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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☐ | Preliminary Proxy Statement | |||
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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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2018 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, 201511, 2018
Dear Fellow Stockholder:
You are invited to attend the 20152018 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc. to be held on Thursday,Tuesday, May 14, 2015,22, 2018, at 11:00 A.M., local time, at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362.
Our Company:At this year’s Annual Meeting you will be asked to: (i) elect 13 directorsAmgen, our mission is to serve patients; this mission guides our unwavering commitment to deliver breakthrough treatments for unmet medical needs. In 2017, we secured 80 country/product launches of new medicines in new indications around the world. We advanced the largest early pipeline in Amgen’s history and set the stage for continued innovation in the years to come. Our products span six therapeutic areas – cardiovascular, oncology/hematology, neuroscience, inflammation, nephrology, and bone health – and we make a significant difference in the fight against serious illness. We continue to seek new treatments for serious diseases and lowering the cost burden that these diseases place on society.
Business Strategy:Our strategy is clear – in six focused therapeutic areas we seek to develop innovativemedicines that address important unmet medical needs in the fight against serious illness. Our strategy includes an integrated set of activities we are pursuing to strengthen our competitive position in our industry. In addition to our significant commitment to innovative research and development, we are developing branded biosimilars, expanding our global geographic reach, deploying next-generation biomanufacturing facilities, improving drug delivery systems, adhering to a disciplined approach to capital allocation while investing for long-term growth, and transforming Amgen for the ensuing year; (ii) ratifyfuture. In the selectionCompensation Discussion and Analysis section of this proxy, we further discuss our progress for 2017 against these objectives. In 2017, we had consistent, strong execution of our independent registered public accountants; (iii) hold an advisory votestrategy and remained focused on generating long-term stockholder value and built on a strong record of delivering superior returns to approve our stockholders. A clear measure of our success is the number of patients reached and helped by our medicines throughout the world.
Stockholder Engagement:We are also guided by the perspectives of our stockholders as expressed through direct engagement with us throughout the year and at our Annual Meeting. Since our 2017 annual meeting of stockholders, in addition to our outreach by our executives and Investor Relations department to investors, we have engaged in governance-focused outreach activities and discussions with the governance teams for stockholders comprising approximately 52% of our outstanding shares. Topics discussed included our business and financial performance, our governance and executive compensation; (iv) consider one stockholder proposal, if properly presentedcompensation programs, including the direct link to our business strategy, and our corporate responsibility and sustainability initiatives. Feedback received during these meetings is shared with the full Board of Directors and informed 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 Meeting and (v) transact such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof. The accompanying Notice of Annual Meeting of Stockholders and proxy statement describe these matters. We urge you to read this information carefully.
The Board of Directors unanimously believes that the election of its nominees for directors, the ratification of its selection of independent registered public accountants and the advisory vote to approve our executive compensation are advisable and in the best interests of Amgen and our stockholders. Accordingly, the Board of Directors recommends a vote FOR the election of the 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.Meeting. In addition to the business to be transacted asand described above, managementin the accompanying Notice of Annual Meeting of Stockholders, I will speakdiscuss recent developments during the past year, the substantial progress we made on our developments of the past yearstrategic priorities for 2017, 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.questions.
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 14.22. As a final note and also on behalf of the Board of Directors, I would like to thank David Baltimore and François de Carbonnel who are not standing forre-election, for their years of wise counsel and guidance for Amgen.
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, 201522, 2018
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: | Tuesday, May 22, 2018 at 11:00 A.M., local time | |||
Location: | Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362 | |||
Record Date: | March 23, 2018. Amgen stockholders of record at the close of business on the record date are entitled to receive notice of, and vote at, the 2018 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 11, 2018 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 hold an advisory vote to approve our executive compensation; | |||
3. | To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, |
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4. | To consider one stockholder proposal for an annual report on the extent to which risks related to public concern over drug pricing strategies are integrated into our executive incentive compensation, if properly |
5. | 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 23, 2018. 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. Scott
Jonathan P. Graham
Secretary
Thousand Oaks, California
April 2, 201511, 2018
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ï 20152018 Proxy Statement
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This summary contains highlights about our Company and the upcoming 20152018 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.
20152018 Annual Meeting of Stockholders
Date and Time: |
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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: | Advisory Vote to Approve Our Executive Compensation (page 27) | FOR | ||
Item 3: | Ratification of Selection of Independent Registered Public Accountants (page | FOR | ||
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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.
Stockholder Proposal For An Annual Report on the Extent To Which Risks Related to |
AGAINST
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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.
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ï 20152018 Proxy Statement1
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9 new Directors since 2012 8 Experienced Current and Former Public Company 6 Directors w/ Scientific Research and/or CEO/CFO Healthcare Experience 5 Directors with Financial Industry Experience 3 Women PROXY ACCESS FOR DIRECTOR NOMINATIONS 92% INDEPENDENT DIRECTORS* LEAD INDEPENDENT DIRECTOR 9 NEW DIRECTORS SINCE 2012* ~4.8 YEARS AVERAGE TENURE*8 CURRENT/FORMER PUBLIC COMPANY CEO/CFOs
Executive Compensation HighlightsItem 1: Election of 13 Nominees to the Board of Directors (Page 7)
Nominee | Age | | Director Since |
| Audit | | Governance and Nominating |
| Executive | | Compensation and Management Development |
| | Equity Award |
| | Corporate Responsibility and Compliance | |||||||||||||||||
Wanda M. Austin
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| 63
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| 2017
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| M
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| M
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Robert A. Bradway
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| 55
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| 2011
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| C
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| M
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Brian J. Druker(1)
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| 62
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| Initial Election
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Robert A. Eckert
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| 63
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| 2012
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| M
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| M
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| C
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Greg C. Garland
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| 60
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| 2013
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| C
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| M
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| M
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| M
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Fred Hassan
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| 72
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| 2015
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| M
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| M
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Rebecca M. Henderson
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| 57
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| 2009
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| M
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| M
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Frank C. Herringer
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| 75
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| 2004
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| M
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| M
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| M
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Charles M. Holley, Jr.
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| 61
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| 2017
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| C
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| M
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Tyler Jacks
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| 57
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| 2012
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| M
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| M
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Ellen J. Kullman
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| 62
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| 2016
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| M
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| M
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Ronald D. Sugar
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| 69
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| 2010
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R. Sanders Williams
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| 69
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| 2014
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| M
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| M
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“C” |
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“M” | indicates member of |
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
(1) |
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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 Highlights and Best Practices
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 requirements for our directors and for vice presidents and above. (pages 61 and 86)
We have a Company-wide Enterprise Risk Management Program to identify, assess, manage, report and monitor enterprise risk and areas that may affect our ability to achieve our objectives. This includes an annual detailed compensation risk analysis performed with the assistance of the Compensation and Management Development Committee’s independent consultant. (page 31)
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)
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)
* | For our director nominees. |
2 ï 20152018 Proxy Statement
Proxy Statement Summary |
We Have Implemented Governance Best Practices
We continuously monitor developments and best practices in corporate governance and consider stockholder feedback when enhancing our governance structures. Below are highlights of our key governance practices:
✓ | Proxy Access(pages 17 and 96) |
- | up to 20 eligible stockholders that own 3% of shares |
- | for 3 years who meet the requirements set forth in our Bylaws |
- | can nominate the greater of 20% or two nominees |
✓ | Majority Voting Standard for Director Elections(pages 16 and 94) |
✓ | Stockholders May Act By Written Consent(page 17) |
✓ | Stockholders Have a Right to Call Special Meetings (15% threshold requirement)(page 17) |
✓ | No Supermajority Vote Provisions in Articles or Bylaws(page 17) |
✓ | Highly Independent Board – 12 of our 13 director nominees(page 21) |
✓ | Strong Refreshment Practices With 9 New Directors Since 2012 – Average Board tenure of approximately 4.8 years for our director nominees(pages 8 and 16) |
✓ | Annual Anonymous Board and Committee Evaluation Process(page 21) |
✓ | All Directors Meet Our Board of Directors Guidelines for Director Qualifications and Evaluations(Appendix A) |
✓ | Robust Lead Independent Director Role(page 17) |
✓ | Significant Stock Ownership Requirements for Directors and Officers(pages 59 and 79) |
✓ | Corporate Responsibility and Compliance Committee(page 23) |
✓ | Enterprise Risk Management Program and Annual Detailed Compensation Risk Analysis – overseen by Board and Compensation and Management Development Committee, respectively(pages 18 and 26) |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE 13 NAMED NOMINEES. | ||||
ï 2018 Proxy Statement 3
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Amgen Inc.
One Amgen Center Drive
Thousand Oaks, California 91320-1799
Proxy StatementItem 2: Advisory Vote to Approve Our Executive
Information Concerning VotingCompensation (Page 27)
2017 Target Total Direct Compensation Mix
We pay for performance, and Solicitationpay outcomes reflect the achievements of our Named Executive Officers, or NEOs, against our strategic priorities.
We use median values as the reference point for each element of compensation at all levels, including our NEOs. We consider performance, job scope, and contribution in our final pay decisions.
Our compensation program is directly linked to our performance and strategy. Each year, our Compensation and Management Development Committee approves Company performance goals under our annual cash incentive programs that are designed to focus our staff on delivering financial and operational objectives to drive annual performance, advance strategic priorities, and position us for longer-term success. Based on our overall performance in 2017 compared to thepre-established Company performance goals of our annual cash incentive award program, we achieved 115% of our target bonus opportunity.
• | Performance units earned for the 2015-2017 (January 30, 2015 to January 30, 2018) performance period were based on an earned payout percentage of 93.4% reflecting the Company’s three-year Total Shareholder Return, or TSR, performance at the 46.7th percentile relative to the TSRs of the companies in the Standard & Poor’s 500 Index, or S&P 500, during the performance period. Our beginning stock price and ending stock price for purposes of the 2015-2017 performance period are each the average daily closing price of a share of our Common Stock for the beginning and last twenty trading days of the performance period ($154.49 and $186.61, respectively). Separately, but of note, Amgen’s 2015-2017 three-year TSR (30.0%) outperformed that of the average TSR of our 2017 peer group (11.6%). |
Long-term Incentive Equity Awards Target Annual Cash Incentive Base Salary CEO 90% Pay at Risk 75% Performance based Other NEOs 82% Pay at Risk 69% Performance based
4 ï 2018 Proxy Statement
Proxy Statement Summary |
2017 Performance
2017 Annual Cash Incentive Program
Goal
| Weighting
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% of Target
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1. Financial Performance
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Revenues
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| 30%
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| 110.6%
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Non-GAAP Net Income(1)
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| 30%
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| 116.8%
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2. Progress Innovative Pipeline
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Execute Key Clinical Studies and Regulatory Filings
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| 20%
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| 123.0%
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Advance Early Pipeline
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| 5%
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| 201.7%
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3. Deliver Annual Priorities
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Execute Critical Launches and Long-Term Commercial Objectives
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| 10%
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| 76.0%
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Realize Functional Transformation Objectives
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| 5%
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| 90.4%
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Composite Score
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| Achieved 115.0%
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Long-Term Incentive Performance Award Program
Long-Term Incentive Program
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Equity
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% of Target
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Performance Units | 50% | 93.4% | ||||
(2015-2017 performance period)
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(1) | Non-Generally Accepted Accounting Principles net income for purposes of the 2017 Company performance goals of our annual cash incentive award program is reported and reconciled inAppendix B. |
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. |
Generalï 2018 Proxy Statement 5
Proxy Statement Summary |
Item 3: Ratification of Selection of Independent Registered Public Accountants (Page 86)
The enclosed proxy is solicited on behalfAudit Committee of the Board of Directors, or Board, of Amgen Inc., a Delaware corporation, for use at our 2015 Annual Meeting of Stockholders, or Annual Meeting, to be held on Thursday, May 14, 2015, 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, 2015 to all stockholders entitled to notice of and to vote at the Annual Meeting.
Important Notice Regarding the Availability of Proxy Materials for the 2015 Stockholder Meeting to Be Held on May 14, 2015.
This proxy statement, our 2014 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 meeting of stockholders; proxy statement; 2014 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 13 directors to serve on our Board for a term of office expiring at the 2016 annual meeting of stockholders;
The ratification of the selection ofhas selected Ernst & Young LLP, or Ernst & Young, as our independent registered public accountants for the fiscal year ending December 31, 2015;2018.
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. | ||||
Item 4: Stockholder Proposal (Page 88)
Stockholders have informed the Company that they intend to present a proposal at our Annual Meeting.
The advisory voteproposal relates to approvethe request for an annual report on the extent to which risks related to public concern over drug pricing strategies are integrated into our executive compensation;incentive compensation.
One stockholder proposal, if properly presented; and
Any other business as may properly come before the Annual Meeting.
Who Can Vote
The Board has set March 16, 2015 asthoroughly considered the record dateproposal and believes that it is NOT in the Company’s or stockholders’ best interests for the Annual Meeting. You are entitled to notice and to vote if you were a stockholderreasons identified starting on page 89 of record of our Common Stock, $.0001the proxy statement, which include the following:
- | The proposal’s underlying subject matter is our drug pricing and capital allocation decisions. Such decisions are integral to our ordinary course operations and the proposed report would put us at a competitive disadvantage and be unduly burdensome while not providing meaningful additional information to stockholders; |
- | We already provide public disclosure regarding the factors that are integrated into our incentive compensation policies and the risks related to compensation; and |
- | We remain focused on delivering breakthrough treatments for unmet medical needs and are committed to working with the entire healthcare community to ensure continued innovation and enable patient access to needed medicines. |
THE BOARD STRONGLY AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST” THE STOCKHOLDER PROPOSAL FOR AN ANNUAL REPORT ON THE EXTENT TO WHICH RISKS RELATED TO PUBLIC CONCERN OVER DRUG PRICING STRATEGIES ARE INTEGRATED INTO OUR EXECUTIVE INCENTIVE COMPENSATION. |
6 ï 20152018 Proxy Statement3
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par value per share, or Common Stock, as of the close of business on March 16, 2015. You are entitled to one vote on each proposal for each share of Common Stock you held on the record date. Your shares may be voted at the Annual Meeting only if you are present in person or your shares are represented by a valid proxy.
Difference Between a Stockholder of Record and a “Street Name” Holder
If your shares are registered directly in your name, you are considered the stockholder of record with respect to those shares.
If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the stockholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares using the methods described below.
Shares Outstanding and Quorum
At the close of business on March 16, 2015, there were 757,913,499 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. The presence of the holders of a majority of the outstanding shares of our Common Stock entitled to vote constitutes a quorum, which is required to hold and conduct business at the Annual Meeting. Shares are counted as present at the Annual Meeting if:
you are present in person at the Annual Meeting; or
your shares are represented by a properly authorized and submitted proxy (submitted by mail, by telephone or over the Internet).
If you are a record holder and you submit your proxy, regardless of whether you abstain from voting on one or more matters, your shares will be counted as present at the Annual Meeting for the purpose of determining a quorum. If your shares are held in “street name,” your shares are counted as present for purposes of determining a quorum if your broker, bank, trust or other nominee submits a proxy covering your shares. Your broker, bank, trust or other nominee is entitled to submit a proxy covering your shares as
to certain “routine” matters, even if you have not instructed your broker, bank, trust or other nominee on how to vote on those matters. Please see the subsection “If You Do Not Specify How You Want Your Shares Voted” below. In the absence of a quorum, the Annual Meeting may be adjourned, from time to time, by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting.
Voting Your Shares
You may vote by attending the Annual Meeting and voting in person or by submitting a proxy. The method of voting by proxy differs (1) depending on whether you are viewing this proxy statement on the Internet or receiving a paper copy and (2) for shares held as a record holder and shares held in “street name.”
Shares Held as a Record Holder. If you hold your shares of Common Stock as a record holder and you are viewing this proxy statement on the Internet, you may submit a proxy over the Internet by following the instructions on the website referred to in the Notice previously mailed to you. You may request paper copies of the proxy statement and proxy card by following the instructions on the Notice. If you hold your shares of Common Stock as a record holder and you are reviewing a paper copy of this proxy statement, you may submit a proxy over the Internet or by telephone by following the instructions on the proxy card, or by completing, dating and signing the proxy card that was included with the proxy statement and promptly returning it in the pre-addressed, postage-paid envelope provided to you.
Shares Held in Street Name. If you hold your shares of Common Stock in street name, you will receive a Notice from your broker, bank, trust or other nominee that includes instructions on how to vote your shares. Your broker, bank, trust or other nominee may allow you to deliver your voting instructions over the Internet and may also permit you to submit your voting instructions by telephone. In addition, you may request paper copies of the proxy statement and proxy card from your broker by following the instructions on the Notice provided by your broker, bank, trust or other nominee.
The Internet and telephone voting facilities will close at 11:59 P.M., Eastern Time, on May 13, 2015. 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, 2015 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 2016 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;
FOR the advisory vote to approve our executive compensation; and
AGAINST the one stockholder proposal, if properly presented.
A “broker non-vote” occurs when a nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner and the nominee does not have discretionary authority to vote the shares. If you hold your shares in street name and do not provide voting instructions to your broker or other nominee, your shares will be considered to be broker non-votes and will not be voted on any proposal on which your broker or other nominee does not have discretionary authority to vote. Shares that constitute broker non-votes will be counted as present at the Annual Meeting for the purpose of determining a quorum, but will not be considered entitled to vote on the proposal in question. Brokers generally have discretionary authority to vote on the ratification of the selection of Ernst & Young LLP as our independent registered public accountants. Brokers, however, do not have discretionary authority to vote on the election of directors to serve on our Board, the advisory vote to approve our executive compensation or on any stockholder proposals.
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 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 broker non-votes. Shares held by persons attending the Annual Meeting but not voting, shares represented by proxies that reflect abstentions as to one or more proposals and broker non-votes will be counted as present for purposes of determining a quorum.
Election of Directors. We have a majority voting standard for the election of directors in an uncontested election, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected at the meeting. In the election of directors, you may either vote “for,” “against” or “abstain” for each nominee. Cumulative voting is not permitted. Under our majority voting standard, in uncontested elections of directors, such as this election, each director must be elected by the affirmative vote of a majority of the votes cast by the shares present in person or represented by proxy. A “majority of the votes cast” means that the number of votes cast “for” a director nominee exceeds the number of votes cast “against” the nominee. For these purposes, abstentions will not count as a vote “for” or “against” a nominee’s election and thus will have no effect in determining whether a director nominee has received a majority of the votes cast. Brokers do not have discretionary authority to vote on this proposal. Broker non-votes will have no effect on the election of directors as brokers are not entitled to vote for or against a nominee without instruction from the beneficial owner. If a director nominee is an incumbent director and does not receive a majority of the votes cast in an uncontested election, that director will
continue to serve on the Board as a “holdover” director, but must tender his or her resignation to the Board promptly after certification of the election results of the stockholder vote. The Governance and Nominating Committee of the Board will then recommend to the Board whether to accept the resignation or whether other action should be taken. The Board will act on the tendered resignation, taking into account the recommendation of the Governance and Nominating Committee, and the Board’s decision will be publicly disclosed within 90 days after certification of the election results of the stockholder vote. A director who tenders his or her resignation after failing to receive a majority of the votes cast will not participate in the recommendation of the Governance and Nominating Committee or the decision of the Board with respect to his or her resignation.
Ratification of Auditors. The ratification of the selection of Ernst & Young LLP 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 ratification. Because brokers have discretionary authority to vote on the ratification, we do not expect any broker non-votes in connection with the ratification.
Advisory Vote on Executive Compensation. The approval of the advisory vote on our executive compensation requires the affirmative vote of 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. Broker non-votes, therefore, will have no effect on the stockholder proposal as brokers are not entitled to vote on such proposal in the absence of voting instructions from the beneficial owner.
6 ï 2015 Proxy Statement
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. If you have received a paper copy of the proxy statement, to receive an admittance ticket you will need to complete and return the postage-paid reply card attached to this proxy statement. If you received electronic delivery of this proxy statement, you will receive an e-mail with instructions for obtaining an admittance ticket. If you are viewing the proxy statement over the Internet, please follow the instructions indicated on the website referred to in the Notice. Each stockholder is entitled to one admittance ticket. Directions to attend the Annual Meeting will be sent with your admittance ticket and are available at the website referred to in the Notice andwww.astproxyportal.com/ast/Amgen.
You must bring certain documents with you to be admitted to the Annual Meeting. The purpose of this requirement is to help us verify that you are actually a stockholder of the Company. Please read the following rules carefully, because
they specify the documents that you must bring with you to the Annual Meeting to be admitted. The items that you must bring with you differ depending upon whether or not you were a record holder of our Common Stock as of the close of business on March 16, 2015. A “record holder” of stock is someone whose shares of stock are registered in his or her name in the records of the Company’s transfer agent. Many stockholders are not record holders because their shares of stock are registered in the name of their broker, bank, trust or other nominee, and the broker, bank, trust or other nominee is the record holder instead.All persons must bring a valid personal photo identification (such as a driver’s license or passport). If you are a record holder, at the Annual Meeting, we will check your name for verification purposes against our list of record holders as of the close of business on March 16, 2015.
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, then you must also bring to the Annual Meeting:
Proof that you owned shares of our Common Stock as of the close of business on March 16, 2015.
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.
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, 2015 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.
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, 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.
ï 2015 Proxy Statement7
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 1314 authorized directors and 13 directors serving on our Board. On October 17, 2014, R. Sanders WilliamsWanda M. Austin was appointed 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.”December 11, 2017. Based upon the recommendation of our Governance and Nominating Committee, the Board has nominated each ofthe current directors directornomineessetforthbelowto stand forre-election, or in thecaseofDr. AustinandBrianJ.Drukertostandforinitialelectionby ourstockholders,ineachcasefor aone-yeartermexpiringatour2019 annualmeetingofstockholdersanduntilhisorhersuccessoriselected andqualified,oruntilhisorherearlierretirement,resignation,
disqualification, removal or death. David Baltimore and François de Carbonnelwill retire from our Board and have not been nominated forre-election at the 2018 Annual Meeting of Dr. WilliamsStockholders, or Annual Meeting. The Board has fixed the authorized number of directors at 13 to standbe effective as of the close of the Annual Meeting and the election by stockholders of the nominees standing for initial electionelection. 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 in each case for a one-year term expiring at our 2016 annual meeting of stockholdersthe Annual Meeting. As lead independent director, Mr. Eckert will continue to have the specific and until his or her successor is elected and qualified, or until his or her earlier retirement, resignation, disqualification, removal or death.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 |
Nominees to the Board
Nominee | Age | Director Since | Audit | Governance and Nominating | Executive | Compensation and Management Development | Equity Award | Corporate Responsibility and Compliance | ||||||||||||
Wanda M. Austin
|
| 63
|
|
| 2017
|
| M
| M
| ||||||||||||
Robert A. Bradway
|
| 55
|
|
| 2011
|
| C
| M
| ||||||||||||
Brian J. Druker(1)
|
| 62
|
|
| Initial Election
|
| ||||||||||||||
Robert A. Eckert
|
| 63
|
|
| 2012
|
| M
| M
| C
| C
| ||||||||||
Greg C. Garland
|
| 60
|
|
| 2013
|
| C
| M
| M
| M
| ||||||||||
Fred Hassan
|
| 72
|
|
| 2015
|
| M
| M
| ||||||||||||
Rebecca M. Henderson
|
| 57
|
|
| 2009
|
| M
| M
| ||||||||||||
Frank C. Herringer
|
| 75
|
|
| 2004
|
| M
| M
| M
| |||||||||||
Charles M. Holley, Jr.
|
| 61
|
|
| 2017
|
| C
| M
| ||||||||||||
Tyler Jacks
|
| 57
|
|
| 2012
|
| M
| M
| ||||||||||||
Ellen J. Kullman
|
| 62
|
|
| 2016
|
| M
| M
| ||||||||||||
Ronald D. Sugar
|
| 69
|
|
| 2010
|
| M
| M
| C
| |||||||||||
R. Sanders Williams
|
| 69
|
|
| 2014
|
| M
| M
|
“C” | indicates Chair of the committee. |
“M” | indicates member of the committee. |
(1) | Dr. Druker is standing for initial election to the Board. Dr. Druker has been appointed to the Audit Committee and the Corporate Responsibility and Compliance Committee, effective as of the Annual Meeting and subject to his election to the Board by our stockholders. |
ï 2018 Proxy Statement 7
Item 1 — Election of Directors |
* | For our director nominees. |
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.
Summary of Director Nominee Core Experiences and Skills
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. The following chart summarizes the competencies of each director nominee to be represented on our Board. The details of each director’s competencies are included in each director’s profile.
The lack of a “✓” for a particular item does not mean that the director does not possess that qualification, characteristic, skill or experience. Each of our Board members have experience and/or skills in the enumerated areas, however, the✓ is designed to indicate that a director has particular strength in that area.
9 new Directors since 2012 8 Experienced Current and Former Public Company 6 Directors w/ Scientific Research and/or CEO/CFO Healthcare Experience 5 Directors with Financial Industry Experience 3 Women Experience / Skills Austin Bradway Druker Eckert Garland Hassan Henderson Herringer Holley Jacks Kullman Sugar Williams Healthcare Industry, Providers and Payers Science/Technology Public Company CEO/COO/CFO Regulatory Compliance Financial/Accounting Government/Public Policy International
8 ï 20152018 Proxy Statement
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES NAMED BELOW.NOMINEES. 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
Wanda M. Austin Director since: 2017 Age:63 Committees: • Audit • Corporate Responsibility and Compliance Other Public Company Boards: • Chevron Corporation | Wanda M. Austin has served as a director of the Company since December 11, 2017. Dr. Austin was first identified to the Governance and Nominating Committee as a potential director candidate by anon-employee member of the Board. She is the retired President and Chief Executive Officer of The Aerospace Corporation, a leading architect of the United States’ national security space programs, where she served from 2008 until her retirement in 2016. From 2004 to 2007, Dr. Austin was Senior Vice President, National Systems Group of The Aerospace Corporation. Dr. Austin joined The Aerospace Corporation in 1979 and served in various positions from 1979 until 2004. Dr. Austin has served as an Adjunct Research Professor at the University of Southern California’s Viterbi School of Engineering since 2007. She is theco-founder of MakingSpace, where she serves as a motivational speaker on STEM education. Dr. Austin has been a director of Chevron Corporation, a petroleum, exploration, production and refining company, since 2016, serving on its Board Nominating and Governance Committee and Public Policy Committee. Dr. Austin is a trustee of the University of Southern | |
California and previously served on the boards of directors of the National Geographic Society and the Space Foundation. Dr. Austin received an undergraduate degree from Franklin & Marshall College, a master’s degree from the University of Pittsburgh and a doctorate from the University of Southern California. She is a member of the National Academy of Engineering. Qualifications The Board concluded that Dr. Austin should serve on the Board based on her leadership and management experience as a chief executive officer, her extensive background in science, technology, and government affairs in a highly regulated industry, and her public board experience. |
Robert A. Bradway Director since:2011 Age:55 Committees: • Equity Award • Executive (Chair) Other Public Company Boards: • The Boeing Company | Robert A. Bradway has served as our director since 2011 and Chairman of the Board since 2013. Mr. Bradway has been our President since 2010 and Chief Executive Officer since 2012. From 2010 to 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 2007 to 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 The Boeing Company, an aerospace company and manufacturer of commercial airplanes, defense, space and securities systems, since 2016, serving on its Audit and Finance committees. From 2011 to May 2017, Mr. Bradway was a director of Norfolk Southern Corporation, a transportation company. He has served on the board of trustees of the University of Southern California | |
since 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 based on his thorough knowledge of all aspects of our business, combined with his leadership and management skills having previously served as our President and Chief Operating Officer and as our Chief Financial Officer. |
ï 20152018 Proxy Statement9
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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.
10 ï 2015 Proxy Statement
Brian J. Druker Director since: Standing for initial election to the Board Age: 62 Committees: If elected by stockholders, Dr. Druker is expected to serve on the following committees: • Audit • Corporate Responsibility and Compliance | Brian J. Druker is standing for initial election to the Company’s Board and will be appointed as a director effective as of the Company’s 2018 Annual Meeting of Stockholders subject to his election by stockholders. Dr. Druker was first identified to the Governance and Nominating Committee as a potential director candidate by Dr. Druker has served on the scientific advisory boards of Aptose Biosciences Inc., a biotechnology company, since 2013, and Grail, Inc., a biotechology company, since 2016. In 2011, he founded Blueprint Medicines Corporation, a biopharmaceutical company, and remains as a scientific advisor to this company. In 2006, he founded MolecularMD, a privately-held molecular diagnostics company. |
François de Carbonnel
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.
ï 2015 Proxy Statement11
Dr. Druker has received numerous awards, including the Lasker-DeBakey Clinical Research Award in 2009, the Japan Prize in Healthcare and Medical Technology in 2012, and the Albany Medical Center Prize in 2013, for influential work in the development of STI571 (Gleevec®) for the treatment of chronic myeloid leukemia. He was elected to the National Academy of Sciences in 2012 as well as the National Academy of Medicine in 2007. Dr. Druker received both an undergraduate degree and his doctorate from the University of California, San Diego. Qualifications The Board concluded that Dr. Druker should serve on the Board based on his extensive scientific research and expertise leading an important academic institution, conducting highly significant research in the area of oncology, and directly managing the care of cancer patients. |
Robert A. Eckert Lead Independent Director Director since: 2012 Age:63 Committees: • Compensation and Management • Equity Award (Chair) • Executive • Governance and Nominating Other Public Company Boards: • McDonald’s Corporation |
Vance D. Coffman
Vance D. Coffman is our lead independent director. Dr. Coffman has been a director of 3M Company, a consumer and office products and services company, since 2002 and he has been a director of Deere & Company, a farm and construction machinery company, since 2004. He serves on the 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.
Robert A. Eckert
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 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 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., 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 Graduate School of Management at Northwestern University and serves on the Eller College National Board of Advisors at the University of Arizona. Mr. Eckert received an undergraduate degree from the University of Arizona and a master's degree in business administration from the Kellogg School of Management at Northwestern University.
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 Officerchief 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.
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Item 1 — Election of Directors |
Greg C. Garland Director since: 2013 Age:60 Committees: • Compensation and Management Development • Equity Award • Executive • Governance and Nominating (Chair) Other Public Company Boards: • Phillips 66(1) | 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 2012. Mr. Garland chairs the Executive Committee of Phillips 66.(1) Prior to Phillips 66, Mr. Garland served as Senior Vice President, Exploration and Production, Americas of ConocoPhillips from 2010 to 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 Council 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. | |
(1) | Mr. Garland also serves as Chairman and Chief Executive Officer of Phillips 66 Partners LP, a master limited partnership and wholly-owned subsidiary of Phillips 66 without any employees. |
Fred Hassan Director since: 2015 Age:72 Committees: • Audit • Compensation and Management Other Public Company Boards: • Intrexon Corporation • Time Warner Inc. Audit Committee financial expert | Fred Hassan is Special Limited Partner at Warburg Pincus LLC, a global private equity investment institution, since 2017. Mr. Hassan was Partner and Managing Director at Warburg Pincus LLC from 2011 to 2017 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 2016, serving on its Compensation Committee. 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. from 2013 to 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 based on 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. |
ï 2018 Proxy Statement 11
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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.
Rebecca M. Henderson
Rebecca 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.
Rebecca M. Henderson Director since: 2009 Age:57 Committees: • Audit • Corporate Responsibility and Compliance Other Public Company Boards: • 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
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. 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.
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 uniquevaluable insight into the Company’s strategic and technology issues.
Frank C. Herringer Director since: 2004 Age:75 Committees: • Audit • Executive • Governance and Nominating Other Public Company Boards: • The Charles Schwab Corporation Audit Committee financial expert | 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 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 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, 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 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 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 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 based on his background as chief executive officer and board chair of a public company, his management and leadership skills, and his career-long focus on corporate financial performance, prospects and strategy. Given his financial and leadership experience, Mr. Herringer has been determined to be an Audit Committee financial expert by our Board. |
12 ï 20152018 Proxy Statement13
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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.
Charles M. Holley, Jr. Director since: 2017 Age:61 Committees: • Audit (Chair) • Corporate Responsibility and Compliance Audit Committee financial expert | Charles M. Holley, Jr. is the former Executive Vice President and Chief Financial Officer forWal-Mart Stores, Inc., or Walmart, where he served from 2010 to 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 2010. From 2005 to 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 2016. Mr. Holley serves on the Advisory Council 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 based on his experience as a chief financial officer of a global public company, his financial acumen, and his management and leadership skills. Given his financial and leadership experience, Mr. Holley has been determined to be an Audit Committee financial expert by our Board. |
Tyler Jacks
Director since: 2012 Age:57 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 | |
Advisory Board, which advises and assists the Director of the National Cancer Institute with respect to the National Cancer Program, in 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 Qualifications The Board concluded that Dr. Jacks should serve on the Board |
ï 2018 Proxy Statement 13
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Ronald D. Sugar
Director since: 2010 Age:69 Committees: • Corporate Responsibility and Compliance (Chair) • Executive • Governance and Nominating Other Public Company Boards: • 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 2010, chairing the Audit and Finance Committee. Dr. Sugar has been a director of Air Lease Corporation, an aircraft leasing company, since | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Qualifications The Board concluded that Dr. Sugar should serve on our Board because Dr. Sugar’s board and senior executive-level expertise, including his |
14 ï 2018 Proxy Statement
Item 1 — Election of Directors |
R. Sanders Williams
Director since: 2014 Age:69 Committees: • Corporate Responsibility and Compliance • Governance and Nominating Other Public Company Boards: • Laboratory Corporation of America Holdings | R. Sanders Williams is the Chief Executive Officer of Gladstone Foundation, anot-for-profit organization supporting the Gladstone Institutes, anon-profit biomedical research enterprise, and President Emeritus of Gladstone Institutes since 2018. Dr. Williams has Dr. Williams has been a director of the Laboratory Corporation of America Holdings, a diagnostic technologies company, since |
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 |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE ABOVE 13 NAMED NOMINEES.
ï 2018 Proxy Statement 15
| Corporate Governance |
Board of Directors Corporate Governance Highlights
Our Board of Directors, or Board, is governed by our Amgen Board of Directors Corporate Governance Principles 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. The Board’s corporate governance practices and stockholder rights include the following:
Board Governance Practices
• | Lead Independent Director.The |
• | Regular Executive Sessions of Independent Directors.Our independent directors meet privately on a regular basis. Our lead independent director presides at such meetings. |
• | Majority Approval Required for
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• | 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 |
• | Board Authority to Retain Outside Advisors. Our Board committees have the authority to retain |
• | 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 is approximately 4.8 years for our director nominees. |
• | 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 with respect to Fred Hassan and Frank C. Herringer based on its determination that it would be beneficial to have Messrs. Hassan and Herringer continue to serve as directors due to their Company knowledge and experience as well as financial acumen in the case of Mr. Herringer and deep industry experience in the case of Mr. Hassan. |
• | Director Changes in Circumstances Evaluated. If a director has a substantial change in principal business or professional affiliation or responsibility, including a change in principal occupation, he or she shall offer his or her resignation to the chairman of the Governance Committee. The Governance Committee determines whether to accept the resignation based on what it believes to be in the best interests of the Company and our stockholders. |
• | Director Outside Relationships RequirePre-Approval. Without the prior approval of disinterested members of the Board, directors should not enter into any |
• | 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 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, |
• | Solicitation of Stockholder Perspectives. The Board believes that |
16 ï 2018 Proxy Statement
Corporate Governance |
Stockholder Rights
• | Proxy Access. Our 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 |
• | Written Consent. Our Amgen Inc. Restated Certificate of Incorporation, or Certificate of Incorporation, permits stockholders to act by written consent in lieu of a meeting upon the request of the holders of at least 15% of our outstanding common shares who otherwise meet the requirements of our Certificate of Incorporation. |
• | Special Meetings. Our Bylaws permit stockholders to call a special meeting upon the written request of the holders of at least 15% of our outstanding common shares who otherwise meet the requirements set forth in our Bylaws. |
• | No Supermajority Vote Provisions in Certificate of Incorporation or Bylaws. We have a simple majority voting standard to amend our Certificate of Incorporation and Bylaws and to approve major mergers and acquisitions. |
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 Mr. Eckert has served as the lead independent director since the May 19, 2016 annual meeting of stockholders, or 2016 Annual Meeting.
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.
Lead Independent Director. The lead independent director is elected by the independent members of the Board on an annual basis. Mr. Eckert has been elected as the lead independent director effective since the 2016 Annual Meeting and wasre-elected by our Board on March 7, 2018 to continue to serve as lead independent director subject to hisre-election to the Board by our stockholders at the Annual Meeting.
In such position, the lead independent director serves as a means for regular communication between the independent directors and Mr. Bradway, keeping Mr. Bradway apprised of any concerns, issues or determinations made during the independent sessions, and consults with Mr. Bradway on other matters pertinent to the Company and the Board. The lead independent director’s additional responsibilities include:
Presiding at meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;
Serving as a liaison between the Chairman and the independent directors;
Previewing the information to be provided to the Board;
Approving meeting agendas for the Board;
Assuring that there is sufficient time for discussion of all meeting agenda items;
Organizing and leading the Board’s evaluation of the CEO;
Being responsible for leading the Board’s annual self-assessment;
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 Composed 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-delegated duties and communicates regularly with the Chairman and members of management. In addition, the Compensation Committee has an effective process for monitoring and evaluating Mr. Bradway’s compensation and performance. Each committee chair provides a report on committee meetings held to the full Board at each regular meeting of the Board.
Independent Directors Sessions. On a regular basis, the independent directors meet in an executive session without Mr. Bradway to review Company performance, management effectiveness, proposed programs and transactions and the Board meeting agenda items. These independent sessions are organized and chaired by our lead independent director.
Annual Assessment. As part of the Board’s annual self-evaluation process, the Board reviews its leadership structure and whether combining or separating the roles of Chairman and CEO is in the best interests of the Company and our stockholders.
ï 2018 Proxy Statement 17
Corporate Governance |
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 position him to identify and prioritize matters for Board review and deliberation.
As Chairman and CEO, Mr. Bradway serves as an important bridge between the Board and management and provides critical leadership for carrying out our strategic initiatives and confronting our challenges. The Board believes that Mr. Bradway brings a unique, stockholder-focused insight to assist the Company to most effectively execute its strategy and business plans to maximize stockholder value.
The strength and effectiveness of the communications between Mr. Bradway as our Chairman and Mr. Eckert as our lead independent director result 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 most 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 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 priorities 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, business development, as well as protecting our assets (financial, intellectual property and information (including cybersecurity)), 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 and management 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.
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 applicable committees of our Board, as appropriate.
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Corporate Governance |
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 associated with the requirements of the Federal health care program, Food and Drug Administration, and the Corporate Integrity Agreement, and risks associated with pricing and access, information security, including cybersecurity, and our reputation. Also oversees staff member compliance with the Code of Conduct. | |||
Compensation and Management Development Committee | • Evaluates whether the right management talent is in place and oversees succession planning. Also 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.
The Board held seven meetings in 2017 and all of the directors attended at least 75% of the total number of meetings of the Board and committeesonwhichtheyserved.WandaM.Austin was appointed to the Board effective in December 2017 and attended all meetings of the Board and committees on which she served after thedate of her
appointment. It is the Company’s policy that all current directors attend our annual meetings of stockholders barring unforeseen circumstances or irresolvable conflicts. Thirteen of the then-current members of the Board were present at our 2017 annual meeting of stockholders, or 2017 Annual Meeting.
Ourannualmeetingofstockholdersprovidesanopportunityeachyear forstockholderstoaskquestionsof,orotherwisecommunicatedirectly with, membersoftheBoardonappropriatematters.In addition,stockholders maycommunicateinwritingwithanyparticulardirector,any committeeoftheBoard,orthedirectorsasagroup,bysendingsuch written communication to our Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799.Copiesofwrittencommunicationsreceivedatsuchaddresswill be provided to the Boardortherelevantdirectorunlesssuch communicationsareconsidered,inthereasonablejudgmentofour Secretary,tobe 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 2017 Annual Meeting, please see page 38 of our Compensation Discussion and Analysis.
ï 2018 Proxy Statement 19
Corporate Governance |
TheBoardhasfour key standing committees: Governance Committee; Audit Committee; Compliance Committee; and Compensation Committee. The Compensation Committee has delegated certain responsibilitiestoanEquityAwardCommittee.Inaddition,anExecutive CommitteeoftheBoardhasallofthepowersandauthorityofthe Boardinthemanagementofourbusinessandaffairs,exceptwith respect to certain enumerated matters, including Board composition and compensation, changes to ourCertificate of Incorporation or any other matter expressly prohibited by law or our Certificate of Incorporation.
The Executive Committee did not meet in 2017. 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.
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 asAppendix A. Among other things, Board
members should possess demonstrated breadth and depth of management and leadership experience, financial and/or business acumen or relevant industry or scientific experience, integrity and high ethical standards, sufficient time to devote to the Company’s business, the ability to oversee, as a director, the Company’s business and affairs for the benefit of our stockholders, the ability to comply with the Amgen Board of Directors Code of Conduct and a demonstrated ability to think independently and work collaboratively. In addition, although the Governance Committee does not maintain a diversity policy, the Governance Committee considers diversity in its determinations. Diversity includes race, ethnicity, age and gender and is also broadly construed to take into consideration many other factors, including industry knowledge, operational experience and scientific and academic expertise, geography and personal backgrounds.
20 ï 2018 Proxy Statement
Corporate Governance |
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 roles, effectiveness, and fulfillment of their fiduciary duties.
1. | Initiation | Formal annual anonymous evaluations of the full Board as well as the Audit, Compensation, Compliance, and Governance Committees are compiled and distributed • Overseen by the Governance Committee | ||||
2. | Evaluation and Assessment | Directors provide feedback regarding Board or committee – • Composition and structure • Role and effectiveness • Fulfillment of fiduciary duties • Meetings and materials • Board interaction with management | ||||
3. | Review | • The lead independent director speaks with each member of the Board forone-on-one discussion • Each committee and the full Board conduct separate discussions in executive session | ||||
4. | Incorporation of Feedback | Follow-up items are addressed at subsequent Board or committee meetings and any committee actions are reported back to the full Board |
The Audit, Compensation, Compliance and Governance Committees each completed their assessments in October 2017 for further evaluationbytheGovernanceCommitteeinDecember2017.TheBoard completeditsevaluationinDecember2017.Eachcommitteeandthe
Board was satisfied with its performance and each was considered to be operating effectively, with appropriate balance among governance, oversight, strategic and operational matters.
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 is and Frank J. Biondi, Jr. and Judith C. Pelham, who served as directors during part of 2017, were independent during 2017 under The NASDAQ Stock Marketing listing standards and the requirements of the SEC. The Board also determined that Brian J. Druker, who is standing for initial election to the Board, is independent. 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.
Allofthereviewedtransactionsandarrangementswereenteredintoin theordinarycourseofbusinessandnoneofthebusinesstransactions, donationsorgrantsinvolvedanamountthat(i)exceededthegreaterof
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 or (ii) exceeded $10,000 with respect to professional or consulting services provided by entities at which 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 the 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, advisory 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 the independent directors (or their immediate family members) 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,
ï 2018 Proxy Statement 21
Corporate Governance |
purchasing supplies, equipment and software licenses, payment of fees and expenses relating to repair and maintenance, utilities, clinical trials, research and development and training, sponsorship of healthcare programs and conferences and investment management, financial advisory and consulting services. |
Drs. Baltimore, Druker, Henderson, Jacks and Williams currently serve as professors for universities to which Amgen has made payments for certain business transactions such as symposiums, conferences and exhibits, postdoctoral research programs, clinical
trials, training and research and development, software licenses and maintenance, as well as for grants. |
None of the directors directly or indirectly provides any professional or consulting services to us and none of the 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.
Governance Committee Processes and Procedures for Considering and Determining Director Compensation
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 conducted such an assessment in 2017 and no changes were made to director compensation.
The Governance Committee has the authority to retain consultants to advise on director compensation matters. During 2017, the
Governance Committee engaged Frederic W. Cook and Co., or Cook & Co., to provide advice regarding director compensation. Cook & Co. reported directly to the Governance Committee and attended the Governance Committee meeting to evaluate director compensation. No executive officer has any role in determining or recommending the form or amount of director compensation. |
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 2017.
22 ï 2018 Proxy Statement
Amgen’s Compliance Program is designed to promote ethical business conduct and ensure compliance with applicable laws and regulations. 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 avenues for staff to raise concerns, including anonymously through a business conduct hotline; conducting investigations; responding appropriately to any compliance violations; and taking appropriate steps to detect and prevent recurrence. Our Chief Compliance Officer, who reports to the CEO, oversees the ongoing operations of the compliance program. Codes of Ethics and Business Conduct Our Board has adopted two codes of business conduct and ethics, one that applies to our directors and a second that applies to our directors and 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 2017. ï 2018 Proxy Statement 23
Our Environmental Sustainability and Social Responsibility Efforts We have demonstrated our commitment to environmentally responsible operations by reducing our impact on the environment in multiple areas of our global business. Our next-generation biomanufacturing facility in Singapore dramatically reduces the scale and costs of making biologics, vastly reduces water and energy use, while maintaining a reliable, high-quality, compliant supply of medicines. We earned placement on the Dow Jones Sustainability World Index for the fourth year in a row and on the North America Index for the fifth year in a row. Our Responsibility Highlights Report is available online on the Company’s website atwww.amgen.com/responsibility. Further, we are a signatory to the United Nations Global Compact, a voluntary initiative based on commitments to implement universal sustainability principles and take steps to support United Nations goals. Amgen is committed to assisting patients with no or limited drug coverage to access the medicines they need. We provide patient support and education programs and help patients in financial need access our medicines. We partner with payers to share risk and accountability for health outcomes, and help patients access the medicines they need without significant financial burden. We have been at the forefront of developing innovative contracting and partnerships designed to improve population health and patient access, as well as outcomes-based and risk-sharing approaches that directly link the price of our medicines to their effectiveness. Through our Amgen Foundation, established in 1991, we seek to advance excellence in science education to inspire the next generation of innovators, and invest in strengthening communities where our staff members live and work. The Amgen Foundation has contributed approximately $300 million tonon-profit organizations across the world that reflect our core values and complement Amgen’s dedication to impacting lives in inspiring and innovative ways. We have also provided support following devastating disasters, including, for example, the contribution of immediate relief and reconstruction efforts in Puerto Rico to address the impact of Hurricane Maria. Moreover, through a twelve-year, $50 million commitment from the Amgen Foundation, the Amgen Scholars Program makes it possible for young scientists across the globe to engage in cutting-edge research experiences and learn more about biotechnology and drug discovery. Additionally, the Amgen Foundation supports the Amgen Biotech Experience, an innovative science education program that empowers high school and middle school teachers to bring biotechnology into their classrooms. 24 ï 2018 Proxy Statement
Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 2017 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 for the previous year in light of the Company performance goals and objectives established for the prior year. The Compensation Committee evaluates the performance of the CEO within the context of the financial and operational performance of the Company, considers competitive market data and establishes the CEO’s compensation based on this evaluation. The values of each component of total compensation (base salary, target annual cash incentive awards, and equity awards) for the current year, as well as total annual compensation for the prior year (including the value of equity holdings, potential change of control payments and vested benefits under our Retirement and Savings Plan, Supplemental Retirement Plan and Nonqualified Deferred Compensation Plan as of the end of the last fiscal year) are considered at this time. Final determinations regarding our CEO’s performance and compensation are made during an executive session of the Compensation Committee and are reported to and reviewed by the Board in an independent directors’ session. During 2017, the Compensation Committee engaged Cook & Co. 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). Each year the Compensation Committee reviews the independence of Cook & Co., an independent compensation consultant, and whether any conflicts of interest exist. 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, 2017. In performing its analysis, the Compensation Committee considers the factors set forth in the SEC rules and The NASDAQ Stock Market listing standards. 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. 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, are 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 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 2017. Following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other staff members, calculated in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K. The Company determined our median employee based on total direct compensation paid to all of our staff members worldwide (consisting of approximately 20,600 individuals) recorded in our global systems as of November 1, 2017. Total direct compensation included base salary (wages earned based on our payroll records), annual cash incentive awards earned for the period (and target sales incentive awards for our sales force), and the annual grant value of long-term incentive, or LTI, equity awards during 2017. Earnings of our staff members outside of the U.S. were converted to U.S. dollars using the currency exchange rate as of November 1, 2017. Nocost-of-living adjustments were made. We then determined the annual total compensation of our median employee for 2017 which was $132,930. As disclosed in the “Summary Compensation Table” appearing on page 64, our CEO’s annual total compensation for 2017 was $16,899,789. Based on the foregoing, the ratio of the annual total compensation of our CEO to that of the median staff member was 127 to 1. ï 2018 Proxy Statement 25
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 our 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 annual cash incentive award for each of our staff members. Additionally, we cap short-term incentives and make LTI equity awards a component of compensation for nearly all of our full-time staff members. In particular, the CEO and the other executive officers participate in compensation plans that are designed so that the largest component of their compensation is in the form of LTI equity awards to ensure that a significant portion of their compensation is associated with long-term, rather than short-term, outcomes, which aligns these individuals’ interests with our stockholders. We employ appropriate 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. 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 his or her 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. 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. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the review and discussions, recommendedtotheBoardofDirectors thattheCompensationDiscussionandAnalysisbeincludedinthe Company’s 2018 Annual Meeting proxy statement and incorporated by reference into the Company’s Annual Report on Form10-K for the year ended December 31, 2017. Compensation Committee of the Board of Directors Robert A. Eckert, Chairman Greg C. Garland Fred Hassan Tyler Jacks 26 ï 2018 Proxy Statement
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 32 through 63) and related compensation tables and the narrative in this proxy statement (pages 64 through 78). 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 ourshort-and long-term measurable performance. Drive implementation of our business strategy and position our staff to execute on our strategic priorities 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.
Robert A. Eckert, Chairman
Fred Hassan
Advisory Vote
Our executive compensation program is designed to achieve the following objectives: Pay for performance in a manner that strongly aligns Drive implementation of our Attract, motivate and retain the highest level of executive talent by providing competitive compensation, consistent with Mitigate compensation riskby maintaining pay practices that
Compensation Committee of the Board of Directors
Greg C.
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 32 through 63) and related compensation tables and the narrative in this proxy statement (pages 64 through 78). 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 ourshort-and long-term measurable performance. Drive implementation of our business strategy and position our staff to execute on our strategic priorities 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. We Have Implemented Compensation Best Practices
ï 2018 Proxy Statement 27
2017 Executive Compensation Was Aligned With Our Strategy and Performance As discussed more fully in our Compensation Discussion and Analysis starting on page 32, a significant majority of each NEO’s compensation isat-risk and dependent on our performance and execution of our strategic priorities and the compensation objectives discussed above. 2017 Target Total Direct Compensation Mix 2017 Award Allocation and Performance 2017 Annual Cash Incentive Program 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. The table below illustrates the weighting of each goal and our actual performance for 2017. Based on our overall performance in 2017 compared to thepre-established Company performance goals, we paid annual cash incentive awards at 115% of target bonus opportunity, a decrease of 44.5 percentage points from our 2016 payout of 159.5% of target bonus opportunity. The following is a summary of our progress against these goals and our strategic priorities. See the Compensation Discussion and Analysis for an expanded discussion.
10% 75% 15% At Risk 18% 64% 18% At Risk Long-term Incentive Equity Awards Target Annual Cash Incentive Base Salary CEO 90% Pay at Risk 75% Performance based Other NEOs 82% Pay at Risk 69% Performance based 28 ï 2018 Proxy Statement
ªWe Delivered on Our Financial Performance Goals.
Revenues were $22.8 billion in 2017, a slight decrease from 2016 despite increased competition for many of our largest products, several of which have lost patent protection. Actual performance was strong as 2017 reported product sales declined by less than $100 million (0.4%) compared to 2016 reported sales. ªWe Progressed Our Pipeline. Our medicines treat serious illnesses. In 2017, we have progressed important product candidates in all six of our therapeutic areas. Executing Key Clinical Studies and Regulatory Filings. Innovative Portfolio Developments.
In 2018, the CHMP(4) of the EMA(5) adopted a positive opinion for the Marketing Authorization to include similar indications.
ï 2018 Proxy Statement 29
Biosimilars Portfolio Developments.
ªWe Advanced Our Early Pipeline. Generated11 product teams (formed when a molecule has the potential to be safe and effective in humans), a record number for our Company. Initiated4first-in-human studies.
Prolia worldwide sales increased in 2017 by 20% year-over-year. Prolia is the leading osteoporosis therapy today. There are 3.5 million patients worldwide taking Prolia, and the demand for it continues to grow. We increased Repatha U.S. net sales and average annual total prescriptions share, as well as E.U. average annual market share. Our focus remains on enabling access to Repatha for appropriate patients as hurdle rates for access and reimbursement for patients remain high. We increased KYPROLIS U.S. andex-U.S. net sales. Our clinical development program has delivered overall survival results in support of KYPROLIS as a backbone therapy for multiple myeloma. ªWe Realized Our Functional Transformational Objectives. We realized approximately $400 million in savings as a result of initiatives at the Company level as well as activities within each function designed to transform approaches and improve processes with specific savings targets established for each area. Together with our progress this year, since 2014, we have realized approximately $1.5 billion of transformation and process improvement savings. These savings were reinvested in product launches, clinical programs and external business development. Consequently, net savings in the same period have not been significant. Further Progress on Our Strategic Priorities Capitalizing on our expansion activities, we secured 80 product country launches. While investing $3.6 billion in research and development, we also returned a total of $6.5 billion of capital to our stockholders through dividends and stock repurchases.
We made investments in next-generation biomanufacturing that build on our existing industry leadership in biologic manufacturing. This next-generation biomanufacturing dramatically reduces the scale and costs of making biologics while maintaining a reliable, high-quality, compliant supply of medicines. In 2017, our new Singapore facility that utilizes the next-generation biomanufacturing approach was approved for certain commercial scale production by multiple regulatory agencies, including the FDA and the EMA. Long-Term Incentive Performance Award 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.
30 ï 2018 Proxy Statement
The 2015-2017 performance period of the performance award program is the last performance period that is earned based solely on our relative TSR performance. Commencing in 2016, and continuing in 2017 and 2018, our outstanding LTI equity award performance units are earned based on our financial performance as measured under annual financial measures, equally weighted with the resulting average earnout percentage increased or decreased by our relative TSR performance against the companies in the S&P 500 for the performance period that commences with the grant date and continues through December 31 of the last year of the relevant three-year performance period. The annual financial performance goals for each of the three years in the performance period are established at the commencement of the three-year performance period. While retaining most of the elements of the 2016-2018 performance period goal design, the Compensation and Management Development Committee, or Compensation Committee, replacednon-GAAP operating expense withnon-GAAP return on invested capital, or ROIC, for the third year (2019) of the 2017-2019 performance period. The Compensation Committee’s replacement ofnon-GAAP operating expense withnon-GAAP ROIC as one of the three financial performance measures (in addition tonon-GAAP earnings per share andnon-GAAP operating margin) 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. Positive 2017 Say on Pay Vote Outcome and Engagement With Our Stockholders In 2017, we received approximately 95% stockholder support on our sayonpayadvisoryvote.Consistentwithourbroaddirectstockholder outreach over the past several years, since our 2017 annual meeting of stockholders, in addition to our outreach by our executives and our InvestorRelationsdepartmenttoinvestors,wehaveengaged in governance-focusedoutreachactivitiesanddiscussionswith stockholders comprising approximately 52% of our outstanding shares. The compensation-related feedback is reviewed by our Compensation Committee. We have made a number of compensation changes in response to past discussions with our stockholders and have implemented the compensation best practices discussed below. For more detail regarding our stockholder engagement, see page 38. 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 compensation 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 and more fully in the Compensation Discussion and Analysis, 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 2019 annual meeting of stockholders. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. ï 2018 Proxy Statement 31
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 Table of Contents
32 ï 2018 Proxy Statement
INNOVATIVE MEDICINES TRANSFORMING AMGEN FOR THE FUTURE GLOBAL GEOGRAPHIC REACH NEXT-GENERATION BIOMANUFACTURING IMPROVED DRUG DELIVERY SYSTEMS CAPITAL ALLOCATION AND INVESTING FOR LONG-TERM GROWTH BRANDED BIOSIMlLARS Innovative Medicines Transforming Amgen for the Future Global Geographic Reach Next-Generation Biomanufacturing Improved Drug Delivery Systems Capital Allocation and Investing for long-Term Growth Branded Biosimilars Six therapeutic areas form the core of our business—cardiovascular, oncology/hematology, neuroscience, inflammation, nephrology, and bone health. Our strategy in these therapeutic areas includes a series of integrated activities to strengthen our long-term competitive position in the industry. These activities include the following strategic priorities: Our Strategic Priorities Key 2017 activities that align our NEO pay with performance and support the execution of these strategic priorities are summarized in the following pages.
Aligning Pay With Performance and
A significant majority of each NEO’s compensation is dependent on our performance and Annual Cash Incentive Program Results
1. Our financial performance was strong.
Revenues were $22.8 billion in 2017, a slight decrease from 2016 despite increased competition for many of our largest products, several of which have lost patent protection. Actual performance was strong as 2017 reported product sales declined by less than $100 million (0.4%) compared to 2016 reported sales.
We develop innovative medicines in six focused therapeutic areas that meet unmet medical needs in addressing serious illnesses. (For complete information of all of our material pipeline advancements, please refer to our Form10-K for the year ended December 31, 2017.) In 2017, we have progressed important products and product candidates in all six of our therapeutic areas.
INNOVATIVE MEDICINES
34 ï
ForRepatha® (our medicine for
Also during 2017, we performed additional analyses of the cardiovascular outcomes study that demonstrated that reducing LDL cholesterol levels with Repatha also reduced:
Oncology Therapeutic Area
Neuroscience Therapeutic Area
Inflammation Therapeutic Area
Nephrology Therapeutic Area
Our deep experience in biologics development and capabilities in biotechnology manufacturing positions us for success in the emerging biosimilars market. In our biosimilars portfolio in 2017, we reported:
3. We delivered on our annual priorities to execute critical launches and long-term commercial objectives and realize our transformational objectives.
and the demand for it continues to grow by double-digit percentages. Our focus remains on enabling access to Repatha for appropriate patients as hurdle rates for access and reimbursement for patients remain high.
Our clinical development program has delivered results in support of KYPROLIS as a backbone therapy for multiple myeloma.
We launched theEnbrel Mini™ single-dose prefilled cartridge with AutoTouch™ reusable auto-injector, a device that is ergonomically designed to meet the needs of rheumatoid arthritis patients; and
Branded Biosimilars INNOVATIVE MEDICINES Improved Drug Delivery Systems
36 ï 2018 Proxy Statement
In 2017, capitalizing on our expansion activities, we secured 80 country product launches. Our commitment to improve our business and operating model through significant transformation and process improvement efforts announced in 2014 delivered results in 2017. These transformation and process improvement efforts across Amgen are continuing tore-shape the expense base and enable us to reallocate resources to fund many of our pipeline and growth opportunities that deliver value to patients and stockholders.
Since 2014, we have realized approximately $1.5 billion of transformation and process improvement savings. These savings were reinvested in product launches, clinical programs and external business development. Consequently, net savings in the same period have not been significant. Through our next-generation biomanufacturing capability, as well as other efforts to optimize our fixed capital infrastructure, we are on track to meet our 2018 goal of reducing our facility footprint by 23%. In 2017, we also made strong progress on other strategic priorities:
business development transactions, while simultaneously providing substantial returns to stockholders. In 2017, whileinvesting $3.6 billion in research and development, we alsoreturned $6.5 billion of capital to our stockholders ($3.4 billion in dividends and ~18.5 million shares in stock repurchases) Annual Dividend Increases
We increased our quarterly dividend per share 15% over 2016 (to $1.15 per share for 2017). On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act, or the 2017 Tax Act, resulting in our having global access to our $41.7 billion balance of cash, cash equivalents and marketable securities as of December 31, 2017. Based on our confidence in the long-term outlook for our business, enhanced by the 2017 Tax Act, and consistent with our ongoing objective to return capital to our stockholders, we executed a tender offer of $10 billion in shares. In addition to this approximately $10 billion share repurchase, we are evaluating other ways to deploy our balance of cash, cash equivalents and marketable securities and invest in our business.
manufacturing. This next-generation biomanufacturing dramatically reduces the scale and costs of making biologics while maintaining a reliable, high-quality, compliant supply of medicines. In 2017, our new Singapore facility was approved for certain commercial scale production by multiple regulatory agencies, including the FDA and the EMA. At this facility, next-generation biomanufacturing vastly reduces water use and energy use, in turn, significantly reducing our carbon footprint. We are leveraging our global presence to deliver the potential of our products to patients globally. We announced in 2018 that we will invest in greater manufacturing capacity to support the volume growth that we foresee. As a result, we plan to build a new drug substance manufacturing plant using our next-generation biomanufacturing capability in the U.S. and add highly skilled jobs. Global Geographic Reach Transforming Amgen for the Future Capital Allocation and Investing for long-Term Growth $1.12 $0.68 29% $1.44 31% $1.88 30% $2.44 30% $3.18 27% $4.00 15% $4.80 2011 † 2012 2013 2104 2015 2016 2017 Next-Generation Biomanufacturing
ï 2018 Proxy Statement 37
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, thus aligning compensation with value creation for our stockholders. Our performance units for the three-year performance period ending January 30, 2018 were earned based on our relative total shareholder return, or TSR. Our beginning stock price and ending stock price for purposes of the 2015-2017 performance period are each the average daily closing price of a share of our Common Stock for the beginning and last twenty trading days of the performance period ($154.49 and $186.61, respectively), representinga three-year TSR of 30%. Payout under our The 2015-2017 performance period is the last LTI performance unit program that is earned based solely on our relative TSR performance. Commencing in 2016, and continuing in 2017 and 2018, our outstanding LTI performance awards are earned based on our financial performance as determined under annual financial measures
In will continue to engage with our stockholders to further enhance our understanding of the perspectives of our investors.
Annual Meeting of
38 ï
ROIC)for
Our 2017 Compensation Program Highlights and Objectives Total Target Direct Compensation Focuses on “At Risk” Compensation All preceding pie charts are calculated using (i) the “Salary” column from tile “Summary Compensation Table” in our Executive Compensation Tables (ii) the target annual caSh incentive caSh incentive award in the “estimated Possible Payouts under non-Equity incentive Plan Awards- Target” column in the table in footnote 2 to the Grants of Plan-based Awards” table in our Executive Compensation Tables and (iii) the grant date fair value of annual grants of performance units RSUs and stock options 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. CEO 90o/o Pay at Risk 75% Performance based Other NEOs 82% Pay at Risk 69% Performance based Purpose LTI Equity Awards provide a direct link to the creation of shareholder value and execution of our strategy All NEO’s interests with stockholders foster long-term focus and retention Annual Cash Incentives Measure NEO’s performancepre-established company performance goals Align all staff members the same company performance goals as all such annual cash incentive awards are based on these on these goals Motivate NEO’s to meet or exceed our annual Company performance goals to drive annual performance and position us for longer-term success via our strategy Base Salary Provides a degree or financial certainty that helps us retain talent Recognizes competitive market condition sandlot rewards individual performance through periodic increases LTI Equity Award alloction:80% performance based 50% performance units 30% Stock Options 20% Restricted stock units 40 ï 2018 Proxy Statement
Restricted Stock Units, or RSUs Stock options and RSUs vest Performance Units Earned for the 2015-2017 Performance Period
Annual Cash Incentive Awards Our Compensation Committee annually approves Company performance goals
Base Salaries (the smallest component of compensation for our NEOs)
Based on data provided to the Compensation Committee, including recommendations of Frederic W. Cook & Co., or Cook & Co., the Compensation Committee’s independent consultant, the Compensation Committee approved an overall merit increase of 2% for our NEOs, adjusted to align with the Market Median for each position.
|
✓ | ||||
|
✓ | 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. |
✓ | ||||
| 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:We do not have “single-trigger” equity vesting acceleration upon a change of control for RSUs and stock options and do not provide taxgross-ups on change of control payments. |
✓ | 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 taxgross-ups:We do not provide taxgross-ups, except for business-related payments such as reimbursement of certain | ||||
| ||||
× | ||||
| ||||
| ||||
| 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 |
42 ï 20152018 Proxy Statement45
|
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 | |||
• | 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 • Provides advice and studies on our equity programs. • Provides advice on the selection of our peer group. | |||
• | 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. |
Management reviews the Company’s compensation programs CEO conducts performance reviews for the other NEOs and recommends Senior Management compensation to the Compensation Committee Compensation Committee evaluates the CEO’s performance within the context of the financial and operational performance of the company Cook & Co. advises the Compensation Committee regarding the appropriateness of Amgen’s NEO compensation and compensation programs relative to market practice Compensation Committee reviews and approves all NEO compensation and compensation programs in which our NEOs participate and oversees succession planning for our senior management
46 ï 20152018 Proxy Statement 43
|
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 in 2017 provided consultation regarding regulatory updates, selection of our peer group, consultation on market competitiveness for our LTI equity award practices, 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 2014,2017, 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. In addition, during 2017, the Governance Committee engaged Cook & Co. to provide advice regarding director compensation. Cook & Co. reported directly to the Governance Committee in its evaluation of director compensation.
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 following chart, the Compensation Committee determined that no changes were necessary in 2017 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.
44 ï 20152018 Proxy Statement47
Compensation Discussion and Analysis |
How We Establish Our Peer Group
2017 Peer Group Companies Biotechnology and pharmaceutical companies with which we compete for executive talent. | ||||
Objective Criteria Considered | 2017 Peer Group (Companies in blue also list Amgen as a peer) | |||
• GICS codes of biotechnology (352010) and pharmaceuticals (352020); • • 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. |
2014 Peer Group
(1) | For purposes of the 2017 peer group analyses: |
2016 Market Capitalization
|
| |||||||||
Amgen | $109 billion |
| $23 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 28, 2017 (the date on which the Compensation Committee considered our peer group) was as follows:
$B Market Capitalization 355 J&J 221 Novartis 217 Roche 198 Pfizer 175 Merck 127 Amgen 121 Sanofi 112 Abbvie 105 Celgene 99 Gilead 98 GSK 91 Eli Lilly 91 BMS 85 Allergan 74 Astra Zeneca 61 Biogen Position shown as of July 28, 2017 Currency in USD
48 ï 20152018 Proxy Statement 45
Compensation Discussion and Analysis |
Peer Group Data Sources
Our primary data sources for evaluating all elements of compensation forourCEOisdatacompiledbyCook &Co.fromSECfilingsofourpeer 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 ExecutiveCompensationSurvey,orPHRASurvey,whichprovides peer company pharmaceuticaldata,augmentedbytheavailabledatafrom proxystatementsfiledwiththeSECfor biotechnology companies in our
peer group. Solely 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 or pay rank basis with an analysis of each element of direct compensation for such NEO at the 50th and 75th percentile of the peer group. Because PHRA Survey and proxy statement data is only available for the previous calendar year, consistent with generally accepted practice, base pay data is aged forward to the current year based on expected salary movement. Annual cash incentive award and LTI equity award market data are not adjusted for aging.
The “Market Median” is determined for our CEO and our other NEOs based on the prior year’s compensation and is reviewed by the Compensation Committee to inform compensation decisions made in March of each year as follows:
Market Median |
CEO(compiled by Cook & Co.) | Other NEOs |
Company, Mr. Hooper was matched to the median of the second highest paid NEOs in the 2013 Towers Survey. No market comparable position 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 statement filings as our peer group companies did not have individuals
in similarly global positions. Mr. Balachandran’s position was unique, as compared to positions reported in the 2013 Towers Survey and the peer group proxy statements, because it includes global oversight of all of the Company’s manufacturing operations, quality and product and process engineering.
• 50th percentile of each compensation element paid to CEOs in our peer group in the previous year from proxy statements.
• 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 awardsawards; 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.
Company Continues to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards
Our compensation philosophy, practices and approach continue to be effective in balancing the use of equity to align employees with our stockholders while being mindful of the level of dilution that our stockholders experience. The Compensation Committee sets an LTI budget that is approximately at the 50th percentile, or median, of our peer group 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 strives to limit the amount of stockholder dilution to that which would be expected to be experienced by stockholders of our peer group. The rates at which we grant LTI equity awards and its potential dilutive effect is consistent with our peer group levels and has decreased over the last 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 believe that our capacity to grant equity-based compensation has been a significant factor in achieving our strategic objectivespriorities 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.
Long-Term Incentive Equity Award Composition
LTI equity awards granted to our NEOs in 2014 consisted of 80% performance units and 20% RSUs.
This allocation results in the substantial majority of equity compensation being earned based on our achieved performance. We believe it is important to maintain a relatively small percentage of equity awards in the form of RSUs to incentivize retention. This composition of LTI equity awards also facilitates a more efficient use of the shares available under our LTI equity award plan and minimizes dilution as fewer shares are used when granting performance units and RSUs as compared to stock options. Performance units are generally earned at the end of the three-year performance period to the extent to which the performance
46 ï 20152018 Proxy Statement49
|
goalsCompany 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 balance the use of equity to align employees with our stockholders while being mindful of the level of dilution that our stockholders experience. LTI equity award grant guidelines are established for each job level within the applicable period are met. OurCompany 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 at approximately the 50th percentile 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, the Compensation Committee also strives to limit the amount of stockholder dilution to that which stockholders would expect to experience with our peer group. We regularly review dilution and the rates at which we grant LTI equity awards and the resulting potential dilutive effect has decreased over the last five years and is consistent with that of our 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. and maintained the current LTI equity award allocation.
LTI Equity Award Allocation
On a value basis, in 2017 80% of our annual equity award value continued to be delivered in the form of performance-based LTI equity awards consisting of 50% in the form of performance units (earned at the end of a generally three-year performance period) and 30% in the form of stock options. Time-vested RSUs, designed to incentivize retention, continued to make up the remaining 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.
amgen historical outstanding potential dilution (% shares outstanding)
ï 2018 Proxy Statement 47
Compensation Discussion and Analysis |
Value of Long-Term Incentive Equity Awards
Granted to Named Executive Officers in 20142017
In December 2013, the Compensation Committee considered2017 Annual Long-Term Incentive Equity Awards
Based on a review of Company and executive LTI equity award grants for 2014. To determine 2014 executive LTI equity award grant compensation, the Compensation Committee compared the value of the 2014 annual LTI equity awards for each NEO being recommended by management to the 50thperformance and 75th percentile of the peer group for each available NEO position (as previously described under “Peer Group Data”). The Compensation Committee also took the Company’s performance, the individual’s performance in their role and historical grant levels into account when determining individual grants.
In reviewing the peer group market data, the Compensation Committee took into accountdetermined to grant the reductionfollowing LTI equity awards to our CEO and the other NEOs in March 2017, with an effective grant date of May 1, 2017, the medianthird business day after the announcement of our first quarter 2017 earnings results. 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 ($) | 2016 Market Median ($) | Difference vs. Market Median Over/ (Under) (%) | ||||||||||||||||||
Robert A. Bradway
|
| 6,000,000
|
|
| 3,600,000
|
|
| 2,400,000
|
|
| 12,000,000
|
|
| 11,500,000
|
|
| 4.3
|
| ||||||
Anthony C. Hooper
|
| 2,000,000
|
|
| 1,200,000
|
|
| 800,000
|
|
| 4,000,000
|
|
| 3,981,529
|
|
| 0.5
|
| ||||||
Sean E. Harper
|
| 1,850,000
|
|
| 1,110,000
|
|
| 740,000
|
|
| 3,700,000
|
|
| 3,701,010
|
|
| 0
|
| ||||||
David W. Meline
|
| 1,750,000
|
|
| 1,050,000
|
|
| 700,000
|
|
| 3,500,000
|
|
| 3,409,511
|
|
| 2.7
|
| ||||||
Jonathan P. Graham
|
| 1,250,000
|
|
| 750,000
|
|
| 500,000
|
|
| 2,500,000
|
|
| 2,614,622
|
|
| (4.4
| )
|
(1) | The 2017-2019 performance period runs from January 1, 2017 through December 31, 2019. |
Based on the March 2017 Compensation Committee review of the market data, the Compensation Committee awarded Mr. Bradway a 2017 LTI equity award grant valued at $12 million, which is approximately 9% higher than the value of his grant in 2016 of $11 million and slightly above the Market Median (4.3%) to increase the proportion of the CEO’s compensation “at risk” (resulting in his total direct compensation at approximately the Market Median). After considering the effect of the 2017 LTI equity award grant on Mr. Bradway’s target total direct compensation, the Compensation Committee determined that awarding a grant value for 2017 LTI equity slightly above the Market Median was appropriate as it ensures the substantial majority of Mr. Bradway’s compensation is “at risk” and performance-based and also achieved the intent of the Compensation Committee for the CEO’s target total direct compensation to increase over time to approximate the Market Median. At the time Mr. Bradway was promoted to the role of CEO in May 2012, the Compensation Committee targeted Mr. Bradway’s total direct compensation below the Market Median to enable Mr. Bradway’s compensation to grow over time subject to his performance and advancement in his role as CEO.
The March 2017 Compensation Committee review of the market data also supported increased 2017 LTI equity award values offor Executive Vice President roles as Market Median LTI equity award grant values had increased for these roles among our peer group. Also,While the Compensation Committee believes that internal equity is an important consideration for building a team approach, in reviewing the market data, the Compensation Committee noted the difference inhigher LTI equity award valuesMarket Median value for ourthe Executive Vice President, roles (or their equivalents).Research and
Development role. As a result, the Compensation Committee approved reduced values for LTI equity award grants made in 2014 from those made in 2013 for all NEOs, other than the CEO, to respond to lower median values among our peer group for those roles. Also, the Compensation Committee approved slightlya higher grant valuesvalue for Mr. Hooper and Dr. Harper than granted to Mr. Balachandran because Mr. Hooper and Dr. Harper are viewed as having positions that have comparable impactwas matched to the executionMarket Median for his role 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.Executive Vice President, Research and Development. The Compensation Committee awarded Mr. Bradway adetermined that an increase of approximately 5.7% (from $3.5 million in 2016) was appropriate, not only because of its Market Median competitiveness, but also because of the scope and span of Dr. Harper’s responsibility and the level of importance of his role to the Company. Messrs. Hooper’s and Meline’s LTI equity award grant valued higherfor 2017 remained unchanged from 2016 as it still approximated the Market Median. Mr. Graham’s LTI equity award grant was increased from $2.3 million to $2.5 million to more closely approximate the Market Median for his role, but remains slightly less than in 2013Market Median for his position.
Performance Units (50% of LTI Equity Awards)
Performance units are rights to maintain median positioningearn shares of our Common Stock, based onpre-established performance goals achieved over a performance period of generally three years. The number of performance units earned is determined by our performance as measured against thepre-established performance goals at the end of the related performance period. Each performance unit earned entitles the participant to one share of our peer group for this position as the 2013 median for the CEO position increased over the prior year.
2014 Long-Term Incentive Equity Awards
Common Stock. Given the design of our performance award program, there is no guarantee of any value realized from grants of performance units as they are dependent on our relative TSR. The Compensation Committee determined to grant the following LTI equity awards to our CEO and the other NEOs in December 2013, with an effective grant date in January 2014. The Compensation Committee approves the aggregate grant value, with the exact number of performance units and RSUs determined based on the fair value of such awards in the 80% performance units/20% RSUs proportion on the date of grant. For more information regarding the determination of Market Median and the peer group data reviewed, see “Peer Group Data” previously discussed.units.
Named Executive Officer | Performance ($) | 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 |
|
5048 ï 20152018 Proxy Statement
Compensation Discussion and Analysis |
Performance Award Program—Performance Units Earned for the 2015-2017 Performance Period
Performance units for the 2015-2017 performance period, which ended January 30, 2018, were earned, certified and converted into shares of Common Stock in March 2018 based on an earned payout percentage of 93.4% resulting from the Company’s three-year TSR of 30% ranking in the 46.7th percentile relative to the TSRs of the
companies in the S&P 500 as of the beginning of the performance period (January 30, 2015). Our beginning stock price and ending stock price for purposes of the 2015-2017 performance period are each the average daily closing price of a share of our Common Stock for the beginning and last twenty trading days of the performance period ($154.49 and $186.61, respectively). During the same period, the Company’s market capitalization also increased by approximately 20%.
2015-2017 Performance Period Program Design
Payout Calculation for the 2015-2017 Performance Period
2015-2017 Performance Period Performance Units Earned
Our actual performance results (the 46.7th percentile, or below the median) for the 2015-2017 performance period that ended January 30, 2018 resulted in the following number of shares of Common Stock being earned under our performance award program for this performance period. Each earned performance unit converted to one share of Common Stock upon the payout date of March 23, 2018.
Named Executive Officer | | Performance Units Value Granted (Target) ($) |
| | Number of Performance Units Granted (#) |
| | Number of Shares of our Common (#) |
| |||
Robert A. Bradway
|
| 8,160,000
|
|
| 51,179
|
|
| 51,766
|
| |||
Anthony C. Hooper
|
| 2,800,000
|
|
| 17,561
|
|
| 17,762
|
| |||
Sean E. Harper
|
| 2,400,000
|
|
| 15,052
|
|
| 15,224
|
| |||
David W. Meline
|
| 2,400,000
|
|
| 15,052
|
|
| 15,224
|
| |||
Jonathan P. Graham
|
|
| (2)
|
|
| (2)
|
|
| (2)
|
(1) | Includes dividend equivalents earned on these amounts rounded down to the nearest whole number of shares (excluding fractional shares paid in cash). |
(2) | Mr. Graham commenced employment with the Company after the participants for the 2015-2017 performance period had been determined and, as such, he did not receive any performance units for the 2015-2017 performance period. |
200% 150% 100% 50% 0% Threshold Target Maximum Achieved 93.4% Linear interpolation throughout performance zone 0%ile 25th%ile Median 75th – 100th %ile Performance Zone 0% 50% 100% 150% Target Award (Performance Units Granted) Relative Total Shareholder Return Multiplier (Amgen vs. S&P 500) Maximum (150%) payout for performance at and above the 75th percentile. Target (100%) payout for median, or 50th percentile, TSR performance. 50% payout for 25th percentile TSR performance. Final Payout 93.4% of Target Liner interpolation throughout performance zone
ï 2018 Proxy Statement 49
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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 arePerformance Units Granted 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 Officer2016 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.
2016–2018 Performance UnitsPeriod
The Compensation Committee grantsapproved the 2016-2018 performance unitsperiod performance award goal design that contained relative TSR as a modifier and had the following annual operating performance measures to tie actual compensation earneddrive 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 three operating measures are weighted equally(one-third per measure) and calculated againstpre-established targets for each year in the 2016-2018 performance period. All operating goals (for each year) were established at the commencement of the three-year
performance period. At the end of the performance period, the final average operating measure percentages for each of the three years are averaged, resulting in a total operating measures score that can range from LTI equity awards directly50% to our long-term150% for maximum performance. Performance units are rightsThe total operating measures score is then modified up or down by up to earn shares of our Common Stock,50 percentage points based on pre-establishedour TSR performance goals achieved overranking relative to the TSRs of the companies in the S&P 500 from the grant date of May 3, 2016 through the end of the performance period (the relative TSR modifier) resulting in a payout range of 0% to 200% of target awards granted. The TSR modifier is limited to target (zero, or no increase) where our absolute TSR is less than zero to limit reward in a performance period generally three years. Eachin which we perform better than the S&P 500 for the period but investors do not recognize stock price growth.
The 2016-2018 performance unit earned entitlesawards have a performance period that commences on January 1, 2016 and ends on December 31, 2018.
(1) | 2017 operating measures have been adjusted by $147 million in operating expense ($0.16 in EPS) for the impact of Hurricane Maria as prescribed by the terms of the 2016-2018 goal document. Otherwise,Non-GAAP EPS,Non-GAAP Operating Margin andNon-GAAP Operating Expense for purposes of 2016 and 2017 with respect to the 2016-2018 performance period are as reported and reconciled inAppendix B.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, and the impact of tax law changes. |
50 ï 2018 Proxy Statement
Compensation Discussion and Analysis |
2016-2018 Performance Period Performance Award Goal Calculation
All operating goals (for each year) are established at the participant to one sharecommencement of the Company’s Common Stock.three-year performance period.
(1) | 2017 operating measures have been adjusted by $147 million in operating expense ($0.16 in EPS) for the impact of Hurricane Maria as prescribed by the terms of the 2016-2018 goal document. Otherwise,Non-GAAP EPS,Non-GAAP Operating Margin andNon-GAAP Operating Expense for purposes of 2016 and 2017 with respect to the 2016-2018 performance period are as reported and reconciled inAppendix B.Non-GAAP for purposes of each of the years of the 2016-2018 performance period was defined as earnings per share, operating margin and operating expense under GAAP, excluding certain items, net of tax, related to acquisitions, restructuring and certain other items, and the impact of tax law changes. |
Non-GAAP(1) Operating Measures (Scoring 50%-150%) Operating Expense 1/3rd Operating Margin 1/3rd EPS 1/3rd S&P 500 Relative TSR Modifier (Scoring +/- 50%) Maximum (50%) for 75th percentile and above Target (0%) for median, or 50th percentile Minimum (-50%) for 25th percentile or below Linear interpolation for performance along the payout curve Payout no greater than target (0%) if Amgen’s absolute TSR is less than 0 (Scoring 0%-200% of Target) Final Payout Multiplier) 2016-2018 Operating Measures Score (Operating Measure Percentages 50%-150% subject to linear interpolation along the payout curve) Operating Measures Percentages are Measured Annually and Equally Weighted for Each of the Three Years of the Performance units grantedPeriodNon-GAAP EPS(1) Growth (1/3rd)Non-GAAP Operating Margin(1) (1/3rd)Non-GAAP Operating Expense(1) (1/3rd) Average Operating Measure Percentages 2016 137% 129% 94% 120% 2017 129% 135% 116% 126% 2018 TBD TBD TBD TBD Three Year Average Operating Measure 2016 Targets 2016 Actual 2017 Targets 2017 ActualNon-GAAP EPS(1) ($) Minimum (50%) Less than or equal 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.$10.64 $11.65 (137%) Less than or equal to $10.89 $12.74 (129%) Target (100%) $10.90 $11.63 Intermediate (125%) $11.52 $12.66 Maximum (150%) More than or equal to $11.79 More than or equal to $13.19Non-GAAP Operating Margin(1) (%) Minimum (50%) Less than or equal to 48% 52.3% (129%) Less than or equal to 48% 54.2% (135%) Target (100%) 50% 51% Intermediate (125%) 52% 53% Maximum (150%) More than or equal to 54% More than or equal to 56%Non-GAAP Operating Expense(1) ($B) Minimum (50%) More than or equal to $11.9 $11.45 (94%) More than or equal to $11.7 $11.0 (116%) Target (100%) $11.5 $11.2 Maximum (150%) Less than or equal to $11.1 Less than or equal to $10.7
ï 2018 Proxy Statement 51
Compensation Discussion and Analysis |
Performance Award Program—Goal Design—Performance Units Granted in 20142017 for the 2014-20162017–2019 Performance Period
TheTo ensure that the performance award program continues to strongly align with the interests of our stockholders and motivates management to create long-term value, 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 2016 and March 2017, 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 2017-2019 performance period (January 1, 2017 to December 31, 2019). The Compensation Committee constructed the 2017-2019 performance period performance award goal design to leverage the 2016-2018 performance period goal design, retaining all of the elements of the 2016-2018 performance period goal design for 2017 and 2018, but changing one operating measure for the 2014-2016last year of the three-year performance period. For the first and second years of the 2017-2019 performance period, substantially identicalthe Compensation Committee retained the three annualnon-GAAP operating measures:
• | Non-GAAP earnings per share(1) (EPS) growth; |
• | Non-GAAP operating margin(1); and |
• | Non-GAAP operating expense(1). |
For the third year of this performance period, the Compensation Committee replacednon-GAAP operating expense withnon-GAAP return on invested capital, or ROIC. The Compensation Committee’s replacement ofnon-GAAP operating expense withnon-GAAP ROIC was made in part in response to stockholder feedback, and is
designed to support our transformation strategic priority to deliver an efficient, disciplined business model beyond 2018 with focused management of our return on deployment of invested capital.
The 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, productivity, and profitability; and
Address the challenges of a single performance metric for a full three-year period.
The three annual operating measures are weighted equally(one-third per measure) and calculated againstpre-established targets for each year in the 2017-2019 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, the final average operating measure percentages for each of the three years are averaged, resulting in a total operating measures score that of last year’s performance awards (i.e.,can range from 50% to 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 of the Company’s three-year TSR results against the three-year TSR results of the companies listed in the S&P 500 asfrom the grant date of May 1, 2017 through the end of the grant date. The continued use of this design is based on the belief that a comparison to the S&P 500 companies:
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
Tests our performance against our competition for equity investor capital.
ï 2015 Proxy Statement51
The target payout of 100% of the units granted requires ourperiod (the relative TSR to rank at the 50th percentile, maximum payout of 150% is based on 75th percentile ranking or above, 50% payout is based on 25th percentile ranking and 0% payout is based on bottom ranking, with linear interpolation between bottom ranking and 75th percentile rankingmodifier) resulting in payouts ranging froma payout range of 0% to 150%200% of the target performance unitsawards granted. However, in the eventThe TSR modifier is limited to target (zero, or no increase) where our absolute TSR is less than zero the payout percentage shall not be greater than 100%, notwithstanding our ranking, to limit rewardsreward in a performance period in which we perform in-line with, or better than the S&P 500 companiesfor the period 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 days of the performance period, which reduces the effect of random stock price volatility on a given day or over a shorter time period.
Performance Award Program—2015–2017 Performance Period
In December 2014, the Compensation Committee decided to retain the design of the performance goals for the performance units granted for the 2015-2017 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 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 member of our peer group 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 goals and Section 162(m) of the Internal Revenue Code, or Section 162(m), 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 of the 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.growth.
(1) | 2017 operating measures have been adjusted by $147 Million in operating expense ($0.16 in EPS) for the impact of Hurricane Maria as prescribed by the terms of the 2017-2019 goal document. Otherwise,Non-GAAP EPS,Non-GAAP Operating Margin andNon-GAAP Operating Expense for purposes of the 2017-2019 performance period are as reported and reconciled inAppendix B.Non-GAAP for purposes of each of the years of the 2017-2019 performance period was defined as earnings per share, operating margin, operating expense, and ROIC under GAAP, excluding certain items, net of tax, related to acquisitions, restructuring and certain other items, and the impact of tax law changes. |
52 ï 20152018 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:
| Compensation Discussion and Analysis |
2017-2019 Performance Period Performance Award Goal Calculation
All operating goals (for each year) are established at the commencement of the three-year performance period.
(1) |
|
Non-GAAP(1) Operating Measures (Scoring 50%-150%) EPS 1/3rd Operating Margin 1/3rd Operating Expense Years 1 & 2 ROIC Years 3 1/3rd S&P 500 Relative TSR Modifier (Scoring +/- 50%) Maximum (50%) for 75th percentile and above Target (0%) for median, or 50th percentile Minimum (-50%) for 25th percentile or below Linear interpolation for performance along the payout curve Payout no greater that target (0%) if Amgen’s absolute TSR is less than 0 (scoring 0%-200% of Target) Final Payout Multiplier 2017-2019 Operating Measures Score (Operating Measure Percentages 50%-150% subject to linear interpolation along the payout curve) Operating Measures Percentages are Measured Annually and Equally Weighted for Each of the Three Years of the Performance PeriodNon-GAAP EPS(1) GrowthNon-GAAP Operating Margin(1)Non-GAAP Operating Expense(1) Years 1 & 2Non-GAAP ROIC(1) Year 3 Average Operating Measure Percentages 2017 134% 115% 107% N/A 118% 2018 TBD TBD TBD TBD 2019 TBD TBD N/A TBD TBD 1/3rd 1/3rd 1/3rd Three Year Average Operating Measure 2017 Targets 2017 ActualNon-GAAP EPS(1) ($) Minimum (50%) Less than or equal to $11.80 $12.74 (134%) Target (100%) $12.00 Intermediate (125%) $12.60 Maximum (150%) More than or equal to $13.00Non-GAAP Operating Margin(1) (%) Minimum (50%) Less than or equal to 51% 54.2% (115%) Target (100%) 53% Intermediate (125%) 55% Maximum (150%) More than or equal to 57%Non-GAAP Operating Expense(1) ($B) Minimum (50%) More than or equal to $11.5 $11.0 (107%) Target (100%) $11.1 Maximum (150%) Less than or equal to $10.7
ï 2018 Proxy Statement 53
| Compensation Discussion and Analysis |
Our actual performance results for the performance periods that ended in 2014 resulted in the following value
Change to Performance Award Goal Design—2018–2020 Performance Period
As part of Common Stock being earned under ourits regular review and consideration of the performance award program, the Compensation Committee evaluated potential performance award goal designs for the 2012-2014 performance period:
Named Executive Officer | Performance Units ($) | 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 a2018-2020 performance period running from his hire date of October 27, 2011 and ending on(January 1, 2018 to December 31, 20142020) with a grant of 35,185input from management and Cook & Co. at its December 2017 and March 2018 meetings. The Compensation Committee constructed the 2018-2020 performance units. Theperiod performance award goal design for this
performance unit award is identical to thatleverage the current design of the 2012-2014Company’s performance awards, retaining a combination of operating measures and the relative TSR modifier. The Compensation Committee retained the samenon-GAAP operating measures (EPS growth, operating margin, and operating expense) for the first year of the 2018-2020 performance period previously discussed, includingas is used for 2018 in the 2017-2019 performance period. For the second and third years of the 2018-2020 performance period, the Compensation Committee moved to twonon-GAAP operating measures (EPS growth and ROIC), reflecting our continued focus on remaining disciplined in our management of the business as we move beyond our 2018 operating performance investor commitments. The operating measures are weighted equally in each year(one-third per measure for 2018 andone-half per measure for 2019 and 2020) and are measured against established targets for each year in the 2018-2020 performance period; all such operating goal targets are established at the commencement of the three year performance period. The operating measures percentages are calculated for each year of the 2018-2020 performance period and are averaged at the end of the performance period, resulting in a maximum payout of 150%. These performance units were calculated using a payouttotal operating measures percentage that can range from 30% for minimum to 170% for maximum performance. The total operating measures percentage is then modified by an increase or decrease of up to 30 percentage points based upon our three-yearon the TSR (204.2%) formodifier. The Compensation Committee believes that rebalancing the period comparedweighting in favor of the operating measures relative to the average three-year TSR ofmodifier further emphasizes the companies inCompany’s operational priorities over the comparator group for this performance period (139.5%)while maintaining alignment of our performance with the experience of our stockholders. Consistent with the design of our 2016-2018 and resulted2017-2019 performance period performance awards, the total operating measures score and the relative TSR modifier result in a payout percentage that was limitedrange of 0% to the maximum200% 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 executive LTI equity award grants for 2015target awards granted and, compared the proposed 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 of the Company’s peer group with respect to our CEO (as previously described under “Peer Group Data”). The Compensation Committee also took 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 and
Mr. Hooper’s role in the 2014 Towers Survey. Dr. Harper receivedevent our absolute TSR is less than zero, 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 stillTSR modifier shall 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 withinadd any percentage points notwithstanding our Company, the Compensation Committee determined to set Mr. Balachandran’s LTI equity award level equal to his grant from the previous year.
ranking.
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 StatementStock Options
Restricted Stock Units
Time-vested RSUsoptions comprise only 20%30% of our LTI equity award grants for NEOs to emphasize the importance of achieving long-term growth and align with stockholder interests as stock options only have value if the Company’s stock price increases after the grant.
Restricted Stock Units
Consistent with our focus on performance-based equity, time-vested RSUscompriseonly20%ofourLTIequityawardgrantsforNEOs.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.cash at the Compensation Committee’s election. Stock options do not have dividend equivalent rights.
Plan Minimum Vesting Period of One Year; Actual Minimum of Two Years
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 2018
In March 2018, the Compensation Committee reviewed the LTI equity award grant values proposed to be granted to NEOs in 2018. The Compensation Committee approved an increase in Mr. Bradway’s LTI equity award from $12 million to $12.5 million to reward Mr. Bradway for strong performance and leadership of the Company in a year of transition for the Company. In making its decision, the Compensation Committee noted that the Market Median had declined because of turnover in leadership at a number of our peer group companies while LTI awards for CEOs who had remained in place at peer companies were increased by 10%. The Compensation Committee granted Mr. Hooper the same LTI equity award value that he had received in 2017 as this aligned him with the Market Median. The Compensation Committee determined to increase Dr. Harper’s and Mr. Meline’s LTI equity award grant value from $3.7 million and $3.5 million, respectively, in 2017 to $4 million in 2018 and Mr. Graham’s LTI equity award value from $2.5 million in 2017 to $2.8 million in 2018 as these increases positioned their respective target total direct compensation closer to the Market Median for their respective roles.
54 ï 2018 Proxy Statement
Compensation Discussion and Analysis |
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 as in effect in 2017. 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,year.
In March 2017, 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.
No later than the first 90 days of the calendar year, the Compensation Committee determinesdetermined 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 were2017, 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 2014,2017, 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. Annual cash incentive awards are paid in March of the year following the annual performance period and certification of the resulting payouts by the Compensation Committee.
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Target Incentive Opportunity
ï 2015 Proxy Statement55
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.NEOs remained the same in 2017 as it was for 2016. Mr. Kelly’sBradway’s target annual cash incentive award opportunity was 55%remains 150% of base salary in 2017. 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 2017 also remained at 100% of base salary. As a Senior Vice President,
Mr. Graham's target annual cash incentive award opportunity of 80% of base salary was also maintained for 2017 as it aligned with the Market Median for 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.role.
2014 GMIP2017 Company Performance Goals
The GMIP2017 Company performance goals approved by the Compensation Committee for 2014 were “Deliver Financially”were:
“Deliver Results” goals (60% weighting), “Deliver the Best):
- | “Revenues” and“Non-GAAP Net Income(2)” 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. |
“Progress Innovative Pipeline” goals (25% weighting), and “Deliver):
- | “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (5%) 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% 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. (15%):
- | “Executive Critical Launches and Long-Term Commercial Objectives” (10%) focused on executing on our key innovative product and delivery systems launched. |
- | “Realize Functional Transformation Office Objectives” (5%) focused on target savings in connection with our transformation. |
While all of thesethe goals measure single-yearsingle–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%) Revenuessuccess, delivery on our strategic priorities 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,
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“Deliver Annual Priorities” (15%) was chosen as a 2014 goal category to highlight the importance of accomplishing a series of current-year objectives to position us for the longer-term to execute under our Full Potential Program, develop drug delivery devices 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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(2) | Non-GAAP net income for purposes of the 2017 Company performance goals of our annual cash incentive award program is reported and reconciled inAppendix B. |
56 ï 20152018 Proxy Statement 55
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2014 GMIP2017 Company Performance Goals and Results
The table below illustrates the weighting of each goal, the goals established and our actual performance for 2014:2017. No amounts can be earned for below threshold performance for our financial metrics. For a more detailed description of our performance under each of thenon-financial measures, please see the “Executive Summary” section above.
Deliver Results (60% weighting)
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Weighted Score Achieved 68.2%
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Financial Goals (60%) ($ In Millions)
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Threshold
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Target
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Maximum
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Weighting
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Achieved
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Revenues |
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$21,085 |
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$22,525 |
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$24,325 |
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30% |
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$22,849 110.6% |
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Non-GAAP Net Income(1) | $8,000 | $8,890 | $9,955 | 30% | | $9,246 116.8% |
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Progress Innovative Pipeline (25% weighting)
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Weighted Score Achieved 34.7%
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Goals
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Results
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Weighting
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Achieved
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Execute Key Clinical Studies and |
• Executed key clinical studies for KYPROLIS, BLINCYTO, EVENITY, IMLYGIC®, omecamtiv mecarbil, AMG 301, and ABP 980 (biosimilar trastuzumab (Herceptin®)). |
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20% |
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123.0% |
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• Completed regulatory filings for Repatha, XGEVA, BLINCYTO, EVENITY, Aimovig, Prolia, Parsabiv, ABP 980 and AMGEVITA (biosimilar adalimumab (HUMIRA®)). | ||||||||||
Advance Early Pipeline | • Generated a total of 11 product teams (formed when a molecule has been judged to have the potential to be safe and effective in humans), a record number for our Company, initiated fourfirst-in-human studies, and advanced AMG 301 through theearly-to-late stage portal.
| 5% | 201.7% | |||||||
Deliver Annual Priorities (15% weighting)
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Weighted Score Achieved 12.1%
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Goals
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Results
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Weighting
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Achieved
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Execute Critical Launches and Long-Term Commercial Objectives |
• Prolia—increased worldwide net sales. |
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10% |
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76.0% |
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• Repatha—increased U.S. net sales, U.S. average annual total prescriptions (TRx) share, as well as E.U. average annual market share. While we increased net sales, we did not achieve our overall sales target. | ||||||||||
• KYPROLIS—increased U.S. andex-U.S. net sales. While we increased net sales, we did not achieve our overall sales target. | ||||||||||
• We did not meet our launch timelines for Parsabiv and EVENITY. | ||||||||||
Realize Functional Transformation Office Objectives | • We introduced a program to drive additional savings across the Company. For this program, we realized approximately $400 million in savings as a result of initiatives at both the Company level as well as activities within each function designed to transform approaches with specific savings targets established for each area.
| 5% | 90.4% |
2017 Company Performance Goals Composite Score | ||||||||||||||||
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(1) |
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56 ï 2018 Proxy Statement
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Compensation Discussion and Analysis | ||
ï 2015 Proxy Statement57
20142017 Annual Cash Incentive Awards
As shown in the table above, our performance against the 2014 GMIP2017 Company performance goals yielded a composite score of approximately 147%115% and the Compensation Committee awarded actual annual cash incentive awards under the EIP to our NEOs based on this composite score. No further discretion was employed.
Named Executive Officer | Target 2014 Award($)(1) | Actual 2014 Award($) |
Target Opportunity | Target 2017 Award($) | Actual 2017 Award($)(1) | |||||||||||||||
Robert A. Bradway | 1,950,000 | 2,867,000 |
| 150
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| 2,333,077
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| 2,683,000
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Anthony C. Hooper | 901,620 | 1,325,000 |
| 100
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| 1,049,769
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| 1,207,000
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David W. Meline(2) | 327,121 | 481,000 | ||||||||||||||||||
Sean E. Harper | 806,850 | 1,186,000 |
| 100
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| 970,308
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| 1,116,000
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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 | ||||||||||||||||||
David W. Meline
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| 100
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| 970,308
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| 1,116,000
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Jonathan P. Graham
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| 80
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| 745,785
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| 858,000
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(1) | Calculated in accordance with |
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2018 Company Performance Goals
In March 2015,2018, the Compensation Committee approved GMIPestablished Company performance goal categories for 2015 performance. These goal categories are “Deliver Results” (70%) (which is comprised 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).2018 performance as follows:
2011 Special Retention Award
2018 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%) • Achieve Transformation Objectives (5%) |
In March 2011, while Mr. Balachandran served as our Senior Vice President, Manufacturing,2018, the Compensation Committee approved a $1,000,000 specialreviewed the target incentive award opportunity for each NEO. Mr. Graham’s target annual cash retentionincentive award opportunity was increased from 80% of base salary to Mr. Balachandran, payable in installments90% of $330,000 on March 2, 2012 and 2013 and $170,000 on March 2, 2014 and 2015, subjectbase salary to align with the Market Median for his continued employment through such dates (excluding terminations duerole. No changes were made to death or disability and involuntary termination by us notthe target incentive award opportunity for cause). This special retention award was made in light of Mr. Balachandran’s valued performance in his then-current role and the Company’s desire to retain him as a succession candidate for the role of Executive Vice President, Operations. In August 2012, Mr. Balachandran was promoted to Executive Vice President, Operations.
Mr. Meline’s Sign-On Bonus
To replace the pro-rata value of Mr. Meline’s 2014 bonus at his current employer, which was forfeited upon his leaving, and to induce Mr. Meline to accept the Company’s offer of employment and join the Company, Mr. Meline received a sign-on bonus of $2,000,000 (50% vested on August 21, 2014 and theany other 50% will vest on July 21, 2015) in addition to his initial hire RSU grant previously discussed.NEO.
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
58 ï 2015 Proxy Statement
qualifications, the Market Median and environmental conditions in determiningto determine each NEO’s base salary. No increase in base salary is automatic or guaranteed.
In March 2014,2017, the Compensation Committee determined that there would be noreviewed 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 in base salariesof 2% was recommended for our NEOs. This isNEOs, adjusted to align with the Market Median for each position. The Compensation Committee approved a 2017 base salary increase of 2% for Mr. Bradway based on recommendations from Cook & Co., to raise his base salary nearer to the Market Median for his position, while managing his target total annual cash compensation to approximate the Market Median and continuing to retain the substantial majority of his compensation as “at risk” and performance-based, and generally consistent with the Compensation Committee’s determination thatincrease to other senior executives. Dr. Harper and Mr. Meline each received base salary increases of 2.5% to raise their base salaries nearer to the Market Median for their respective positions. Messrs. Hooper and Graham each staff member atreceived a
senior managerial level and above would not be increased, except as previously approved by the Compensation Committee with respect to recent promotions or appointments, to attain better alignment base salary increase of 2% for 2017 consistent with the peer group for such levels. As a result, base salaries of our NEOs were generally slightly below the Market Median.increase to other senior executives.
2014ï 2018 Proxy Statement 57
Compensation Discussion and Analysis |
2017 Base Salary Market Position
The 20142017 base salaries and the 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 |
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Named Executive Officer | 2016 Base Salary ($) | Increase (%) | 2017 Base Salary ($) | 2016 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | |||||||||||||||
Robert A. Bradway
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| 1,530,000
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| 2.0
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| 1,560,000
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| 1,588,000
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Anthony C. Hooper
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| 1,032,000
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| 2.0
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| 1,053,000
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| 999,440
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| 5.4
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Sean E. Harper
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| 950,000
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| 2.5
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| 974,000
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| 1,004,107
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| (3.0
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David W. Meline
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| 950,000
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| 2.5
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| 974,000
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| 996,373
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Jonathan P. Graham
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| 917,000
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| 2.0
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| 935,000
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| 876,479
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| 6.7
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20152018 Base Salary Adjustments
In March 2015,2018, the Compensation Committee determined thatreviewed the market competitiveness of each NEO’s base salaries for each NEO would again notsalary based on a review of market data and such executive officer’s performance, experience and other qualifications, as well as the Company’s overall performance. In light of the Company’s decision to provide no salary increases to its executive directors and officers (except in exceptional circumstances) to be increased. This is consistent with the market for talent as well as with our continuing exercise of financial discipline, the Compensation Committee’s determination thatCommittee decided to provide no base salaries for each staff member at an executive director level and above would not be increased in recognition ofsalary increases to our on-going transformation activities.NEOs.
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 2014,2017, the Compensation Committee reviewed target total annual cash compensation for each NEO comparing it to the Market Median as set forth belowmarket data 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 whichwith the Compensation Committee considered appropriate.exception of the CEO, for the reasons previously discussed, and Mr. Graham as the Market Median for his position declined over the prior year. 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 2017 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.table below:
Named Executive Officer | 2016 Amgen Target Total Annual Cash ($) | 2016 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | |||||||||
Robert A. Bradway
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| 3,825,000
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| 3,750,000
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| 2.0
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Anthony C. Hooper
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| 2,064,000
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| 2,195,771
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| (6.0
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Sean E. Harper
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| 1,900,000
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| 1,965,625
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| (3.3
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David W. Meline
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| 1,900,000
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| 1,979,256
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| (4.0
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Jonathan P. Graham
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| 1,650,600
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| 1,546,353
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| 6.7
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58 ï 20152018 Proxy Statement59
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2014 Target Annual Cash Compensation
Named Executive Officer | 2014 Amgen Target Annual Cash ($) | 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 |
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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.
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 taxgross-ups for assistance with loss on sale of a home. Our limited home sale loss assistance serves as an 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) whichthat 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. Since December 2015, our guidelines require that each officer who has not met their ownership requirements must 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.
ï 2018 Proxy Statement 59
Compensation Discussion and Analysis |
Stock Ownership Guidelines Requirements
The stock ownership guidelines for 2014 were as follows:2017 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 41 times his base salary, or seven times his stock ownership requirement as of October 20, 2017, the effective date of certifications. |
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, 2014,20, 2017, 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 marginmargin; or (iv) entering into any derivative, hedging or similar transactions with respect to our Common Stock. We do not have any executive 10b5-1 plans.
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, 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.
60 ï 2018 Proxy Statement
Compensation Discussion and Analysis |
Non-Direct Compensation and Payouts in Certain Circumstances
Offer Letter, Severance Arrangement and Change of Control Benefits and Offer Letter With Limited Severance 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. MelineMr. Graham
Mr. Meline, whoGraham commenced employment as our Chief Financial OfficerSenior Vice President, General Counsel and Secretary effective July 21, 2014, is currently subject to an13, 2015. His offer letter that was negotiated in connection with his hiring and approved by the Compensation Committee. Mr. Meline’s offer letter included our standard relocation assistance to facilitate Mr. Meline’s relocation from Minnesota to California. We agreed to provide Mr. Meline with 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 provide Mr. Meline with a $2,000,000 sign-on bonus, with $1,000,000 payable within 30 days of his hire date and $1,000,000 to be paid on the one year anniversary of his hire date, or July 21, 2015, to replace the pro-rata value of Mr. Meline’s 2014 bonus with his former employer which was forfeited upon leaving his position. We also agreed to provide Mr. Meline with an RSU grant at a value of $6,800,000 to compensate Mr. Meline for equity forfeited as
a result of his leaving his previous employer, to induce him to join the Company and to provide long-term incentives that tie a significant portion of Mr. Meline’s compensation to the value of our stock in alignment with the Company’s and its stockholders’ interests. To replace Mr. Meline’s forfeiture of certain pension benefits at his former employer, Mr. Meline was also provided with a contribution to his Deferred Compensation Plan of $1,600,000 which will vest at the rate of 12.5% per year from 2015 through 2022 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 cashcontains severance protection terms that are payable only if Mr. Graham is terminated other than for three years following his hire datecause that expire on July 13, 2018. For a qualifying termination that occurs before July 13, 2018, Mr. Graham would be entitled to a cash payment equal to one year’sa multiple of two times annual base salary and aplus target annual cash incentive award (currently 90% of his annual base salary) plusand up to 1218 months of Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA(1) medical and dental coverage paid by us. Benefits of this type are often provided to officer-level candidates to provide an incentive to them to join the Company by reducing the risk of making such a job change. These severance benefits will expire on July 21, 2017, and are payable only if Mr. Meline is terminated other than for “cause.”
Severance Arrangement—Jonathan M. Peacock
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 Mr. Kelly, our then-Acting Chief Financial Officer, which transition period ended in May 2014. Upon his
ï 2015 Proxy Statement63
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 1,5861,613 U.S. staff members (as of
December 31, 2014)2017), 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”reason,” in each case 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 theany change of control. In general, the performance units are earned based on a truncated performance period and our performance through any change of control (or target performance for the operating measures if the change in control occurs in the first year of a performance period). If the change of control and providesoccurs within the first six months of a performance period, the amount earned ispro-rated based on the number of months of the performance period prior to the change of control. In the event of a termination of employment due to death, disability or retirement, our performance units provide for potentialearn-out at the end of the performance period based on actual results with the amount earnedpro-rated for a change of control that occurs within based on the first six months of the performance period or thereafter.termination date. 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 2014April 2017, using a sample group of 14 companies, chosen so as
(1) | The Consolidated Omnibus Budget Reconciliation Act of 1985. |
ï 2018 Proxy Statement 61
Compensation Discussion and Analysis |
to have the greatest representation from our peer group. The data generated from this survey is used by the Compensation Committee and management in evaluating the competitive positioning and program design of ourthese health, retirement and other benefit programs that pertain to all U.S.-based staff members, including our NEOs.programs.
Retirement and Savings Plan, Supplemental Retirement Plan and Nonqualified Deferred Compensation Plan
Our Retirement and Savings Plan, or 401(k) Plan, is available to all regular U.S.-based staff members of the Company and participating subsidiaries. All 401(k) Plan participants are eligible to receive the same proportionate level of matching and core contributions from us.
We credit to our Supplemental Retirement Plan, or SRP, which is available to all 401(k) Plan participants, Company core and matching contributions on eligible compensation that cannot be made to the 401(k) Plan because they relate
to compensation that is in excess of the maximum amount of recognizable compensation allowed under the Internal Revenue Code’s qualified plan rules. We also credit staff members in the SRP for lost 401(k) Plan Company match and core contributions resulting from making a deferral into the Nonqualified Deferred Compensation Plan, or NDCP. Earnings under the SRP are market-based—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. 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. The 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 and 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 is to terminate the Retiree Health Access Plan when the health insurance exchange system becomes a viable health insurance option for our retirees.
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. At the time the Compensation Committee made its 2017 compensation decisions, Section 162(m) placesplaced 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 doesdid not apply to performance-based compensation, as defined under Section 162(m). Our 2017 executive compensation program iswas 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 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 20142017 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 2017 of the RSUs not being performance-based is approximately $2.3 million assuming the Company’s U.S. combined effective tax rate for 2017.
|
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.
62 ï 2018 Proxy Statement
Compensation Discussion and Analysis |
The 162(m) exception was repealed in the tax reform legislation signed into law on December 22, 2017 for taxable years beginning after December 31, 2017. It is uncertain whether compensation that the Compensation Committee originally intended to structure as performance-based compensation under Section 162(m) that is paid in 2018 or subsequent years will be deductible under transition rules. The Compensation Committee will continue to focus on performance-based compensation, though certain of the requirements of Section 162(m) will no longer be relevant, and thus will not be taken into consideration when setting future compensation.
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 we 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 20152018 Proxy Statement 63
|
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 | 2017 2016 2015 | 1,555,962 1,531,731 1,505,769 | 0 0 0 | 8,399,812 7,699,723 10,199,959 | 3,599,974 3,299,994 0 | 2,683,000 3,650,000 3,841,000 | 661,041 668,553 550,986 | 16,899,789 16,850,001 16,097,714 | ||||||||||||||||||||||||
Anthony C. Hooper Executive Vice President, Global Commercial Operations | 2017 2016 2015 | 1,050,173 1,031,788 1,005,653 | 0 0 0 | 2,799,937 2,799,874 3,499,865 | 1,199,973 1,199,995 0 | 1,207,000 1,639,000 1,649,000 | 295,467 294,528 260,211 | 6,552,550 6,965,185 6,414,729 | ||||||||||||||||||||||||
Sean E. Harper Executive Vice President, Research and Development | 2017 2016 2015 | 970,769 946,246 899,948 | 0 0 0 | 2,589,867 2,449,925 2,999,795 | 1,110,000 1,049,986 0 | 1,116,000 1,502,000 1,476,000 | 269,731 264,885 232,082 | 6,056,367 6,213,042 5,607,825 | ||||||||||||||||||||||||
David W. Meline(6) Executive Vice President and Chief Financial Officer | 2017 2016 2015 | 970,769 946,733 903,478 | 0 0 1,000,000 | 2,449,878 2,449,925 2,999,795 | 1,049,990 1,049,986 0 | 1,116,000 1,503,000 1,482,000 | 271,651 268,821 207,351 | 5,858,288 6,218,465 6,592,624 | ||||||||||||||||||||||||
Jonathan P. Graham(7) Senior Vice President, General Counsel and Secretary | 2017 2016 2015 | 932,577 916,789 424,464 | 0 1,000,000 1,427,203 | 1,749,939 1,609,898 8,599,985 | 749,997 689,990 0 | 858,000 1,165,000 151,797 | �� | 231,695 1,038,668 2,179,852 | 4,522,208 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 |
64 ï 2018 Proxy Statement
Executive Compensation Tables |
The table below shows the grant date fair values of these performance unit awards: (1) if the maximum is achieved with regard to all of the operating performance measures which would result in an earnout of 150% based on the operating performance measures with the TSR market condition at target, with no increase or decrease based on the market condition, and (2) if the maximum is achieved with regard to all of the operating performance measures and maximum performance occurs under the TSR market condition which results in an additional 50% earnout, for total earned payout of 200% of performance units granted.
Fair Value of Performance Units for the 2017-2019 Performance Period | ||||||||
Name | Based on the Maximum Performance Regarding the 2017-2019 Operating Performance Measures | Based on the Maximum Performance Regarding the Operating Performance Measures and Maximum Payout for the TSR Modifier | ||||||
Robert A. Bradway
|
|
$8,999,665
|
|
|
$11,999,673
|
| ||
Anthony C. Hooper
|
|
2,999,829
|
|
|
3,999,891
|
| ||
Sean E. Harper
|
|
2,774,810
|
|
|
3,699,747
|
| ||
David W. Meline
|
|
2,624,738
|
|
|
3,499,770
|
| ||
Jonathan P. Graham
|
|
1,874,915
|
|
|
2,499,887
|
|
(3) | For 2017, reflects the grant date fair values |
Reflects amounts that were earned under our Executive Incentive Plan, or EIP, for |
See the subsection “All Other Compensation—Perquisites and Other Compensation” immediately following these footnotes. |
ï 2015 Proxy Statement67
The amount shown for Mr. Meline in the bonus column for 2015 is the second of two installments paid to him as asign-on bonus to replace the value of Mr. Meline’spro-rata 2014 bonus with his former employer which was forfeited upon leaving his position to work at our Company. |
(7) | Mr. |
|
|
|
|
All Other Compensation—Perquisites and Other Compensation
Perquisites.Perquisites. The amounts reported reflect the aggregate incremental cost of perquisites and other personal benefits provided to our NEOs and are included in the “All Other Compensation” column of the “Summary Compensation Table.” The following table sets forth the perquisites provided to our NEOs in 2014.2017.
Personal Use of Company Aircraft(1) | Personal Use of Company Car and Driver(2) | Personal Financial Planning Services | Moving and Relocation Expenses(3),(4) | Other(5) | Personal Use of Company Aircraft(1) | Personal Use of Company Car and Driver(2) | Personal Financial Planning Services | Other(3) | ||||||||||||||||||||||||||||||||||||||||
Name | Aggregate Incremental Cost($) | 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($) | Aggregate Incremental Cost($) | Total($) | ||||||||||||||||||||||||||||||||||||
Robert A. Bradway | 55,332 | 2,068 | 15,000 | 0 | 0 | 6,818 | 79,218 |
|
111,098
|
|
|
3,866
|
|
|
15,000
|
|
|
10,539
|
|
|
140,503
|
| ||||||||||||||||||||||||||
Anthony C. Hooper | 280 | 1,558 | 15,000 | 0 | 0 | 6,623 | 23,461 |
|
805
|
|
|
1,455
|
|
|
15,000
|
|
|
9,330
|
|
|
26,590
|
| ||||||||||||||||||||||||||
Sean E. Harper
|
|
0
|
|
|
0
|
|
|
15,000
|
|
|
7,500
|
|
|
22,500
|
| |||||||||||||||||||||||||||||||||
David W. Meline | 200 | 138 | 10,000 | 245,415 | 22,198 | 856 | 278,807 |
|
90
|
|
|
2,388
|
|
|
15,000
|
|
|
6,842
|
|
|
24,320
|
| ||||||||||||||||||||||||||
Sean E. Harper | 0 | 32 | 15,000 | 0 | 0 | 5,000 | 20,032 | |||||||||||||||||||||||||||||||||||||||||
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
|
|
90
|
|
|
40
|
|
|
15,000
|
|
|
6,842
|
|
|
21,972
|
|
(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 20152018 Proxy Statement 65
|
|
|
|
|
|
|
|
|
|
|
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 20142017 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 |
|
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-year performance period and are paid out at the end of the performance period based on our level of achievement of the applicable pre-established performance goals over the performance period, as determined by our Compensation and Management Development Committee, or Compensation Committee, for such performance period for each grant. The number of performance units earned are paid out in shares of our Common Stock at a ratio of one share of Common Stock for each performance unit earned.
Performance units are generally forfeited unless a participant is continuously employed through the last business day of the performance period. The underlying principle is that the participant needs to have been an active employee during the entire performance period in order to have contributed to the results on which the earned awards are based. Exceptions to this treatment are a termination of employment in connection with a change of control or the death, disability or retirement of a participant as discussed under “Potential Payments Upon Termination or Change of Control” below.
ï 2015 Proxy Statement69
Performance Goals and Formulas
For a description of the performance units for the 2012-2014 performance period that began on January 1, 2012 and ended on December 31, 2014 and for the 2014-2016 performance period that began on January 31, 2014 and will end 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 2013-2015 performance period that began on January 28, 2013 and will end on January 28, 2016 are based upon our TSR for the
2013-2015 performance period (or Amgen TSR) relative to the TSRs of 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 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.
Name | Company Contributions to 401(k) Retirement and Savings Plan($) | Company Credits to Supplemental Retirement Plan($) | Total($) | |||||||||
Robert A. Bradway
|
|
27,000
|
|
|
493,538
|
|
|
520,538
|
| |||
Anthony C. Hooper
|
|
27,000
|
|
|
241,877
|
|
|
268,877
|
| |||
Sean E. Harper
|
|
27,000
|
|
|
220,231
|
|
|
247,231
|
| |||
David W. Meline
|
|
27,000
|
|
|
220,331
|
|
|
247,331
|
| |||
Jonathan P. Graham
|
|
27,000
|
|
|
182,723
|
|
|
209,723
|
|
Grants of Plan-Based Awards
The following table sets forth summary information regarding all grants of plan-based awards made to our NEOs for the year ended December 31, 2014. Mr. Peacock is not included in2017. All of our equity based awards were granted under the tableAmgen Inc. 2009 Equity Incentive Plan, as his service as our Chief Financial Officer terminated in January 2014, resulting in no grants of equity or non-equity awards to him in 2014.amended.
Estimated Future Payouts | Estimated Future Payouts Under Equity Incentive Plan Awards(# of units)(4) | All Other Stock Awards: Number of Shares of Stock or Units(#)(5) | Grant Date Fair Value of Stock and Option Awards($) | |||||||||||||||||||||||||||||||
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 ($/Sh) | Grant Date Fair Value of Stock and Option Awards($) | |||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Approval Date(1) | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||||||||||||
EIP | Performance Units | RSUs | Stock Options | |||||||||||||||||||||||||||||||||||||||||||||
Robert A. Bradway | 3/7/17 | 3/7/17 | (2) | (2) | 11,702,500 | |||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | (3) | 33,543 | 67,086 | 5,999,836 | (6) | ||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | 14,760 | 2,399,976 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17
|
|
| 3/7/17
|
|
| 130,718
|
|
| 162.60
|
|
| 3,599,974
| (8)
| ||||||||||||||||||||||||||||||||||
Anthony C. Hooper | 3/7/17 | 3/7/17 | (2) | (2) | 7,021,500 | |||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | (3) | 11,181 | 22,362 | 1,999,945 | (6) | ||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | 4,920 | 799,992 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17
|
|
| 3/7/17
|
|
| 43,572
|
|
| 162.60
|
|
| 1,199,973
| (8)
| ||||||||||||||||||||||||||||||||||
Sean E. Harper | 3/7/17 | 3/7/17 | (2) | (2) | 7,021,500 | |||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | (3) | 10,342 | 20,684 | 1,849,874 | (6) | ||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | 4,551 | 739,993 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17
|
|
| 3/7/17
|
|
| 40,305
|
|
| 162.60
|
|
| 1,110,000
| (8)
| ||||||||||||||||||||||||||||||||||
David W. Meline | 3/7/17 | 3/7/17 | (2) | (2) | 7,021,500 | |||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | (3) | 9,783 | 19,566 | 1,749,885 | (6) | ||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | 4,305 | 699,993 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17
|
|
| 3/7/17
|
|
| 38,126
|
|
| 162.60
|
|
| 1,049,990
| (8)
| ||||||||||||||||||||||||||||||||||
Jonathan P. Graham | 3/7/17 | 3/7/17 | (2) | (2) | 4,681,000 | |||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | (3) | 6,988 | 13,976 | 1,249,944 | (6) | ||||||||||||||||||||||||||||||||||||||||||
5/1/17 | 3/7/17 | 3,075 | 499,995 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17
|
|
| 3/7/17
|
|
| 27,233
|
|
| 162.60
|
|
| 749,997
| (8)
|
(1) | Reflects the date on which the grants were approved by the Compensation |
(2) |
|
Represents awards to our NEOs made under our EIP. |
66 ï 2018 Proxy Statement
Executive Compensation Tables |
maximum. Consistent with its practice since the EIP was approved by our stockholders, the Compensation Committee |
GMIP | Non-Equity Incentive Plan Compensation($) | |||||||||||||||||||||||||||||
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards($) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards($) | Non-Equity Compensation($) | ||||||||||||||||||||||||||||
Name | Threshold | Target | Maximum | Actual | Threshold | Target | Maximum | Actual | ||||||||||||||||||||||
Robert A. Bradway | — | 1,950,000 | 4,387,500 | 2,867,000 |
|
—
|
|
|
2,333,077
|
|
5,249,423
|
2,683,000
| ||||||||||||||||||
Anthony C. Hooper | — | 901,620 | 2,028,645 | 1,325,000 |
|
—
|
|
|
1,049,769
|
|
2,361,980
|
1,207,000
| ||||||||||||||||||
Sean E. Harper
|
|
—
|
|
|
970,308
|
|
2,183,193
|
1,116,000
| ||||||||||||||||||||||
David W. Meline | — | 327,121 | 736,022 | 481,000 |
|
—
|
|
|
970,308
|
|
2,183,193
|
1,116,000
| ||||||||||||||||||
Sean E. Harper | — | 806,850 | 1,815,413 | 1,186,000 | ||||||||||||||||||||||||||
Madhavan Balachandran | — | 693,000 | 1,559,250 | 1,019,000 | ||||||||||||||||||||||||||
Michael A. Kelly | — | 280,388 | 630,873 | 412,000 | ||||||||||||||||||||||||||
Jonathan P. Graham
|
|
—
|
|
|
745,785
|
|
1,678,016
|
858,000
|
Reflects estimated payouts regarding performance units granted during |
The payout percentage for the |
Reflects the RSUs granted during |
(5) | Reflects the 2017 annual grant ofnon-qualified stock options to our NEOs. |
(6) | Reflects the grant date fair values of |
ï 2015 Proxy Statement71
interest rate of |
(7) | Reflects the grant date fair values of RSUs granted during |
(8) | Reflects the grant date fair values of stock options granted during 2017 determined in accordance with ASC 718 based on the number of options granted multiplied by the grant date fair value per option of $27.54. 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 2.1%; expected life of 5.8 years; expected volatility of the price of our Common Stock of 22.7%; expected dividend yield of 2.8%; and the exercise price of $162.60. |
ï 2018 Proxy Statement 67
Executive Compensation Tables |
Outstanding Equity Awards at Fiscal Year End
The following table sets forth summary information regarding the outstanding equity awards at December 31, 20142017 granted to each of our NEOs.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($/ 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 |
|
|
130,718 |
|
|
162.60 |
|
|
5/1/27 |
|
|
45,070 |
|
|
7,837,673 |
| ||||||||||||||||||||||||||
0 | 119,782 | 156.35 | 5/3/26 | 68,436 | (4) | 11,901,020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
73,500 | 0 | 54.69 | 4/25/21 | 33,750 | (5) | 5,869,125 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 127,000
|
|
| 0
|
|
| 58.43
|
|
| 4/26/20
|
|
| 48,212
| (6)
|
| 8,384,067
|
| |||||||||||||||||||||||||||||||||||||||||||||||
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 |
|
|
43,572 |
|
|
162.60 |
|
|
5/1/27 |
|
|
15,563 |
|
|
2,706,406 |
|
|
22,812 |
(4) |
|
3,967,007 |
| ||||||||||||||||||||||||||||||
0 | 43,557 | 156.35 | 5/3/26 | 12,273 | (5) | 2,134,275 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 16,542
| (6)
|
| 2,876,654
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sean E. Harper |
|
0 |
|
|
40,305 |
|
|
162.60 |
|
|
5/1/27 |
|
|
14,043 |
|
|
2,442,078 |
|
|
21,100 |
(4) |
|
3,669,290 |
| ||||||||||||||||||||||||||||||||||||||||
0 | 38,112 | 156.35 | 5/3/26 | 10,738 | (5) | 1,867,338 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21,000 | 0 | 54.69 | 4/25/21 | 14,179 | (6) | 2,465,728 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 16,000
|
|
| 0
|
|
| 58.43
|
|
| 4/26/20
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
David W. Meline | 0 | 0 | 54,596 | 8,696,597 |
|
0 |
|
|
38,126 |
|
|
162.60 |
|
|
5/1/27 |
|
|
26,592 |
|
|
4,624,349 |
|
|
19,959 |
(4) |
|
3,470,870 |
| ||||||||||||||||||||||||||||||||||||
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 |
| ||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 38,112 | 156.35 | 5/3/26 | 10,738 | (5) | 1,867,338 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,179
| (6)
|
| 2,465,728
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan P. Graham |
|
0 |
|
|
27,233 |
|
|
162.60 |
|
|
5/1/27 |
|
|
32,403 |
|
|
5,634,882 |
|
|
14,257 |
(4) |
|
2,479,292 |
| ||||||||||||||||||||||||||||||||||||||||
| 0
|
|
| 25,045
|
|
| 156.35
|
|
| 5/3/26
|
|
| 7,056
| (5)
|
| 1,227,038
|
|
(1) | Stock options |
(2) |
|
The following table shows the vesting of RSUs and |
72 ï 2015 Proxy Statement
Granted on | ||||||||||||||||||||||||
Name | May 1, 2017(a) | May 3 2016(a) | August 4, 2015(b) | January 30, 2015(c) | August 1, 2014(d) | January 31, 2014(e) | ||||||||||||||||||
Robert A. Bradway
|
|
15,057
|
|
|
14,726
|
|
|
0
|
|
|
9,653
|
|
|
0
|
|
|
5,634
|
| ||||||
Anthony C. Hooper
|
|
5,019
|
|
|
5,354
|
|
|
0
|
|
|
3,312
|
|
|
0
|
|
|
1,878
|
| ||||||
Sean E. Harper
|
|
4,642
|
|
|
4,685
|
|
|
0
|
|
|
2,838
|
|
|
0
|
|
|
1,878
|
| ||||||
David W. Meline
|
|
4,391
|
|
|
4,685
|
|
|
0
|
|
|
2,838
|
|
|
14,678
|
|
|
0
|
| ||||||
Jonathan P. Graham
|
|
3,136
|
|
|
3,079
|
|
|
26,188
|
|
|
0
|
|
|
0
|
|
|
0
|
|
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 |
(a) |
|
(b) |
|
|
(c) | Approximately half vested on January 30, 2018, and the remainder are scheduled to vest on the fourth anniversary of the grant date. |
(d) |
|
(e) |
|
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 |
68 ï 2018 Proxy Statement
Executive Compensation Tables |
(5) | Reflects the sum of the number of performance units granted for the 2016–2018 performance period (January 1, 2016 to December 31, 2018) and the related dividend equivalents accrued through December 31, 2017 multiplied by the target payout percentage of 100%. As required by SEC rules, the target payout percentage is disclosed in the table since the estimated payout percentage as of December 31, 2017, based on the sum of: (1) the estimated outcomes of our operating measures to be achieved, and (2) the TSR modifier 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 to December 31, 2017, is less than the target payout of 100% of the units granted. The number of dividend equivalents multiplied by the 100% payout percentage (rounded down to the nearest whole number of units) included in the table above are as follows: 1,504 units for Mr. Bradway; 547 units for Mr. Hooper; 478 units for Dr. Harper and Mr. Meline; and 314 units for Mr. Graham.Dividend equivalents are only paid when and to the extent the underlying performance units are earned. |
(6) | Reflects the number of performance units granted for the 2015-2017 performance period (January 30, 2015 to January 30, 2018) and related dividend equivalents accrued through December 31, 2017 multiplied by the payout percentage of 87.6%, which is the relative TSR percentage multiplier based on |
|
|
|
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.
ï 2015 Proxy Statement73
Option Exercises and Stock Vested
The following table summarizes the option exercises and vesting of RSUs and the payment of 2014-2016 performance units (and related dividend equivalents)equivalents, as applicable) for each of our NEOs forduring the year ended December 31, 2014. For a description of the2017. The RSUs and performance units vested and related dividend equivalents earnedconverted to one share of our Common Stock for theeach vested RSU and performance periods that ended on Decemberunit. The 2014-2016 performance units had a performance period from January 31, 2014 through January 31, 2017 and that were earnedbecame payable as of that date, see the “Outstanding Equity Awards at Fiscal Year End” table above and footnotes 7 and 8 to the table.shares upon certification by our Compensation Committee in March 2017.
Option Awards | Stock Awards |
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($)(2) | Number of Securities Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||||||||||||||||
Robert A. Bradway | 65,000 | 3,814,850 | 18,596 | 2,087,842 |
|
0
|
|
|
0
|
|
|
86,584
|
|
|
14,212,621
|
| ||||||||||||||||
Anthony C. Hooper | 0 | 0 | 19,660 | 2,401,006 |
|
0
|
|
|
0
|
|
|
29,366
|
|
|
4,817,129
|
| ||||||||||||||||
Sean E. Harper
|
|
0
|
|
|
0
|
|
|
29,139
|
|
|
4,781,433
|
| ||||||||||||||||||||
David W. Meline | 0 | 0 | 0 | 0 |
|
0
|
|
|
0
|
|
|
15,850
|
|
|
2,742,555
|
| ||||||||||||||||
Sean E. Harper | 0 | 0 | 31,091 | 4,699,033 | ||||||||||||||||||||||||||||
Madhavan Balachandran | 0 | 0 | 12,334 | 1,547,226 | ||||||||||||||||||||||||||||
Michael A. Kelly | 14,848 | 1,223,300 | 5,477 | 641,979 | ||||||||||||||||||||||||||||
Jonathan M. Peacock | 167,632 | 10,290,376 | 8,175 | 922,932 | ||||||||||||||||||||||||||||
Jonathan P. Graham
|
|
0
|
|
|
0
|
|
|
12,926
|
|
|
2,251,605
|
|
(1) |
|
(2) | The value |
Nonqualified Deferred Compensation
The following table sets forth summary information regarding aggregate contributions to and account balances under our SRP and NDCP for and as of the year ended December 31, 2014.2017. There were no withdrawals by any of the NEOs in 2014.2017.
Name | 2014 Employee Contributions ($)(1) | 2014 Company Contributions ($)(2) | 2014 Earnings ($)(3) | Balance as of 12/31/14($)(4) |
2017 Employee Contributions ($)(1) |
2017 Company Contributions ($)(2) |
2017 Earnings (Losses) ($)(3) |
Balance as of 12/31/17 | ||||||||||||||||||||||||
Robert A. Bradway | 1,799,000 | 483,800 | 357,495 | 8,240,060 |
|
0
|
|
|
493,538
|
|
|
1,082,707
|
|
|
12,433,496
|
| ||||||||||||||||
Anthony C. Hooper | 1,000 | 241,880 | 39,761 | 715,971 |
|
111,008
|
|
|
241,877
|
|
|
179,864
|
|
|
1,821,560
|
| ||||||||||||||||
Sean E. Harper
|
|
0
|
|
|
220,231
|
|
|
363,960
|
|
|
3,278,167
|
| ||||||||||||||||||||
David W. Meline | 181,734 | 1,618,173 | 33,046 | 1,832,953 |
|
243,677
|
|
|
220,331
|
|
|
737,154
|
|
|
5,687,018
|
| ||||||||||||||||
Sean E. Harper | 0 | 213,750 | 92,136 | 2,169,060 | ||||||||||||||||||||||||||||
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
|
|
|
182,723
|
|
|
413,509
|
|
|
2,801,102
|
|
(1) | Reflects the |
ï 2018 Proxy Statement 69
Executive Compensation Tables |
reflects the portions of |
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 investment options during 20142017 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 regular U.S-basedU.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 deathdeath; 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.”
70 ï 2018 Proxy Statement
Executive Compensation Tables |
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 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. This contribution and related earnings and losses thereon 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 20142017 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
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 2017 | Name of Investment Option | Rate of Return for 2017 | ||||||||||||||
Amgen Target Retirement Portfolio Income | 6.98% | Capital Preservation | 1.39% |
|
11.17
|
%
|
Large Cap Value
|
|
17.79
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2010 | 7.00% | Fixed Income Index | 6.06% |
|
11.30
|
%
|
Large Cap Index
|
|
21.81
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2020 | 6.98% | Fixed Income | 5.75% |
|
12.99
|
%
|
Large Cap Growth
|
|
31.12
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2030 | 6.81% | High Yield | 2.48% |
|
16.14
|
%
|
Small-Mid Cap Value
|
|
8.35
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2040 | 6.41% | Inflation-Protection | 3.57% |
|
20.76
|
%
|
Small-Mid Cap Index
|
|
17.94
|
%
| ||||||||||
Amgen Target Retirement Portfolio 2050 | 5.94% | Large Cap Value | 11.10% |
|
22.20
|
%
|
Small-Mid Cap Growth
|
|
27.19
|
%
| ||||||||||
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
|
|
1.83
|
%
|
International Value
|
|
22.88
|
%
| |||||||||||||
Fixed Income Index
|
|
3.46
|
%
|
International Index
|
|
27.14
|
%
| |||||||||||||
Fixed Income
|
|
3.52
|
%
|
International Growth
|
|
29.37
|
%
| |||||||||||||
High Yield
|
|
7.47
|
%
|
Emerging Markets
|
|
33.07
|
%
| |||||||||||||
Inflation-Protection
|
|
3.02
|
%
|
REIT Index
|
|
5.20
|
%
|
ï 2018 Proxy Statement 71
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
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 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
72 ï 2018 Proxy Statement
Executive Compensation Tables |
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 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)., provided that, beginning
with RSUs granted in 2018, any unvested RSUs will vest in full in the event of death following such holders’ retirement from the Company. 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 NEOsDr. Harper would have received this benefit because they did not meethe has met the above-mentioned retirement requirements.
Performance Units
Our performance award program provides forPerformance units are generally forfeited unless a potential earn-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 performanceparticipant is continuously employed through the change of control, and provides for potential earn-out at the endlast 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 event ofresults on which the earned awards are based. Exceptions to this treatment are a termination of employment due toin connection with a change of control or the 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.participant.
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 beforeof the last completed fiscal quarter preceding the change of control and the participantcontrol. The TSR market condition performance 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. With respect to the operating performance measures, 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, however, the participant is entitled to a payment equal to an amount calculated in the manner described in the preceding sentence above, butpro-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.
ï 2018 Proxy Statement 73
Executive Compensation Tables |
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 NEOsDr. Harper would have received this benefit because they did not meethe met the above-mentioned retirement requirements.
Mr. Meline’sGraham’s Offer Letter
We entered into an offer letter with Mr. MelineGraham in connection with his initial hiring as Chief Financial OfficerSenior Vice President, General Counsel and Secretary effective July 21, 2014,13, 2015, which provides ourfor 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 one yeartwo years of base salary and target bonus, as defined, plus up to 1218 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, 2017,13, 2018, the third anniversary of the commencement of his employment with the Company.
80 ï 2015 Proxy Statement
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,disability; (ii) to Messrs. MelineDr. Harper, upon retirement; and Balachandran,(iii) to Mr. 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, 20142017 and do not include: (i) the 2012-2014 performance unit awards and the 20142017 EIP payouts, which were earned as of December 31, 2014;2017; (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 policiespolicies; 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 $159.29.2017 ($173.90). The value ofamounts shown for accelerated stock options is the aggregate spreaddifference between the applicable
closing price at December 31, 2017 ($173.90) and the exercise price of theunvested stock options whilemultiplied by the number of unvested stock options. The value per unit of accelerated RSUs and performance units, including the related accrued dividend equivalents (rounded down to the nearest whole number of units), equals the applicable closing price multiplied by the number of units and dividend equivalents vested or earned, as applicable, as a result of such event.
Estimated Payments to Robert A. Bradway
Triggering Event | ||||||||||||
Estimated Potential Payment or Benefit | Change in Control($) | 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($) | |||||||||
Lump sum cash severance payment | 0 | 3,806,840 | 0 | |||||||||
Intrinsic value of accelerated unvested options | n/a | n/a | n/a | |||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 4,176,902 | 4,176,902 | |||||||||
Value of 2014-2016 performance units | 4,682,648 | (1) | 4,682,648 | (1) | 4,682,648 | (2) | ||||||
Value of 2013-2015 performance units | 7,066,901 | (1) | 7,066,901 | (1) | 7,066,901 | (2) | ||||||
Continuing health care benefits for 18 months(3) | 0 | 24,756 | 0 | |||||||||
Continuing retirement plan contributions for two years(4) | 0 | 385,684 | 0 | |||||||||
Total | 11,749,549 | 20,143,731 | 15,926,451 |
8274 ï 20152018 Proxy Statement
|
Estimated Payments to David W. MelineRobert A. Bradway
Triggering Event | ||||||||||||||||
Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Termination Without Cause($)(5) | Death or Disability($) | ||||||||||||
Lump sum cash severance payment | 0 | 3,420,061 | 1,710,030 | 0 | ||||||||||||
Intrinsic value of accelerated unvested options | n/a | n/a | n/a | n/a | ||||||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 8,696,597 | 0 | 3,623,517 | (8) | |||||||||||
Value of 2014-2016 performance units | n/a | n/a | n/a | n/a | ||||||||||||
Value of 2013-2015 performance units | n/a | n/a | n/a | n/a | ||||||||||||
Continuing health care benefits for applicable period(3) | 0 | 36,532 | 23,707 | 0 | ||||||||||||
Continuing retirement plan contributions(4) | 0 | 347,006 | 0 | 0 | ||||||||||||
Acceleration of unvested balance of DCP account | 1,630,913 | 1,630,913 | 0 | 0 | ||||||||||||
Total | 1,630,913 | 14,131,109 | 1,733,737 | 3,623,517 |
Triggering Event | ||||||||||||
Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | |||||||||
Lump sum cash severance payment
|
|
0
|
|
|
7,800,000
|
|
|
0
|
| |||
Intrinsic value of accelerated unvested stock options
|
|
0
|
|
|
3,579,288
|
|
|
3,579,288
|
| |||
Intrinsic value of accelerated unvested RSUs
|
|
0
|
|
|
7,837,673
|
|
|
7,837,673
|
| |||
Value of 2017-2019 performance units
|
|
8,925,765
|
(1)
|
|
8,925,765
|
(1)
|
|
6,438,300
|
(2)
| |||
Value of 2016-2018 performance units
|
|
7,970,359
|
(1)
|
|
7,970,359
|
(1)
|
|
5,305,689
|
(2)
| |||
Value of 2015-2017 performance units
|
|
8,384,067
|
(1)
|
|
8,384,067
|
(1)
|
|
8,384,067
|
(2)
| |||
Continuing health care benefits for 18 months(3)
|
|
0
|
|
|
35,802
|
|
|
0
|
| |||
Continuing retirement plan contributions for two years(4)
|
|
0
|
|
|
785,000
|
|
|
0
|
| |||
Total |
|
25,280,191 |
|
|
45,317,954 |
|
|
31,545,017 |
|
Estimated Payments to Sean E. HarperAnthony C. Hooper
Triggering Event | ||||||||||||
Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | |||||||||
Lump sum cash severance payment | 0 | 3,406,700 | 0 | |||||||||
Intrinsic value of accelerated unvested options | 0 | 746,844 | 746,844 | |||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 3,348,754 | 3,348,754 | |||||||||
Value of 2014-2016 performance units | 4,682,648 | (1) | 4,682,648 | (1) | 4,682,648 | (2) | ||||||
Value of 2013-2015 performance units | 7,066,901 | (1) | 7,066,901 | (1) | 7,066,901 | (2) | ||||||
Continuing health care benefits for 18 months(3) | 0 | 36,532 | 0 | |||||||||
Continuing retirement plan contributions for two years(4) | 0 | 345,670 | 0 | |||||||||
Total | 11,749,549 | 19,634,049 | 15,845,147 |
Triggering Event | ||||||||||||
Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | |||||||||
Lump sum cash severance payment
|
|
0
|
|
|
4,212,000
|
|
|
0
|
| |||
Intrinsic value of accelerated unvested stock options
|
|
0
|
|
|
1,256,789
|
|
|
1,256,789
|
| |||
Intrinsic value of accelerated unvested RSUs
|
|
0
|
|
|
2,706,406
|
|
|
2,706,406
|
| |||
Value of 2017-2019 performance units
|
|
2,975,255
|
(1)
|
|
2,975,255
|
(1)
|
|
2,146,100
|
(2)
| |||
Value of 2016-2018 performance units
|
|
2,898,217
|
(1)
|
|
2,898,217
|
(1)
|
|
1,929,247
|
(2)
| |||
Value of 2015-2017 performance units
|
|
2,876,654
|
(1)
|
|
2,876,654
|
(1)
|
|
2,876,654
|
(2)
| |||
Continuing health care benefits for 18 months(3)
|
|
0
|
|
|
24,235
|
|
|
0
|
| |||
Continuing retirement plan contributions for two years(4)
|
|
0
|
|
|
426,200
|
|
|
0
|
| |||
Total |
|
8,750,126 |
|
|
17,375,756 |
|
|
10,915,196 |
|
ï 20152018 Proxy Statement83 75
|
Estimated Payments to Madhavan BalachandranSean E. Harper
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($) | Retirement($) | Death or Disability($) | |||||||||||||||||||||||||||
Lump sum cash severance payment | 0 | 2,926,000 | 0 | 0 | 0 |
|
0
|
|
|
3,896,000
|
|
|
0
|
|
|
0
|
| |||||||||||||||||||
Intrinsic value of accelerated unvested options | 0 | 560,133 | 0 | 560,133 | 560,133 | |||||||||||||||||||||||||||||||
Intrinsic value of accelerated unvested stock options
|
|
0
|
|
|
1,124,312
|
|
|
1,124,312
|
|
|
1,124,312
|
| ||||||||||||||||||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 5,496,301 | 0 | 2,524,109 | (7) | 5,496,301 |
|
0
|
|
|
2,442,078
|
|
|
2,442,078
|
|
|
2,442,078
|
| ||||||||||||||||||
Value of 2014-2016 performance units | 4,370,599 | (1) | 4,370,599 | (1) | 0 | 4,370,599 | (2) | 4,370,599 | (2) | |||||||||||||||||||||||||||
Value of 2013-2015 performance units | 7,066,901 | (1) | 7,066,901 | (1) | 0 | 7,066,901 | (2) | 7,066,901 | (2) | |||||||||||||||||||||||||||
Value of 2017-2019 performance units
|
|
2,751,968
|
(1)
|
|
2,751,968
|
(1)
|
|
1,985,069
|
(2)
|
|
1,985,069
|
(2)
| ||||||||||||||||||||||||
Value of 2016-2018 performance units
|
|
2,535,984
|
(1)
|
|
2,535,984
|
(1)
|
|
1,688,047
|
(2)
|
|
1,688,047
|
(2)
| ||||||||||||||||||||||||
Value of 2015-2017 performance units
|
|
2,465,728
|
(1)
|
|
2,465,728
|
(1)
|
|
2,465,728
|
(2)
|
|
2,465,728
|
(2)
| ||||||||||||||||||||||||
Continuing health care benefits for 18 months(3) | 0 | 36,532 | 0 | 0 | 0 |
|
0
|
|
|
35,802
|
|
|
0
|
|
|
0
|
| |||||||||||||||||||
Continuing retirement plan contributions for two years(4) | 0 | 297,600 | 0 | 0 | 0 |
|
0
|
|
|
394,600
|
|
|
0
|
|
|
0
|
| |||||||||||||||||||
Special retention award(6) | 0 | 170,000 | 170,000 | 0 | 170,000 | |||||||||||||||||||||||||||||||
Total | 11,437,500 | 20,924,066 | 170,000 | 14,521,742 | 17,663,934 |
|
7,753,680 |
|
|
15,646,472 |
|
|
9,705,234 |
|
|
9,705,234 |
|
Estimated Payments to Michael A. KellyDavid W. Meline
Triggering Event | ||||||||||||||||
Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Retirement($) | Death or Disability($) | ||||||||||||
Lump sum cash severance payment | 0 | 1,580,368 | 0 | 0 | ||||||||||||
Intrinsic value of accelerated unvested options | 0 | 185,874 | 185,874 | 185,874 | ||||||||||||
Intrinsic value of accelerated unvested RSUs | 0 | 1,423,256 | 444,897 | (7) | 1,423,256 | |||||||||||
Value of 2014-2016 performance units | 615,178 | (1) | 615,178 | (1) | 615,178 | (2) | 615,178 | (2) | ||||||||
Value of 2013-2015 performance units | 769,052 | (1) | 769,052 | (1) | 769,052 | (2) | 769,052 | (2) | ||||||||
Continuing health care benefits for 18 months(3) | 0 | 36,532 | 0 | 0 | ||||||||||||
Continuing retirement plan contributions for two years(4) | 0 | 163,037 | 0 | 0 | ||||||||||||
Total | 1,384,230 | 4,773,297 | 2,015,001 | 2,993,360 |
Triggering Event | ||||||||||||
Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Death or Disability($) | |||||||||
Lump sum cash severance payment
|
|
0
|
|
|
967,249
|
(5)
|
|
0
|
| |||
Intrinsic value of accelerated unvested stock options
|
|
0
|
|
|
1,099,689
|
|
|
1,099,689
|
| |||
Intrinsic value of accelerated unvested RSUs
|
|
0
|
|
|
4,624,349
|
|
|
4,624,349
|
| |||
Value of 2017-2019 performance units
|
|
2,603,109
|
(1)
|
|
2,603,109
|
(1)
|
|
1,877,772
|
(2)
| |||
Value of 2016-2018 performance units
|
|
2,535,984
|
(1)
|
|
2,535,984
|
(1)
|
|
1,688,047
|
(2)
| |||
Value of 2015-2017 performance units
|
|
2,465,728
|
(1)
|
|
2,465,728
|
(1)
|
|
2,465,728
|
(2)
| |||
Continuing health care benefits for 18 months(3)
|
|
0
|
|
|
35,802
|
|
|
0
|
| |||
Continuing retirement plan contributions for two years(4)
|
|
0
|
|
|
394,600
|
|
|
0
|
| |||
Acceleration of unvested balance of DCP account
|
|
1,087,082
|
|
|
1,087,082
|
|
|
0
|
| |||
Total |
|
8,691,903 |
|
|
15,813,592 |
|
|
11,755,585 |
|
8476 ï 20152018 Proxy Statement
|
Estimated Payments to Jonathan P. Graham
Triggering Event | ||||||||||||||||
Estimated Potential Payment or Benefit | Change in Control($) | Change in Control and Termination($) | Termination Without Cause($)(6) | Death or Disability($) | ||||||||||||
Lump sum cash severance payment
|
|
0
|
|
|
3,366,000
|
|
|
3,366,000
|
|
|
0
|
| ||||
Intrinsic value of accelerated unvested stock options
|
|
0
|
|
|
747,273
|
|
|
0
|
|
|
747,273
|
| ||||
Intrinsic value of accelerated unvested RSUs
|
|
0
|
|
|
5,634,882
|
|
|
0
|
|
|
5,634,882
|
| ||||
Value of 2017-2019 performance units
|
|
1,859,339
|
(1)
|
|
1,859,339
|
(1)
|
|
0
|
|
|
1,341,291
|
(2)
| ||||
Value of 2016-2018 performance units
|
|
1,666,310
|
(1)
|
|
1,666,310
|
(1)
|
|
0
|
|
|
1,109,308
|
(2)
| ||||
Value of 2015-2017 performance units
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
| ||||
Continuing health care benefits for 18 months(3)
|
|
0
|
|
|
35,802
|
|
|
35,802
|
|
|
0
|
| ||||
Continuing retirement plan contributions for two years(4)
|
|
0
|
|
|
341,600
|
|
|
0
|
|
|
0
|
| ||||
Acceleration of unvested balance of SRP account
|
|
0
|
|
|
355,012
|
|
|
0
|
|
|
355,012
|
| ||||
Acceleration of unvested balance of DCP account
|
|
1,437,967
|
|
|
1,437,967
|
|
|
1,437,967
|
|
|
1,437,967
|
| ||||
Total |
|
4,963,616 |
|
|
15,444,185 |
|
|
4,839,769 |
|
|
10,625,733 |
|
(1) | In the event of a change of control occurring after the first six months of the |
In the event of a change of control occurring during the second year 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, 2017 multiplied by a payout percentage of 135.8%, which is the percentage based on the estimated outcomes of our operating performance measures achieved during the first year of the performance period of 120% increased by the TSR modifier by 15.8 percentage points 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 to September 30, 2017, the last business day of the last fiscal quarter before the change in control. |
In the event of a change of control during the third year of the 2015-2017 performance period, which ended on January 30, 2018, 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, 2017, multiplied by a payout percentage of 87.6% 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 |
|
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, 2017 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 |
(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. |
For the 2017-2019 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, 2017, multiplied by the |
For 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 |
For 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 |
In the event of actual death or disability, payout of shares in satisfaction of amounts earned for grants for the |
ï 2018 Proxy Statement 77
Executive Compensation Tables |
As |
(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 the cash severance payment pursuant to our Change of Control Severance Plan described above. The payment to Mr. Meline was reduced by $2,928,751 from the amount otherwise due to him to avoid excise tax he would be liable for if all benefits pursuant to the Change of Control Severance Plan was paid to Mr. Meline. For purposes of determining whether this cash severance payment reduction should be made, we applied the highest applicable federal and state income tax rates to the benefits subject to income taxes that would be payable to Mr. Meline pursuant to the Change of Control Severance Plan in the table above. |
(6) | Reflects amounts that would be paid to Mr. |
|
|
|
78 ï 20152018 Proxy Statement85
|
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. In October 2017, the
Governance and Nominating Committee, or Governance Committee, reviewed our director compensation. The Governance Committee hired Frederic W. Cook & Co., Inc., or Cook & Co., as an independent consultant to the Governance Committee to advise on director compensation. Cook & Co. provided detailed competitive comparisons against our peer group and recommended no changes to our director compensation levels. Based on this review and recommendation by Cook & Co., the Governance Committee recommended to the Board that no changes be made to the compensation levels for directors.
20142017 Director Compensation
Cash CompensationCompensation.. Eachnon-employee director receives an annual cash retainer of $100,000. In addition, chairs of our Boardthe four key standing 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 grantsA director may also elect to non-employee directors commencingreceive deferred RSUs in 2013.lieu of up to 100% of his or her cash compensation.
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. Separate and in addition to this ongoing annual program, The Amgen Foundation, Inc. matches, on adollar-for-dollar basis, donations to specified disaster relief organizations, up to $20,000 per deployment per person.
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 dates that were on or prior to December 31, 2017 met the stock ownership guidelines as of December 31, 2017.
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 20152018 Proxy Statement87 79
|
Director Compensation Table
The following table shows compensation of thenon-employee members of our Board for 2014.2017. 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.
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($) | ||||||||||||||||||||||||
Wanda M. Austin(1)
|
|
12,333
|
|
|
0
|
|
|
20,000
|
|
|
32,333
|
| ||||||||||||||||||||
David Baltimore | 121,000 | 199,981 | 21,009 | 341,990 |
|
118,000
|
|
|
199,998
|
|
|
20,727
|
|
|
338,725
|
| ||||||||||||||||
Frank J. Biondi, Jr. | 145,000 | 199,981 | 42,821 | 387,802 | ||||||||||||||||||||||||||||
Frank J. Biondi, Jr.(2)
|
|
71,000
|
|
|
199,998
|
|
|
61,168
|
|
|
332,166
|
| ||||||||||||||||||||
François de Carbonnel | 121,000 | 199,981 | 19,038 | 340,019 |
|
122,000
|
|
|
199,998
|
|
|
20,293
|
|
|
342,291
|
| ||||||||||||||||
Vance D. Coffman | 177,000 | 199,981 | 35,627 | 412,608 | ||||||||||||||||||||||||||||
Robert A. Eckert | 124,000 | 199,981 | 20,705 | 344,686 |
|
168,000
|
|
|
199,998
|
|
|
20,000
|
|
|
387,998
|
| ||||||||||||||||
Greg C. Garland | 122,000 | 199,981 | 15,000 | 336,981 |
|
145,000
|
|
|
199,998
|
|
|
20,000
|
|
|
364,998
|
| ||||||||||||||||
Fred Hassan
|
|
120,000
|
|
|
199,998
|
|
|
20,000
|
|
|
339,998
|
| ||||||||||||||||||||
Rebecca M. Henderson | 116,000 | 199,981 | 19,408 | 335,389 |
|
121,000
|
|
| �� 199,998
|
|
|
28,885
|
|
|
349,883
|
| ||||||||||||||||
Frank C. Herringer(1) | 145,000 | 199,981 | 45,755 | 390,736 | ||||||||||||||||||||||||||||
Frank C. Herringer(3)
|
|
139,500
|
|
|
199,998
|
|
|
86,733
|
|
|
426,231
|
| ||||||||||||||||||||
Charles M. Holley
|
|
125,500
|
|
|
199,998
|
|
|
10,000
|
|
|
335,498
|
| ||||||||||||||||||||
Tyler Jacks | 118,000 | 199,981 | 20,000 | 337,981 |
|
124,000
|
|
|
199,998
|
|
|
20,000
|
|
|
343,998
|
| ||||||||||||||||
Gilbert S. Omenn(2) | 61,000 | 199,981 | 35,800 | 296,781 | ||||||||||||||||||||||||||||
Judith C. Pelham | 125,000 | 199,981 | 20,622 | 345,603 | ||||||||||||||||||||||||||||
Ellen J. Kullman(3)
|
|
122,000
|
|
|
199,998
|
|
|
22,877
|
|
|
344,875
|
| ||||||||||||||||||||
Judith C. Pelham(2)
|
|
57,000
|
|
|
199,998
|
|
|
36,852
|
|
|
293,850
|
| ||||||||||||||||||||
Ronald D. Sugar | 138,000 | 199,981 | 20,240 | 358,221 |
|
140,000
|
|
|
199,998
|
|
|
20,694
|
|
|
360,692
|
| ||||||||||||||||
R. Sanders Williams(2) | 29,000 | 49,928 | 13,100 | 92,028 | ||||||||||||||||||||||||||||
R. Sanders Williams
|
|
120,000
|
|
|
199,998
|
|
|
20,212
|
|
|
340,210
|
|
(1) |
|
Dr. |
(2) | Mr. Biondi and Ms. Pelham retired from our Board in May 2017. |
(3) | All cash fees for Mr. Herringer and Ms. Kullman were deferred under our NDCP. |
(4) | Reflects all fees |
Reflects the grant date fair values of RSUs granted during |
8880 ï 20152018 Proxy Statement
|
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, 2017(a) |
Aggregate Option Awards Outstanding as of December 31, 2017(b) | ||||||||||||
Restricted Stock Units and Dividend Equivalents | Stock Options | Restricted Stock Units and Dividend Equivalents | Stock Options | |||||||||||||
Wanda M. Austin
|
|
0
|
|
|
0
|
| ||||||||||
David Baltimore | 0 | 25,000 |
|
0
|
|
|
15,000
|
| ||||||||
Frank J. Biondi, Jr. | 15,318 | 15,000 |
|
20,340
|
|
|
15,000
|
| ||||||||
François de Carbonnel | 2,115 | 5,000 |
|
2,274
|
|
|
0
|
| ||||||||
Vance D. Coffman | 8,377 | 25,000 | ||||||||||||||
Robert A. Eckert | 3,722 | 20,000 |
|
7,870
|
|
|
20,000
|
| ||||||||
Greg C. Garland | 0 | 0 |
|
0
|
|
|
0
|
| ||||||||
Fred Hassan
|
|
0
|
|
|
0
|
| ||||||||||
Rebecca M. Henderson | 7,469 | 8,000 |
|
11,900
|
|
|
8,000
|
| ||||||||
Frank C. Herringer | 16,742 | 25,000 |
|
21,872
|
|
|
15,000
|
| ||||||||
Charles M. Holley
|
|
0
|
|
|
0
|
| ||||||||||
Tyler Jacks | 1,818 | 20,000 |
|
5,823
|
|
|
20,000
|
| ||||||||
Gilbert S. Omenn | 4,647 | 25,000 | ||||||||||||||
Ellen J. Kullman
|
|
1,254
|
|
|
0
|
| ||||||||||
Judith C. Pelham | 0 | 0 |
|
0
|
|
|
0
|
| ||||||||
Ronald D. Sugar | 7,109 | 30,000 |
|
11,513
|
|
|
30,000
|
| ||||||||
R. Sanders Williams | 0 | 0 |
|
0
|
|
|
0
|
|
(a) | Restricted stock units and related dividend equivalents are all vested, but receipt has been deferred. |
(b) | All options are vested. |
ï 20152018 Proxy Statement89 81
|
The table below provides a summary of amounts paid by the Company for perquisites and other special |
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($) |
| |||||||||||||||||||||
Wanda M. Austin
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,000
|
| |||||||||||
David Baltimore
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
497
|
|
|
230
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,727
|
| |||||||||||
Frank J. Biondi, Jr.
|
|
12,500
|
|
|
0
|
|
|
0
|
|
|
460
|
|
|
213
|
|
|
5,605
|
|
|
2,590
|
|
|
39,800
|
|
|
61,168
|
| |||||||||||
François de Carbonnel
|
|
10,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
10,293
|
|
|
20,293
|
| |||||||||||
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
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,000
|
| |||||||||||
Rebecca M. Henderson
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
8,885
|
|
|
28,885
|
| |||||||||||
Frank C. Herringer
|
|
40,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
46,733
|
|
|
86,733
|
| |||||||||||
Charles M. Holley
|
|
10,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
10,000
|
| |||||||||||
Tyler Jacks
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,000
|
| |||||||||||
Ellen J. Kullman
|
|
20,000
|
|
|
0
|
|
|
13
|
|
|
1,959
|
|
|
905
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
22,877
|
| |||||||||||
Judith C. Pelham
|
|
10,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
25,508
|
|
|
1,344
|
|
|
0
|
|
|
36,852
|
| |||||||||||
Ronald D. Sugar
|
|
20,000
|
|
|
0
|
|
|
0
|
|
|
475
|
|
|
219
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
20,694
|
| |||||||||||
R. Sanders Williams
|
|
20,000
|
|
|
0
|
|
|
19
|
|
|
0
|
|
|
0
|
|
|
132
|
|
|
61
|
|
|
0
|
|
|
20,212
|
|
(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. |
9082 ï 20152018 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 23, 2018 by: (i) each current director and nominee; (ii) our Named Executive Officers, or NEOs (as specified on page 32); and (iii) all of our current directors and executive officers as a group. There were 668,270,489 shares of our Common Stock outstanding as of March 23, 2018. 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) | ||||||||||||
Beneficial Owner | Total Common Stock Beneficially Owned | Shares Acquirable Within 60 Days | Percent of Total | |||||||||
Non-Employee Directors and Nominees
| ||||||||||||
Wanda M. Austin
|
|
94
|
|
|
0
|
|
|
*
|
| |||
David Baltimore
|
|
46,159
|
|
|
15,000
|
|
|
*
|
| |||
François de Carbonnel
|
|
13,269
|
|
|
0
|
|
|
*
|
| |||
Brian J. Druker
|
|
0
|
|
|
0
|
|
|
*
|
| |||
Robert A. Eckert
|
|
20,435
|
|
|
20,000
|
|
|
*
|
| |||
Greg C. Garland
|
|
5,924
|
|
|
0
|
|
|
*
|
| |||
Fred Hassan
|
|
6,091
|
|
|
0
|
|
|
*
|
| |||
Rebecca M. Henderson
|
|
8,000
|
|
|
8,000
|
|
|
*
|
| |||
Frank C. Herringer(3)
|
|
42,722
|
|
|
15,000
|
|
|
*
|
| |||
Charles M. Holley, Jr.(4)
|
|
1,260
|
|
|
0
|
|
|
*
|
| |||
Tyler Jacks
|
|
21,890
|
|
|
20,000
|
|
|
*
|
| |||
Ellen J. Kullman
|
|
410
|
|
|
0
|
|
|
*
|
| |||
Ronald D. Sugar
|
|
30,000
|
|
|
30,000
|
|
|
*
|
| |||
R. Sanders Williams
|
|
4,009
|
|
|
0
|
|
|
*
|
| |||
Named Executive Officers
| ||||||||||||
Robert A. Bradway
|
|
629,319
|
|
|
244,921
|
|
|
*
|
| |||
Anthony C. Hooper
|
|
215,535
|
|
|
16,152
|
|
|
*
|
| |||
Sean E. Harper
|
|
98,600
|
|
|
51,132
|
|
|
*
|
| |||
David W. Meline
|
|
44,404
|
|
|
14,132
|
|
|
*
|
| |||
Jonathan P. Graham
|
|
21,483
|
|
|
9,286
|
|
|
*
|
| |||
All current directors and executive officers as a group (22 individuals)(5)
|
|
1,323,915
|
|
|
477,062
|
|
|
*
|
|
* | 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 2018 Proxy Statement 83
|
(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 23, 2018 or within 60 days thereafter, and (b) upon exercise of stock options that are vested as of March 23, 2018 or within 60 days thereafter, as set forth in the table below. Such shares are deemed to be outstanding in calculating the percentage ownership of such individual (and the group), but are not deemed to be outstanding as to any other person. Excludes vested RSUs, and related dividend equivalents, for which receipt has been deferred by certain of thenon-employee directors to a date later than 60 days after March 23, 2018. Dividend equivalents credited on RSUs are deemed reinvested and are paid out with the vested RSUs in shares of our Common Stock. |
Name | RSUs and Dividend Equivalents Included | Stock Options Included |
RSUs and Dividend Equivalents Excluded Because of Deferrals | |||||||||
Wanda M. Austin
|
|
0
|
|
|
0
|
|
|
0
|
| |||
David Baltimore
|
|
0
|
|
|
15,000
|
|
|
0
|
| |||
François de Carbonnel
|
|
0
|
|
|
0
|
|
|
2,290
|
| |||
Brian J. Druker
|
|
0
|
|
|
0
|
|
|
0
|
| |||
Robert A. Eckert
|
|
0
|
|
|
20,000
|
|
|
7,926
|
| |||
Greg C. Garland
|
|
0
|
|
|
0
|
|
|
0
|
| |||
Fred Hassan
|
|
0
|
|
|
0
|
|
|
0
|
| |||
Rebecca M. Henderson
|
|
0
|
|
|
8,000
|
|
|
11,984
|
| |||
Frank C. Herringer
|
|
0
|
|
|
15,000
|
|
|
22,026
|
| |||
Charles M. Holley, Jr.
|
|
0
|
|
|
0
|
|
|
0
|
| |||
Tyler Jacks
|
|
0
|
|
|
20,000
|
|
|
5,864
|
| |||
Ellen J. Kullman
|
|
0
|
|
|
0
|
|
|
1,263
|
| |||
Ronald D. Sugar
|
|
0
|
|
|
30,000
|
|
|
11,594
|
| |||
R. Sanders Williams
|
|
0
|
|
|
0
|
|
|
0
|
| |||
Robert A. Bradway
|
|
4,893
|
|
|
240,028
|
|
|
0
|
| |||
Anthony C. Hooper
|
|
1,779
|
|
|
14,373
|
|
|
0
|
| |||
Sean E. Harper
|
|
1,556
|
|
|
49,576
|
|
|
0
|
| |||
David W. Meline
|
|
1,556
|
|
|
12,576
|
|
|
0
|
| |||
Jonathan P. Graham
|
|
1,022
|
|
|
8,264
|
|
|
0
|
|
(3) | Includes 17,152 shares held by family trusts. |
(4) | Shares held through the Holley Family Trust. |
(5) | Includes 114,311 shares (excluding fractional shares) held by the four executive officers who are not NEOs and who have a right to acquire such shares upon the vesting of RSUs that have not been deferred to a date later than 60 days after March 23, 2018 or upon exercise of vested stock options as of March 23, 2018 or within 60 days thereafter. All current directors and executive officers as a group have the right to acquire a total of 12,346 shares upon vesting of RSUs, and related dividend equivalents, where the shares are issuable as of March 23, 2018 or within 60 days thereafter and 464,716 shares upon exercise of stock options that are vested as of March 23, 2018 or within 60 days thereafter. |
84 ï 2018 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 March 23, 2018, 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 23, 2018.
Common Stock Beneficially Owned | ||||||||
Name and Address of Beneficial Owner | Number of Shares | Percent of Total(1) | ||||||
The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355
|
| 52,334,809
|
|
| 7.8%
|
| ||
FMR LLC(3) 245 Summer Street Boston, MA 02210
|
| 51,882,823
|
|
| 7.8%
|
| ||
Capital Research Global Investors(4) 333 South Hope Street Los Angeles, CA 90071
|
| 50,922,740
|
|
| 7.6%
|
| ||
BlackRock, Inc.(5) 55 East 52nd Street New York, NY 10055
|
| 49,434,699
|
|
| 7.4%
|
|
(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 23, 2018 and may differ from the “Percent of Class” reported in statements of beneficial ownership filed with the SEC. |
(2) | The amounts shown and the following information was provided by The Vanguard Group pursuant to a Schedule 13G/A filed with the SEC on February 12, 2018. The Vanguard Group reports that it has sole voting power over 1,026,853 of these shares and sole dispositive power over 51,170,964 shares. |
(3) | The amounts shown and the following information was provided by FMR LLC pursuant to a Schedule 13G/A filed with the SEC on February 13, 2018. FMR LLC reports that it has sole voting power over 4,487,286 of these shares and sole dispositive power over 51,882,823 shares. |
(4) | The amounts shown and the following information was provided by Capital Research Global Investors pursuant to a Schedule 13G/A filed with the SEC on February 14, 2018. Capital Research Global Investors reports that it has sole voting and dispositive power over all 50,922,740 shares. |
(5) | The amounts shown and the following information was provided by BlackRock, Inc. pursuant to a Schedule 13G/A filed with the SEC on January 29, 2018. BlackRock, Inc. reports that it has sole voting power over 43,091,703 of these shares and sole dispositive power over 49,434,699 shares. |
ï 2018 Proxy Statement 85
Item 3 — 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, 2018, and the Board has directed that management submit this selection for ratification by the stockholders at our 2018 Annual Meeting of 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. 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. 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 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.
86 ï 2018 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, 2014.2017.
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. 16,1301,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, 20142017 for filing with the Securities and Exchange Commission.
Audit Committee of the Board of Directors
Frank J. Biondi,Charles M. Holley, Jr., Chairman
David BaltimoreWanda M. Austin
François de Carbonnel
Robert A. EckertFred Hassan
GregRebecca M. Henderson
Frank C. GarlandHerringer
Judith C. Pelham
ï 2015 Proxy Statement91
Ellen J. Kullman
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, 20142017 and December 31, 2013,2016, and fees for other services rendered by Ernst & Young during these periods.
2014 | 2013 |
2017
|
2016
| |||||||||||||
Audit | $ | 6,894,000 | $ | 6,425,000 |
$
|
8,182,000
|
|
$
|
7,703,000
|
| ||||||
Audit-Related | 385,000 | 371,000 |
|
290,000
|
|
|
427,000
|
| ||||||||
Tax | 136,000 | 367,000 |
|
0
|
|
|
0
|
| ||||||||
All Other Fees | 0 | 0 |
|
0
|
|
|
0
|
| ||||||||
Total Fees | $ | 7,415,000 | $ | 7,163,000 |
$
|
8,472,000
|
|
$
|
8,130,000
|
|
Included in Audit fees above are professional services associated with the integrated audit of our consolidated financial statements and our internal control over financial reporting and the statutory audits of various subsidiaries of the Company. Audit-Related fees are primarily attributable to audits of our affiliated companies and our retirement plans. Tax fees are primarily attributable to various U.S. and international tax compliance and planning services. The Audit Committee has considered whether the Audit-Related and Tax services provided by Ernst & Young are compatible with maintaining that firm’s independence.
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.
92 ï 20152018 Proxy Statement 87
|
The Company’s Annual Report on Form10-Kfor fiscal 2014,2017, which contains the consolidated financial statements of the Company for fiscal 2014,2017, accompanies this proxy statement, but is not a part of the Company’s soliciting materials.
Stockholders may obtain, without charge, a copy of theStockholdersmayobtain,withoutcharge,acopyofthe Company’s Annual Report on Form10-K for fiscal 2014,2017, filed with the Securities and Exchange Commission, including the financial statements and schedules thereto, without the accompanying
exhibits, by writing to: Investor Relations, Senior Manager, Amgen Inc., One
Amgen Center Drive, Thousand Oaks, CA 91320-1799, Mail Stop 28-1-C, or contact Investor Relations by telephone at(805) 447-1060 or emailat 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.
Item 4 — Stockholder Proposal |
Stockholder Proposal
Certain stockholders andco-filers have informed the Company that they intend to present the proposal set forth below at our 2018 Annual Meeting of Stockholders, or Annual Meeting. If the stockholders (or their respective “qualified representative” as determined under applicable law and our Amended and Restated Bylaws of Amgen Inc., or Bylaws) are present at the Annual Meeting and properly submit the proposal for a vote, then the stockholder proposal will be voted upon at the Annual Meeting.
Pursuant to Rule14a-8(l)(1) of the Securities Exchange Act of 1934, as amended, the Company will provide the name, address and number of shares of our Common Stock held by each of the proponents of the stockholder proposal set forth below promptly upon receipt of a written or oral request. Requests should be submitted to the Company’s Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799 or805-447-1000.
In accordance with the Federal securities laws, the stockholder proposal and supporting statement is presented below as submitted by the stockholders, are quoted verbatim and are 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 OF DIRECTOR’S, OR BOARD, RESPONSE, WHICH FOLLOWS THE STOCKHOLDER PROPOSAL, THE BOARD STRONGLY AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST” THE STOCKHOLDER PROPOSAL.
Stockholder Proposal
RESOLVED, that shareholders of Amgen Inc. (“Amgen”) urge the Compensation Committee (the “Committee”) to report annually to shareholders on the extent to which risks related to public concern over drug pricing strategies are integrated into Amgen’s incentive
compensation policies, plans and programs (together, “arrangements”) for senior executives. The report should include, but need not be limited to, discussion of whether incentive compensation arrangements reward, or not penalize, senior executives for adopting pricing strategies, or making and honoring commitments about pricing, that incorporate public concern regarding the level or rate of increase in prescription drug prices; and considering risks related to drug pricing when allocating capital.
SUPPORTING STATEMENT
As long-term investors, we believe that senior executive incentive compensation arrangements should reward the creation of sustainable long-term value. To that end, it is important that those arrangements align with company strategy and encourage responsible risk management.
A key risk facing drug companies is potential backlash against high prices. Public outrage over drug prices and their impact on patient access may force price rollbacks and harm corporate reputation. Investigations regarding pricing of prescription medicines may bring about broader changes. (E.g.,https://democrats-oversight.house.gov/news/press-releases/cummings-
and-welch-launch-investigation-of-drug-companies-skyrocketing-prices;https://democrats-oversight.house.gov/news/press-releases/cummings-
and-welch-propose-medicare-drug-negotiation-bill-in-meeting-with) Amgen has been criticized for price hikes on Enbrel, often timed close to increases by AbbVie on competing drug Humira.(https://www.washingtonpost.com/news/wonk/wp/2016/11/07/the-
bizarre-reason-two-competing-drug-prices-rose-in-tandem/?utm_
term=.987248414e13)
We are encouraged by Amgen’s willingness to experiment with outcomes-based pricing for new cholesterol-lowering drug Repatha. (http://www.wbur.org/commonhealth/2017/05/03/amgen-repatha-refund-promise-harvard-pilgrim) We are concerned, however, that the
88 ï 2018 Proxy Statement
|
incentive compensation arrangements applicable to Amgen’s senior executives may not encourage them to take actions that result in lower short-term financial performance even when those actions may be in Amgen’s best long-term financial interests.
Amgen uses revenue andnon-GAAP net income, along with product-related goals, as metrics for the annual bonus, and earnings per share (EPS) as one of the metrics for long-term incentive awards. (2017 Proxy Statement, at 58, 62) A recent Credit Suisse analyst report stated that “US drug price rises contributed 100% of industry EPS growth in 2016” and characterized that fact as “the most important issue for a Pharma investor today.” The report identified Amgen as a company where net price increases accounted for at least 100% of net income growth in 2016. (Global Pharma and Biotech Sector Review: Exploring Future US Pricing Pressure, Apr. 18, 2017, at 5)
In our view, excessive dependence on drug price increases is a risky and unsustainable strategy, especially when price hikes drive large senior executive compensation payouts. For example, coverage of the skyrocketing cost of Mylan’s EpiPen noted that a 600% rise in Mylan’s CEO’s total compensation accompanied the 400% EpiPen price increase. (See,e.g., https://www.nbcnews.com/business/consumer/mylan-execs-gave-themselves-raises-they-hiked-epipen-prices-n636591;https://www.wsj.com/articles/epipen-maker-dispenses-outsize-pay-
1473786288;https://www.marketwatch.com/story/mylan-top-executive-
pay-was-second-highest-in-industry-just-as-company-raised-epipen-
prices-2016-09-13)
The disclosure we request would allow shareholders to better assess the extent to which compensation arrangements encourage senior executives to responsibly manage risks relating to drug pricing and contribute to long-term value creation. We urge shareholders to vote for this Proposal.
Board Response to the Stockholder Proposal
The Board of Directors recommends a vote “AGAINST” the Stockholder Proposal.
We are committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics.Our mission is to serve patients. We focus on areas of high unmet medical need and leverage our expertise to strive for solutions that improve health outcomes and dramatically improve people’s lives.
The Board’s recommendation to vote “AGAINST” the Stockholder Proposal is based on the following reasons:
The proposal’s underlying subject matter is our drug pricing and capital allocation decisions. Such decisions are integral to our ordinary course operations and the proposed report would put us at a competitive disadvantage and be unduly burdensome while not providing meaningful additional information to stockholders.Making the best pricing decisions for each of the Company’s products in each of its geographies and allocating capital incorporate a number of risk and benefit decisions that are fundamental to management’s ability to run the Company on aday-to-day basis. Such decisions are made carefully and purposefully by the Company’s management and our Board and require a deep knowledge of the Company’s business and operations—information to which the Company’s stockholders do not have access. Further, in the examples cited by the proponent, it appears that the proponent envisions that the Company justifies its business decisions regarding specific pricing decisions for each of our products on aproduct-by-product basis to the Company’s competitive disadvantage.
We already have policies and procedures that delineate our overall approaches to the pricing of our medicines and have made these policies and procedures freely available to our stockholders and the general public through our publicly accessible website located atwww.amgen.com. Accordingly, it would be burdensome on the
Company to generate a separate annual report that attempted to assess “the extent to which risks related to public concern over drug pricing strategies” are integrated into our compensation policies.
We already provide public disclosure regarding the factors that are integrated into our incentive compensation policies and the risks related to compensation.Our annual cash and long-term equity incentive programs are designed to provide compensation that is based on our financial, operating, and stock price performance. Further, our Compensation Discussion and Analysis section of this proxy statement discusses the performance goals and payouts under our short- and long-term incentive programs and the reasons the Compensation Committee selected the goals and incentive program design at length. Amgen uses financial measures as part of its compensation program includingnon-Generally Accepted Accounting Principles earnings per share, or EPS, as a metric for the long-term performance awards component of our executive compensation. That the proponent was able to successfully derive the components of our compensation program, including EPS, from our 2017 Proxy Statement in its statement shows that we already provide detailed discussion on this topic. Further, EPS is measured across three years and comprises justone-third of our performance award operating measures and such awards are modified by the total shareholder return such that actions over three years that are damaging to the Company’s reputation and performance would reduce such long-term performance award payouts. Revenues, net income and EPS all benefit from higher product sales driven by demand composed of a mix of units and price. Thus, consideration of how we price our products is already reflected in the financial metrics used in our executive compensation decisions.
Moreover, we already provide disclosure regarding our “compensation policies and practices as they relate to risk management.” As discussed in this proxy statement and in our 2017 Proxy Statement, our management, working with the Compensation Committee’s independent compensation consultant, conducts an annual assessment of the Company’s compensation policies and practices for material
ï 2018 Proxy Statement 89
Item 4 — Stockholder Proposal |
risks to the Company. As we disclose in this proxy statement under “CORPORATE GOVERNANCE—Compensation Risk Management,” we believe that our compensation policies and practices do not present risks that are reasonably likely to have a material adverse effect on our Company.
Further, the Company has disclosed in this proxy statement and in our 2017 Proxy Statement the 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 – employee misconduct that gives rise to the concerns identified by the proponent, including pricing decisions that create “public outrage over drug prices”, that destroy value, or that “harm corporate reputation” would be subject to such consideration.
Moreover, our Board of Directors oversees the Company’s Enterprise Risk Management program to identify, monitor and mitigate enterprise risks as more fully discussed in this proxy statement under CORPORATE GOVERNANCE – The Board’s Role in Risk Oversight. Our Board discusses enterprise risks with the Company’s senior management multiple times during the year, including the specific areas of pricing, value and access and sales. All members of our Compensation Committee participate in such oversight and discussion and bring such awareness and understanding to their evaluation of executive compensation program design and results.
Our annual report on Form10-K explains that the Company’s competitive position may be impacted by price and reimbursement, among other factors, and identifies the risks that the Company could face as a result of intense public scrutiny of the price of drugs, heightened control over product pricing and patient access by government and private payers and/or changes to U.S. federal reimbursement policy resulting from legislative or regulatory action, including addressing potential consequences to the Company of specific federal and state pricing and reimburse policy actions. Further, we routinely discuss significant pricing trends in our Management Discussion & Analysis section, or MD&A, of our Form10-Qs and10-Ks. For example, in our 2016 annual report on Form10-K’s MD&A, we reported, for Enbrel, that “[i]n 2017, we expect intensifying competition and relatively little benefit from net selling price changes.” These disclosures demonstrate that the Company already provides the disclosure called for by the proposal and that management is behaving in an informed manner with respect to managing the business for the longer-term and is keeping investors appropriately informed.
We remain focused on delivering breakthrough treatments for unmet medical needs and are committed to working with the
entire healthcare community to ensure continued innovation and enable patient access to needed medicines.We do this by:
Investing billions of dollars annually in research and development;
Developing more affordable therapeutic choices in the form of high-quality and reliably-supplied biosimilars;
Pricing our medicines to reflect the value they provide;
Partnering with payers to share risk and accountability for health outcomes;
Providing patient support and education programs and helping patients in financial need access our medicines; and
Working with policymakers, patients and other stakeholders to establish a sustainable healthcare system with access to affordable care and where patients and their healthcare professionals are the primary decision makers.
The medicines we bring to market are discovered through complex, time-consuming, and resource-intensive processes that carry a high risk of failure. Even after a medicine is approved, its value evolves over time. We continue to invest in studies, new indications, formulations and delivery methods of our currently approved molecules to expand the number of people we can help and to make our therapies easier and more convenient to take. This ongoing innovation requires significant continuing investment. Our innovative medicines and healthcare solutions improve patient productivity, longevity, and quality of life, while helping to reduce healthcare costs, such as medical spending, hospital costs and physician office visit expenditures, and societal costs. With that in mind, we price our medicines to reflect their ability to reduce the burden of diseases for individuals and society by improving health outcomes. The rising costs of disease, not medicines, threaten the future sustainability of our healthcare system and our management is keenly aware of the effect that the price of our products has on our relationship with patients and other stakeholders.
Ensuring that patients have access to our medicines is critical to Amgen. We have evolved our manufacturing processes in an effort to drive down costs and developed advanced new technologies to engage patients and providers to ensure optimal value is derived from our products. Furthermore, we support a number of programs to improve patient access through reimbursement support services, patient resources and financial assistance programs, such as our Amgen Safety Net Foundation, our charitable patient assistance program.We are committed to helping patients who are uninsured, underinsured and in financial need access the medicines they need.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THE STOCKHOLDER PROPOSAL.
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Certain Relationships and Related Transactions |
Certain Relationships and Related 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:
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2. |
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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. |
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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 for a portion of 2017, is employed by us as KeyMarketing Director, and previously served as National Accounts Senior Manager. Mr. Jones’ compensation earned in 20142017 consisted of $121,921$183,730 in base salary, $70,350$88,867 in annual cash incentive awards and bonuses and a
grantgrants of 123119 restricted stock units
and 12467 performance units, each valued at $13,703$19,500 and $12,564,$12,000 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.
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Information Concerning Voting and Solicitation |
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 2018 Annual Meeting of Stockholders, or Annual Meeting, to be held on Tuesday, May 22, 2018, 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 11, 2018 to all stockholders entitled to notice of and to vote at the Annual Meeting.
Important Notice Regarding the Availability of Proxy Materials for the 2018 Stockholder Meeting to Be Held on May 22, 2018.
This proxy statement, our 2017 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 2018 Annual Meeting of Stockholders; proxy statement; 2017 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 director nominees named herein to serve on our Board for a term of office expiring at the 2019 annual meeting of stockholders;
The advisory vote to approve our executive compensation;
The ratification of the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2018;
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 23, 2018 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 par value per share, or Common Stock, as of the close of business on March 23, 2018. 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 23, 2018, there were 668,270,489 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. The presence of the holders of a majority of the outstanding shares of our Common Stock entitled to vote constitutes a quorum, which is required to hold and conduct business at the Annual Meeting. Shares are counted as present at the Annual Meeting if:
You are present in person at the Annual Meeting; or
Your shares are represented by a properly authorized and submitted proxy (submitted by mail, by telephone or over the Internet).
If you are a record holder and you submit your proxy, regardless of whether you abstain from voting on one or more matters, your shares
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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.
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 21, 2018. 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 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 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, (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 23, 2018 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 2019 annual meeting of stockholders;
FOR the advisory vote to approve our executive compensation;
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Information Concerning Voting and Solicitation |
FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2018; and
AGAINST the one stockholder proposal for an annual report on the extent to which risks related to public concern over drug pricing strategies are integrated into our executive incentive compensation.
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, or on the stockholder proposal.
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.
Management Proposals (Advisory Vote to Approve Our Executive Compensation and Ratification of Ernst & Young LLP) and Stockholder Proposal For an Annual Report on the Extent To Which Risks Related to Public Concern Over Drug Pricing Strategies are Integrated Into Our Executive Incentive Compensation.The approval of the advisory vote to approve our executive compensation, the ratification of the selection of Ernst & Young LLP, and the approval of the stockholder proposal, if properly presented at the Annual Meeting, each require the affirmative votes 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.
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. Brokers do not have discretionary authority to vote on the advisory vote to approve our executive compensation or on the stockholder proposal for an annual report on the extent to which risks related to public concern over drug pricing strategies are integrated into our executive incentive compensation. Brokernon-votes, therefore, will have no effect on the advisory votes to approve our executive compensation or on the stockholder proposal as brokers are not entitled to vote on such proposals in the absence of voting instructions from the beneficial owner.
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.
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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 23, 2018. 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 included 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 were a record holder of our Common Stock as of the close of business on March 23, 2018. See “Difference Between a Stockholder of Record and 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 23, 2018.
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 23, 2018, 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 23, 2018; 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 23, 2018.
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 23, 2018; or (3) a brokerage account statement indicating that you owned shares of our Common Stock as of the close of business on March 23, 2018.
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 23, 2018, 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 23, 2018.
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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, 2014,2017, the Reporting Persons met all applicable Section 16(a) filing requirements.
Stockholder Proposals for the 2019 Annual Meeting
Stockholder Proposals and Director Nominees for Inclusion in our 2019 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 20162019 annual meeting of stockholders. To be eligible for inclusion in our 20162019 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, 2015,12, 2018, 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 the. Our 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 pursuant to Proxy Access at the 2019 annual meeting of stockholders, you must comply with all of the procedures, information requirements, qualifications and conditions set forth in our Bylaws. A fully compliant nomination notice must be received by us no earlier than November 12, 2018 and no later than December 12, 2018 assuming the date of the 2019 annual meeting of stockholders is not more than thirty days before and not
more than seventy days after the anniversary date of the 2018 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 2019 Annual Meeting Without Inclusion in our 2019 Proxy Statement
Business Proposals and Nominations Pursuant to our Bylaws. To nominate a director or bring any other business before the stockholders at the 20162019 annual meeting of stockholders that will not be included in our 2019 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, including those summarized below.Bylaws. In addition, assuming the date of the 20162019 annual meeting of stockholders is not more than thirty days before and not more than seventy days after the anniversary date of the 2015 Annual Meeting of Stockholders, or 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, 201622, 2019 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
21, 2019.ï 2015 Proxy Statement95
contemplated by Item 407(a) of Regulation S-K adopted by the SEC (or any corresponding provisions subsequently adopted by the SEC and applicable to the Company). Our 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 not 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.
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 20152018 Proxy Statement
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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 areourstockholderswillbehouseholdingour proxy materials. A single NoticeofAnnualMeetingof 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.
Forward-Looking Statements
This proxy statement contains forward-looking statements that are based on management’sthe 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.Amgen. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including estimates of revenues, operating margins, capital expenditures, cash, other financial metrics, expected legal, arbitration, political, regulatory or clinical results or practices, customer and prescriber patterns or practices, reimbursement activities and outcomes and other such estimates and results. Forward-looking statements involve significant risks and uncertainties, including those
discussed below and more fully described in the SECSecurities and Exchange Commission reports filed by Amgen, including Amgen’sour most recent annual report on Form10-K for the year ended December 31, 2014 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, 2015the date of this proxy statement and expressly disclaimsdoes not undertake any dutyobligation to update informationany forward-looking statements contained in this proxy statement. document 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 and global economic conditions. In addition, 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. 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, including our devices, after they are on the market. Our business may be impacted by government investigations, litigation and product 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
ï 2018 Proxy Statement 97
Other Matters |
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, 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, including in Puerto Rico, and also depend on third parties for a portion of our manufacturing activities, 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 many of our marketed products as well as for the discovery and development of new products. Discovery or identification of new product candidates cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate will be successful and become a commercial product. Further, preclinical results do not guarantee safe and effective performance of product candidates in humans. 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. We develop product candidates internally and through licensing collaborations, partnerships, joint ventures and acquisitions. 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, sales of our products are affected by 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. 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 products liability claims. 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. We depend on third parties for a significant portion of our manufacturing capacity for the supply of certain of our current and future products 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 some 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, delaysCertain of our distributors, customers and payers 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 on our business and results of operations. Our efforts to acquire other companies or unexpected costsproducts and not achieve anticipated benefits and savings from our restructuring plan. Our efforts to integrate the operations of companies we have acquired may not be successful. A breakdown, cyberattack or information security breach could compromise the confidentiality, integrity and availability of our systems and our data. Our stock price is volatile and may be affected by a number of events. Our business performance could affect or limit the ability of our Board of Directors to declare a dividend or our ability to pay a dividend or repurchase our Common Stock. We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.
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
98 ï 20152018 Proxy Statement
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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 20152018 Proxy StatementA-1
Appendix B |
Reconciliations of GAAP toNon-GAAP Measures
Amgen Inc.
GAAP toNon-GAAP Reconciliations
(Dollars in millions)
(Unaudited)
Years ended December 31, | ||||||||
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2017 | 2016 | |||||||
GAAP cost of sales | $ | 4,069 | $ | 4,162 | ||||
Adjustments to cost of sales: | ||||||||
Acquisition-related expenses(a) | (1,126) | (1,248) | ||||||
Certain net charges pursuant to our restructuring initiative | — | (1) | ||||||
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Total adjustments to cost of sales | (1,126) | (1,249) | ||||||
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Non-GAAP cost of sales | $ | 2,943 | $ | 2,913 | ||||
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| |||||
GAAP cost of sales as a percentage of product sales | 18.7% | 19.0% | ||||||
Acquisition-related expenses (a) | -5.2 | -5.7 | ||||||
Certain net charges pursuant to our restructuring initiative | 0.0 | 0.0 | ||||||
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Non-GAAP cost of sales as a percentage of product sales | 13.5% | 13.3% | ||||||
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GAAP research and development expenses | $ | 3,562 | $ | 3,840 | ||||
Adjustments to research and development expenses: | ||||||||
Acquisition-related expenses(a) | (77) | (78) | ||||||
Certain net charges pursuant to our restructuring initiative | (3) | (7) | ||||||
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Total adjustments to research and development expenses | (80) | (85) | ||||||
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Non-GAAP research and development expenses | $ | 3,482 | $ | 3,755 | ||||
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GAAP research and development expenses as a percentage of product sales | 16.3% | 17.5% | ||||||
Acquisition-related expenses(a) | -0.3 | -0.3 | ||||||
Certain net charges pursuant to our restructuring initiative | 0.0 | 0.0 | ||||||
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Non-GAAP research and development expenses as a percentage of product sales | 16.0% | 17.2% | ||||||
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GAAP selling, general and administrative expenses | $ | 4,870 | $ | 5,062 | ||||
Adjustments to selling, general and administrative expenses: | ||||||||
Acquisition-related expenses(b) | (99) | (180) | ||||||
Certain net charges pursuant to our restructuring initiative | (2) | (5) | ||||||
Other | (3) | — | ||||||
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Total adjustments to selling, general and administrative expenses | (104) | (185) | ||||||
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Non-GAAP selling, general and administrative expenses | $ | 4,766 | $ | 4,877 | ||||
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GAAP selling, general and administrative expenses as a percentage of product sales | 22.3% | 23.1% | ||||||
Acquisition-related expenses(b) | -0.4 | -0.8 | ||||||
Certain net charges pursuant to our restructuring initiative | 0.0 | 0.0 | ||||||
Other | 0.0 | 0.0 | ||||||
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Non-GAAP selling, general and administrative expenses as a percentage of product sales | 21.9% | 22.3% | ||||||
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ï 2018 Proxy Statement B-1
Appendix B |
Years ended December 31, | ||||||||
|
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2017 | 2016 | |||||||
GAAP operating expenses | $ | 12,876 | $ | 13,197 | ||||
Adjustments to operating expenses: | ||||||||
Adjustments to cost of sales | (1,126) | (1,249) | ||||||
Adjustments to research and development expenses | (80) | (85) | ||||||
Adjustments to selling, general and administrative expenses | (104) | (185) | ||||||
Certain net charges pursuant to our restructuring initiative(c) | (83) | (24) | ||||||
Acquisition-related adjustments (d) | (292) | (4) | ||||||
Expense related to legal proceedings | — | (105) | ||||||
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Total adjustments to operating expenses | (1,685) | (1,652) | ||||||
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Non-GAAP operating expenses | $ | 11,191 | $ | 11,545 | ||||
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GAAP operating income | $ | 9,973 | $ | 9,794 | ||||
Adjustments to operating expenses | 1,685 | 1,652 | ||||||
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Non-GAAP operating income | $ | 11,658 | $ | 11,446 | ||||
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GAAP operating income as a percentage of product sales | 45.8% | 44.7% | ||||||
Adjustments to cost of sales | 5.2 | 5.7 | ||||||
Adjustments to research and development expenses | 0.3 | 0.3 | ||||||
Adjustments to selling, general and administrative expenses | 0.4 | 0.8 | ||||||
Certain net charges pursuant to our restructuring initiative(c) | 0.4 | 0.2 | ||||||
Acquisition-related adjustments (d) | 1.4 | 0.0 | ||||||
Expense related to legal proceedings | 0.0 | 0.6 | ||||||
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Non-GAAP operating income as a percentage of product sales | 53.5% | 52.3% | ||||||
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GAAP income before income taxes | $ | 9,597 | $ | 9,163 | ||||
Adjustments to operating expenses | 1,685 | 1,652 | ||||||
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Non-GAAP income before income taxes | $ | 11,282 | $ | 10,815 | ||||
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GAAP provision for income taxes | $ | 7,618 | $ | 1,441 | ||||
Adjustments to provision for income taxes: | ||||||||
Income tax effect of the above adjustments to operating expenses(e) | 538 | 525 | ||||||
Other income tax adjustments(f) | (6,120) | 64 | ||||||
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Total adjustments to provision for income taxes | (5,582) | 589 | ||||||
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Non-GAAP provision for income taxes | $ | 2,036 | $ | 2,030 | ||||
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| |||||
GAAP tax as a percentage of income before taxes | 79.4% | 15.7% | ||||||
Adjustments to provision for income taxes: | ||||||||
Income tax effect of the above adjustments to operating expenses(e) | -7.1 | 2.5 | ||||||
Other income tax adjustments(f) | -54.3 | 0.6 | ||||||
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Total adjustments to provision for income taxes | -61.4 | 3.1 | ||||||
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Non-GAAP tax as a percentage of income before taxes | 18.0% | 18.8% | ||||||
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| |||||
GAAP net income | $ | 1,979 | $ | 7,722 | ||||
Adjustments to net income: | ||||||||
Adjustments to income before income taxes, net of the income tax effect | 1,147 | 1,127 | ||||||
Other income tax adjustments(f) | 6,120 | (64) | ||||||
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Total adjustments to net income | 7,267 | 1,063 | ||||||
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Non-GAAP net income | $ | 9,246 | $ | 8,785 | ||||
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B-2 ï 2018 Proxy Statement
Appendix B |
Amgen Inc.
GAAP toNon-GAAP Reconciliations
(In millions, except per share data)
(Unaudited)
The following table presents the computations for GAAP andnon-GAAP diluted EPS.
Year ended December 31, 2017 | Year ended December 31, 2016 | |||||||||||||||
GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||
Net income | $ | 1,979 | $ | 9,246 | $ | 7,722 | $ | 8,785 | ||||||||
Weighted-average shares for diluted EPS | 735 | 735 | 754 | 754 | ||||||||||||
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Diluted EPS | $ | 2.69 | $ | 12.58 | $ | 10.24 | $ | 11.65 | ||||||||
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(a) | The adjustments related primarily tonon-cash amortization of intangible assets acquired in business combinations. |
(b) | The adjustments related primarily tonon-cash amortization of intangible assets acquired in business combinations. For the year ended December 31, 2016, the adjustment also included a $73 million charge resulting from the reacquisition of Prolia®, XGEVA® and Vectibix® license agreements in certain markets from Glaxo Group Limited. |
(c) | For the year ended December 31, 2017, the adjustment related primarily to severance expenses associated with our restructuring initiative. For the year ended December 31, 2016, the adjustment related primarily to asset-related charges associated with our site closures. |
(d) | For the year ended December 31, 2017, the adjustment included net charges associated with the discontinuance of the internal development of AMG 899. |
(e) | 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. Due to these factors, the effective tax rate for the adjustments to our GAAP income before income taxes for the year ended December 31, 2017, was 31.9% compared with 31.8% for the corresponding period of the prior year. |
(f) | For the year ended December 31, 2017, the adjustment related primarily to the impact of U.S. Corporate tax reform, including the repatriation tax on accumulated foreign earnings and the remeasurement of certain net deferred and other tax liabilities. For the year ended December 31, 2016, the adjustment related to certain acquisition items and prior period items excluded from GAAP earnings. |
ï 2018 Proxy Statement B-3
Amgen Inc. One Amgen Center Drive Thousand Oaks, CA 91320-1799 |
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Only Amgen Inc. stockholders with admittance tickets will be admitted to the 20152018 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, 2015.23, 2018. Ensuring the 20152018 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.
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YOU DO NOT NEED TO RETURN THIS CARD IF YOU DO NOT PLAN TO ATTEND
THE 20152018 ANNUAL MEETING OF STOCKHOLDERS.
SAMPLE
SAMPLE ANNUAL MEETING OF STOCKHOLDERS OF
AMGEN INC.
May 14, 2015
22, 2018 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 22, 2018: The Notice of 2018 Annual Meeting of Stockholders, Proxy Statement, Form Proxy Card and 2017 Annual Report are available at http://www.astproxyportal.com/ast/Amgen If you wish to attend the Annual Meeting, please visit [address has been provided to stockholders directly]. Please sign, date and mail your proxy card in the envelope provided as soon as possible. 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. 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. The Board of Directors recommends you vote “FOR” each listed nominee in item #1. 1. To elect thirteen directors to the Board of Directors of Amgen Inc. for a term of office expiring at the 2019 annual meeting of stockholders. The nominees for election to the Board of Directors are: Dr. Wanda M. Austin Mr. Robert A. Bradway Dr. Brian J. Druker Mr. Robert A. Eckert Mr. Greg C. Garland Mr. Fred Hassan Dr. Rebecca M. Henderson 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 you vote “FOR” each of items #2 and #3. 2. Advisory vote to approve our executive compensation. 3. To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2018. The Board of Directors recommends you vote “AGAINST” the Stockholder Proposal in item #4. 4. Stockholder proposal for an annual report on the extent to which risks related to public concern over drug pricing strategies are integrated into our executive incentive compensation. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x Please detach along perforated line and mail in the e n v e l o p e p r o v i d e d . FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN GO GREEN
e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.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: The Notice of 2015 Annual Meeting of Stockholders, Proxy Statement, Form Proxy Card and 2014 Annual Report are available at http://www.astproxyportal.com/ast/Amgen.If you wish to attend the Annual Meeting, please visit https://starcite. Please smarteventscloud. sign,com/2015AnnualMeeting date and mail to register.your proxy card in the envelope provided as soonPlease 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 xThe Board of Directors recommends a vote “FOR” each listed nominee in item #1.of for office election expiring to the at Board the 2016 are: annual meeting of stockholders. FOR AGAINST The nominees ABSTAINDr. 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:Dr. Rebecca M. Henderson Mr. Frank C. Herringer Dr. Tyler Jacks Ms. Judith C. Pelham Dr. Ronald D. Sugar Dr. R. Sanders Williams
FOR 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
This Proxy Card will be voted as specified or, if no choice is specified, will be voted FOR the election of the named director nominees, FOR ratification of the selection of Ernst & Young LLP, FOR the advisory vote to approve our executive compensation and AGAINST the Stockholder Proposal.As of the date hereof, the undersigned hereby acknowledges receipt of the 2015 Proxy Statement and accompanying Notice of 2015 Annual Meeting of Stockholders to be held on May 14, 2015, Form Proxy Card and the 2014 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 2015 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 2015 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.
SAMPLE 0 14475 AMGEN INC.
ONE AMGEN CENTER DRIVE, THOUSAND OAKS, CA 91320-1799 PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 20152018 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14, 2015
22, 2018 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 20152018 Annual Meeting of Stockholders of Amgen Inc., to be held on Thursday,Tuesday, May 14, 2015,22, 2018, 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)14475 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 the advisory vote to approve our executive compensation, FOR ratification of the selection of Ernst & Young LLP, and AGAINST the Stockholder Proposal. As of the date hereof, the undersigned hereby acknowledges receipt of the 2018 Proxy Statement and accompanying Notice of 2018 Annual Meeting of Stockholders to be held on May 22, 2018, Form Proxy Card and the 2017 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 2018 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 2018 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. 1.1
SAMPLE
SAMPLE 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. 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. JOHN SMITH 1234 MAIN STREET APT. 203 NEW YORK, NY 10038 ANNUAL MEETING AMGEN OF STOCKHOLDERS OF AMGEN INC. OF May 14, 2015 PROXY VOTING INSTRUCTIONSINTERNET—22, 2018 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 to attend the Annual Meeting, please visit [deleted text from public filing] to register.COMPANY NUMBER ACCOUNT NUMBERIMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 14, 2015:The Notice of 2015 Annual Meeting of Stockholders, Proxy Statement, Form Proxy Card and 2014 Annual Report are available at http://www.astproxyportal.com/ast/Amgen.
VOTING INSTRUCTIONS Please detach along perforated line and mail in the envelope provided IF you are not voting by telephone or the Internet. ————————
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x ------------------ ---------------- COMPANY NUMBER ACCOUNT NUMBER IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 22, 2018: The Notice of 2018 Annual Meeting of Stockholders, Proxy Statement, Form Proxy Card and 2017 Annual Report are available at http://www.astproxyportal.com/ast/Amgen If you wish to attend the Annual Meeting, please visit [address has been provided to stockholders directly]. The Board of Directors recommends ayou vote “FOR” each listed nominee in item #1.
1. To of office elect thirteen expiring directors at the 2016 to annual the Board meeting of Directors of stockholders. of Amgen The Inc. for nominees a term of office expiring at the 2019 annual meeting of stockholders. The nominees for election to the Board of Directors are: FOR AGAINST ABSTAIN
Dr. David Baltimore Mr. Frank J. Biondi, Jr.Wanda M. Austin Mr. Robert A. Bradway Mr. François de Carbonnel Dr. Vance D. CoffmanBrian J. Druker 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 Stockholder Date: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 StockholderIf 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:
Mr. Fred Hassan Dr. Rebecca M. Henderson Mr. Frank C. Herringer Mr. Charles M. Holley, Jr. Dr. Tyler Jacks Ms. Judith C. PelhamEllen J. Kullman Dr. Ronald D. Sugar Dr. R. Sanders WilliamsFOR AGAINST ABSTAIN
The Board of Directors recommends ayou vote “FOR” each of items #2 and #3.
2. Advisory vote to approve our executive compensation. 3. 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.
2018. The Board of Directors recommends ayou vote “AGAINST” the Stockholder Proposal in item #4.
4. Stockholder Proposal (Vote Tabulation).
SAMPLE
This Proxy Card will be voted as specified or, if no choice is specified, will be voted FORproposal for an annual report on the election of the named director nominees, FOR ratification of the selection of Ernst & Young LLP, FOR the advisory voteextent to approvewhich risks related to public concern over drug pricing strategies are integrated into our executive compensation and AGAINST the Stockholder Proposal.As of the date hereof, the undersigned hereby acknowledges receipt of the 2015 Proxy Statement and accompanying Notice of 2015 Annual Meeting of Stockholders to be held on May 14, 2015, Form Proxy Card and the 2014 Annual Report.In their discretion, the Proxy Holders (as defined below) are authorized to vote upon suchincentive compensation. NOTE: Such other mattersbusiness as may properly come before the 2015 Annual Meeting of Stockholders and atmeeting or any continuation, postponement or adjournment thereof. The Board of Directors, at present, knows of no other business to be presented at the 2015 Annual Meeting of Stockholders.FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
SAMPLE
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.
SAMPLE 0 14475 AMGEN INC.
ONE AMGEN CENTER DRIVE, THOUSAND OAKS, CA 91320-1799 PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 20152018 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14, 2015
22, 2018 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 20152018 Annual Meeting of Stockholders of Amgen Inc., to be held on Thursday,Tuesday, May 14, 2015,22, 2018, 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)14475 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 the advisory vote to approve our executive compensation, FOR ratification of the selection of Ernst & Young LLP, and AGAINST the Stockholder Proposal. As of the date hereof, the undersigned hereby acknowledges receipt of the 2018 Proxy Statement and accompanying Notice of 2018 Annual Meeting of Stockholders to be held on May 22, 2018, Form Proxy Card and the 2017 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 2018 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 2018 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. 1.1