming 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. Historically, and in 2014, the Compensation Committee has paid well below the maximum award permitted under the EIP and consistent with the results warranted by our performance under our Company goals. 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.year.
No later than the first 90 days of the calendar year, the Compensation Committee determines for the EIP participants, the EIP definition of adjustednon-GAAP net income(1), the maximum award payable tofor each participant, under the EIP, the target annual cash incentive award opportunities underand, for the EIP, as a percentage of base salary,Global Management Incentive Plan, or GMIP, and Global Performance Incentive Plan, or GPIP, the GMIP Company performance goals and the weightings and the percentages payable for threshold, target and maximum performance under the GMIP.performance.
For 2014, Messrs. Bradway, Hooper, Balachandran and Kelly and Dr. Harper were2016, 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 adjustedexpressed as the EIPnon-GAAP net income as defined in the EIP(1) (0.125% definition and, consistent with past years, was 0.125% for our CEO, 0.075% for each of the Executive Vice President NEOs and 0.05% for Mr. Kelly). In 2014, Mr. Meline was a participantthe Senior Vice President NEO. Historically, and in the GMIP because he was not an employee at the time participants in the EIP were determined. Mr. Peacock left the Company prior to the time EIP payments were made and he did not receive any cash incentive award for 2014. In 2014,2016, the Compensation Committee continued itshas paid well below the maximum award permitted under the EIP based on a practice of exercising negative discretion from the calculated EIP maximum award payable to each individualparticipant by using the GMIP Company
performance goals composite score as applied to the participant’s target annual cash incentive award opportunity in making its determination of thefor actual award amount paid. Annualawards.
Target Incentive Opportunity
The target annual cash incentive awards are paid in Marchaward opportunity for Mr. Bradway was increased for 2016 from 140% to 150% as Mr. Bradway’s 2015 target total annual cash compensation approximated the 25th percentile of our peer group and the year followingCompensation Committee wanted his target total annual cash compensation to more closely align with the Market Median of our peer group, while continuing to emphasize compensation that is “at risk” and performance-based. Following the 2016 changes made to Mr. Bradway’s compensation, his total target annual cash compensation remained below the Market Median. For our Executive Vice Presidents, to also align with the Market Median, continue to emphasize compensation that is “at risk” and performance-based, and promote internal equity and 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%). As a Senior Vice President, Mr. Graham’s target annual cash incentive award opportunity of 80% of base salary was maintained for 2016 as it aligned with the Market Median for his role.
2016 Company Performance Goals
The 2016 Company performance period and certification of the resulting payoutsgoals approved by the Compensation Committee.Committee were:
“Deliver Results” goals (70%):
| - | “Revenues” and“Non-GAAP Net Income(1)” (60%) are equally focused ontop- and bottom-line growth and were assigned the largest target weighting with each element contributing up to 30% each, consistent with the fundamental importance of financial performance to us and our stockholders in both the near- and longer-term. |
| - | “Execute Product and Delivery System Launches” was assigned 10% and focused on executing on our key innovative product and delivery systems launched in 2015. |
| (1) | For |
ï 20152017 Proxy Statement 5577
| COMPENSATION DISCUSSION AND ANALYSIS |
Consistent with the prior year, the target annual cash incentive award opportunity for 2014 for Mr. Bradway was 130%, and for each Executive Vice President was 90%, of base salary. The target annual cash incentive award opportunity for Mr. Bradway and each Executive Vice President aligns us competitively with our peer group and, on average, falls slightly below the median of our peer group. Mr. Kelly’s target annual cash incentive award opportunity was 55% of base salary as his bonus opportunity had been increased from 40% in recognition of his service in the capacity of Acting Chief Financial Officer until Mr. Meline’s appointment to Chief Financial Officer.
2014 GMIP Company Performance Goals
The GMIP Company performance“Progress Innovative Pipeline” goals approved by the Compensation Committee for 2014 were “Deliver Financially” (60% weighting), “Deliver the Best Pipeline” (25% weighting), and “Deliver Annual Priorities” (15% 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 near- and longer-term success:
The 2014 “Deliver Financially” goals (60%(30%) 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.:
“Deliver the Best Pipeline” goals (25%) 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,
| - | “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%) which measure 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. |
“Deliver Annual Priorities” (15%) was chosenWhile all of the goals measure single–year performance, taken as a 2014 goal categorywhole, they are intended to highlight the importance of accomplishing a series of current-year objectives topositively position us for thebothnear- and longer-term to execute undersuccess, delivery on our Full Potential Program, develop drug delivery devices
strategic priorities and deliver improvements in the area of decision making.
All of these goal categories are intended to create stockholder value in the near- and longer-term.value. There are no payouts for below-threshold performance on the two financial metrics. ThresholdMeasurements of performance for thenon-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.
For 2014, to reduce Annual cash incentive awards are paid in March of the GMIP Companyyear following the annual performance goal score during yearsperiod and certification of high financial over-achievement,the resulting payouts by the Compensation Committee widened the minimum and maximum ranges of performance. In addition, the maximum payout for the financial goals for 2014 requires higher performance over plan than prior years.Committee.
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56 ï 2015 Proxy Statement
2014 GMIP2016 Company Performance Goals and Results
The table below illustrates the weighting of each goal, the goals established and our actual performance for 2014:2016:
| Deliver Results (70% weighting) | Weighted Score Achieved 99.0% | |||||||||||||||||
| Financial Goals (60%) ($ In Millions) | Threshold | Target | Maximum | Achieved | ||||||||||||||
| Revenues (30%) | $20,900 | $22,330 | $24,120 | | $22,991 139.7% |
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| Non-GAAP Net Income(1) (30%) | $7,410 | $8,235 | $9,225 | | $8,690 147.5% |
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Execute Product and Delivery System Launches Goal (10%) | Results | Achieved | |||||||||||||||||
• Neulasta®On-Pro® Kit—as we exited 2016, utilization of the Kit in the U.S. continues to grow | 127.8% | ||||||||||||||||||
• Repatha®—drove market share, particularly in the E.U. | |||||||||||||||||||
• Kyprolis®—drove international growth | |||||||||||||||||||
| Progress Innovative Pipeline (30% weighting) | Weighted Score Achieved 60.5% | ||||||||||||||||||
| Goals | Results | Achieved | |||||||||||||||||
| Execute Key Clinical Studies and Regulatory Filings (20%) | • Executed clinical studies for Repatha®, erenumab, XGEVA®, and omecamtiv mecarbil | 190.0% | |||||||||||||||||
| • Completed regulatory filings for Kyprolis®, Repatha®, Vectibix®, BLINCYTO®, AMJEVITA™ (biosimilar adalimumab (Humira®)), ABP 215 (biosimilar bevacizumab (Avastin®)), and EVENITY™* |
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| • Generated new product strategy teams, initiatedfirst-in-human studies, and advanced programs through theearly-to-late stage portal | 225.0% |
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| 2016 Company Performance Goals Composite Score | Achieved 159.5% | ||||||||||||
| (1) | ||
Non-GAAP net income for purposes of the 2016 Company |
| * | FDA provisionally approved trade name. |
78 ï 20152017 Proxy Statement57
| COMPENSATION DISCUSSION AND ANALYSIS |
20142016 Annual Cash Incentive Awards
As shown in the table above, our performance against the 2014 GMIP2016 Company performance goals yielded a composite score of approximately 147%159.5% and the Compensation Committee awarded actual annual cash incentive awards under the EIP to our NEOs based on this composite score. No further discretion was employed.
| Named Executive Officer | Target 2014 Award($)(1) | Actual 2014 Award($) | Target Opportunity (% of Base Salary) | Target Award($) | Actual Award($)(1) | |||||||||||||||
Robert A. Bradway | 1,950,000 | 2,867,000 |
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150
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2,288,077
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3,650,000
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Anthony C. Hooper | 901,620 | 1,325,000 |
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100
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1,027,354
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1,639,000
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David W. Meline | 327,121 | 481,000 |
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100
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942,310
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1,503,000
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Sean E. Harper | 806,850 | 1,186,000 |
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100
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941,769
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1,502,000
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Madhavan Balachandran | 693,000 | 1,019,000 | ||||||||||||||||||
Michael A. Kelly | 280,388 | 412,000 | ||||||||||||||||||
Jonathan M. Peacock(3) | n/a | 0 | ||||||||||||||||||
Jonathan P. Graham
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80
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730,278
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1,165,000
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| (1) | Calculated in accordance with |
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2017 Company Performance Goals
In March 2015,2017, the Compensation Committee approved GMIPestablished Company performance goal categories for 2015 performance. These goal categories are “Deliver Results” (70%) (which is comprised2017 performance as follows:
| 2017 Company Performance Goals | ||
| 60% | Deliver Results | |
• Revenues (30%) • Non-GAAP Net Income (30%) | ||
| 25% | Progress Innovative Pipeline | |
• Execute Key Clinical Studies and Regulatory Filings (20%) • Advance Early Pipeline (5%) | ||
| 15% | Deliver Annual Priorities | |
• Execute Critical Launches and Long-Term Commercial Objectives (10%) • Realize Functional Transformation Objectives (5%) |
Based on Cook & Co.’s recommendation and a review of Revenues (30%), Adjusted Net Income (30%) and Execute New Product/Delivery System Launches (10%) sub-goals) and “Progress Innovative Pipeline” (30%) (which is comprised of “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%) sub-goals).
2011 Special Retention Award
In March 2011, while Mr. Balachandran served as our Senior Vice President, Manufacturing,Market Median data, the Compensation Committee approved a $1,000,000 specialdetermined that target annual cash retentionincentive award to Mr. Balachandran, payableopportunity percentages were generally 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 notalignment with the Market Median for cause). This special retention award was made in light of Mr. Balachandran’s valued performance in his then-currenteach NEO’s role and would remain unchanged for 2017 for each of the Company’s desire to retain him as a succession candidateNEOs (150% of base salary for the roleMr. Bradway, 100% of Executive Vice President, Operations. In August 2012,base salary for Messrs. Hooper and Meline and Dr. Harper, and 80% of base salary for Mr. Balachandran was promoted to Executive Vice President, Operations.Graham).
Mr. Meline’s Graham’s Vesting ofSign-On Bonus
To replace thepro-rata value of Mr. Meline’s 2014Graham’s 2015 bonus at his currentformer employer, which was forfeited upon his leaving, and to induce Mr. MelineGraham to accept the Company’s offer of employment and join the Company,us in July 2015, Mr. MelineGraham received asign-on bonus of $2,000,000 (50% vested onwas paid as an advance by August 21, 201413, 2015, and the other 50% was paid in July 2016). Mr. Graham will vestbe required to repay the advance of $1,000,000 if he resigns his employment on or before July 21, 2015) in addition to his initial hire RSU grant previously discussed.13, 2017.
ï 2017 Proxy Statement79
| COMPENSATION DISCUSSION AND ANALYSIS |
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 previously described under “Peer“How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data.Data Sources.” 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’sthe Compensation Committee’s own evaluation of our CEO’s performance, information with respect to each NEO’s experience and other qualifications, the Market Median and environmental conditions to determine each NEO’s base salary. No increase in base salary is automatic or guaranteed.
In both 2014 and 2015, no base salary increases were made to the NEOs. In March 2016, the Compensation Committee reviewed the market competitiveness of each NEO’s base salary based on 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 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 Market Median for his position, while managing his target total annual cash compensation at the Market Median and continuing to retain the substantial majority of his compensation as “at risk” and performance-based. Consistent with our projections for 2016 base salary industry average increases, Messrs. Hooper and Graham each received base salary increases of 3% which aligned them with the Market Median for their respective roles. Mr. Meline’s and Dr. Harper’s 2015 base salaries were significantly lower than the 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 disparity between their base salaries and Market Median for their positions, the Compensation Committee approved base salary increases for Mr. Meline and Dr. Harper of 5.6% and 6%, respectively, which positioned them closer to the Market Median for their respective roles.
2016 Base Salary Market Position
The 2016 base salaries and the Market Median position are shown in the table below:
| Named Executive Officer | 2015 Base Salary ($) | Increase (%) | 2016 Base Salary ($) | 2015 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | |||||||||||||||
Robert A. Bradway
|
|
1,500,000
|
|
|
2.0
|
|
|
1,530,000
|
|
|
1,596,000
|
|
|
(4.1
|
)
| |||||
Anthony C. Hooper
|
|
1,001,800
|
|
|
3.0
|
|
|
1,032,000
|
|
|
1,013,922
|
|
|
1.8
|
| |||||
David W. Meline
|
|
900,016
|
|
|
5.6
|
|
|
950,000
|
|
|
1,012,974
|
|
|
(6.2
|
)
| |||||
Sean E. Harper
|
|
896,500
|
|
|
6.0
|
|
|
950,000
|
|
|
1,007,257
|
|
|
(5.7
|
)
| |||||
Jonathan P. Graham
|
|
890,006
|
|
|
3.0
|
|
|
917,000
|
|
|
877,734
|
|
|
4.5
|
| |||||
2017 Base Salary Adjustments
In March 2017, the Compensation Committee reviewed the market competitiveness of each NEO’s base salary based on a review of Market Median data and such executive officer’s performance, experience and other qualifications, as well as
the Company’s overall performance. The Compensation Committee approved a 2017 base salary increase of 2% for Mr. Bradway based on recommendations from Cook & Co. and equal to the budgeted amount for U.S. staff members generally while positioning him slightly below (1.8%) the
5880 ï 20152017 Proxy Statement
| COMPENSATION DISCUSSION AND ANALYSIS |
qualifications,Market Median and continuing to retain the substantial majority of his compensation as “at risk” and performance-based. Messrs. Hooper’s and Graham’s base salaries were increased by 2%, consistent with the budgeted amount established for U.S. staff members generally. Mr. Meline’s and Dr. Harper’s 2016 base salaries were lower than the Market Median, and environmental conditions in determining each NEO’s base salary. No increase inpart, as a result of not having received base salary is automatic or guaranteed.
In Marchincreases in 2014 and 2015. For 2017, the Compensation Committee determined that there would be no increase inapproved 2017 base salariessalary increases for our NEOs. This is consistent with the Compensation Committee’s determination that base salaries forMr. Meline and Dr. Harper of 2.5% each staff member at a
senior managerial level and above would not be increased, except as previously approved by the Compensation Committee with respectwhich aligns them closer to recent promotions or appointments, to attain better alignment with the peer group for such levels. As a result, base salaries of our NEOs were generally slightly below the Market Median.
2014 Base Salary Market Position
The 2014 base salaries and Market Median position are shown in the table below:
| Named Executive Officer | 2013 Base ($) | Increase (%) | 2014 Base ($) | Market Median ($) | Difference vs. Market Median Over/(Under) (%) | |||||||||||||||
Robert A. Bradway | 1,500,000 | 0 | 1,500,000 | 1,575,000 | (4.8 | ) | ||||||||||||||
Anthony C. Hooper(1) | 1,001,800 | 0 | 1,001,800 | 1,070,000 | (6.4 | ) | ||||||||||||||
David W. Meline(2) | n/a | n/a | 900,016 | 901,092 | (0.1 | ) | ||||||||||||||
Sean E. Harper | 896,500 | 0 | 896,500 | 989,703 | (9.4 | ) | ||||||||||||||
Madhavan Balachandran(3) | 770,000 | 0 | 770,000 | n/a | n/a | |||||||||||||||
Michael A. Kelly(4) | 509,796 | 0 | 509,796 | n/a | n/a | |||||||||||||||
Jonathan M. Peacock(5) | 904,900 | 0 | n/a | n/a | n/a | |||||||||||||||
|
|
|
|
|
2015 Base Salary Adjustments
In March 2015, the Compensation Committee determined that base salaries for each NEO would again not be increased. This is consistent with the Compensation Committee’s determination that base salaries for each staff member at an executive director level and above would not be increased in recognition of our on-going transformation activities.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 NEOs’ total target annual cash compensation as compared to the Market Median provides a useful check.check in making compensation decisions.
In March 2014,2016, the Compensation Committee reviewed target total annual cash compensation for each NEO comparing it to the Market Median as set forth below and received historical target total annual cash compensation figures. Our prior year target annual cash compensation figures overreviewed by the previous three years. Our target total annual cash compensationCompensation Committee was generally below the Market Median which the Compensation Committee considered appropriate.and is set forth below. 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”Data Sources” previously described. No material adjustments were made to target
Target Total Annual Cash Compensation
Target total annual cash compensation for any of our NEOs as a result of this reviewreviewed by the Compensation Committee asin March 2016 prior to the comparisons demonstrated acceptable market alignment as well as appropriate internal pay equity amongcompensation changes being made are shown in the Executive Vice Presidents.
ï 2015 Proxy Statement59
2014 Target Annual Cash Compensation
| Named Executive Officer | 2014 Amgen Target Annual Cash ($) | Market Median ($) | Difference vs. Market Median Over/(Under) (%) | |||||||||
Robert A. Bradway | 3,450,000 | 3,750,000 | (8.0 | ) | ||||||||
Anthony C. Hooper(1) | 1,903,420 | 2,140,000 | (11.1 | ) | ||||||||
David W. Meline(2) | 1,710,030 | 2,029,200 | (15.7 | ) | ||||||||
Sean E. Harper | 1,703,350 | 1,897,212 | (10.2 | ) | ||||||||
Madhavan Balachandran(3) | 1,463,000 | 1,903,426 | (23.1 | ) | ||||||||
Michael A. Kelly(4) | 790,184 | n/a | n/a | |||||||||
Jonathan M. Peacock(5) | n/a | n/a | n/a | |||||||||
|
|
|
|
|
| Named Executive Officer | 2015 Amgen Target Total Annual Cash ($) | 2015 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | |||||||||
Robert A. Bradway
|
|
3,600,000
|
|
|
3,829,000
|
|
|
(6.0
|
)
| |||
Anthony C. Hooper
|
|
1,903,420
|
|
|
2,139,689
|
|
|
(11.0
|
)
| |||
David W. Meline
|
|
1,710,030
|
|
|
2,066,107
|
|
|
(17.2
|
)
| |||
Sean E. Harper
|
|
1,703,350
|
|
|
2,008,248
|
|
|
(15.2
|
)
| |||
Jonathan P. Graham
|
|
1,602,011
|
|
|
1,589,214
|
|
|
0.8
|
| |||
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 paid on behalf of newly-hired and current executives who agree to
relocate to work on the Company’s behalf and, in limited instances, personal expenses when on business travel such as guests accompanying NEOs on business travel.NEOs. 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 taxgross-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 for assistance with loss on sale of a home.
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| COMPENSATION DISCUSSION AND ANALYSIS |
We believe that providing taxgross-up reimbursements on the applicable moving and relocation expenses paid on behalf of newly-hired and current executives who agree to relocate on the Company’s behalf is appropriate because it treats these executives in a similar manner asnon-executives under our Company-wide policy which 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 caps on moving and relocation expenses and onprovide limited home sale loss assistance for Senior Vice Presidents and above. above in connection with relocations that benefit the Company and are at the Company’s request, and in certain new hire situations. We do not provide tax
gross-ups for assistance with loss on sale of a home. Our limited home sale loss assistance serves as important tool in inducing senior management to fully commit to their new role and relocation.
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
60 ï 2015 Proxy Statement
Company or staff members who accept an assignment and relocate, to repay us for moving and relocation expenses and home loss assistance 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 apro-rata refund in the second year).
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
Our cash incentive compensation plansaward programs (EIP, GMIP and VEP)GPIP) 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.
Stock Ownership and Retention 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 December 2015, the Compensation Committee amended our guidelines to require that each officer who has not met their required ownership guidelines retain shares of our Common Stock acquired through the vesting of RSUs, the payout of performance units, and the exercise of stock options awarded on or after December 15, 2015, net of shares retained by us to satisfy associated tax withholding requirements and exercise price amounts, until such officer has reached his or her required stock ownership level.
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| COMPENSATION DISCUSSION AND ANALYSIS |
Stock Ownership Guidelines Requirements
The stock ownership guidelines for 2014 were as follows:2016 were:
| Position | Stock Ownership Requirement | Compliance | ||||
Chief Executive Officer(1) | 6x base salary | ✓ | ||||
Executive Vice President | 3x base salary | ✓ | ||||
Senior Vice President | 2x base salary | ✓ | ||||
Vice President | 1x base salary | ✓ |
| (1) | Mr. Bradway exceeded his ownership requirement and holds approximately 30 times his base salary, or five times his stock ownership requirement. |
The following holdings count towards satisfying these stock ownership requirements:
shares of our Common Stock beneficially held that are not subject to forfeiture restrictions and are beneficially held;restrictions;
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.
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, 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 expectedrequired to maintain such ownership until they change job levels or are no longer employed by the Company. As of October 24, 2014,November 16, 2016, the effective date of our executive certifications, all executive officers, including our NEOs, who were expected to meet such guidelines, were in compliance. NEOs promoted to a new position within the last five years have the compliance dates for their new position as set forth in the table below.
ï 2015 Proxy Statement61
Stock Ownership Guidelines Compliance DatesMessrs. Meline and Holdings
With the exception of Mr. Meline, whoGraham commenced employment with our Company on July 21, 2014 all NEOs substantially exceedand July 13, 2015 and have until 2019 and 2020, respectively, to meet their applicable stock ownership requirements.guidelines.
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 or (iv) entering into any derivative, hedging or similar transactions with respect to our Common Stock. We do not have any executive10b5-1 plans.
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 anin-person or telephonic meeting of the Compensation Committee (for grants of equity awards to executive 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.
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 annual earnings, generally 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 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 performance units 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,
ï 2017 Proxy Statement83
| COMPENSATION DISCUSSION AND ANALYSIS |
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.
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 our 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 2014.
62 ï 2015 Proxy Statement
Stockholder Outreach—Executive Compensation Website
We have implementedmaintain a website accessible throughout the year atwww.amgen.com/executivecompensation, which provides a link to thisour most recent 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 double-trigger Change of Control Severance Plan discussed below. In addition,connection with new hires, we typically enter into offer letters with new hires detailing their initial 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 “otherother than cause”for “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. Other than the foregoing, our CEO and NEOs are not covered by contractual arrangements that provide for severance or other benefits in the event of termination.
Offer Letter—David W.Mr. Meline
Mr. Meline who commenced employment as our Chief Financial Officer effective July 21, 2014, is currently subject to an offer letter that was negotiated in connection with his hiring and approved by the Compensation Committee.2014. Mr. Meline’s offer letter included our standard relocation assistance to facilitate Mr. Meline’s relocation from Minnesota to California. We agreed to providecontains severance protection terms payable only if Mr. Meline withis terminated other than for “cause” on or before July 21, 2017. For a base salary of $900,016, which was targeted at the Market Median, and a target annual cash incentive award opportunity of 90% of base salary, which is consistent with the target annual cash incentive award opportunity for each of the other Executive Vice Presidents. We also agreed to providequalifying termination that occurs before
July 21, 2017, Mr. Meline withwould be entitled to 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 as long as Mr. Meline remains actively and continuously employed by us. We agreed to provide Mr. Meline with such compensation and benefits because Mr. Meline’s leadership talent and broad international experience was important to the Company as we execute our strategy for long-term growth and bring our pipeline of medicines toward commercialization in a number of new markets and to attract him to our Company and California. Mr. Meline’s compensation and benefits were designed and negotiated to facilitate a prompt, effective and fair process.
Mr. Meline’s offer letter provides for cash severance protection for three years following his hire datepayment equal to one year’s annual base salary and aplus target annual cash incentive award (currently 90%100% of his annual base salary) plusand up to 12 months of Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, medical and dental coverage paid by us. Benefits
Offer Letter—Mr. Graham
Mr. Graham commenced employment as our Senior Vice President, General Counsel and Secretary effective July 13, 2015. Mr. Graham’s offer letter includes a $2,000,000sign-on bonus discussed earlier to replace thepro-rata value of this type are often providedMr. Graham’s 2015 bonus with his former employer that was forfeited upon leaving his position and to officer-level candidates to provide an incentive to theminduce Mr. Graham to join the Company by reducingCompany. Mr. Graham received $1,000,000 in July 2016 as the risk of making such a job change. Thesesecond payment and final payment under thissign-on bonus. His offer letter also contains severance benefits will expire on July 21, 2017, andprotection terms that are payable only if Mr. MelineGraham is terminated other than for “cause.”
Severance Arrangement—Jonathan M. Peacock
cause that expire on July 13, 2018. For a qualifying termination that occurs before July 13, 2018, Mr. Peacock resigned as our Chief Financial Officer effective January 10, 2014, at which time he continuedGraham would be entitled to be employed in a non-executive officer capacitycash payment equal to assist in the transitiona multiple of Mr. Kelly, our then-Acting Chief Financial Officer, which transition period ended in May 2014. Upontwo times annual base salary plus target annual cash incentive award (currently 80% of his annual base salary) and up to 18 months of COBRA medical and dental coverage paid by us.
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| COMPENSATION DISCUSSION AND ANALYSIS |
termination from the Company, Mr. Peacock was provided 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 cash 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 was 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) an aggregate payment of $10,800, representing an hourly rate of $1,200 for authorized time that he spent 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 eligible for severance protection at a higher benefit multiple of two times annual base salary and target annual cash incentive award opportunity plus up to 18 months of COBRA protection, that the pro-rata value of the last unvested tranche 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 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 provides 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 disparage the Company.
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 1,5861,533 U.S. staff members (as of
December 31, 2014)2016), including each NEO. There are no taxgross-up payments provided under the plan. The plan wasis 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 “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 change of control bonus. The cash severance multiple for our 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, toCommittee:
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, tocontrol;
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,benefits; and to
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 Units and Stock Options
All LTI equity award grants that have yet to vestunvested RSUs and stock options 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 unvestedAll RSUs 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.
64 ï 2015 Proxy Statement
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, and provides for potentialearn-out at the end of the performance period with the amount earnedpro-rated for a change of control that occurs within 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,Health, retirement and other benefits programs are generally 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.group. The primary survey used to make this total company comparison is the Aon Hewitt Benefit Index®, last updated as of May 20142016, 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.
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| COMPENSATION DISCUSSION AND ANALYSIS |
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—there are no “above 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 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 (excluding employees acquired in our acquisition of Onyx Pharmaceuticals, Inc.)(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 atax-effective fashion that is not readily available without our sponsorship.
Health Savings Account and 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 generally available to U.S.-based (excluding Puerto Rico) staff members. To encourage participation, in the first year of offering of the HDHP and HSA only, we made a $1,000 Company contribution to U.S.-based (excluding Puerto Rico) staff members enrolled in family coverage in the HDHP and HSA on January 1, 2016. We ceased making this contribution in 2017. 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 Planmembers that allows all staff members to makeafter-tax deferrals to be used post-termination to reimburse them for eligible medical expenses. TheUnder this plan, 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. TheWe terminated our Retiree Health Access Plan is
ï 2015 Proxy Statement65
available to U.S.-based staff members who retire after attaining age 55 and ten years of service andeffective January 1, 2016 as our retirees who are 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 isMedicare now have access to terminate the Retiree Health Access Plan whenhealth 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 maintain 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 atyear-end, and any of our three other most highly compensated employees who serve as executive officers atyear-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 provide cash incentive compensation under our EIP, and performance units under our performance award program and stock options under our equity incentive plan as qualifying
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| COMPENSATION DISCUSSION AND ANALYSIS |
performance-based compensation. Due 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 paynon-deductible compensation. These circumstances have included the following:
To maintain a competitive base salary, the base salary provided to Messrs. Bradway and Hooper in 20142016 exceeded thetax-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 2016 of the RSUs not being performance-based is approximately $2.6 million assuming the Company’s U.S. combined effective tax rate for 2016.
|
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 orsign-on bonuses and moving and relocation, as part of their initial employment offers.offers, and bonuses paid under our GMIP to executives who are hired past the eligibility
date of our EIP. Suchsign-on bonuses and moving and relocation benefits were offered to Mr. Graham in connection with his initial employment offer. |
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 itnon-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.
66 ï 20152017 Proxy Statement87
| 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) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||
| Performance Units and Restricted Stock Units | EIP | |||||||||||||||||||||||||||
Robert A. Bradway Chairman of the Board, Chief Executive Officer and President |
| 2014 2013 2012 |
|
| 1,505,769 1,490,769 1,262,308 |
|
| 0 0 0 |
|
| 8,999,880 7,999,917 8,571,724 |
|
| 2,867,000 3,598,000 3,316,000 |
|
�� | 589,018 561,121 420,059 |
|
| 13,961,667 13,649,807 13,570,091 |
| |||||||
Anthony C. Hooper Executive Vice President, Global Commercial Operations |
| 2014 2013 2012 |
|
| 1,005,653 1,001,858 976,179 |
|
| 0 0 0 |
|
| 2,999,960 3,199,895 5,296,747 |
|
| 1,325,000 1,677,000 1,795,000 |
|
| 291,341 300,750 518,068 |
|
| 5,621,954 6,179,503 8,585,994 |
| |||||||
David W. Meline(5) Executive Vice President and Chief Financial Officer | 2014 | 408,469 | 1,000,000 | 6,799,914 | 481,000 | 1,909,980 | 10,599,363 | |||||||||||||||||||||
Sean E. Harper(6) Executive Vice President, Research and Development |
| 2014 2013 2012 |
|
| 899,948 896,543 835,038 |
|
| 0 0 0 |
|
| 2,999,960 3,199,895 3,542,911 |
|
| 1,186,000 1,501,000 1,535,000 |
|
| 259,782 265,228 176,814 |
|
| 5,345,690 5,862,666 6,089,763 |
| |||||||
Madhavan Balachandran(7) Executive Vice President, Operations |
| 2014 2013 |
|
| 772,961 762,461 |
|
| 170,000 330,000 |
|
| 2,799,884 3,199,895 |
|
| 1,019,000 1,273,000 |
|
| 224,300 203,354 |
|
| 4,986,145 5,768,710 |
| |||||||
Michael A. Kelly(8) Former Acting Chief Financial Officer and Vice President, Global Business Services | 2014 | 511,757 | 0 | 1,627,205 | 412,000 | 251,248 | 2,802,210 | |||||||||||||||||||||
Jonathan M. Peacock(9) Former Executive Vice President and Chief Financial Officer |
| 2014 2013 2012 |
|
| 428,087 904,945 878,931 |
|
| 0 0 0 |
|
| 0 3,199,895 3,542,911 |
|
| 0 1,515,000 1,615,000 |
|
| 7,467,590 266,967 240,588 |
|
| 7,895,677 5,886,807 6,277,430 |
| |||||||
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||
Performance Units and Restricted Stock Units | Stock Options | EIP/GMIP | ||||||||||||||||||||||||||||||
Robert A. Bradway | 2016 2015 2014 | 1,531,731 1,505,769 1,505,769 | 0 0 0 | 7,699,723 10,199,959 8,999,880 | 3,299,994 0 0 | 3,650,000 3,841,000 2,867,000 | 668,553 550,986 589,018 | 16,850,001 16,097,714 13,961,667 | ||||||||||||||||||||||||
Anthony C. Hooper Executive Vice President, Global Commercial Operations | 2016 2015 2014 | 1,031,788 1,005,653 1,005,653 | 0 0 0 | 2,799,874 3,499,865 2,999,960 | 1,199,995 0 0 | 1,639,000 1,649,000 1,325,000 | 294,528 260,211 291,341 | 6,965,185 6,414,729 5,621,954 | ||||||||||||||||||||||||
David W. Meline(6) Executive Vice President and Chief Financial Officer | 2016 2015 2014 | 946,733 903,478 408,469 | 0 1,000,000 1,000,000 | 2,449,925 2,999,795 6,799,914 | 1,049,986 0 0 | 1,503,000 1,482,000 481,000 | 268,821 207,351 1,909,980 | 6,218,465 6,592,624 10,599,363 | ||||||||||||||||||||||||
Sean E. Harper Executive Vice President, Research and Development | 2016 2015 2014 | 946,246 899,948 899,948 | 0 0 0 | 2,449,925 2,999,795 2,999,960 | 1,049,986 0 0 | 1,502,000 1,476,000 1,186,000 | 264,885 232,082 259,782 | 6,213,042 5,607,825 5,345,690 | ||||||||||||||||||||||||
Jonathan P. Graham(7) Senior Vice President, General Counsel and Secretary | 2016 2015 | 916,789 424,464 | 1,000,000 1,427,203 | 1,609,898 8,599,985 | 689,990 0 | 1,165,000 151,797 | 1,038,668 2,179,852 | 6,420,345 12,783,301 | ||||||||||||||||||||||||
| (1) | Reflects base salary earned in eachbi-weekly pay period (or portion thereof) during each fiscal year beforepre-tax contributions and, therefore, includes compensation deferred under our qualified deferred compensation plan and nonqualified deferred compensation |
| (2) | For |
The |
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| EXECUTIVE COMPENSATION TABLES |
defined under ASC |
| (3) | For 2016, reflects the grant date fair values ofnon-qualified stock options granted during 2016 determined in accordance with ASC 718 (see footnote 8 to the “Grants of Plan-Based Awards” table for information on how these amounts were determined). |
| (4) | Reflects amounts that were earned under our Executive Incentive Plan, or EIP, for |
See the subsection “All Other Compensation—Perquisites and Other Compensation” immediately following these footnotes. |
ï 2015 Proxy Statement67
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|
|
|
|
All Other Compensation—Perquisites and Other Compensation
Perquisites.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 2014.2016.
| 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) | Personal Use of Company Aircraft(1) | Personal Use of Company Car and Driver(2) | Personal Financial Planning Services | Moving and Relocation Expenses(3) | Other(4) | |||||||||||||||||||||||||||||||||||||||||||||||
| Name | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Tax Gross- Up($) | Aggregate Incremental Cost($) | Total($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Tax Gross- Up($) | Aggregate Incremental Cost($) | Total($) | ||||||||||||||||||||||||||||||||||||||||||
Robert A. Bradway | 55,332 | 2,068 | 15,000 | 0 | 0 | 6,818 | 79,218 | 98,221 | 4,191 | 15,000 | 0 | 0 | 14,502 | 131,914 | ||||||||||||||||||||||||||||||||||||||||||
Anthony C. Hooper | 280 | 1,558 | 15,000 | 0 | 0 | 6,623 | 23,461 | 747 | 1,426 | 15,000 | 0 | 0 | 9,720 | 26,893 | ||||||||||||||||||||||||||||||||||||||||||
David W. Meline | 200 | 138 | 10,000 | 245,415 | 22,198 | 856 | 278,807 | 108 | 880 | 15,000 | 0 | 0 | 10,402 | 26,390 | ||||||||||||||||||||||||||||||||||||||||||
Sean E. Harper | 0 | 32 | 15,000 | 0 | 0 | 5,000 | 20,032 | 112 | 0 | 15,000 | 0 | 0 | 7,996 | 23,108 | ||||||||||||||||||||||||||||||||||||||||||
Madhavan Balachandran | 0 | 0 | 15,000 | 0 | 0 | 5,000 | 20,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Michael A. Kelly | 0 | 243 | 7,500 | 91,717 | 54,108 | 1,700 | 155,268 | |||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan M. Peacock | 0 | 281 | 0 | 0 | 0 | 1,631 | 1,912 | |||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan P. Graham | 589 | 0 | 15,000 | 440,294 | 425,120 | 8,480 | 889,483 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (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 (except foron-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 |
| (2) | The aggregate incremental cost for personal use of the car and driver provided by us is determined as the sum of the cost of fuel, driver overtime costs allocable to personal usage and maintenance costs for the total number of personal miles driven. Personal miles include travel to and from work from home. 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 salaries are not included. |
|
|
|
68 ï 20152017 Proxy Statement89
| EXECUTIVE COMPENSATION TABLES |
|
|
|
|
Mr. |
| (a) | $ |
| (b) | $ |
| (c) | $72,919 for costs to relocate household goods; |
|
| (d) | $ |
| (e) | $ |
Other expenses include Company contributions tonon-profit charities designated by the executive in the amount of |
Other Compensation. The following table sets forth compensation for our NEOs in 20142016 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($) | Company Credits to Supplemental Retirement Plan($) | Company Deferred | Total($) | ||||||||||||
Robert A. Bradway | 26,000 | 483,800 | 0 | 509,800 | ||||||||||||
Anthony C. Hooper | 26,000 | 241,880 | 0 | 267,880 | ||||||||||||
David W. Meline | 13,000 | 18,173 | 1,600,000 | (1) | 1,631,173 | |||||||||||
Sean E. Harper | 26,000 | 213,750 | 0 | 239,750 | ||||||||||||
Madhavan Balachandran | 26,000 | 178,300 | 0 | 204,300 | ||||||||||||
Michael A. Kelly | 26,000 | 69,980 | 0 | 95,980 | ||||||||||||
Jonathan M. Peacock | 26,000 | 172,485 | 0 | 198,485 | ||||||||||||
|
| Name | Company Contributions to 401(k) Retirement Plan($) | Company Credits to Supplemental Retirement Plan($) | Total($) | |||||||||
Robert A. Bradway | 26,500 | 510,139 | 536,639 | |||||||||
Anthony C. Hooper | 26,500 | 241,135 | 267,635 | |||||||||
David W. Meline | 26,500 | 215,931 | 242,431 | |||||||||
Sean E. Harper | 26,500 | 215,277 | 241,777 | |||||||||
Jonathan P. Graham | 26,500 | 122,685 | 149,185 | |||||||||
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 applicablepre-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 2014-2016 performance period that began on January 31, 2014 and ended on January 31, 2017 and for the 2016-2018 performance period that began on January 1, 2016 and will end on December 31, 2018, see “Elements of Compensation and Specific Compensation Decisions—Long-Term Incentive Equity Awards” in our Compensation Discussion and Analysis.
90 ï 20152017 Proxy Statement69
| EXECUTIVE COMPENSATION TABLES |
Performance Goals and Formulas
For a descriptionThe structure of the performance unitsgoals for the 2012-2014 performance period that began on January 1, 2012 and ended on December 31, 2014 and for theoutstanding 2014-2016 performance period that began on January 31, 2014 and will endended on January 31, 2017 see “Elements of Compensation and Specific Compensation Decisions—Long-Term Incentive Equity Awards” in our Compensation Discussion and Analysis.
Performance goals for the outstanding 2013-20152015-2017 performance period that began on January 28, 2013are substantially similar and will end on January 28, 2016 are based upon our TSR for the
2013-2015 2014-2016 and 2015-2017 performance period (or Amgen TSR)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 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%, the maximum number of performance units that may be earned for the 2013-2015 performance period.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, 2014. Mr. Peacock is not included in the table as his service as our Chief Financial Officer terminated in January 2014, resulting in no grants of equity or non-equity awards to him in 2014.2016.
Estimated Future Payouts | Estimated Future Payouts Under Equity Incentive Plan Awards(# of units)(4) | All Other Stock Awards: Number of Shares of Stock or Units(#)(5) | Grant Date Fair Value of Stock and Option Awards($) | |||||||||||||||||||||||||||||||
| Name | Grant Date | Approval Date(1) | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||
| EIP | Performance Units | RSUs | ||||||||||||||||||||||||||||||||
Robert A. Bradway | 3/5/14 | 3/5/14 | (3) | (3) | 8,213,750 | |||||||||||||||||||||||||||||
| 1/31/14 | 12/13/13 | (4) | 57,738 | 86,607 | 7,199,929 | (6) | ||||||||||||||||||||||||||||
| 1/31/14 | 12/13/13 | 15,132 | 1,799,951 | (7) | ||||||||||||||||||||||||||||||
Anthony C. Hooper | 3/5/14 | 3/5/14 | (3) | (3) | 4,928,250 | |||||||||||||||||||||||||||||
| 1/31/14 | 12/13/13 | (4) | 19,246 | 28,869 | 2,399,976 | (6) | ||||||||||||||||||||||||||||
| 1/31/14 | 12/13/13 | 5,044 | 599,984 | (7) | ||||||||||||||||||||||||||||||
David W. Meline | 7/21/14 | (2) | 7/21/14 | (2) | (3) | 327,121 | 736,022 | |||||||||||||||||||||||||||
| 8/1/14 | 6/5/14 | 54,161 | 6,799,914 | (7) | ||||||||||||||||||||||||||||||
Sean E. Harper | 3/5/14 | 3/5/14 | (3) | (3) | 4,928,250 | |||||||||||||||||||||||||||||
| 1/31/14 | 12/13/13 | (4) | 19,246 | 28,869 | 2,399,976 | (6) | ||||||||||||||||||||||||||||
| 1/31/14 | 12/13/13 | 5,044 | 599,984 | (7) | ||||||||||||||||||||||||||||||
Madhavan Balachandran | 3/5/14 | 3/5/14 | (3) | (3) | 4,928,250 | |||||||||||||||||||||||||||||
| 1/31/14 | 12/13/13 | (4) | 17,963 | 26,944 | 2,239,986 | (6) | ||||||||||||||||||||||||||||
| 1/31/14 | 12/13/13 | 4,707 | 559,898 | (7) | ||||||||||||||||||||||||||||||
Michael A. Kelly | 3/5/14 | 3/5/14 | (3) | (3) | 3,285,500 | |||||||||||||||||||||||||||||
| 4/25/14 | 3/5/14 | (4) | 2,541 | 3,811 | 257,454 | (6) | ||||||||||||||||||||||||||||
| 10/30/14 | 10/17/14 | 1,856 | 299,892 | (7) | ||||||||||||||||||||||||||||||
| 4/25/14 | 3/5/14 | 628 | 69,965 | (7) | ||||||||||||||||||||||||||||||
| 1/31/14 | 12/13/13 | 8,406 | 999,894 | (7) | ||||||||||||||||||||||||||||||
70 ï 2015 Proxy Statement
Estimated Future Payouts |
Estimated Future | All Other Stock Awards: Number of Shares of Stock or Units(#)(4) | All Other Option Awards: Number of Securities Underlying Options (#)(5) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards($) | |||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Approval Date(1) | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||||||||||||
| EIP | Performance Units | RSUs | Stock Options | |||||||||||||||||||||||||||||||||||||||||||||
Robert A. Bradway | 3/2/16 | 3/2/16 | (2 | ) | (2 | ) | 10,981,250 | |||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | (3 | ) | 32,246 | 64,492 | 5,499,878 | (6) | |||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 14,070 | 2,199,845 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 119,782 | 156.35 | 3,299,994 | (8) | |||||||||||||||||||||||||||||||||||||||||||
Anthony C. Hooper | 3/2/16 | 3/2/16 | (2 | ) | (2 | ) | 6,588,750 | |||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | (3 | ) | 11,726 | 23,452 | 1,999,987 | (6) | |||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 5,116 | 799,887 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 43,557 | 156.35 | 1,199,995 | (8) | |||||||||||||||||||||||||||||||||||||||||||
David W. Meline | 3/2/16 | 3/2/16 | (2 | ) | (2 | ) | 6,588,750 | |||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | (3 | ) | 10,260 | 20,520 | 1,749,946 | (6) | |||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 4,477 | 699,979 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 38,112 | 156.35 | 1,049,986 | (8) | |||||||||||||||||||||||||||||||||||||||||||
Sean E. Harper | 3/2/16 | 3/2/16 | (2 | ) | (2 | ) | 6,588,750 | |||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | (3 | ) | 10,260 | 20,520 | 1,749,946 | (6) | |||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 4,477 | 699,979 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 38,112 | 156.35 | 1,049,986 | (8) | |||||||||||||||||||||||||||||||||||||||||||
Jonathan P. Graham | 3/2/16 | 3/2/16 | (2 | ) | (2 | ) | 4,392,500 | |||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 6,742 | 13,484 | 1,149,916 | (6) | |||||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 2,942 | 459,982 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/3/16 | 3/2/16 | 25,045 | 156.35 | 689,990 | (8) | |||||||||||||||||||||||||||||||||||||||||||
| (1) | Reflects the date on which the grants were approved by the Compensation Committee. |
| (2) |
|
Represents awards to our NEOs made under our EIP. |
ï 2017 Proxy Statement91
| EXECUTIVE COMPENSATION TABLES |
employed thepre-established Company performance goals, |
| GMIP | Non-Equity Incentive Plan Compensation($) | |||||||||||||||||||||||||||||||||
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards($) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards($) | Non-Equity Incentive Plan Compensation($) | ||||||||||||||||||||||||||||||||
| Name | Threshold | Target | Maximum | Actual | Threshold | Target | Maximum | Actual | ||||||||||||||||||||||||||
Robert A. Bradway | — | 1,950,000 | 4,387,500 | 2,867,000 |
|
—
|
|
|
2,288,077
|
|
|
5,148,173
|
|
|
3,650,000
|
| ||||||||||||||||||
Anthony C. Hooper | — | 901,620 | 2,028,645 | 1,325,000 |
|
—
|
|
|
1,027,354
|
|
|
2,311,547
|
|
|
1,639,000
|
| ||||||||||||||||||
David W. Meline | — | 327,121 | 736,022 | 481,000 |
|
—
|
|
|
942,310
|
|
|
2,120,198
|
|
|
1,503,000
|
| ||||||||||||||||||
Sean E. Harper | — | 806,850 | 1,815,413 | 1,186,000 |
|
—
|
|
|
941,769
|
|
|
2,118,980
|
|
|
1,502,000
|
| ||||||||||||||||||
Madhavan Balachandran | — | 693,000 | 1,559,250 | 1,019,000 | ||||||||||||||||||||||||||||||
Michael A. Kelly | — | 280,388 | 630,873 | 412,000 | ||||||||||||||||||||||||||||||
Jonathan P. Graham
|
|
—
|
|
|
730,278
|
|
|
1,643,126
|
|
|
1,165,000
|
| ||||||||||||||||||||||
Reflects estimated payouts regarding performance units granted during |
Reflects the RSUs granted during |
| (5) | Reflects the 2016 annual grant ofnon-qualified stock options to our NEOs. |
| (6) | Reflects the grant date fair values of |
ï 2015 Proxy Statement71
interest rate of |
92 ï 2017 Proxy Statement
| EXECUTIVE COMPENSATION TABLES |
The table below shows the grant date fair values of these performance unit awards if the maximum is achieved with regard to all of the operating performance measures: |
| Name | Fair Value of Performance Units for the 2016-2018 Performance Period Based on the | |||
Robert A. Bradway | 8,249,817 | |||
Anthony C. Hooper | 2,999,980 | |||
David W. Meline | 2,624,918 | |||
Sean E. Harper | 2,624,918 | |||
Jonathan P. Graham | 1,724,873 | |||
| (7) | Reflects the grant date fair values of RSUs granted during |
| (8) | Reflects the grant date fair values of stock options granted during 2016 determined in accordance with ASC 718 based on the number of options granted multiplied by the grant date fair value per option of $27.55. The grant date fair value of an option was determined using a Black-Scholes option valuation model with the following key assumptions: risk-free interest rate of 1.5%; expected life of 5.8 years; expected volatility of the price of our Common Stock of 24.3%; expected dividend yield of 2.6%; and the exercise price of $156.35. |
ï 2017 Proxy Statement93
| EXECUTIVE COMPENSATION TABLES |
Outstanding Equity Awards at Fiscal Year End
The following table sets forth summary information regarding the outstanding equity awards at December 31, 20142016 granted to each of our NEOs.
| Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($/ Option) | Option Expiration Date(1) | Number of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | 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 |
| 48,510 127,000 84,000 84,000 |
|
| 24,990 0 0 0 |
|
| 54.69 58.43 50.44 42.13 |
|
| 4/25/21 4/26/20 4/28/16 4/29/15 | (2)
| 56,678 | 9,028,239 |
| 88,193 110,915 132,045 | (5) (6) (7) |
| 14,048,263 17,667,650 21,033,448 |
| | 0 73,500 127,000 |
| | 119,782 0 0 |
| | 156.35 54.69 58.43 |
| | 5/3/26 4/25/21 4/26/20 |
| 46,090 | 6,738,819 | | 20,577 35,057 57,394 | (4) (5) (6) | | 3,008,563 5,125,684 8,391,577 |
| ||||||||||||||||||||||||
Anthony C. Hooper | 0 | 0 | 26,222 | 4,176,902 |
| 29,397 44,365 54,577 52,777 | (5) (6) (7) (8) |
| 4,682,648 7,066,901 8,693,570 8,406,848 |
| 0 | 43,557 | 156.35 | 5/3/26 | 16,396 | 2,397,259 | | 7,482 12,029 19,131 | (4) (5) (6) | | 1,093,943 1,758,760 2,797,144 |
| ||||||||||||||||||||||||||||||||||||||||||
David W. Meline | 0 | 0 | 54,596 | 8,696,597 | 0 | 38,112 | 156.35 | 5/3/26 | 37,281 | 5,450,855 | | 6,547 10,310 | (4) (5) | | 957,237 1,507,425 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Sean E. Harper |
| 13,860 16,000 |
|
| 7,140 0 |
|
| 54.69 58.43 |
|
| 4/25/21 4/26/20 | (2)
| 21,023 | 3,348,754 |
| 29,397 44,365 54,577 | (5) (6) (7) |
| 4,682,648 7,066,901 8,693,570 |
| | 0 21,000 16,000 |
| | 38,112 0 0 |
| | 156.35 54.69 58.43 |
| | 5/3/26 4/25/21 4/26/20 |
| 15,056 | 2,201,338 | | 6,547 10,310 19,131 | (4) (5) (6) | | 957,237 1,507,425 2,797,144 |
| ||||||||||||||||||||||||
Madhavan Balachandran |
| 10,395 6,000 |
| | 5,355 0 | |
| 54.69 58.43 |
|
| 4/25/21 4/26/20 | (2)
| 34,505 | 5,496,301 |
| 27,438 44,365 15,845 | (5) (6) (7) |
| 4,370,599 7,066,901 2,523,950 |
| ||||||||||||||||||||||||||||||||||||||||||||
Michael A. Kelly | 0 | 1,777 | 54.69 | 4/25/21 | (2) | 8,935 | 1,423,256 |
| 3,862 4,828 7,567 | (5) (6) (7) |
| 615,178 769,052 1,205,347 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan M. Peacock | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan P. Graham | 0 | 25,045 | 156.35 | 5/3/26 | 41,259 | 6,032,478 | 4,302 | (4) | 628,995 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Stock options |
| (2) |
|
The following table shows the vesting of RSUs and |
| Granted on | ||||||||||||||||||||||||
| Name | May 3, 2016(a) | August 4, 2015(b) | January 30, 2015(c) | August 1, 2014(d) | January 31, 2014(e) | January 28, 2013(f) | ||||||||||||||||||
Robert A. Bradway
|
|
14,343
|
|
|
0
|
|
|
14,032
|
|
|
0
|
|
|
10,813
|
|
|
6,902
|
| ||||||
Anthony C. Hooper
|
|
5,215
|
|
|
0
|
|
|
4,814
|
|
|
0
|
|
|
3,605
|
|
|
2,762
|
| ||||||
David W. Meline
|
|
4,563
|
|
|
0
|
|
|
4,126
|
|
|
28,592
|
|
|
0
|
|
|
0
|
| ||||||
Sean E. Harper
|
|
4,563
|
|
|
0
|
|
|
4,126
|
|
|
0
|
|
|
3,605
|
|
|
2,762
|
| ||||||
Jonathan P. Graham
|
|
2,999
|
|
|
38,260
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
| ||||||
| (a) | Scheduled to vest at a rate of approximately 33%, 33% and 34% on the second, third and fourth anniversaries of the grant date, respectively. |
| (b) | Scheduled to vest in approximately equal installments on each of the second, third and fourth anniversaries of the grant date. |
| (c) | Approximately 33% vested on January 30, 2017, and the remainder are scheduled to vest at a rate of approximately 33% and 34% on the third and fourth anniversaries of the grant date, respectively. |
| (d) | Scheduled to vest in approximately equal installments on the third and fourth anniversaries of the grant date. |
| (e) | Approximately half vested on January 31, 2017, and the remaining are scheduled to vest on the fourth anniversary of the grant date. |
| (f) | All units vested on January 28, 2017. |
7294 ï 20152017 Proxy Statement
| EXECUTIVE COMPENSATION TABLES |
| Granted on | ||||||||||||||||||||||||||||||||||||||||
| Name | October 30, | August 1, 2014(b) | April 25, | January 31, | April 26, | January 28, | July 31, | April 27, | October 27, | April 25, | ||||||||||||||||||||||||||||||
Robert A. Bradway | 0 | 0 | 0 | 15,409 | 0 | 19,383 | 0 | 14,746 | 0 | 7,140 | ||||||||||||||||||||||||||||||
Anthony C. Hooper | 0 | 0 | 0 | 5,136 | 0 | 7,753 | 0 | 6,094 | 7,239 | 0 | ||||||||||||||||||||||||||||||
David W. Meline | 0 | 54,596 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Sean E. Harper | 0 | 0 | 0 | 5,136 | 0 | 7,753 | 0 | 6,094 | 0 | 2,040 | ||||||||||||||||||||||||||||||
Madhavan Balachandran | 0 | 0 | 0 | 4,793 | 0 | 7,753 | 18,659 | 1,770 | 0 | 1,530 | ||||||||||||||||||||||||||||||
Michael A. Kelly | 1,862 | 0 | 636 | 4,280 | 804 | 0 | 0 | 845 | 0 | 508 | ||||||||||||||||||||||||||||||
|
|
|
|
|
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 |
Reflects the sum of the number of performance units granted for the |
| (5) | Reflects the number of performance units granted for the 2015-2017 performance period and related dividend equivalents accrued through December 31, 2016 multiplied by the payout percentage of 65.4%, which is the relative TSR percentage multiplier based on |
| (6) | Reflects the number of performance units granted for the 2014-2016 performance period and related dividend equivalents accrued through December 31, 2016 multiplied by the payout percentage of 93.2%, 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 31, 2014 grant date to December 31, |
|
|
|
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 2013-2015 performance units (and related dividend equivalents, as applicable) for each of our NEOs during the year ended December 31, 2016. The RSUs and performance units vested and converted to one share of our Common Stock for each vested RSU and performance unit. The 2013-2015 performance units had a performance period from January 28, 2013 through January 28, 2016 and became payable as shares upon certification by our Compensation Committee in March 2016.
| 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($)(2) | ||||||||||||
Robert A. Bradway
|
|
84,000
|
|
|
8,189,566
|
|
|
133,360
|
|
|
20,033,665
|
| ||||
Anthony C. Hooper
|
|
0
|
|
|
0
|
|
|
53,096
|
|
|
7,976,813
|
| ||||
David W. Meline
|
|
0
|
|
|
0
|
|
|
14,112
|
|
|
2,427,697
|
| ||||
Sean E. Harper
|
|
0
|
|
|
0
|
|
|
53,096
|
|
|
7,976,813
|
| ||||
Jonathan P. Graham
|
|
0
|
|
|
0
|
|
|
12,588
|
|
|
2,183,238
|
| ||||
| (1) | The value shown is based on the stock options exercised multiplied by the difference between the prices at which they were valued on the date of exercise and the stock option exercise price. |
| (2) | The value shown is the closing price of a share of our Common Stock on the business days immediately prior to the vesting dates of RSUs and to the payment date for the performance units, as applicable, multiplied by the number of units vested/paid, including cash received in lieu of fractional dividend equivalents. |
ï 20152017 Proxy Statement 7395
| EXECUTIVE COMPENSATION TABLES |
Option Exercises and Stock Vested
The following table summarizes the option exercises and vesting of RSUs (and related dividend equivalents) for each of our NEOs for the year ended December 31, 2014. For a description of the performance units and related dividend equivalents earned for the performance periods that ended on December 31, 2014 and that were earned as of that date, see the “Outstanding Equity Awards at Fiscal Year End” table above and footnotes 7 and 8 to the table.
| Option Awards | Stock Awards | |||||||||||||||
| Name | Number of Securities Acquired on Exercise(#) | Value Realized on Exercise($)(1) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($)(2) | ||||||||||||
Robert A. Bradway | 65,000 | 3,814,850 | 18,596 | 2,087,842 | ||||||||||||
Anthony C. Hooper | 0 | 0 | 19,660 | 2,401,006 | ||||||||||||
David W. Meline | 0 | 0 | 0 | 0 | ||||||||||||
Sean E. Harper | 0 | 0 | 31,091 | 4,699,033 | ||||||||||||
Madhavan Balachandran | 0 | 0 | 12,334 | 1,547,226 | ||||||||||||
Michael A. Kelly | 14,848 | 1,223,300 | 5,477 | 641,979 | ||||||||||||
Jonathan M. Peacock | 167,632 | 10,290,376 | 8,175 | 922,932 | ||||||||||||
|
|
Nonqualified Deferred Compensation
The following table sets forth summary information regarding aggregate contributions to and account balances under our SRP and NDCP for and as of the year ended December 31, 2014.2016. There were no withdrawals by any of the NEOs in 2014.2016.
| Name | 2014 Employee Contributions ($)(1) | 2014 Company Contributions ($)(2) | 2014 Earnings ($)(3) | Balance as of 12/31/14($)(4) | 2016 Employee Contributions ($)(1) | 2016 Company Contributions ($)(2) | 2016 Earnings (Losses) ($)(3) | Balance 12/31/16 | ||||||||||||||||||||||||
Robert A. Bradway | 1,799,000 | 483,800 | 357,495 | 8,240,060 |
|
576,150
|
|
|
510,139
|
|
|
803,293
|
|
|
10,857,250
|
| ||||||||||||||||
Anthony C. Hooper | 1,000 | 241,880 | 39,761 | 715,971 |
|
49,441
|
|
|
241,135
|
|
|
86,123
|
|
|
1,288,810
|
| ||||||||||||||||
David W. Meline | 181,734 | 1,618,173 | 33,046 | 1,832,953 |
|
1,276,370
|
|
|
215,931
|
|
|
222,032
|
|
|
4,485,856
|
| ||||||||||||||||
Sean E. Harper | 0 | 213,750 | 92,136 | 2,169,060 |
|
0
|
|
|
215,277
|
|
|
217,029
|
|
|
2,693,976
|
| ||||||||||||||||
Madhavan Balachandran | 0 | 178,300 | 47,193 | 3,498,551 | ||||||||||||||||||||||||||||
Michael A. Kelly | 135,000 | 69,980 | 160,856 | 3,142,424 | ||||||||||||||||||||||||||||
Jonathan M. Peacock | 0 | 172,485 | 50,009 | 800,386 | ||||||||||||||||||||||||||||
Jonathan P. Graham
|
|
0
|
|
|
122,685
|
|
|
118,363
|
|
|
2,204,870
|
| ||||||||||||||||||||
| (1) | Reflects the portion of the annual cash incentive award deferred and contributed to the NDCP in the amount of $576,150 and $1,185,600 by Messrs. Bradway and |
74 ï 2015 Proxy Statement
| (2) | Reflects credits to the |
| (3) | Reflects earnings (losses) in the NDCP and SRP for |
| (4) | Reflects balances in the NDCP and SRP on December 31, |
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 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 ouron-going financial solvency. We have established a grantor
trust (aso-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 been created for use as default investment options. The
96 ï 2017 Proxy Statement
| EXECUTIVE COMPENSATION TABLES |
investment options during 20142016 are described in the subsection “Investment Options Under the Supplemental Retirement Plan and Nonqualified Deferred Compensation 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 regularU.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 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.
ï 2015 Proxy Statement75
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. 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 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—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 earntax-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 contributingsign-on bonuses to the accounts of newly-hired staff members or for retention purposes.
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
ï 2017 Proxy Statement97
| EXECUTIVE COMPENSATION TABLES |
employment. Participants may also elect to receive anin-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 may 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.
76 ï 2015 Proxy Statement
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 20142016 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 anall-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 2014 | Name of Investment Option | Rate of Return for 2014 | Rate of Return for 2016 | Name of Investment Option | Rate of Return for 2016 | ||||||||||||||
Amgen Target Retirement Portfolio Income | 6.98% | Capital Preservation | 1.39% |
|
7.31
|
%
|
Large Cap Value
|
|
17.44
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2010 | 7.00% | Fixed Income Index | 6.06% |
|
7.35
|
%
|
Large Cap Index
|
|
11.95
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2020 | 6.98% | Fixed Income | 5.75% |
|
7.99
|
%
|
Large Cap Growth
|
|
-2.76
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2030 | 6.81% | High Yield | 2.48% |
|
8.78
|
%
|
Small-Mid Cap Value
|
|
21.55
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2040 | 6.41% | Inflation-Protection | 3.57% |
|
10.08
|
%
|
Small-Mid Cap Index
|
|
15.93
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2050 | 5.94% | Large Cap Value | 11.10% |
|
10.43
|
%
|
Small-Mid Cap Growth
|
|
5.95
|
%
| ||||||||||
| Large Cap Index | 13.66% | |||||||||||||||||||
| Large Cap Growth | 9.35% | |||||||||||||||||||
| Small-Mid Cap Value | 3.36% | |||||||||||||||||||
| Small-Mid Cap Index | 7.51% | |||||||||||||||||||
| Small-Mid Cap Growth | 1.71% | |||||||||||||||||||
| International Value | (2.43%) | |||||||||||||||||||
| International Index | (3.75%) | |||||||||||||||||||
| International Growth | (2.36%) | |||||||||||||||||||
| Emerging Markets | (3.52%) | |||||||||||||||||||
| REIT Index | 28.01% | |||||||||||||||||||
Capital Preservation
|
|
1.75
|
%
|
International Value
|
|
8.00
|
%
| |||||||||||||
Fixed Income Index
|
|
2.52
|
%
|
International Index
|
|
4.69
|
%
| |||||||||||||
Fixed Income
|
|
2.61
|
%
|
International Growth
|
|
-4.28
|
%
| |||||||||||||
High Yield
|
|
14.55
|
%
|
Emerging Markets
|
|
21.84
|
%
| |||||||||||||
Inflation-Protection
|
|
4.71
|
%
|
REIT Index
|
|
7.93
|
%
| |||||||||||||
98 ï 2017 Proxy Statement
| EXECUTIVE COMPENSATION TABLES |
Potential Payments Upon Termination or Change of Control
Change of Control Severance Plan
Our Amended and Restated Change of Control Severance Plan, (“or Change of Control Severance Plan”)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.
ï 2015 Proxy Statement77
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: |
a benefits multiple of one or two based on the participant’s position (each of our NEOs has a benefits multiple of two); and
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 Consolidated Omnibus Budget 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 the18-month period immediately following the participant’s termination (whichever occurs earlier);
fully-vested benefits accrued under our 401(k) Plan and our SRP;
either alump-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
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 |
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 taxgross-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 is subject to automaticone-year extensions unless we notify participants no later than November 30 that the term will not be extended. If a change of control occurs
ï 2017 Proxy Statement99
| EXECUTIVE COMPENSATION TABLES |
during the term of the plan, the plan will continue in effect for at least 24 months following the change of control. Prior to a change of control, we can 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;
78 ï 2015 Proxy Statement
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;
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. Unvested stock options and RSUs made prior to March 2, 2011 (all of which by their terms were fully
vested as of March 2, 2015), would have vestedwill vest in full uponin connection with 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 only if and RSUs made on or after March 2, 2011, all such awards will vest in full only if,when, within 24 months following the changeChange of control,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 options and RSUs 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, apro-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 tonon-U.S. staff members or an independent medical advisor appointed by us.
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
100 ï 2017 Proxy Statement
| 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 apro-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. Messrs. Balachandran and Kelly were retirement eligible as of December 31, 2014 and they would have received this
ï 2015 Proxy Statement79
benefit (other than with respect to RSUs granted to Mr. Balachandran on July 31, 2012 and Mr. Kelly on January 31 and October 30, 2014, which were expressly excepted from our standard retirement provisions), had they retired on December 31, 2014. No other NEOs would have received this benefit because they did not meetnone of them met the above-mentioned retirement requirements.
Performance Units
Our performance award program provides for a potentialearn-out of outstanding performance units upon a Change of Control (as defined in our Change of Control Severance Plan) based on a truncated performance period and our performance through the change of control, and provides for potentialearn-out at the end of the performance period in the event of a termination of employment due to death, disability or 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 fiscal quarter preceding the change of control (the last business day before the change of control for the 2015-2017 and 2014-2016 performance periods) and the participant is entitled to a payment equal to the amount the participant would have received for the performance period based on: (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 twenty (20) trading 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 reference group based on such companies’ average daily closing stock price for the last twenty (20) trading days of such shortened performance period. And
with respect to the operating performance measures for the 2016-2018 performance period, if the change in control occurs: (i) during the first fiscal year of the performance period, target levels of performance shall be used to calculate the payment, and (ii) subsequent to the first fiscal year of the performance period, actual levels of performance for completed fiscal year(s) shall be used to calculate the payment. 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 two sentencespro-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 apro-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. 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 (aa retirement-eligible participant),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 apro-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 and Mr. Kelly would have received this benefit had they retired on December 31, 2014. No other NEOs would have received this benefit because they did not meet the above-mentioned retirement requirements.
Mr. Meline’s and Mr. Graham’s Offer LetterLetters
We entered into an offer letter with Mr. Meline in connection with his initial hiring as Chief Financial Officer effective July 21, 2014, which provides ourfor limited severance benefits in the event of termination of employment by us, other than
ï 2017 Proxy Statement101
| EXECUTIVE COMPENSATION TABLES |
for cause. Specifically, the offer letter provides for severance protection for three years following the hire date equal to one year of base salary and target bonus, as defined, plus up to 12 months of COBRA medical 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 Company by reducing the risk of making such a job change. These severance benefits will expire on July 21, 2017, the third anniversary of the commencement of his employment with the Company.
80 ïWe entered into an offer letter with Mr. Graham in connection with his initial hiring as Senior Vice President, General Counsel and Secretary effective July 13, 2015, Proxy Statementwhich provides for limited severance benefits in the event of termination of employment by us, other than for cause. Specifically, the offer letter provides for severance protection for three years following the hire date equal to two years of base salary and target bonus, as defined, plus up to 18 months of COBRA medical 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 Company by reducing the risk of making such a job change. These severance benefits will expire on July 13, 2018, 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 Information and Inventions Agreement.
Mr. Balachandran’s 2011 Special Retention Award
We entered into an arrangement with Mr. Balachandran in March 2011 which provided 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, except in the event of his death, disability or involuntary termination of employment not for “Cause.” For purposes of this arrangement, “cause” is defined in the same manner as it is in Mr. Meline’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, and a cash payment of $170,000 on each of March 2, 2014 and 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 ended in May 2014. Upon his termination from the Company, Mr. Peacock received the following severance benefits: (1) lump sum payment of $2,600,000 that is approximately equal to 1.5 times base pay salary plus target annual cash incentive award opportunity; (2) reimbursement of $36,104 for COBRA medical coverage for up to 18 months; (3) senior executive career transition services for up to 12 months at a cost of $15,000; (4) a payment of $4,605,289 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 was 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) a payment of $10,800 representing authorized time that he spent following the
termination of his employment in further transitioning his responsibilities and with matters that arose during his tenure with the Company at an hourly rate of $1,200. In determining these benefits, the Compensation Committee considered that, until September 2013, Mr. Peacock was eligible for severance protection at a higher benefit multiple of two times annual base salary and target annual cash incentive award opportunity plus up to 18 months of COBRA protection, that the pro-rata value of the last unvested tranche 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 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 provides 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 disparage the Company.
Estimated Potential Payments
The tables below set forth the estimated current value of payments and benefits: (i) to each of our NEOs (other than Mr. Peacock who was not employed by us on December 31, 2014), 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. Meline and Balachandran,Graham, upon termination without cause and (iii) to Messrs. Balachandran and Kelly, upon their retirement (Messrs. Balachandran and Kelly are the only retirement-eligible NEOs).cause. All other amounts shown in the tables below assume that the triggering events occurred on December 31, 20142016 and do not include: (i) the 2012-2014 performance unit awards and the 20142016 EIP payouts, which were earned as of December 31, 2014;2016; (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
ï 2015 Proxy Statement81
provided can only be determined at the time of a change of control and/or the NEO’s separation from the Company. In 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, 2014 $159.29. The value of2016 ($146.21). There are no amounts shown for accelerated stock options is the aggregate spread between the applicable
closing price andas the exercise price of theunvested stock options whileexceeded the applicable closing price. The value per unit of accelerated RSUs and performance units, including the related accrued dividend equivalents (rounded down to the nearest whole number of units), equals the applicable closing price multiplied by the number of units and dividend equivalents vested or earned, as applicable, as a result of such event.
Estimated Payments to Robert A. Bradway
| Triggering Event | ||||||||||||
| Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | |||||||||
Lump sum cash severance payment | 0 | 6,900,000 | 0 | |||||||||
Intrinsic value of accelerated unvested options | 0 | 2,613,954 | 2,613,954 | |||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 9,028,239 | 9,028,239 | |||||||||
Value of 2014-2016 performance units | 14,048,263 | (1) | 14,048,263 | (1) | 14,048,263 | (2) | ||||||
Value of 2013-2015 performance units | 17,667,650 | (1) | 17,667,650 | (1) | 17,667,650 | (2) | ||||||
Continuing health care benefits for 18 months(3) | 0 | 36,532 | 0 | |||||||||
Continuing retirement plan contributions for two years(4) | 0 | 695,000 | 0 | |||||||||
Total | 31,715,913 | 50,989,638 | 43,358,106 | |||||||||
Estimated Payments to Anthony C. Hooper
| Triggering Event | ||||||||||||
| Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | |||||||||
Lump sum cash severance payment | 0 | 3,806,840 | 0 | |||||||||
Intrinsic value of accelerated unvested options | n/a | n/a | n/a | |||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 4,176,902 | 4,176,902 | |||||||||
Value of 2014-2016 performance units | 4,682,648 | (1) | 4,682,648 | (1) | 4,682,648 | (2) | ||||||
Value of 2013-2015 performance units | 7,066,901 | (1) | 7,066,901 | (1) | 7,066,901 | (2) | ||||||
Continuing health care benefits for 18 months(3) | 0 | 24,756 | 0 | |||||||||
Continuing retirement plan contributions for two years(4) | 0 | 385,684 | 0 | |||||||||
Total | 11,749,549 | 20,143,731 | 15,926,451 | |||||||||
82102 ï 20152017 Proxy Statement
| EXECUTIVE COMPENSATION TABLES |
Estimated Payments to David W. MelineRobert A. Bradway
| Triggering Event | Triggering Event | |||||||||||||||||||||||||||
| Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Termination Without Cause($)(5) | Death or Disability($) | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | |||||||||||||||||||||
Lump sum cash severance payment | 0 | 3,420,061 | 1,710,030 | 0 |
|
0
|
|
|
7,650,000
|
|
|
0
|
| |||||||||||||||
Intrinsic value of accelerated unvested options | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 8,696,597 | 0 | 3,623,517 | (8) |
|
0
|
|
|
6,738,819
|
|
|
6,738,819
|
| ||||||||||||||
Value of 2016-2018 performance units
|
|
7,209,323
|
(1)
|
|
7,209,323
|
(1)
|
|
3,008,563
|
(2)
| |||||||||||||||||||
Value of 2015-2017 performance units
|
|
5,125,684
|
(1)
|
|
5,125,684
|
(1)
|
|
5,125,684
|
(2)
| |||||||||||||||||||
Value of 2014-2016 performance units | n/a | n/a | n/a | n/a |
|
8,391,577
|
(1)
|
|
8,391,577
|
(1)
|
|
8,391,577
|
(2)
| |||||||||||||||
Value of 2013-2015 performance units | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||
Continuing health care benefits for applicable period(3) | 0 | 36,532 | 23,707 | 0 | ||||||||||||||||||||||||
Continuing retirement plan contributions(4) | 0 | 347,006 | 0 | 0 | ||||||||||||||||||||||||
Acceleration of unvested balance of DCP account | 1,630,913 | 1,630,913 | 0 | 0 | ||||||||||||||||||||||||
Continuing health care benefits for 18 months(3)
|
|
0
|
|
|
33,678
|
|
|
0
|
| |||||||||||||||||||
Continuing retirement plan contributions for two years(4)
|
|
0
|
|
|
770,000
|
|
|
0
|
| |||||||||||||||||||
Total | 1,630,913 | 14,131,109 | 1,733,737 | 3,623,517 | 20,726,584 | 35,919,081 | 23,264,643 | |||||||||||||||||||||
Estimated Payments to Sean E. HarperAnthony C. Hooper
| Triggering Event | Triggering Event | |||||||||||||||||||||||
| Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | ||||||||||||||||||
Lump sum cash severance payment | 0 | 3,406,700 | 0 |
|
0
|
|
|
4,128,000
|
|
|
0
|
| ||||||||||||
Intrinsic value of accelerated unvested options | 0 | 746,844 | 746,844 | |||||||||||||||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 3,348,754 | 3,348,754 |
|
0
|
|
|
2,397,259
|
|
|
2,397,259
|
| ||||||||||||
Value of 2016-2018 performance units
|
|
2,621,545
|
(1)
|
|
2,621,545
|
(1)
|
|
1,093,943
|
(2)
| |||||||||||||||
Value of 2015-2017 performance units
|
|
1,758,760
|
(1)
|
|
1,758,760
|
(1)
|
|
1,758,760
|
(2)
| |||||||||||||||
Value of 2014-2016 performance units | 4,682,648 | (1) | 4,682,648 | (1) | 4,682,648 | (2) |
|
2,797,144
|
(1)
|
|
2,797,144
|
(1)
|
|
2,797,144
|
(2)
| |||||||||
Value of 2013-2015 performance units | 7,066,901 | (1) | 7,066,901 | (1) | 7,066,901 | (2) | ||||||||||||||||||
Continuing health care benefits for 18 months(3) | 0 | 36,532 | 0 |
|
0
|
|
|
22,776
|
|
|
0
|
| ||||||||||||
Continuing retirement plan contributions for two years(4) | 0 | 345,670 | 0 |
|
0
|
|
|
417,800
|
|
|
0
|
| ||||||||||||
Total | 11,749,549 | 19,634,049 | 15,845,147 | 7,177,449 | 14,143,284 | 8,047,106 | ||||||||||||||||||
ï 20152017 Proxy Statement 83103
| EXECUTIVE COMPENSATION TABLES |
Estimated Payments to Madhavan BalachandranDavid W. Meline
| Triggering Event | Triggering Event | |||||||||||||||||||||||||||||||||||
| Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Termination Without Cause($) | Retirement($) | Death or Disability($) | Change in Control($) | Change in Control and Termination($) | Termination Without Cause($)(5) | Death or Disability($) | |||||||||||||||||||||||||||
Lump sum cash severance payment | 0 | 2,926,000 | 0 | 0 | 0 |
|
0
|
|
|
3,067,986
|
(6)
|
|
1,900,000
|
|
|
0
|
| |||||||||||||||||||
Intrinsic value of accelerated unvested options | 0 | 560,133 | 0 | 560,133 | 560,133 | |||||||||||||||||||||||||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 5,496,301 | 0 | 2,524,109 | (7) | 5,496,301 |
|
0
|
|
|
5,450,855
|
|
|
0
|
|
|
5,450,855
|
| ||||||||||||||||||
Value of 2016-2018 performance units
|
|
2,293,742
|
(1)
|
|
2,293,742
|
(1)
|
|
0
|
|
|
957,237
|
(2)
| ||||||||||||||||||||||||
Value of 2015-2017 performance units
|
|
1,507,425
|
(1)
|
|
1,507,425
|
(1)
|
|
0
|
|
|
1,507,425
|
(2)
| ||||||||||||||||||||||||
Value of 2014-2016 performance units | 4,370,599 | (1) | 4,370,599 | (1) | 0 | 4,370,599 | (2) | 4,370,599 | (2) |
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
| |||||||||||||||
Value of 2013-2015 performance units | 7,066,901 | (1) | 7,066,901 | (1) | 0 | 7,066,901 | (2) | 7,066,901 | (2) | |||||||||||||||||||||||||||
Continuing health care benefits for 18 months(3) | 0 | 36,532 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||
Continuing health care benefits for applicable period(3)
|
|
0
|
|
|
33,678
|
|
|
21,889
|
|
|
0
|
��
| ||||||||||||||||||||||||
Continuing retirement plan contributions for two years(4) | 0 | 297,600 | 0 | 0 | 0 |
|
0
|
|
|
385,000
|
|
|
0
|
|
|
0
|
| |||||||||||||||||||
Special retention award(6) | 0 | 170,000 | 170,000 | 0 | 170,000 | |||||||||||||||||||||||||||||||
Acceleration of unvested balance of SRP account
|
|
0
|
|
|
126,538
|
|
|
0
|
|
|
126,538
|
| ||||||||||||||||||||||||
Acceleration of unvested balance of DCP account
|
|
1,260,897
|
|
|
1,260,897
|
|
|
0
|
|
|
0
|
| ||||||||||||||||||||||||
Total | 11,437,500 | 20,924,066 | 170,000 | 14,521,742 | 17,663,934 | 5,062,064 | 14,126,121 | 1,921,889 | 8,042,055 | |||||||||||||||||||||||||||
Estimated Payments to Michael A. KellySean E. Harper
| Triggering Event | Triggering Event | |||||||||||||||||||||||||||
| Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Retirement($) | Death or Disability($) | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | |||||||||||||||||||||
Lump sum cash severance payment | 0 | 1,580,368 | 0 | 0 |
|
0
|
|
|
3,800,000
|
|
|
0
|
| |||||||||||||||
Intrinsic value of accelerated unvested options | 0 | 185,874 | 185,874 | 185,874 | ||||||||||||||||||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 1,423,256 | 444,897 | (7) | 1,423,256 |
|
0
|
|
|
2,201,338
|
|
|
2,201,338
|
| ||||||||||||||
Value of 2016-2018 performance units
|
|
2,293,742
|
(1)
|
|
2,293,742
|
(1)
|
|
957,237
|
(2)
| |||||||||||||||||||
Value of 2015-2017 performance units
|
|
1,507,425
|
(1)
|
|
1,507,425
|
(1)
|
|
1,507,425
|
(2)
| |||||||||||||||||||
Value of 2014-2016 performance units | 615,178 | (1) | 615,178 | (1) | 615,178 | (2) | 615,178 | (2) |
|
2,797,144
|
(1)
|
|
2,797,144
|
(1)
|
|
2,797,144
|
(2)
| |||||||||||
Value of 2013-2015 performance units | 769,052 | (1) | 769,052 | (1) | 769,052 | (2) | 769,052 | (2) | ||||||||||||||||||||
Continuing health care benefits for 18 months(3) | 0 | 36,532 | 0 | 0 |
|
0
|
|
|
33,678
|
|
|
0
|
| |||||||||||||||
Continuing retirement plan contributions for two years(4) | 0 | 163,037 | 0 | 0 |
|
0
|
|
|
385,000
|
|
|
0
|
| |||||||||||||||
Total | 1,384,230 | 4,773,297 | 2,015,001 | 2,993,360 | 6,598,311 | 13,018,327 | 7,463,144 | |||||||||||||||||||||
84104 ï 20152017 Proxy Statement
| EXECUTIVE COMPENSATION TABLES |
Estimated Payments to Jonathan P. Graham
| Triggering Event | ||||||||||||||||
| Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Termination Without Cause($)(7) | Death or Disability($) | ||||||||||||
Lump sum cash severance payment
|
|
0
|
|
|
2,752,761
|
(6)
|
|
3,301,200
|
|
|
0
|
| ||||
Intrinsic value of accelerated unvested RSUs
|
|
0
|
|
|
6,032,478
|
|
|
0
|
|
|
6,032,478
|
| ||||
Value of 2016-2018 performance units
|
|
1,507,279
|
(1)
|
|
1,507,279
|
(1)
|
|
0
|
|
|
628,995
|
(2)
| ||||
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
|
| ||||
Continuing health care benefits for applicable period(3)
|
|
0
|
|
|
33,678
|
|
|
33,678
|
|
|
0
|
| ||||
Continuing retirement plan contributions for two years(4)
|
|
0
|
|
|
335,120
|
|
|
0
|
|
|
0
|
| ||||
Acceleration of unvested balance of SRP account
|
|
0
|
|
|
140,545
|
|
|
0
|
|
|
140,545
|
| ||||
Acceleration of unvested balance of DCP account
|
|
1,617,574
|
|
|
1,617,574
|
|
|
1,617,574
|
|
|
1,617,574
|
| ||||
Total | 3,124,853 | 12,419,435 | 4,952,452 | 8,419,592 | ||||||||||||
| (1) | In the event of a change of control occurring after the first six months of the 2016-2018 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, 2016 multiplied by a payout percentage of 150%, which assumes a target level of performance for the operating performance measures of 100% modified up by 50 percentage points by the TSR modifier which is based on our TSR percentile rank relative to the TSRs of the companies in the Reference Group for the period from the May 3, 2016 grant date through September 30, 2016, the last business day of the last fiscal quarter before the change in control. |
In the event of a change of control occurring during the second year 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, 2016 multiplied by a payout percentage of 65.4%, 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, 2016, the last business day before the change in control. |
In the event of a change of control during the third 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, |
|
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 the last 20 trading days of the shortened performance period ended on September 30, 2016 or December 30, |
For information on the actual number of units to be earned for these performance unit grants, see “Elements of Compensation and Specific Compensation Decisions—Long-Term Incentive Equity Awards” in our Compensation Discussion and Analysis, and |
| (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 and 6 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 |
ï 2017 Proxy Statement105
| EXECUTIVE COMPENSATION TABLES |
| (3) | Reflects the estimated cost of medical, dental and |
| (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, |
| (5) | Reflects amounts that would be paid to Mr. Meline pursuant to his offer letter in the event Mr. Meline 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 the cash |
| (7) |
|
|
106 ï 20152017 Proxy Statement85
| DIRECTOR COMPENSATION |
The compensation program for ournon-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.
20142016 Director Compensation
Cash CompensationCompensation.. Eachnon-employee director receives an annual cash retainer of $100,000. In addition, chairs of our Boardthe four committees receive an additional $20,000 annual retainersretainer as follows: (i) Audit Committee, $20,000;Committee; (ii) Compensation and Management Development Committee, $20,000;Committee; (iii) Corporate Responsibility and Compliance Committee, $20,000Committee; and (iv) Governance and Nominating Committee, $20,000.Committee. 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 taxgross-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 IncentivesIncentives.. Under the provisions of our revised Director Equity Incentive Program, eachnon-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. Vested RSUs may be deferred by the director.shares. Directors that elect to defer receipt of the shares accrue
dividend equivalents on the vested RSUs during the deferral period. Stock options were eliminated from the annual equity grants to non-employee directors commencing in 2013.
Deferred Compensation and Other BenefitsBenefits.. 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—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 andnon-employee directors. Our directors participate in the program on the same terms as our staff members. The Amgen Foundation, Inc. matches, on adollar-for-dollar basis, qualifying donations made by directors and staff members to eligible organizations, up to $20,000 per person, per year.
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 GuidelinesGuidelines.. Allnon-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 anon-employee director.
Allnon-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 first 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
86 ï 2015 Proxy Statement
of record by thenon-employee director, issued and 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. All directors with compliance
ï 2017 Proxy Statement107
| DIRECTOR COMPENSATION |
dates that were on or prior to December 31, 2016 met the stock ownership guidelines as of December 31, 2016.
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 (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 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, 2014 met the stock ownership guidelines as of December 31, 2014. Directors elected to the Board within the last five years have the following compliance dates:
| ||
| ||
| ||
| ||
| ||
|
ï 2015 Proxy Statement87
Director Compensation Table
The following table shows compensation of thenon-employee members of our Board for 2014.2016. 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. Charles M. Holley, Jr. is not included in the table as he was appointed to the Board effective February 1, 2017 and thus received no compensation in 2016.
| Non-Employee Director | Fees Earned or Paid in Cash($)(3) | Stock Awards($)(4)(5) | All Other Compensation($)(6) | Total($) | Fees Earned or Paid in Cash($)(4) | Stock Awards($)(5)(6) | All Other Compensation($)(7) | Total($) | ||||||||||||||||||||||||
David Baltimore | 121,000 | 199,981 | 21,009 | 341,990 |
|
124,000
|
|
|
199,972
|
|
|
24,986
|
|
|
348,958
|
| ||||||||||||||||
Frank J. Biondi, Jr. | 145,000 | 199,981 | 42,821 | 387,802 |
|
145,000
|
|
|
199,972
|
|
|
54,376
|
|
|
399,348
|
| ||||||||||||||||
François de Carbonnel | 121,000 | 199,981 | 19,038 | 340,019 |
|
125,000
|
|
|
199,972
|
|
|
18,718
|
|
|
343,690
|
| ||||||||||||||||
Vance D. Coffman | 177,000 | 199,981 | 35,627 | 412,608 | ||||||||||||||||||||||||||||
Vance D. Coffman(1)
|
|
84,500
|
|
|
199,972
|
|
|
49,198
|
|
|
333,670
|
| ||||||||||||||||||||
Robert A. Eckert | 124,000 | 199,981 | 20,705 | 344,686 |
|
139,500
|
|
|
199,972
|
|
|
20,000
|
|
|
359,472
|
| ||||||||||||||||
Greg C. Garland | 122,000 | 199,981 | 15,000 | 336,981 |
|
137,000
|
|
|
199,972
|
|
|
20,000
|
|
|
356,972
|
| ||||||||||||||||
Fred Hassan
|
|
125,000
|
|
|
199,972
|
|
|
20,023
|
|
|
344,995
|
| ||||||||||||||||||||
Rebecca M. Henderson | 116,000 | 199,981 | 19,408 | 335,389 |
|
122,000
|
|
|
199,972
|
|
|
27,526
|
|
|
349,498
|
| ||||||||||||||||
Frank C. Herringer(1) | 145,000 | 199,981 | 45,755 | 390,736 | ||||||||||||||||||||||||||||
Frank C. Herringer(2)
|
|
144,000
|
|
|
199,972
|
|
|
59,583
|
|
|
403,555
|
| ||||||||||||||||||||
Tyler Jacks | 118,000 | 199,981 | 20,000 | 337,981 |
|
119,000
|
|
|
199,972
|
|
|
18,865
|
|
|
337,837
|
| ||||||||||||||||
Gilbert S. Omenn(2) | 61,000 | 199,981 | 35,800 | 296,781 | ||||||||||||||||||||||||||||
Ellen J. Kullman(3)
|
|
30,000
|
|
|
49,970
|
|
|
0
|
|
|
79,970
|
| ||||||||||||||||||||
Judith C. Pelham | 125,000 | 199,981 | 20,622 | 345,603 |
|
123,000
|
|
|
199,972
|
|
|
20,773
|
|
|
343,745
|
| ||||||||||||||||
Ronald D. Sugar | 138,000 | 199,981 | 20,240 | 358,221 |
|
140,000
|
|
|
199,972
|
|
|
20,000
|
|
|
359,972
|
| ||||||||||||||||
R. Sanders Williams(2) | 29,000 | 49,928 | 13,100 | 92,028 | ||||||||||||||||||||||||||||
R. Sanders Williams
|
|
120,000
|
|
|
199,972
|
|
|
20,000
|
|
|
339,972
|
| ||||||||||||||||||||
| (1) |
|
Dr. |
| (2) | All cash fees were deferred by Mr. Herringer under our NDCP. |
| (3) | Ms. Kullman was appointed to our Board on October 14, 2016. Accordingly, fees earned by Ms. Kullman in 2016 consist of apro-rata amount of the annual retainer fee(pro-rated on a quarterly basis) and fees for committee meetings attended in 2016. |
| (4) | Reflects all fees |
Reflects the grant date fair values of RSUs granted during |
88108 ï 20152017 Proxy Statement
| DIRECTOR COMPENSATION |
All of the RSUs granted to directors in |
The table below shows the aggregate numbers of stock awards and stock option awards outstanding for eachnon-employee director as of December 31, |
| Non-Employee Director | Aggregate Stock Awards Outstanding as of December 31, 2014(#) | Aggregate Option Awards Outstanding as of December 31, 2014(#) | Aggregate Stock Awards Outstanding as of December 31, 2016(#) | Aggregate Option Awards Outstanding as of December 31, 2016(#) | ||||||||||||
Restricted Stock Units and Dividend Equivalents | Stock Options | Restricted Stock Units and Dividend Equivalents | Stock Options | |||||||||||||
David Baltimore | 0 | 25,000 |
|
0
|
|
|
15,000
|
| ||||||||
Frank J. Biondi, Jr. | 15,318 | 15,000 |
|
18,588
|
|
|
15,000
|
| ||||||||
François de Carbonnel | 2,115 | 5,000 |
|
2,215
|
|
|
0
|
| ||||||||
Vance D. Coffman | 8,377 | 25,000 |
|
8,773
|
|
|
15,000
|
| ||||||||
Robert A. Eckert | 3,722 | 20,000 |
|
6,443
|
|
|
20,000
|
| ||||||||
Greg C. Garland | 0 | 0 |
|
0
|
|
|
0
|
| ||||||||
Fred Hassan
|
|
0
|
|
|
0
|
| ||||||||||
Rebecca M. Henderson | 7,469 | 8,000 |
|
10,368
|
|
|
8,000
|
| ||||||||
Frank C. Herringer | 16,742 | 25,000 |
|
20,081
|
|
|
15,000
|
| ||||||||
Tyler Jacks | 1,818 | 20,000 |
|
4,449
|
|
|
20,000
|
| ||||||||
Gilbert S. Omenn | 4,647 | 25,000 | ||||||||||||||
Ellen J. Kullman
|
|
0
|
|
|
0
|
| ||||||||||
Judith C. Pelham | 0 | 0 |
|
0
|
|
|
0
|
| ||||||||
Ronald D. Sugar | 7,109 | 30,000 |
|
9,991
|
|
|
30,000
|
| ||||||||
R. Sanders Williams | 0 | 0 |
|
0
|
|
|
0
|
| ||||||||
ï 20152017 Proxy Statement 89109
| DIRECTOR COMPENSATION |
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) | Reimbursement of Expenses in Connection with Guests Accompanying Directors on Business Travel(c) | Other(d) | Dividends Accrued on Vested/ Deferred RSUs($)(e) | Total($) | |||||||||||||||||||||||||||||||
| Non-Employee Director | Aggregate Incremental Amounts($) | Tax Gross- Up($) | Aggregate Incremental Amounts ($) | Tax Gross- Up($) | Aggregate Incremental Amounts($) | Tax Gross- Up($) | ||||||||||||||||||||||||||||||
David Baltimore | 20,000 | 0 | 0 | 690 | 319 | 0 | 0 | 0 | 21,009 | |||||||||||||||||||||||||||
Frank J. Biondi, Jr. | 20,000 | 191 | 2,016 | 595 | 275 | 0 | 0 | 19,744 | 42,821 | |||||||||||||||||||||||||||
François de Carbonnel | 10,000 | 2,408 | 1,265 | 0 | 0 | 181 | 78 | 5,106 | 19,038 | |||||||||||||||||||||||||||
Vance D. Coffman | 20,000 | 0 | 0 | 0 | 0 | 0 | 0 | 15,627 | 35,627 | |||||||||||||||||||||||||||
Robert A. Eckert | 20,000 | 0 | 705 | 0 | 0 | 0 | 0 | 0 | 20,705 | |||||||||||||||||||||||||||
Greg C. Garland | 15,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 15,000 | |||||||||||||||||||||||||||
Rebecca M. Henderson | 15,000 | 0 | 0 | 0 | 0 | 0 | 0 | 4,408 | 19,408 | |||||||||||||||||||||||||||
Frank C. Herringer | 20,000 | 1,566 | 1,006 | 0 | 0 | 0 | 0 | 23,183 | 45,755 | |||||||||||||||||||||||||||
Tyler Jacks | 20,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 20,000 | |||||||||||||||||||||||||||
Gilbert S. Omenn | 20,000 | 569 | 1,393 | 1,232 | 509 | 621 | 257 | 11,219 | 35,800 | |||||||||||||||||||||||||||
Judith C. Pelham | 20,000 | 0 | 622 | 0 | 0 | 0 | 0 | 0 | 20,622 | |||||||||||||||||||||||||||
Ronald D. Sugar | 20,000 | 0 | 240 | 0 | 0 | 0 | 0 | 0 | 20,240 | |||||||||||||||||||||||||||
R. Sanders Williams | 13,100 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 13,100 | |||||||||||||||||||||||||||
Non-Employee Director | | Matching of Charitable Contributions ($)(a) |
| | Personal Use of Company Aircraft(b) |
| | Reimbursement of Expenses in Connection with Guests Accompanying Directors on Business Travel(c) |
| Other(d) | | Dividends Accrued on Vested/ Deferred RSUs($)(e) |
| Total($) | ||||||||||||||||||||||||
| | Aggregate Incremental Amounts($) |
| | Tax Gross- Up($) |
| | Aggregate Incremental Amounts($) |
| | Tax Gross- Up($) |
| | Aggregate Incremental Amounts($) |
| | Tax Gross- Up($) |
| |||||||||||||||||||||
David Baltimore
|
|
20,000
|
|
|
3,312
|
|
|
1,197
|
|
|
326
|
|
|
151
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
24,986
|
| |||||||||||
Frank J. Biondi, Jr.
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
455
|
|
|
210
|
|
|
0
|
|
|
0
|
|
|
33,711
|
|
|
54,376
|
| |||||||||||
François de Carbonnel
|
|
10,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
8,718
|
|
|
18,718
|
| |||||||||||
Vance D. Coffman
|
|
20,000
|
|
|
83
|
|
|
192
|
|
|
364
|
|
|
168
|
|
|
1,169
|
|
|
540
|
|
|
26,682
|
|
|
49,198
|
| |||||||||||
Robert A. Eckert
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,000
|
| |||||||||||
Greg C. Garland
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,000
|
| |||||||||||
Fred Hassan
|
|
20,000
|
|
|
0
|
|
|
23
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,023
|
| |||||||||||
Rebecca M. Henderson
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
7,526
|
|
|
27,526
|
| |||||||||||
Frank C. Herringer
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
39,583
|
|
|
59,583
|
| |||||||||||
Tyler Jacks
|
|
18,865
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
18,865
|
| |||||||||||
Ellen J. Kullman
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
| |||||||||||
Judith C. Pelham
|
|
20,000
|
|
|
243
|
|
|
530
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,773
|
| |||||||||||
Ronald D. Sugar
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,000
|
| |||||||||||
R. Sanders Williams
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,000
|
| |||||||||||
| (a) | These are charitable contributions of The Amgen Foundation, Inc. that matched the directors’ charitable contributions made in |
| (b) | Where we have guests accompany directors on our aircraft or where the director, fornon-business purposes, accompanies executives using our aircraft for business purposes, we typically incur no incremental cost for transporting 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 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) |
|
| (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. |
90110 ï 20152017 Proxy Statement
| 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, 2014.2016.
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
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 onForm 10-K for the year ended December 31, 20142016 for filing with the Securities and Exchange Commission.
Audit Committee of the Board of Directors
Frank J. Biondi, Jr., Chairman
David Baltimore
François de Carbonnel
Robert A. EckertFred Hassan
Greg C. GarlandRebecca M. Henderson
Charles M. Holley, Jr.
Tyler Jacks
Ellen J. Kullman
Judith C. Pelham
ï 20152017 Proxy Statement 91111
| 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, 20142016 and December 31, 2013,2015, and fees for other services rendered by Ernst & Young during these periods.
| 2014 | 2013 | 2016 | 2015 | |||||||||||||
Audit | $ | 6,894,000 | $ | 6,425,000 |
$
|
7,703,000
|
|
$
|
7,266,940
|
| ||||||
Audit-Related | 385,000 | 371,000 |
|
427,000
|
|
|
439,000
|
| ||||||||
Tax | 136,000 | 367,000 |
|
0
|
|
|
0
|
| ||||||||
All Other Fees | 0 | 0 |
|
0
|
|
|
0
|
| ||||||||
Total Fees | $ | 7,415,000 | $ | 7,163,000 |
$
|
8,130,000
|
|
$
|
7,705,940
|
| ||||||
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.
The Audit Committee has approved all audit and permissiblenon-audit services prior to such services being provided by Ernst & Young. The Audit Committee, or one or morethe Chairman of its designated members that havethe Audit Committee who has been granted authority by the Audit Committee, meets to approveapproves each audit ornon-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 membersChairman of the Audit Committee is presented to the entire Audit Committee at a subsequent meeting.
92112 ï 20152017 Proxy Statement
| ANNUAL REPORT |
The Company’s Annual Report on Form10-Kfor fiscal 2014,2016, which contains the consolidated financial statements of the Company for fiscal 2014,2016, 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 Form10-K for fiscal 2014,2016, filed with the Securities and Exchange Commission, including the financial statements and schedules thereto, without the accompanying exhibits, by writingto: 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 Form10-K is also available online aton the Company’s website atwww.amgen.com. A list of exhibits is included in the Form10-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 Party Transactions
Under our written Approval of Related Party Transactions policy, a Securities and Exchange Commission, or SEC, 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 personspersons; 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 is required to update the Audit Committee as to any material changes to any approved or ratified related party transaction. A “Related“SEC 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. |
|
ï 2017 Proxy Statement113
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
| 2. |
|
ï 2015 Proxy Statement93
Item 404 of RegulationS-K, or the listing requirements of The NASDAQ Stock Market LLC, including Rule 5630) when aggregated with all similar transactions; or |
| 3. |
|
In deciding whether to approve or ratify a related party transaction, the Audit Committee will consider the following factors:
whetherWhether 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;
whetherWhether there are demonstrable business reasons for the Company to enter into the transaction;
whetherWhether the transaction would impair the independence of an outside director; and
whetherWhether 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 thebrother-in-law of Brian M. McNamee, an executive officer of the Company, is employed by us as Key AccountsNational Account Senior Manager. Mr. Jones’ compensation earned in 20142016 consisted of $121,921$163,931 in base salary, $70,350$59,966 in annual cash incentive awards and bonuses and a
grant of 12370 restricted stock units and 12464 performance units,
each valued at $13,703$10,945 and $12,564,$10,916 respectively, on the date of grant.grant date. This transaction did not require the review or approval of the Audit Committee pursuant to our Approval of Related Party Transactions policy.policy because it was reviewed by our Compensation and Management Development Committee.
94114 ï 20152017 Proxy Statement
| 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.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, 2014,2016, the Reporting Persons met all applicable Section 16(a) filing requirements.
Stockholder Proposals for the 2018 Annual Meeting
Stockholder Proposals and Director Nominees for Inclusion in our 2018 Proxy Statement
Proposals Pursuant to Rule 14a-8.14a-8. Pursuant to Rule14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in our proxy statement and for consideration at our 20162018 annual meeting of stockholders. To be eligible for inclusion in our 20162018 proxy statement, your proposal must be received by our Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799, Mail Stop 38-5-A no later than December 4, 2015,7, 2017, 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 Rule14a-8.
Business Proposals andDirector Nominations Pursuant to our Bylaws.Our Bylaws. Under theOur Amended and Restated Bylaws of Amgen Inc., or Bylaws, 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 20162018 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 7, 2017 and no later than December 7, 2017 assuming the date of the 20162018 annual meeting of stockholders is not more than thirty days before and not more than seventy days after the anniversary date of the 20152017 Annual Meeting of Stockholders, or Annual Meeting, and such nomination notice must be delivered to our Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799.
Stockholder Proposals and Nominees Brought at the 2018 Annual Meeting Without Inclusion in our 2018 Proxy Statement
Business Proposals and Nominations Pursuant to our Bylaws.To nominate a director or bring any other business before the stockholders at the 2018 annual meeting of stockholders that will not be included in our 2018 proxy statement pursuant to Rule14a-8 or the Proxy Access provisions of our Bylaws, you must comply with all of the procedures, information requirements, qualifications and conditions set forth in our Bylaws. In addition, assuming the date of the 2018 annual meeting of stockholders is not more than thirty days before and not more than seventy days after the anniversary date of the Annual Meeting, you must notify us in writing and such notice must be delivered to our Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799, Mail Stop 38-5-A no earlier than January 15, 2016 and no later than February 14,
2016. Moreover, as further described below, certain information required to be included in such notice must be updated as 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, 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
ï 20152017 Proxy Statement 95115
| OTHER MATTERS |
contemplated by Item 407(a) of Regulation S-K adopted by the SEC (or any corresponding provisions subsequently adopted by the SECOaks, California 91320-1799 no earlier than January 19, 2018 and applicable to the Company). Our Bylaws provide that a a stockholder’s advance notice of a proposed business item (other than a nomination) must include: (1) a brief description of the business desired to be brought before the meeting; (2) the text of the proposal or business (including the text of any resolutions proposed for consideration 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, all nominees proposed by the stockholder giving the notice and any Stockholder Associated Persons, 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 stockholder 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, 2018.
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.
96 ï 2015 Proxy Statement
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 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.
116 ï 2017 Proxy Statement
| 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 reportAnnual Report on Form10-K for the year ended December 31, 20142016 and any subsequent periodic reports on Form 10-Q and Form 8-K. Please refer to the Form 10-K and any subsequentForms 10-Q and 8-K for additional information on the uncertainties and risk factors related to our business.Form8-K. Unless otherwise noted, Amgen is providing this information as of March 16, 2015April 6, 2017 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
ï 2015 Proxy Statement97
differ materially from those we project. Our results may be affected by our ability to successfully market both new and existing 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. We may experience difficulties, delays or unexpected costsCertain of our distributors, customers and not achieve anticipated benefitspayers have substantial purchasing leverage in their dealings with us. 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 savings from our restructuring plan.on its business and results of operations. Our efforts to acquire other companies or
ï 2017 Proxy Statement117
| OTHER MATTERS |
products and to integrate the operations of companies we have acquired may not be successful. We may not be able to 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 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
David J. ScottJonathan P. Graham
Secretary
April 2, 2015
98118 ï 20152017 Proxy Statement
| 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.
ï 20152017 Proxy Statement A-1
| APPENDIX B |
Reconciliations of GAAP toNon-GAAP Measures
Amgen Inc.
Reconciliations of GAAP toNon-GAAP Measures
($ In millions)
(Unaudited)
| Years ended December 31, | ||||||||
|
| |||||||
| 2016 | 2015 | |||||||
GAAP operating expenses | $ | 13,197 | ||||||
Adjustments to operating expenses: | ||||||||
Adjustments to cost of sales | (1,249) | |||||||
Adjustments to research and development expenses | (85) | |||||||
Adjustments to selling, general and administrative expenses | (185) | |||||||
Certain net charges pursuant to our restructuring initiative(a) | (24) | |||||||
Expense related to various legal proceedings | (105) | |||||||
Acquisition-related adjustments | (4) | |||||||
|
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Total adjustments to operating expenses | (1,652) | |||||||
|
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Non-GAAP operating expenses | $ | 11,545 | ||||||
|
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GAAP operating income | $ | 9,794 | $ | 8,470 | ||||
Adjustments to operating income: | ||||||||
Acquisition-related expenses(b) | 1,510 | 1,377 | ||||||
Certain net charges pursuant to our restructuring initiative(a) | 37 | 114 | ||||||
Expense related to various legal proceedings | 105 | 91 | ||||||
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Total adjustments to operating income | 1,652 | 1,582 | ||||||
|
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| |||||
Non-GAAP operating income | $ | 11,446 | $ | 10,052 | ||||
|
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| |||||
Product sales | $ | 21,892 | ||||||
GAAP operating margin | 44.7% | |||||||
Impact of total adjustments to operating income | 7.6% | |||||||
|
| |||||||
Non-GAAP operating margin | 52.3% | |||||||
|
| |||||||
ï 2017 Proxy StatementB-1
| APPENDIX B |
| Years ended December 31, | ||||||||
|
| |||||||
| 2016 | 2015 | |||||||
GAAP net income | $ | 7,722 | $ | 6,939 | ||||
Adjustments to net income: | ||||||||
Adjustments to operating income | 1,652 | 1,582 | ||||||
Income tax effect of the above adjustments(c) | (525 | ) | (496 | ) | ||||
Other income tax adjustments(d) | (64 | ) | (71 | ) | ||||
|
|
|
| |||||
Non-GAAP net income | $ | 8,785 | $ | 7,954 | ||||
|
|
|
| |||||
Weighted-average shares for diluted EPS | 754 | |||||||
|
| |||||||
GAAP diluted EPS | $ | 10.24 | ||||||
|
| |||||||
Non-GAAP diluted EPS | $ | 11.65 | ||||||
|
| |||||||
| (a) | The adjustments related primarily to asset impairments, accelerated depreciation and other charges related to the closure of our facilities, as well as severance. 2015 also included gains recognized on the sale of assets related to our site closures. |
| (b) | The adjustments related primarily tonon-cash amortization of intangible assets acquired in business combinations. |
| (c) | The tax effect of the adjustments between our GAAP andnon-GAAP results takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). Generally, this results in a tax impact at the U.S. marginal tax rate for certain adjustments, including the majority of amortization of intangible assets, whereas the tax impact of other adjustments, including restructuring expense, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable tax rate(s) in those jurisdictions. |
| (d) | The adjustments related to certain prior period items excluded fromnon-GAAP earnings. |
B-2 ï 2017 Proxy Statement
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SAMPLE | NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES | |||||||||||
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BUSINESS REPLY MAIL FIRST-CLASS MAIL PERMIT NO. 67 THOUSAND OAKS CA | ||||||||||||
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ANNUAL MEETING AMGEN | ||||||||||||
PO BOX 2605 | ||||||||||||
SEAL BEACH CA 90740-9906 | ||||||||||||
SAMPLE
Only Amgen Inc. stockholders with admittance tickets will be admitted to the 20152017 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 16, 2015.20, 2017. Ensuring the 20152017 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. |
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Name | (Please print) | |||||||
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| Address | ||||||||
( ) | ||||||||
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| City | State | Zip | Telephone No. (Please provide) | |||||
YOU DO NOT NEED TO RETURN THIS CARD IF YOU DO NOT PLAN TO ATTEND
THE 20152017 ANNUAL MEETING OF STOCKHOLDERS.
SAMPLE
ANNUAL MEETING OF STOCKHOLDERS OF
AMGEN INC.
May 14, 201519, 2017
GO GREEN
e-Consent makes it easy to go paperless. Withe-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.comwww.astfinancial.com to enjoy online access.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 14, 2015: 19, 2017:
The Notice of 20152017 Annual Meeting of Stockholders, Proxy Statement, Form Proxy Card and 20142016 Annual Report are available at http://www.astproxyportal.com/ast/Amgen.Amgen
If you wish to attend the Annual Meeting, please visit https://starcite.
[address has been provided to stockholders directly].
Please smarteventscloud. sign,com/2015AnnualMeeting date and mail to register.
your proxy card in the envelope provided as soon as possible.
Please detach along perforated as possible. 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.of for office election expiring1. To elect thirteen directors to the Board of Directors of Amgen Inc. for a term
of office expiring at Board the 2016 are:2018 annual meeting of stockholders. The nominees for election to the Board of Directors are:
FOR AGAINST The nominees 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. GarlandTo indicate changes change your to the the new address registered address on name(s) your in the account, address on the please account space check above. may not the Please be box submitted at note right and that via this method.Signature of StockholderNote: Please sign exactly asfull title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such.Date:Signature of StockholderIf When signer signing is a partnership, as executor, please administrator, sign in partnership attorney-in name -fact, trustee by authorized or guardian, person please . giveDate:Mr. Fred Hassan
Dr. Rebecca M. Henderson Mr. Frank C. Herringer Dr. Tyler Jacks Ms. Judith C. Pelham Dr. Ronald D. Sugar Dr. R. Sanders Williams
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
Mr. Frank C. Herringer
Mr. Charles M. Holley, Jr.
Dr. Tyler Jacks
Ms. Ellen J. Kullman
Dr. Ronald D. Sugar
Dr. R. Sanders Williams
The Board of Directors recommends a vote “FOR” each of items #2 and #3.
FOR AGAINST ABSTAIN
2. To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2015.2017.
3. Advisory vote to approve our executive compensation.
The Board of Directors recommends a vote “AGAINST” the Stockholder Proposalof “ONE YEAR” in item #4.
4. Advisory vote on the frequency of future stockholder advisory votes to approve executive compensation.
ONE YEAR TWO YEARS THREE YEARS ABSTAIN
The Board of Directors recommends a vote “AGAINST” the Stockholder
Proposal in item #5.
FOR AGAINST ABSTAIN
5. Stockholder Proposal (Vote Tabulation).proposal to adopt majority votes cast standard for matters presented by stockholders.
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
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
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, for ONE YEAR on the frequency of future stockholder advisory votes to approve executive compensation, and AGAINST the Stockholder Proposal.
As of the date hereof, the undersigned hereby acknowledges receipt of the 20152017 Proxy Statement and accompanying Notice of 20152017 Annual Meeting of Stockholders to be held on May 14, 2015,19, 2017, Form Proxy Card and the 20142016 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 20152017 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 20152017 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.
AMGEN INC.
ONE AMGEN CENTER DRIVE, THOUSAND OAKS, CA 91320-1799
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 20152017 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14, 201519, 2017
Robert A. Bradway, David 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 20152017 Annual Meeting of Stockholders of Amgen Inc., to be held on Thursday,Friday, May 14, 2015,19, 2017, 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 and to be signed on the reverse side)
1.1
14475
SAMPLE
SAMPLE ANNUAL MEETING AMGEN OF STOCKHOLDERS OF AMGEN INC. OF May 14, 201519, 2017 PROXY VOTING INSTRUCTIONSINTERNET— 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— 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 PMETPM ET the day before the meeting. MAIL—MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible.INPERSON— IN PERSON - You may vote your shares in person by attending the Annual Meeting.
GO GREEN—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.comwww.astfinancial.com to enjoy online access.If you wish [address has been provided to attend the Annual Meeting, please visit [deleted text from public filing] to register.
stockholders directly]. COMPANY NUMBER ACCOUNT NUMBER
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 14, 2015:
19, 2017: The Notice of 20152017 Annual Meeting of Stockholders, Proxy Statement, Form Proxy Card and 20142016 Annual Report are available at http://www.astproxyportal.com/ast/Amgen.
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 HEREThe Board of Directors recommends a vote “FOR” each listed nominee in item #1.
1. To of office elect thirteen expiring directors at the 20162018 to annual the Board meeting of Directors of stockholders. of Amgen The Inc. for nominees a term for election to the Board of Directors 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 Dr. Rebecca M. Henderson To indicate changes change your to the the new address registered address on name(s) your in the account, address on the please account space check above. may not the Please be box submitted at note right and that via this method.
FOR AGAINST ABSTAIN Mr. Frank C. Herringer Mr. Charles M. Holley, Jr. Dr. Tyler Jacks Ms. Ellen J. Kullman Dr. Ronald D. Sugar Dr. R. Sanders Williams The Board of Directors recommends a vote “FOR” each of items #2 and #3. FOR AGAINST ABSTAIN 2. To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2017. 3. Advisory vote to approve our executive compensation. The Board of Directors recommends a vote of “ONE YEAR” in item #4. ONE TWO THREE YEAR YEARS YEARS ABSTAIN 4. Advisory vote on the frequency of future stockholder advisory votes to approve executive compensation. The Board of Directors recommends a vote “AGAINST” the Stockholder Proposal in item #5. FOR AGAINST ABSTAIN 5. Stockholder proposal to adopt majority votes cast standard for matters presented by stockholders. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 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.Signature of Stockholder
If When signer signing is a partnership, as executor, please administrator, sign in partnership attorney-in-fact, name trustee by authorized or guardian, person. please giveDate:Dr. Rebecca M. Henderson Mr. Frank C. Herringer Dr. Tyler Jacks Ms. Judith C. Pelham Dr. Ronald D. Sugar Dr. R. Sanders WilliamsFOR AGAINST ABSTAINThe 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, 2015.3. Advisory vote to approve our executive compensation.The Board of Directors recommends a vote “AGAINST” the Stockholder Proposal in item #4.4. Stockholder Proposal (Vote Tabulation).
SAMPLE
SAMPLE 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, for ONE YEAR on the frequency of future stockholder advisory votes to approve executive compensation, and AGAINST the Stockholder Proposal.
As of the date hereof, the undersigned hereby acknowledges receipt of the 20152017 Proxy Statement and accompanying Notice of 20152017 Annual Meeting of Stockholders to be held on May 14, 2015,19, 2017, Form Proxy Card and the 20142016 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 20152017 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 20152017 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.
AMGEN INC.
ONE AMGEN CENTER DRIVE, THOUSAND OAKS, CA 91320-1799 PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 20152017 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14, 2015
19, 2017 Robert A. Bradway, David 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 20152017 Annual Meeting of Stockholders of Amgen Inc., to be held on Thursday,Friday, May 14, 2015,19, 2017, 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
