2018 Proxy Statement and Notice of Annual Meeting of Stockholders
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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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 11, 20187, 2020
Dear Fellow Stockholder:
You are invited to attend the 20182020 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc. to be held on Tuesday, May 22, 2018,19, 2020, at 11:00 A.M., local time, at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362.Pacific Time.
Our Company:MissionAt Amgen, 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. This mission is the central underpinning of our strategy, inherently long-term, and in service of patients and their families.
Our strategy includes an integrated set of activitiesHeritage:This month, we are pursuingcelebrating our fortieth anniversary. Entrepreneurs started Amgen 40 years ago knowing that biotechnology could change lives. Today, our innovative medicines can be found in approximately 100 countries. We are proud of what Amgen has accomplished in the past four decades, and excited for what the future holds.
Execution of Our Strategy: In 2019, we advanced key facets of our long-term growth strategy in a year of transition. We have reshaped our portfolio of innovative medicines in recent years, focusing on products that can grow primarily through volume increases, rather than price increases, includingRepatha®,Aimovig®,Prolia®,EVENITY® and, most recently,Otezla®. Leveraging our industry-leading biologics manufacturing skills, we have delivered our first biosimilars to strengthenthe U.S. market,MVASI® (biosimilar bevacizumab (Avastin®)) andKANJINTI® (biosimilar trastuzumab (Herceptin®)), in 2019 (adding to our competitive positiontwo successful biosimilar launches outside of the U.S. last year). We progressed our early oncology programs, includingAMG 510, our KRASG12C small molecule inhibitor, that has enrolled a potentially pivotal Phase 2 monotherapy study in advancednon-small cell lung cancer, began enrollment of colorectal cancer patients in a Phase 2 monotherapy study, and is also being investigated as a treatment for a variety of other solid tumors. Outside of oncology, we have also advanced our pipeline in our industry. In additionother therapeutic areas and await data fromtezepelumab for allergic andnon-allergic asthma,omecamtiv mecarbil for heart failure, and Otezla for mild to our significant commitment to innovative research and development,moderate psoriasis. And we are developing branded biosimilars,increasingly well-positioned to take advantage of the growing demand for innovative healthcare globally, with our expanding presence in markets around the world, including China, where we have entered into a strategic oncology collaboration withBeiGene Ltd., and Japan. In 2019, we also continued to work on the construction of our global geographic reach, deployingsecond next-generation biomanufacturing facilities, improving drug delivery systems, adheringmanufacturing facility in Rhode Island, building on the success we have had with our first next-generation facility in Singapore; delivering the same output as a traditional plant, but with a much smaller environmental footprint. We continue to maintain a disciplined approach to capital allocation through which we invest in our future while investing for long-term growth, and transforming Amgen for the future.also returning capital to stockholders. In the Compensation Discussion and Analysis section of this proxy, we further discuss our progress for 2017 against these objectives. In 2017,our strategy in 2019.
Our Commitment to Society:As we had consistent, strong executionstrive to bring to marketfirst-in-class orbest-in-class medicines to treat serious illness and deliver a large effect size, we believe that we are bringing the type of innovation that can address the challenges of our strategyincreasingly older and remained focused on generating long-term stockholder valuemore urban global population. How we achieve this aspiration is equally important since making a positive difference in the world is at the heart of what we do. As part of our mission to serve patients, we take our responsibilities seriously with respect to the areas of environmental sustainability, social responsibility, and built oncorporate governance (ESG). In addition to a strong record of delivering superior returnscommitment to ethical business practices, our ESG efforts include integrating environmentally sustainable practices throughout our business, improving patient access to our stockholders. A clear measuremedicines, supporting science education for the next generation of innovators, and enhancing the diversity and inclusiveness of our success is the number of patients reached and helped by our medicines throughout the world.workforce.
Stockholder Engagement:We are also guided by the perspectives of our stockholders as expressed through their direct engagement with us throughout the year and at our Annual Meeting. Since our 20172019 annual meeting of stockholders, in addition to our outreach by our executives and Investor Relations department to investors owning approximately 58% of our outstanding shares, we have engaged in governance-focused outreach activities and discussions with the governance teams for stockholders comprising approximately 52%51% of our outstanding shares. Topics discussed included our business and financial performance, our governanceESG programs, and executive compensation programs, including the(including its direct link to our business strategy, and our corporate responsibility and sustainability initiatives.strategy). Feedback received during these meetings is shared with the full Board of Directors and informedinforms Board and committee decisions. The conversations heldWe are eager to continue this valuable dialogue with our stockholders are beneficial, and we look forward to continuing our dialogueinvestors in the coming year.
We are grateful to our former Executive Vice President and Chief Financial Officer, David W. Meline, who retired as CFO at the end of 2019 for his significant and lasting contributions to Amgen. Peter H. Griffith joined us as our new CFO this year and his extensive financial and operational experience will benefit Amgen as we continue our efforts to serve more patients and drive long-term growth and stockholder value.
I look forward to sharing more about our Company at the Annual Meeting. In addition to the business to be transacted and described in the accompanying Notice of Annual Meeting of Stockholders, I will discuss recent developments during the past year, the substantial progress we made on our strategic priorities for 2017,2019, and respond to comments and questions.
On behalf of theour Board of Directors, I thank you for your participation and investment in Amgen. We look forward to seeing youthe Annual Meeting on May 22.19. As a final note, and also on behalf of theour Board of Directors, I would like to thank David Baltimore and François de CarbonnelRebecca M. Henderson, who areis not standing forre-election this year, for their yearsher decade of wise counsel to and guidance forof 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 22, 201819, 2020
To the Stockholders of Amgen Inc.:
Date and Time: | Tuesday, May | |||
Location: |
Stockholders or their proxyholders may participate, vote, and examine our list of stockholders at our Annual Meeting via the Internet atwww.virtualshareholdermeeting.com/AMGN2020 and using your control number. | |||
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 | |||
| Items of Business: | ||||
1. | To elect | |||
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, | |||
4. | To consider one stockholder proposal, | |||
5. | To transact such other business as may properly come before the Annual Meeting or any continuation, postponement, or adjournment thereof. | |||
Attendance: | ||||
Voting:Your vote is important, regardless of the 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 Notice of Annual Meeting of Stockholders and proxy statement with care and follow the voting instructions to 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
Jonathan P. Graham
Secretary
Thousand Oaks, California
April 11, 20187, 2020
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Table of Contents
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| 17 | ||||
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| 18 | ||||
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Process for Selecting Directors, Director Qualifications, and | 22 | |||
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| 25 | ||||
Governance Committee Processes and Procedures for Considering and Determining Director Compensation | 26 | |||
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| 27 | ||||
| 27 | |||
| 28 | ||||
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| 29 | ||||
| 30 | ||||
| 30 | ||||
| 31 | ||||
Our Commitment to Environmental Sustainability, Social Responsibility, and Human Capital Management | 31 | |||
| 34 | ||||
| 38 | ||||
| Compensation Discussion and Analysis | 38 | |||
| 38 | ||||
ï 20182020 Proxy Statement
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Proxy Statement Summary
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This summary contains highlights about our Company and the upcoming 20182020 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.
20182020 Annual Meeting of Stockholders
Date and Time: | Tuesday, May | |
Location: |
Stockholders or their proxyholders may participate, vote, and examine our list of stockholders at our Annual Meeting via the Internet atwww.virtualshareholdermeeting.com/AMGN2020 and using your control number. | |
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 | |||
Management Proposals: | ||||
Item 1:
| Election of
| FOR each Director Nominee
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Item 2:
| Advisory Vote to Approve Our Executive Compensation (page
| FOR
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Item 3:
| Ratification of Selection of Independent Registered Public Accountants (page
| FOR
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Stockholder Proposal: | ||||
Item 4:
| Stockholder Proposal
| AGAINST
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ï 20182020 Proxy Statement 1
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Proxy Statement Summary
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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/CFOsHow to Vote
| •By Internet: You may submit a proxy over the Internet by following the instructions on the website referred to in the Notice, proxy card, or voting instruction form mailed to you. You will need the control number that appears on your Notice, proxy card, or voting instruction form. | |
| •By Telephone: You may submit a proxy by telephone by following the instructions on the website referred to in the Notice, proxy card, or voting instruction form mailed to you. You will need the control number that appears on your Notice, proxy card, or voting instruction form. | |
| •By Mail:If you received a full paper set of materials, date and sign your proxy card or voting instruction form and mail it in the enclosed, postage-paid envelope. If you received a Notice, you may request a proxy card by following the instructions on your Notice. You do not need to mail the proxy card if you are submitting your proxy by Internet or telephone. | |
| •At the Meeting:To vote at the Annual Meeting, visitwww.virtualshareholdermeeting.com/AMGN2020. You will need the control number that appears on your Notice, proxy card, or voting instruction form.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 provide a legal proxy, issued in your name from the record holder (your broker, bank, trust, or other nominee). Please read “INFORMATION CONCERNING VOTING AND SOLICITATION—Attendance at the Annual Meeting.” Even if you intend to attend the Annual Meeting, we encourage you to submit your proxy in advance of the Annual Meeting. |
2 2020 Proxy Statement
Proxy Statement Summary |
Item 1: Election of 1311 Nominees to the Board of Directors (Page 7)9)
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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| 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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| M
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| M
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| C
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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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Nominee | Independent | Age | | Director Since |
| Audit | | Governance and Nominating |
| Executive | | Compensation and Management Development |
| | Equity Award |
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Corporate Responsibility and Compliance |
| |||||||||||||||||||
Wanda M. Austin
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| ✓
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| 65
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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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| 57
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| 2011
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| C
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|
| M
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| ||||||||||||||||||||||||||
Brian J. Druker
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| ✓
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| 64
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| 2018
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| M
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| M
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| |||||||||||||||||||||||
Robert A. Eckert
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| ✓
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| 65
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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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| ✓
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| 62
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| 2013
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| C
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| M
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|
| M
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| ||||||||||||||||||||
Fred Hassan
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| ✓
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| 74
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| 2015
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| M
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| M
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| |||||||||||||||||||||||
Charles M. Holley, Jr.
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| ✓
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| 63
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| 2017
|
|
| C
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| M
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|
| M
|
| ||||||||||||||||||||
Tyler Jacks
|
| ✓
|
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| 59
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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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| ✓
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| 64
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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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| ✓
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| 71
|
|
| 2010
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| M
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| M
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|
| C
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| ||||||||||||||||||||
R. Sanders Williams
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| ✓
|
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| 71
|
|
| 2014
|
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| M
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| M
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| |||||||||||||||||||||||
| “C” | indicates Chair of the committee. |
| “M” | indicates member of the committee. |
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Director* and Corporate Governance Highlights and Best Practices
| * | For our director nominees. |
2 ï 20182020 Proxy Statement 3
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Proxy Statement Summary
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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:
Effective Board Leadership and Independent Oversight |
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| ✓ |
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Highly Independent Board – |
✓ | Strong Refreshment Practices With |
✓ | Annual Anonymous Board and Committee Evaluation Process( |
✓ | All Directors Meet Our Board of Directors Guidelines for Director Qualifications and Evaluations(Appendix A) |
✓ | Robust Lead Independent Director Role( |
✓ |
|
Corporate Responsibility and Compliance Committee(page |
✓ | Enterprise Risk Management Program and Annual Detailed Compensation Risk Analysis – overseen by Board and Compensation and Management Development Committee, respectively(pages 20 and 29-30) | |||
Focus on Stockholder Rights | ✓ Proxy Access(pages 18 and ✓ Majority Voting Standard for Director Elections(pages 17 and 99) ✓ Stockholders* May Act By Written Consent(page 18) ✓ Stockholders* Have a Right to Call Special Meetings (15% threshold requirement)(page 18) ✓ No Supermajority Vote Provisions in Certificate of Incorporation or Bylaws(page 18) ✓ No Poison Pill(page 18) | |||
History of Transparency and Accountability | ✓ Significant Stock Ownership Requirements for Officers and Directors(pages 61-62 and 83) ✓ Regular Engagement With Stockholders to Seek Feedback (page 46) ✓ We Continue to Seek Mechanisms to Lower the Cost Burden on Society of Serious Diseases ✓ We Have Demonstrated our Commitment to Environmentally Responsible Operations, Improving Patient Access to Medicines, Science Education, and our Community (pages 31-33) |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE
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| * | Who meet the requirements set forth in our Restated Certificate of Incorporation or our Amended and Restated Bylaws, as applicable. |
4 ï 20182020 Proxy Statement 3
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Proxy Statement Summary
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Item 2: Advisory Vote to Approve Our Executive
Compensation (Page 27)34)
2017 Target Total DirectWe Have Implemented Compensation MixBest Practices
We pay for performance, and pay 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.
What we do |
|
| ✓ | Recoupment in the |
| ✓ | Clawback policy tied to financial restatement |
| ✓ | Robust stock |
| ✓ | Minimum vesting periods for |
| ✓ | Long-term performance-based equity awards (80% of |
| ✓ | Independent compensation consultant |
What we don’t do |
| ⨯ | No hedging or pledging |
Long-term Incentive Equity Awards Target Annual Cash Incentive Base Salary CEO 90% Pay at Risk 75%
| ⨯ | Nore-pricing or backdating |
| ⨯ | No taxgross-ups (except in connection with relocation) |
| ⨯ | No single-trigger for stock options and restricted stock units in the event of a change of control |
| ⨯ | No excessive perks |
| ⨯ | No employment agreements |
| ⨯ | No dividends paid on unvested equity |
| ⨯ | No defined benefit pension or supplemental executive retirement plan (SERP) benefits |
NEO Compensation is Dependent on Our Performance based Other NEOs 82% Pay at Risk 69% Performance based
• A significant amount of each Named Executive Officer’s, or NEOs, compensation isat-risk and dependent on our performance and execution of 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. | 2019 Total Target Direct Compensation Mix
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4 ï 20182020 Proxy Statement 5
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Proxy Statement Summary
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20172019 Annual and Long-Term Awards Reflect Performance AgainstPre-Established Goals and Measures
2017 Annual Cash Incentive Program
Goal
| Weighting
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% of Target
| ||||
1. Financial Performance
| ||||||
Revenues
|
| 30%
|
| 110.6%
| ||
Non-GAAP Net Income(1)
|
| 30%
|
| 116.8%
| ||
2. Progress Innovative Pipeline
| ||||||
Execute Key Clinical Studies and Regulatory Filings
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| 20%
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| 123.0%
| ||
Advance Early Pipeline
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| 5%
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| 201.7%
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3. Deliver Annual Priorities
| ||||||
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%
| ||
Composite Score
|
| Achieved 115.0%
| ||||
Long-Term Incentive Performance Award Program
Long-Term Incentive Program
|
Equity
|
% of Target
| ||||
Performance Units | 50% | 93.4% | ||||
(2015-2017 performance period)
| ||||||
2019 Annual Cash Incentive Program
| 2017-2019 Long-Term Incentive Performance Award Payout
| |||||||
Our annual cash incentive program is designed to focus our staff on delivering financial and operational objectives to drive annual performance, advance strategic priorities, and position us for long-term success.
| 80% of our annual long-term incentive, or LTI, equity award grants are performance-based, aligning compensation with long-term value creation for our stockholders. Three-year performance units comprise 50% of our LTI equity award grants, with the goal design and all measurement targets established at the beginning of the three-year performance period. | |||||||
Goal
| Weighting
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% of Target Earned
|  | |||||
Financial Performance
| ||||||||
Revenues
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| 30%
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| 177%
| ||||
Non-GAAP Net Income(1)
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| 30%
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| 168%
| ||||
Progress Innovative Pipeline
| ||||||||
Advance Early Pipeline
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| 10%
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| 100%
| ||||
Execute Key Clinical Studies and Regulatory Filings
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| 20%
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| 80%
| ||||
Deliver Annual Priorities
| ||||||||
Execute Critical Launches and Long-Term Commercial Objectives
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| 5%
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| 77%
| ||||
Achieve Productivity Objectives
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| 5%
|
| 107%
| ||||
Final Score
|
| Achieved 138.9%
| ||||||
| (1) |
|
| (2) | The operating measures of the 2017-2019 performance goals were based onnon-GAAP financial results for 2017, 2018, and 2019 as reported and reconciled inAppendix B, except that operating measures were further adjusted for the impacts of Hurricane Maria as prescribed by the terms of the 2017-2019 performance goals document as follows: operating expense was reduced by $147 million ($0.16 in EPS) for 2017, increased by $21 million ($0.03 in EPS) for 2018, and increased by $49 million ($0.07 in EPS) for 2019. |
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.
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6 ï 20182020 Proxy Statement 5
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Proxy Statement Summary
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Item 3: Ratification of Selection of Independent Registered
Public Accountants (Page 86)90)
The Audit Committee of the Board has selected Ernst & Young LLP, or Ernst & Young,EY, as our independent registered public accountants for the fiscal year ending December 31, 2018.2020.
Ernst & YoungEY 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 & YoungEY 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. | ||||
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Item 4: Stockholder Proposal (Page 88)93)
Stockholders have informed the Company that they intendStockholder proposal to present a proposal at our Annual Meeting.
The proposal relates to the request forrequire an annual report on the extent to which risks related to public concern over drug pricing strategies are integrated into our executive incentive compensation.
Theindependent Board has thoroughly considered the proposal and believes that it is NOT in the Company’s or stockholders’ best interests for the reasons identified starting on page 89 of the proxy statement, which include the following:Chair, if properly presented.
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| - |
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| - | Strong Board and committee involvement to provide |
| - | Regular communication between the |
| - | Diverse, experienced, and skilled directors, with ten of our eleven director nominees independent as defined by The NASDAQ Stock Market listing standards and the requirements of the Securities and Exchange Commission; |
| - | All members of the Board’s key committees are independent; and |
| - |
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| • | Leadership Structure.Our governance documents give the Board discretion in determining whether to separate or combine the roles of the Chairman and Chief Executive Officer. This flexibility permits the Board to choose a leadership structure that can be tailored to the strengths of the Company’s officers and directors and to best address our evolving and highly complex business. |
ï 2020 Proxy Statement 7
Proxy Statement Summary |
| • | Annual Evaluation of Leadership Structure.The Board conducts annual evaluations of the Company’s leadership structure and determined that the Company and its stockholders are best served at this time by having Mr. Bradway serve as both Chairman and Chief Executive Officer, coupled by a separate active lead independent director, currently served by Robert A. Eckert. |
Our Lead Independent Director Responsibilities The lead independent director’s responsibilities outlined in the Amgen Board of Directors Corporate Governance Principles include: - Approving meeting agendas for - Assuring that there is sufficient time for discussion of all meeting agenda items; - Previewing the information to be provided to the Board; - Having the authority to call meetings of the independent directors; - Organizing and - Serving as a liaison between the Chairman and the independent directors; - Leading the Board’s annual self-assessment; - Ensuring that he/she is available for consultation and direct communication, if requested by major stockholders; and - Presiding at meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors. In addition to - Meets with the - With the Chairman, determines presenters for attendance at Board meetings; - Hasone-on-one discussions with each independent director, including as part of the Board’s annual evaluation process; - Attends all committee meetings, including those committees for which he is not a member (at his discretion) and is provided with access to - Has the authority to engage independent consultants; - Is regularly apprised of inquiries from stockholders; - Interviews Board candidates; and - Has an increased role in crisis management, as appropriate. |
Please see “Leadership Structure” in the Corporate Governance section for a full discussion of our current leadership structure and lead independent director responsibilities.
THE BOARD
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68 ï 20182020 Proxy Statement
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Item 1 — Election of Directors
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Election of Directors
Under our governinggovernance 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 1412 authorized directors serving on our Board. Wanda M. Austin was appointed to serve on our Board effective December 11, 2017. Based upon the recommendation of our Governance and Nominating Committee, the Board has nominated each ofthedirectornomineessetforthbelowto stand forre-election oras a director, in theeach caseofDr. AustinandBrianJ.Drukertostandforinitialelectionby ourstockholders,ineachcasefor aone-yeartermexpiringatour2019 2021 annualmeetingofstockholdersanduntilhisorhersuccessoriselected andqualified,oruntilhisorherearlierretirement,resignation,
disqualification, removal, or death. David Baltimore and François de Carbonnelwill retire from our Board and haveRebecca M. Henderson is not been nominatedstanding forre-election at the 20182020 Annual Meeting of Stockholders, or Annual Meeting. Meeting, after ten years of valuable service to the Company.
The Board has fixed the authorized number of directors at 1311 to be effective as of the close of the Annual Meeting and the election by stockholders of the nominees standing for election. 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, 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. 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.
The independent members of the Board have elected Robert A. Eckert to continue to serve as our lead independent director, subject to hisre-election to the Board by our stockholders at the Annual Meeting. As lead independent director, Mr. Eckert will continue to have the specific and significant duties as discussed under “Corporate Governance.”
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
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| 63
|
|
| 2017
|
| M
| M
| ||||||||||||
Robert A. Bradway
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| 55
|
|
| 2011
|
| C
| M
| ||||||||||||
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
|
| M
| M
| C
| C
| ||||||||||
Greg C. Garland
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| 60
|
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| 2013
|
| C
| M
| M
| M
| ||||||||||
Fred Hassan
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| 72
|
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| 2015
|
| M
| M
| ||||||||||||
Rebecca M. Henderson
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| 57
|
|
| 2009
|
| M
| M
| ||||||||||||
Frank C. Herringer
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| 75
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| 2004
|
| M
| M
| M
| |||||||||||
Charles M. Holley, Jr.
|
| 61
|
|
| 2017
|
| C
| M
| ||||||||||||
Tyler Jacks
|
| 57
|
|
| 2012
|
| M
| M
| ||||||||||||
Ellen J. Kullman
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| 62
|
|
| 2016
|
| M
| M
| ||||||||||||
Ronald D. Sugar
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| 69
|
|
| 2010
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| M
| M
| C
| |||||||||||
R. Sanders Williams
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| 69
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| 2014
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| M
| M
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Nominee | Independent | 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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| ✓
|
|
| 65
|
|
| 2017
|
|
| M
|
|
| M
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| |||||||||||||||||||||||
Robert A. Bradway
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| 57
|
|
| 2011
|
|
| C
|
|
| M
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| ||||||||||||||||||||||||||
Brian J. Druker
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| ✓
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| 64
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|
| 2018
|
|
| M
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|
| M
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| |||||||||||||||||||||||
Robert A. Eckert
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| ✓
|
|
| 65
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| 2012
|
|
| M
|
|
| M
|
|
| C
|
| ||||||||||||||||||||
Greg C. Garland
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| ✓
|
|
| 62
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|
| 2013
|
|
| C
|
|
| M
|
|
| M
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| ||||||||||||||||||||
Fred Hassan
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| ✓
|
|
| 74
|
|
| 2015
|
|
| M
|
|
| M
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| |||||||||||||||||||||||
Charles M. Holley, Jr.
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| ✓
|
|
| 63
|
|
| 2017
|
|
| C
|
|
| M
|
|
| M
|
| ||||||||||||||||||||
Tyler Jacks
|
| ✓
|
|
| 59
|
|
| 2012
|
|
| M
|
|
| M
|
| |||||||||||||||||||||||
Ellen J. Kullman
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| ✓
|
|
| 64
|
|
| 2016
|
|
| M
|
|
| M
|
| |||||||||||||||||||||||
Ronald D. Sugar
|
| ✓
|
|
| 71
|
|
| 2010
|
|
| M
|
|
| M
|
|
| C
|
| ||||||||||||||||||||
R. Sanders Williams
|
| ✓
|
|
| 71
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|
| 2014
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|
| M
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|
| M
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| “C” | indicates Chair of the committee. |
| “M” | indicates member of the committee. |
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ï 20182020 Proxy Statement 79
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Item 1 — Election of Directors
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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.
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.biotechnology. 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.
Experience / Skills Austin Bradway Druker Eckert Garland Hassan Henderson 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
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
| * | For our director nominees. |
810 ï 20182020 Proxy Statement
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Item 1 — Election of Directors
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NAMED 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.
Wanda M. Austin
Director since: 2017
Age:
Committees: • Audit •
Other Public Company Boards: • Chevron Corporation • Virgin Galactic Holdings, Inc. |
Wanda M. Austin
Dr. Austin served as Interim President of the University of Southern California from August 2018 until June 2019. She 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, Inc., 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 chairing its Public Policy Committee. Dr. Austin has been a director of Virgin Galactic Holdings, Inc., a commercial space flight company, since October 2019 and is a member of its Audit Committee and Safety Committee, and chair of its Compensation 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:
Committees: • Equity Award • Executive (Chair)
Other Public Company Boards: • The Boeing Company
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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 | |||
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 20182020 Proxy Statement 911
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Item 1 — Election of Directors
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Brian J. Druker
Director since:
Age:
Committees: • • Corporate Responsibility and Compliance
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Brian J. Druker
Dr. Druker has served on the scientific advisory |
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, | ||
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:
Committees: • Compensation and Management
• Executive • Governance and Nominating
Other Public Company Boards: • Levi Strauss & Co. •McDonald’s Corporation • Uber Technologies, Inc. |
Robert A. Eckert is our lead independent director. Mr. Eckert has been an Operating Partner at Friedman Fleischer & Lowe, a private equity firm, since 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 also has served as a director of Levi Strauss & Co., a jeans and casual wear manufacturer, since 2010, serving as Chair of the Compensation Committee and a member of the Nominating, Governance and Corporate Citizenship Committee. Levi Strauss & Co. was a privately-held company until March 2019 when it became publicly traded. In March 2020, Mr. Eckert was appointed a director of Uber Technologies, Inc., a personal mobility, meal delivery and logistics technology platform, serving on its Compensation and Nominating and Governance Committees. Mr. Eckert was a director of Smart & Final Stores, Inc., a warehouse store, from 2013 until 2014 prior to it becoming a publicly-traded company. |
Qualifications
The Board concluded that Mr. Eckert should serve on our Board because of Mr. Eckert’s long-tenured experience as a chief executive officer and director of large public companies, his broad international experience in marketing and business development, and his valuable leadership experience.
1012 ï 20182020 Proxy Statement
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Item 1 — Election of Directors
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Greg C. Garland
Director since:2013
Age:
Committees: • Compensation and Management Development
• Executive • Governance and Nominating (Chair)
Other Public Company Boards: • Phillips 66(1)
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Greg C. Garland is the Chairman and Chief Executive Officer of Phillips 66,
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:
Committees: • Audit • Compensation and Management
Other Public Company Boards: • Intrexon Corporation
Audit Committee financial expert
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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, a global private equity investment institution, since 2018. Mr. Hassan was Special Limited Partner at Warburg Pincus LLC from 2017 to 2018 and Partner and Managing Director 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 Intrexon Corporation, a synthetic biology company, since 2016, serving on its Compensation Committee. Mr. Hassan was a director of Time Warner Inc., a media company, from 2009 until its acquisition by AT&T Inc., a provider of communications and digital entertainment services, in 2018.Mr. Hassan was a director of Avon Products, Inc., a manufacturer and marketer of beauty and related 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 the 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 20182020 Proxy Statement 1113
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Item 1 — Election of Directors
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Director since:
Age:
Committees: • Audit
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director of Linbeck Construction Corporation, a privately-held facility solutions company, from 2000 until 2004. Dr. Henderson has published articles, papers and reviews in a range of scholarly journals. Dr. Henderson received an undergraduate degree from MIT and a doctorate from Harvard University.
Qualifications
The Board concluded that Dr. Henderson should serve on the Board because Dr. Henderson’s study of the complex strategy issues faced by high technology companies provides valuable insight into the Company’s strategic and technology issues.
• Executive • Governance and Nominating
Other Public Company Boards: • • Phillips 66
Audit Committee financial expert
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12 
ï 2018 Proxy Statement
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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
Mr. Holley has been a director of Phillips 66, an energy manufacturing and logistics company, since October 2019 and serves on the Audit and Finance, and Public Policy Committees. In connection with the 2020 spin-off from United Technologies Corporation of Carrier Global Corporation, a provider of heating, ventilating, air conditioning (HVAC), refrigeration, fire, and security solutions, Mr. Holley has been appointed as a director of Carrier. He serves on the Advisory Council for the McCombs School of Business at the University of Texas at Austin and the University of Texas Presidents’ |
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:
Committees: • •
Other Public Company Boards: • Thermo Fisher Scientific, Inc.
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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 2009, serving on its Strategy and Finance Committee and scientific advisory board and chairing its Science and Technology Committee. In 2006, heco-founded T2 Biosystems, Inc., a biotechnology company, and served on its scientific advisory board until 2013. Dr. Jacks has served on the scientific advisory board of SQZ Biotech, a privately-held biotechnology company, since 2015. | |||
Advisory Board, which advises and assists the Director of the National Cancer Institute with respect to the National Cancer Program, in 2011 and served as Chair until 2016. In 2016, Dr. Jacks was named to a blue ribbon panel of scientists and advisors established as a working group of the National Cancer Advisory Board and served asco-Chair advising the Cancer MoonshotSM Task Force. Dr. Jacks was a director of MIT’s Center for Cancer Research from 2001 to 2007 and received numerous awards including the Paul Marks Prize for Cancer Research and the American Association for Cancer Research Award for Outstanding Achievement. He was elected to the National Academy of Sciences as well as the National Academy of Medicine in 2009 and received the MIT Killian Faculty Achievement Award in 2015. Dr. Jacks received an undergraduate degree from Harvard University and his doctorate from the University of California, San Francisco. | ||||
Qualifications
The Board concluded that Dr. Jacks should serve on the Board based on his extensive scientific expertise relevant to our industry, including his broad experience as a cancer researcher, pioneering uses of technology to study cancer-associated genes, and service on several scientific advisory boards and membership in the National Cancer Advisory Board.
14 ï 20182020 Proxy Statement 13
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Item 1 — Election of Directors
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Ellen J. Kullman
Director since: 2016
Age:
Committees: • Audit • Governance and Nominating
Other Public Company Boards: • Dell Technologies Inc. •Goldman Sachs Group, Inc.
Audit Committee financial expert
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Ellen J. Kullman was appointed President and Chief Executive Officer of Carbon, Inc., or Carbon, a privately-held 3D printing company, in November 2019, and has served as a director of Carbon since 2016. She is the former President, Chair and Chief Executive Officer of E.I. du Pont de Nemours and Company, or DuPont, a science and technology-based company, where she served from 2009 to 2015. Prior to this, Ms. Kullman served as President of DuPont from 2008 to 2009. From 2006 through 2008, she served as Executive Vice President of DuPont. Prior to that, Ms. Kullman was Group Vice President, DuPont Safety and Protection. Ms. Kullman has been a director of
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| ||
Qualifications
The Board concluded that Ms. Kullman should serve on the Board based on her lengthy global experience as chief executive officer and board chair at both public and private companies, her management and leadership skills, and her experience with scientific operations, all of which provide valuable insight into the operations of our Company. Given her leadership and financial experience, Ms. Kullman has been determined to be an Audit Committee financial expert by our Board.
Ronald D. Sugar
Director since:2010
Age:
Committees: • Corporate Responsibility and Compliance (Chair) • Executive • Governance and Nominating
Other Public Company Boards: • Air Lease Corporation (will not be standing forre-election) • Apple Inc. • Chevron Corporation • Uber Technologies, Inc. |
Ronald D. Sugar is the retired Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation, a global aerospace and defense company, having held these posts from 2003 through 2009.
Dr. Sugar has been a director of Chevron Corporation, a petroleum, exploration, production and refining company, since 2005, serving as the lead director and on the Management Compensation Committee and chairing the Board Nominating and Governance Committee. Dr. Sugar has been a director of Apple Inc., a manufacturer and seller of, among other things, personal computers, mobile communication and media devices, since 2010, chairing the Audit and Finance Committee. Dr. Sugar has been a director of Air Lease Corporation, an aircraft leasing company, since 2010, chairing the Compensation Committee and serving on the Nominating and Corporate Governance Committee, and will not be standing for election to the board of Air Lease Corporation at the next annual meeting of stockholders expected to occur in May 2020. Dr. Sugar has been a director of Uber Technologies, Inc., a personal mobility, meal delivery and logistics technology platform, since 2018, serving as the Chair of the board of directors and chairing the Nominating and Governance Committee and serving on the Compensation Committee. Since 2010, he has been a senior advisor to Ares Management LLC, a privately-held asset manager and registered investment advisor. In 2014, Dr. Sugar joined the Temasek Americas Advisory Panel of Temasek Holdings (Private) Limited, a privately-held investment company based in Singapore. Dr. Sugar is a member of the National Academy of Engineering, trustee of the University of Southern California, member of the UCLA Anderson School of Management Board of Advisors, and director of the Los Angeles Philharmonic Association. | |||
Qualifications
The Board concluded that Dr. Sugar should serve on our Board because Dr. Sugar’s board and senior executive-level expertise, including his experience as chief executive officer and board chair of a large, highly regulated, public company and his insight in the areas of operations, government affairs, science, technology and finance. | ||
14 ï 20182020 Proxy Statement 15
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Item 1 — Election of Directors
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R. Sanders Williams
Director since:2014
Age:
Committees: • Corporate Responsibility and Compliance • Governance and Nominating
Other Public Company Boards: • Laboratory Corporation of America Holdings
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R. Sanders Williams is the President Emeritus of Gladstone Institutes, anon-profit biomedical research enterprise, having served in this position since 2018, and was the Chief Executive Officer of Gladstone Foundation, anot-for-profit organization supporting the Gladstone Institutes
Dr. Williams has been a director of the Laboratory Corporation of America Holdings, a diagnostic technologies company, since 2007, serving on the Audit |
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, |
Qualifications
The Board concluded that Dr. Williams should serve on the Board because of his broad medical and scientific background, including his leadership roles in domestic and academic science settings, his deep experience in cardiology, oversight of governance of multi-hospital healthcare provider systems, leadership and development of international medical programs in Asia, and prior industry board experience.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE ABOVE 1311 NAMED NOMINEES.
16 ï 20182020 Proxy Statement 15
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Corporate Governance
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Board of Directors Corporate Governance Highlights
Our Board of Directors, or Board, is governed by our Amgen Board of Directors Corporate Governance Principles 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 independent members of the Board elect a lead independent director on an annual basis. The lead independent director has robust responsibilities and authorities as discussed below. Robert A. Eckert currently serves as our lead independent director. |
| • | Regular Executive Sessions of Independent Directors.Our independent directors meet privately on a regular basis. Our lead independent director presides at such meetings. |
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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 Company, its operations, and results. The Corporate Responsibility and Compliance Committee, or Compliance Committee, members also have regular meetings in executive session with our Chief Compliance Officer, and the Audit Committee members have regular meetings in executive session with our internal and external auditors and separate meetings in executive session with our head of Corporate Audit. |
| • | Board Authority to Retain Outside Advisors. Our Board committees have the authority to retain outside advisors. The Audit Committee has the sole authority to appoint, compensate, retain, and oversee the independent registered public accountants. The Compensation and Management Development Committee, or Compensation Committee, has the sole authority to appoint, compensate, retain, and oversee compensation advisors for senior management compensation review. The Governance and Nominating Committee, or Governance Committee, has the sole authority to appoint, retain, and replace search firms to identify director candidates and compensation advisors for our directors’ compensation review. |
| • | Regular Board and Committee Evaluations. The Board and the Audit, Compensation, Compliance, and Governance Committees each have an annual evaluation process. We provide more information regarding the Board and committee evaluations on page 24. |
| • | Management Succession Oversight. Our Board oversees Chief Executive Officer, or CEO, and senior management succession planning. Directors engage with potential CEO, executive, and senior management successors at Board and committee meetings. Our Board also establishes steps to address succession to respond to unexpected vacancies in the event of an emergency. |
| • | Solicitation of Stockholder Perspectives. The Board believes that engagement with stockholders is a source of valuable information and perspectives on the Company. The Board has requested that management solicit input from investors on behalf of the Board and the lead independent director has also met directly with stockholders when appropriate. We provide more information regarding the stockholder engagement program on page 46. |
| • | Majority Approval Required for Director Elections. If an incumbent director up forre-election at a meeting of stockholders fails to receive a majority of the votes cast in favor for his or her election in an uncontested election, the Board will adhere to the director resignation policy as provided in our Amended and Restated Bylaws of Amgen Inc., or Bylaws. |
| • | Director Limitation on Number of Boards. A director who is currently serving as our |
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| • | Director Retirement Age. The Board has established a retirement age of |
| • | 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 transaction or relationship with the Company in which they will have a financial or a personal interest or any transaction that otherwise involves a conflict of interest. |
| • | Director Conflicts of Interest. If an actual or potential conflict of interest arises for a director or a situation arises giving the appearance of an actual or potential conflict, the director must promptly inform the Chairman of the Board or |
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themselves from any discussion or decision found to affect their personal, business, or professional interests. |
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 Bylaws may have their nominees |
| • | Written Consent. Our Amgen Inc. Restated |
| • | Special Meetings. Our Bylaws permit stockholders to request that the Company 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 |
| • | No Poison Pill. We do not have a shareholder rights plan, or poison pill. |
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 servedserves as the lead independent director since the May 19, 2016 annual meeting of stockholders, or 2016 Annual Meeting.director.
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.
Annual Evaluation of Leadership Structure and Annual Election of Lead Independent Director. The Board considers and discusses the leadership structure every year. As part of this annual 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. The Board also considers:
The effectiveness of the policies, practices, and people in place at the Company to help ensure strong, independent Board oversight;
The Company’s performance and the effect the leadership structure could have on its performance;
The Board’s performance and the effect the leadership structure could have on the Board’s performance;
The Chairman’s performance in the role;
The views of the Company’s stockholders; and
The practices at other companies and trends in governance.
If the Board determines that it remains in the best interests of the Company and its stockholders that the CEO serve as chairman, the lead independent director is considered and elected by the independent members of the Board on an annual basis. Mr. Eckert has been elected as theBoard.
Overview of Lead Independent Director Responsibilities.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 forengages in 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 outlined in our Corporate Governance Principles 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 leadingPreviewing the Board’s evaluation ofinformation to be provided to the CEO;
Being responsible for leading the Board’s annual self-assessment;Board;
Having the authority to call meetings of the independent directors; and
If requested by major stockholders, ensuringOrganizing and leading the Board’s evaluation of the CEO;
Serving as a liaison between the Chairman and the independent directors;
Leading the Board’s annual self-assessment;
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 otherwisecommunication, if requested by major stockholders; and
Presiding at meetings of the committee). Each of our committees effectively manages its Board-delegated duties and communicates regularly withBoard at which 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 meetingis not present, including executive sessions 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.directors.
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.
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In addition to the responsibilities outlined above, the lead independent director:
Meets with the Chairman prior to each regular meeting of the Board and its committees to discuss, provide input on, and approve the agendas;
With the Chairman, determines presenters for attendance at Board meetings;
Hasone-on-one discussions with each independent director, including as part of the Board’s annual evaluation process;
Attends all committee meetings, including those committees for which he is not a member (at his discretion) and is provided with access to all committee materials;
Has the authority to engage independent consultants;
Is regularly apprised of inquiries from stockholders;
Interviews Board candidates; and
Has an increased role in crisis management, as appropriate.
Independent Directors Sessions. A meeting of the independent directors is scheduled at every regular Board meeting and 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 and our lead independent director provides direct feedback to Mr. Bradway after these executive sessions.
Independent Committee Leadership. The Audit, Compensation, Compliance, and Governance Committees are each led by independent directors and provide independent oversight of management. In addition:
Each committee chair meets with management in advance of meetings to review and refine agendas, add topics of interest, and review and comment on materials to be delivered to the committee;
Every independent director has access to all committee materials;
Each committee chair provides a report summarizing committee meetings to the full Board at each regular meeting of the Board;
Each committee meeting includes adequate time for executive session and the committees meet in executive session on a regular basis with no members of management present (unless otherwise requested by the committee); and
Each committee effectively manages its Board-delegated duties and communicates regularly with the Chairman and members of management.
Furthermore, the Compensation Committee has an effective process for monitoring and evaluating Mr. Bradway’s compensation and performance.
Lead Independent Director. Mr. Eckert has been elected annually as the lead independent director since the May 2016 annual meeting of stockholders and wasre-elected by our Board on March 4, 2020 to continue to serve as lead independent director subject to hisre-election to the Board by our stockholders at the 2020 Annual Meeting.
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 effectivecomprehensive 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 regularlyannually 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.
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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 its strategic priorities to improve long-term financialoperational and operationalfinancial 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 controlcontrols and mitigation of theseactivities for such risks. We believe that the risk management areas that are fundamental to the success of our annual and strategic plansenterprise include the areas of product development, safety and surveillance, supply and 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.
Our Board has ultimate oversight responsibility for the risk management process. 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. For example, the potential risk associated with our pricing and access strategy and approach is an area of enterprise risk with respect to which our Board and Compliance Committee receive regular updates. All risk areas are appropriately monitored by management and all risk areas that could lead to business disruption, including the potential to cause severe financial or reputational harm, report to the Board regularly oras-needed, and are subject to appropriate Board oversight.
Each Board Committee has primary risk oversight responsibility that is aligned with its areas of focus. At each regular meeting, or more frequently as needed, the Board receives and considers committee reports, which reports may provide additional detail on risk management issues and management’s response.
| Committee | Primary Risk Oversight Responsibility | |||
Governance and Nominating | • Oversees the assessment of each member of the Board’s independence, as well as the compliance with our Corporate Governance Principles and Board of Directors’ Code of Conduct. Also oversees Board and committee evaluations and Board succession. | |||
Audit | • Oversees internal controls over financial reporting, and oversees internal audit and independent registered public accountants, as well as financial risk, such as capital risk, tax risk, and financial compliance risk. | |||
Compensation and Management Development | • Oversees human capital management, as well as executive talent management, development, and succession planning. Also oversees our compensation policies and practices and incentive program administration and design, including whether such policies, practices, and incentive programs balance risk-taking and rewards in an appropriate manner (as discussed further below), align with stockholders’ interests, and are consistent with emerging best practices. | |||
Corporate Responsibility and Compliance | • Overseesnon-financial compliance risk, such as regulatory risks associated with the requirements of the Federal health care program, Food and Drug Administration, and risks associated with privacy, antitrust and competition, anti-corruption, information systems and security (including cybersecurity), pricing and access, government affairs, labor and employment (including diversity and inclusion), and our reputation. Also oversees staff member compliance with the Code of Conduct. | |||
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While theCodes of Ethics and Business Conduct
Our Board has adopted two codes of business conduct and ethics, one that applies to our Board and a second that applies to our Board, all our staff, and others conducting business on our behalf. Annual training on the ultimate oversight responsibilityglobal code of conduct is required and our Board participates in such training. We also have a code of ethics for the risk management process, various committeessenior financial officers. To view our codes of the Board are structuredbusiness conduct and ethics, please visit
our website atwww.amgen.com. We intend to oversee specific risks, as follows: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 on our website. There were no waivers of any of our codes of business conduct or code of ethics in 2019.
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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 seven6 meetings in 20172019 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.they served. It is the Company’s policy that all current
directors attend our annual meetings of stockholders barring unforeseen circumstances or irresolvable conflicts. ThirteenEach of the then-current members of the Boardour directors were present at our 2017 annual meeting of stockholders, or 20172019 Annual Meeting.
Ourannualmeetingofstockholdersprovidesanopportunityeachyear forstockholderstoaskquestionsoforotherwise our lead independent director and other members of the Board on appropriate matters. In addition, stockholders may communicatedirectly in writing 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 20172019 Annual Meeting, please see page 3846 of our Compensation Discussion and Analysis.
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TheBoardhasfour key standing committees: Governance Committee; Audit Committee; Compliance Committee; and Compensation Committee. The Compensation Committee has delegated certain responsibilitiestoanEquityAwardCommittee.Inaddition,anExecutive CommitteeoftheBoardhasallofthepowersandauthorityofthe Board has all of the powers and authority of the Board inthemanagementofourbusinessandaffairs,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.
Incorporation. The Executive Committee did not meet in 2017.2019. The Board maintains charters for each of these standing committees.committees and these charters are evaluated annually. In addition, the Board has adopted a written set of Corporate Governance Principles and a Board of Directors’ Code of Conduct that generally formalize practices we have in place. To view the charters of our standing Board committees, our Corporate Governance Principles, and the Board of Directors’ code of conduct, please visit our website atwww.amgen.com.
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Process for Selecting Directors, Director Qualifications, and Review of Board Diversity
Board Composition. Board composition is one of the most critical areas of focus for the Board. Reflecting our Board’s commitment to refreshment, the Board has appointed five new directors since 2015, including two additional women, adding critical skills and experience to our Board in furtherance of our strategic priorities.
Our Governance Committee regularly screens and recommends candidates for nomination by the full Board and, among other things, considers feedback received during the annual Board and Committee evaluation process, investor feedback, our qualification guidelines and skills matrix, and diversity. The Governance Committee will consider recommendations for director candidates made by stockholders and evaluate them using the same criteria as for other candidates.
Director Qualifications and 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 withregularly and reports to the Board on 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 containsmaintains at least the minimum number of independent directors required by applicable laws and regulations.
The Governance Committee maintainsdetermines and oversees 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 possesspossess:
a demonstrated breadth and depth of management and leadership experience, experience;
financial and/or business acumen or relevant industry or scientific experience, experience;
integrity and high ethical standards, standards;
sufficient time to devote to the Company’s business, business;
the ability to oversee, as a director, the Company’s business and affairs for the benefit of our stockholders, stockholders;
the ability to comply with the Amgen Board of Directors Code of ConductConduct; 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.
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Continuous Board Refreshment
Our Board is committed to strong refreshment practices to continuously align the composition of the Board and its leadership structure with our long-term strategic needs. The Board, led by the Governance Committee, has an ongoing process for identifying, evaluating, and selecting directors, and these decisions are also informed by the annual Board and committee evaluation process described below. Our Governance Committee uses a variety of methods to help identify potential Board candidates and considers an assessment of current Board skills, background, diversity, independence, experience, tenure, and anticipated retirements to identify gaps that may need to be filled through the Board refreshment process.
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Regular Board and Committee Evaluations
The Board and committee evaluations play a critical role in supporting the Audit, Compensation, Complianceeffective functioning of our Board. Through evaluations, our directors review where they believe our Board functions effectively and, importantly, areas where our Board thinks there may be opportunities for improvement, including through Board refreshment.
Annual Governance Committees each haveReview. Our Governance Committee leads an annual evaluation process which focuses on their roles,of the Board and its committees. Directors provide feedback regarding Board and committee composition and structure, role and effectiveness, and fulfillment of their fiduciary duties.duties, meetings and materials, and interaction with management.
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Evaluation Results.The Audit, Compensation, Compliance, and Governance Committees each completed their assessments in October 20172019 for further evaluationbytheGovernanceCommitteeinDecember2017. 2019. TheBoard completeditsevaluationinDecember2017. 2019. 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.
Ongoing Feedback. Our directors provide real-time feedback throughout the year outside of the formal evaluation process and have open access to management and third-party advisors. Additionally,
executive sessions of directors (without management) are scheduled for every regular Board and committee meeting to identify any issues and assess whether meeting objectives were satisfied.
Changes Implemented. Based on the annual Board and committee evaluation process, ongoing feedback provided by directors, andone-on-one discussions between our lead independent director and each director, changes to Board practices have included enhancements to our committee structure and composition, additional presentations on various topics, and the addition of new directors.
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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,Herringer, who served as directorsa director during part of 2017, were2019, was independent during 20172019 under The NASDAQ Stock MarketingMarket 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, donations,orgrantsinvolvedanamountthat(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 capacityas an employee, officer, partner, or director, 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), except for Fred Hassan, 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.
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, purchasing supplies, equipment and software licenses, payment of fees or memberships, and expenses relating to repair and maintenance, utilities, clinical trials, research and development and training, sponsorship of healthcare programs and conferences, financial management, investment advisory and consulting services, and reimbursement of business-related expenses incurred by our staff members (such as for transportation, gas, and food purchases).
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Drs. Baltimore,Wanda M. Austin, Brian J. Druker, Rebecca M. Henderson, Tyler Jacks, and R. Sanders Williams currently serve as professors for universities to which Amgen has made payments for certain business transactions such as symposiums, conferences and exhibits, postdoctoral research programs, clinical trials, training and research and development, software licenses and maintenance, as well as for grants.
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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.
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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
compensation matters. During 2017, the Governance Committee engaged Frederic W. Cook and Co., or FW Cook, |
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.
Current Members: Charles M. Holley, Jr.* (Chair)
Wanda M. Austin
Fred Hassan*
Ellen J. Kullman*
*Audit Committee financial expert
Others Who Served in Frank
Rebecca M. Henderson Tyler Jacks
Number of Meetings Held in
Each member has been determined by the Board to be independent under The NASDAQ Stock Market listing standards and the requirements of the SEC, including the requirements regarding financial literacy and sophistication.
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Description and Key Responsibilities:
• Oversees our accounting and financial reporting process and the audits of the financial statements, as required by NASDAQ.
• Assists the Board in fulfilling its fiduciary responsibilities with respect to the oversight of our financial accounting and reporting, the underlying internal controls and procedures over financial reporting, and the audits of the financial statements.
• Has sole authority for the appointment, compensation,
• Reviews and discusses, prior to filing or issuance, with management and the independent registered public accountants (when appropriate) our audited consolidated financial statements to be included in our Annual Report on Form10-K and earnings press releases.
• Approves all related party transactions, as required by NASDAQ. | |||||||
Audit Committee Oversight of the Independent Registered Public Accountants • Auditor Selection. Evaluates the qualifications and performance of our independent registered public accountants each year and appoints the independent registered public accountants annually. • Audit Partner Selection. Participates directly in the selection of the lead engagement partner through an interview process. • Audit Firm Evaluation. Considers the quality and efficiency of the services provided, the independent registered public accountants’ technical expertise and knowledge of our operations and industry. • Audit Services.Pre-approves services. | ||||||||
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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 and the Compliance Committee, 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.
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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
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Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 20172019
With respect to our CEO, byCompensation Committee Determination of Compensation.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. evaluation as well as the compensation for each executive officer.
Values and Components.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.
Executive Officers. 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 compensation recommendations for each NEO, our CEO reviews comparative peer group data, as well as the performance of the executive. The Compensation Committee has typically followed these recommendations.
Executive Sessions.Each Compensation Committee meeting includes adequate time for executive session and the Compensation Committee meets in executive session on a regular basis with no members of management present (unless otherwise requested by the Compensation Committee).
Delegation of Authority. The Compensation Committee has authority to delegate any of its functions to a subcommittee of its members.
28 ï 2020 Proxy Statement
Corporate Governance |
During 2017, theIndependent Compensation Consultant. The Compensation Committee engagedcontinued to engage FW Cook, & Co.an independent compensation consultant, to provide advice regarding executive compensation and executive compensation trends and developments, compensation designs, and equity compensation practices, market data as requested, and opinions on the appropriateness and competitiveness of our executive compensation programs relative to market practice. FW 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 FW Cook & Co., an independent compensation consultant, and whether any conflicts of interest exist.
After review and consultation with FW Cook, & Co., the Compensation Committee has determined that FW Cook & Co. is independent and there is no conflict of interest resulting from retaining FW Cook & Co. currently or during the year ended December 31, 2017.2019. 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.
Peer Group Review.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 FW 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. FW Cook & Co. provides the Compensation Committee with market data, an annual report on the compensation levels and practices of our peer group, and recommendations for the CEO position.
Compensation Risk Management.In cooperation with management, FW Cook assesses the potential risks arising from our compensation policies and practices as discussed more fully below.
Annual Risk Management Assessment.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.
Results of Risk Management Assessment.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.
Factors That Discourage Excessive Risk-Taking.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:
| • | Mix of Incentives.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 long-term success. |
| • | Company-wide Results.Company-wide results are the most important factor in determining the amount of an annual cash incentive award, one of our mix of incentives, for each of our staff members. |
| • | Emphasis on Long-Term Performance. We cap short-term incentives and make long-term incentive, or LTI, equity awards a component of compensation for nearly all of our full-time staff members. In particular, the CEO and the other executive officers |
participate in compensation plans that are designed so that the largest component of their compensation is in the form of LTI equity awards to ensure that a significant portion of their compensation is associated with long-term, rather than short-term, outcomes, which aligns these individuals’ interests with those of our stockholders. |
| • | Equity Award Grant Practices.We employ appropriate practices with respect to equity awards: we do not award mega-grants, discounted stock options, or immediately vested equity to staff members; and 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. |
| • | Robust Stock Ownership and Retention Guidelines.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 hold shares of our Common Stock acquired through the vesting of restricted stock units, the payout of performance units, and the exercise of stock options (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. |
| • | Comprehensive Performance Evaluations. 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. |
| • | Discretion to Reduce Awards.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. |
ï 2020 Proxy Statement 29
Corporate Governance |
| • | Recoupment Provisions.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. |
| • | 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 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. |
| • | Disclosure. Subject to our recoupment and clawback policy statement, we intend to disclose the general circumstances of any application of our recoupment provisions or clawback policy against any executive officer (current or former) and the aggregate amount of compensation recovered. Our policy statement is available on our website atwww.amgen.com. |
| • | No Hedging or Pledging. Our Insider Trading Policy prohibits pledging or purchasing of our Common Stock on margin and hedging the economic risk of our Common Stock (as discussed more fully below). |
Under our global Insider Trading Policy, all of our Board members and staff members, including our NEOs, consultants, contract workers, secondees, and temporary staff worldwide are considered “Covered Persons.” It is against the Insider Trading Policy for Covered Persons to directly or indirectly participate in transactions involving trading activities that by their nature are aggressive or speculative, or may give rise to an appearance of impropriety. Covered Persons may not:
Engage in short sales (sales of stock that the seller does not own or a sale that is completed by delivery of borrowed stock) with respect to our securities;
Our Compensation Committee determines compensation forEngage in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the executive officers (other than the CEO) based, in part, on the recommendationsmarket value 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.Amgen stock;
| • | Purchase or pledge Amgen stock on margin or as collateral to secure a loan or other obligation(1); or |
The Compensation Committee generally holds executive sessions (with no membersEnter into any derivative or similar transactions with respect to our securities.
Examples of management present, unless requested by the Compensation Committee) at its regular meetings.
The Compensation Committee has authorityprohibited derivative transactions include, but are not limited to, delegatepurchases or sales of puts and calls (whether written or purchased or sold), options (whether “covered” or not), forward contracts, including but not limited to prepaid variable forward contracts; put and call “collars” (“European” or “American”), “equity” or “performance” swap or exchange agreements, or any of the functions described above to a subcommittee of its members. No delegation of this authority was madesimilar agreements or arrangements however denominated, in 2017.our securities.
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 human resources systems as of November 1, 2017.December 31, 2019. Total direct compensation included base salary (wages earned based onrecorded in our payroll records)records as of December 31, 2019), 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 2017.2019. 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.December 31, 2019. Nocost-of-living adjustments were made. We then determined the annual total compensation of our median employee for 20172019 which was $132,930.$130,904. As disclosed in the “Summary Compensation Table” appearing on page 64,66, our CEO’s annual total compensation for 20172019 was $16,899,789.$19,612,793. Based on the foregoing, the ratio of the annual total compensation of our CEO to that of the median staff member was 127150 to 1. For information on the determination of executive compensation, please see “Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 2019” above and our Compensation Discussion and Analysis beginning on page 38.
| (1) | With the exception of the use of a margin account to purchase our common stock in connection with the exercise of Amgen-granted stock options (i.e., “cashless exercises”). |
30 ï 20182020 Proxy Statement 25
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Corporate Governance
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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 20182020 Annual Meeting proxy statement and incorporated by reference into the Company’s Annual Report on Form10-K for the year ended December 31, 2017.2019.
Compensation Committee of the Board of Directors
Robert A. Eckert, Chairman
Wanda M. Austin
Brian J. Druker
Greg C. Garland
Fred Hassan
Tyler Jacks
Our Commitment to Environmental Sustainability, Social Responsibility, and Human Capital Management
Corporate responsibility is important to Amgen since making a positive difference in the world is at the heart of what we do. As part of our mission to serve patients, we take our responsibilities seriously with respect to the areas of environmental sustainability, social responsibility and corporate governance (ESG).
ESG matters at Amgen are governed at the highest levels. Our executive leadership reports our progress to the Compliance Committee of the Board. An executive-level governance council, chaired by the Senior Vice President of Corporate Affairs, oversees the continuing evolution and enhancement of our approach to corporate responsibility and ESG. With the oversight of executive leadership, individual programmatic elements are managed at a functional level.
In addition to a commitment to ethical business practices, our ESG efforts include integrating environmentally sustainable practices throughout our business, improving patient access to medicines, promoting supplier sustainability and diversity, supporting science education for the next generation of innovators, and enhancing the diversity and inclusiveness of our workplace.
Environmental Sustainability
We have a long-standing commitment to reducing our impact on the environment and regularly set targets to challenge ourselves to deliver further improvements.
26 Progress Toward Targets. We are in the last year of our 2012-2020 conservation targets, which are set in areas where we can make the most progress in reducing our environmental impact and deliver value, including targets for reductions in fleet and facilities carbon, waste, and water use. In addition to beingon-track to deliver on all of our targets, we are well-head of our targets to reduce our carbon and water consumption.
ï 2020 Proxy Statement 31
Corporate Governance |
Reducing Carbon Emissions Through Energy Conservation. Our carbon reduction strategy focuses on eliminating energy use, increasing energy efficiency, and increasing the proportion of energy used from renewable and alternative sources. We have exceeded our 2020 carbon targets and are continuing to work through our portfolio of identified carbon reduction opportunities as we finalize our next generation of environmental targets. Amgen also participates in the CDP (formerly Carbon Disclosure Project).
Sustainable by Design. Amgen helped invent the processes and tools that created the global biotech industry. As we continue to grow and innovate, we are pioneering advanced technologies for research and development and manufacturing to increase operational efficiency, improve access to our medicines, and reduce our environmental footprint.
Our next-generation biomanufacturing facility in Singapore is an example of our innovative capability at work. This redesign of our approach to biomanufacturing 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. In 2019, we continued to work on the construction of our second next-generation biomanufacturing plant in Rhode Island. This new plant is expected to be the first of its kind in the U.S. and will use our next-generation biomanufacturing capabilities.
United Nations Global Compact.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.
Climate-Related Risks and Opportunities.We have processes to evaluate and quantify risk from climatic events to our operations and take steps to avoid the associated consequences. Additionally, Amgen has had a carbon and energy reduction strategy since 2008 and, as described above, considerable progress has been made in reducing our carbon footprint as a result.
Social Responsibility
Improving Patient Access to Medicines. 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. Amgen Safety Net Foundation (ASNF), a separate legal entity entirely funded by Amgen, supports qualifying patients in the U.S. who might go without important medicines because of financial barriers, by providing our medicines at no cost. In 2019, the commercial value of Amgen’s medicines provided at no cost to uninsured or underinsured patients by ASNF was approximately $1.5 billion(1). In 2018, Amgen donated over $93 million worth of Amgen cancer treatment and supportive care medicines(1)for distribution to patients in 18 developing countries through Direct Relief, a leadingnon-governmental organization, and we recently completed a second donation of medicine through Direct Relief in 2019.
We also partner with payers to share risk and accountability for health outcomes, and help patients access the medicines they need without significant financial burden. We continue to spearhead implementation of innovative contracting, including outcomes-based and risk-sharing approaches, to improve patient access to medicines while providing budget predictability to payers, in addition to value based partnerships designed to create mutually beneficial opportunities, improve patient outcomes, experience, and satisfaction in the context of the healthcare system and overall total costs to society.
Supplier Sustainability and Diversity.All staff members are responsible for upholding the Amgen Values and Code of Conduct and, similarly, we require our suppliers to conduct their businesses in alignment with our mission and values. We focus not only on commitment to quality, cost, and reliability but also on a wide range of sustainability and social responsibility considerations, such as business ethics, labor and human rights, and environmental impacts.
We also have a supplier diversity program designed to identify, develop, and utilize small, disadvantaged, veteran, service-disabled veteran, minority, and women-owned business enterprises, as well as companies located in historically underutilized business zones, in our procurement of goods and services.
Science Education.The Amgen Foundation, Inc. (Amgen Foundation),a separate legal entity entirely funded by Amgen, seeks 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.
Since its inception almost 30 years ago, the Amgen Foundation has contributed more than $325 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.
Through what is now a sixteen-year 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.
LabXchange, developed at Harvard University with the financial sponsorship of the Amgen Foundation, is a free online science education platform which launched in January 2020 providing students around the world with access to personalized instruction, next-generation virtual lab experiences, and networking opportunities across the global, scientific community.
The Amgen Foundation is the biology partner of the Khan Academy, a leading online learning educational platform with over 89 million registered users across the globe.
Additionally, the Amgen Foundation supports the Amgen Biotech Experience, an innovative science education program that empowers high school teachers to bring biotechnology education into their classrooms.
| (1) | Valued at wholesale acquisition cost. |
32 ï 2020 Proxy Statement
| Corporate Governance |
Our Community.The Amgen Foundation has provided support following devastating disasters, including immediate relief for victims of the wildfires in Australia and Southern California, and continues to provide support for reconstruction efforts in Puerto Rico following Hurricane Maria. Moreover, the Amgen Foundation provides programs and resources to empower individual Amgen staff in their charitable giving, including through a matching gift program and by providing service grants tonon-profit organizations where staff members regularly volunteer.
Amgen’s Response to the COVID-19 Pandemic As a leading global healthcare company and responsible corporate citizen, Amgen is committed to help address theCOVID-19 outbreak. We have prioritized the safety of our employees, supply of our medicines to patients, and health of the communities where we live and work. For information on our response to this unprecedented situation, please visitwww.amgen.com/COVID-19(1). |
Human Capital Management
Our Board has a key role in the oversight of our culture, setting the tone at the top, and holding management accountable for maintaining high ethical standards. The Board believes that human capital management, including diversity and inclusion initiatives, are important to our success. We conduct staff member engagement surveys on a regular basis and the results of these surveys are discussed with the Board.
Amgen places significant value on fostering and enabling growth for staff, both personally and professionally, and we are committed to providing a safe, healthy, innovative, and diverse work environment for our staff.
Our Social Architecture. Since Amgen’s founding in 1980, our staff members have directed their intelligence and enthusiasm toward a simple, yet powerful mission to serve patients. This clearly articulated mission, our aspiration to be the world’s best human therapeutics company, a carefully considered strategy informed by our mission and aspiration, a well-defined set of Amgen Values that define how we behave, and clear leadership attributes that we expect from our staff members, together form the “social architecture” that defines our unique culture. This social architecture is deeply rooted in our culture and has enabled Amgen’s growth over the past forty years from an early pioneer in the biotech industry to a leading innovator and world-class biologics manufacturer.
The Amgen Values were formalized in 1996 and continue to serve as the principles that guide the way we conduct business
Amgen Values
| Be Science-Based | Trust and Respect Each Other | |
| Compete Intensely and Win | Ensure Quality | |
Create Value for Patients, | Work in Teams | |
| Be Ethical | Collaborate, Communicate, and Be Accountable |
Diverse and Inclusive Workforce. We believe that an environment of inclusion and belonging fosters innovation, which drives our ability to serve patients. Our global presence is strengthened by having a workforce that reflects the diversity of the patients we serve. To that end, we established a new executive diversity, inclusion, and belonging council chaired by our CEO. With endorsement from executive management and engagement with senior leaders across the organization, we have implemented a global strategy designed to leverage our diversity and create a more inclusive workspace.
This strategy is designed to help us successfully navigate a global, complex marketplace as we bring more medicines to patients around the world. In addition, we are setting goals to improve our focus around diversity, inclusion, and belonging and Amgen is positioned to amplify our program reach across the globe and measure our progress towards creating a more inclusive workplace. Additionally, we currently have global Employee Resource Groups at our Company, all with executive sponsorship, that are organized around primary diversity attributes, including:
Amgen Asian Association (AAA) | Amgen Black Employee Network (ABEN) | |
Ability Bettered through Leadership and Education (ABLE), a resource group for the physically or cognitively disabled | ||
Amgen Early Career Professionals (AECP) | Amgen Indian Subcontinent Network (AISN) | |
Amgen Latino Employee Network (ALEN) | Amgen LGBTQ and Allies Network (PRIDE) | |
Amgen Veterans Employees Network (AVEN) | Women Empowered to be Exceptional (WE2) | |
Attracting and Developing Talent. Our success depends on our ability to attract and retain talent and skilled staff members. We compensate our staff members based on their roles, experience, and performance, provide wellness resources, as well as support employees in giving back and volunteering in their local communities. Amgen has added transgender benefits and continues to pride itself on industry-leading, family-friendly offerings for families of all compositions.
| (1) | Reference to our website is not intended to function as a hyperlink and the information contained on our website is not intended to be part of this proxy statement. |
ï 2020 Proxy Statement 33
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Item 2 — Advisory Vote to Approve Our Executive Compensation
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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 cast an advisory vote on the compensation of our Named Executive Officers, or NEOs, as disclosed in the Compensation Discussion and Analysis (pages 3238 through 63)65) and related compensation tables and the narrative in this proxy statement (pages 6466 through 78)82).
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 short- and long-term measurable performance.
Drive implementation of our business strategy and positionby positioning 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
What we do
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| ✓ | A substantial majority of NEO compensation is |
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| ✓ | Recoupment in the case of misconduct causing serious financial or reputational damage |
| ✓ | Clawback policy tied to financial restatement |
| ✓ | Robust stock ownership and retention guidelines |
| ✓ | Minimum vesting periods |
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| ✓ | Long-term performance-based equity awards (80% of total target equity) |
| ✓ | Independent compensation consultant |
What we don’t do
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No hedging or pledging |
| ⨯ | Nore-pricing or backdating |
No taxgross-ups (except in connection with relocation) |
No single-trigger for stock options and restricted stock units in the event of a change of control |
| ⨯ | No excessive perks |
No employment agreements |
No dividends paid on unvested equity |
No defined benefit pension or supplemental executive retirement plan (SERP) benefits |
34 ï 2018 Proxy Statement 27
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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.
| Goal | Weighting | % of Target Earned | ||||||
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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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 20182020 Proxy Statement
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Item 2 — Advisory Vote to Approve Our Executive Compensation
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2019 Executive Compensation Was Aligned With Our Strategy and Performance
As discussed more fully in our Compensation Discussion and Analysis starting on page 38, a significant majority of each NEO’s compensation isªat-risk We Deliveredand dependent on Our Financial Performance Goals.our performance and execution of our strategic priorities.
| LTI Equity Award Allocation | 2019 Total Target Direct Compensation Mix | |
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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.
2019 Performance AgainstªPre-Established We Progressed Our Pipeline.Goals and Measures
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.
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In 2018, the CHMP(4) of the EMA(5) adopted a positive opinion for the Marketing Authorization to include similar indications.
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2019 Annual Cash Incentive Program
| 2017-2019 Long-Term Incentive Performance Award Payout
| |||||||
Goal
|
| Weighting
|
|
% of Target Earned
|
| |||
Financial Performance
| ||||||||
Revenues
|
| 30%
|
| 177%
| ||||
Non-GAAP Net Income(1)
|
| 30%
|
| 168%
| ||||
Progress Innovative Pipeline
| ||||||||
Advance Early Pipeline
|
| 10%
|
| 100%
| ||||
Execute Key Clinical Studies and Regulatory Filings
|
| 20%
|
| 80%
| ||||
Deliver Annual Priorities
| ||||||||
Execute Critical Launches and Long-Term Commercial Objectives
|
| 5%
|
| 77%
| ||||
Achieve Productivity Objectives
|
| 5%
|
| 107%
| ||||
Final Score
|
| Achieved 138.9%
| ||||||
| (1) | Non-GAAP net income for purposes of the 2019 Company performance goals of our annual cash incentive award program is reported and reconciled inAppendix B. |
| (2) |
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|
|
|
|
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ï 20182020 Proxy Statement 2935
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Item 2 — Advisory Vote to Approve Our Executive Compensation
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Biosimilars Portfolio Developments.
|
|
|
ªWe Advanced Our Early Pipeline.2019 Alignment of Pay with Performance
Generated11 product teams (formed whenOur strategy includes a molecule hasseries of integrated activities to strengthen our long-term competitive position in the potential to be safeindustry. Key 2019 activities that align our NEO pay with performance and effectivesupport the execution of our strategic priorities are summarized below.
Our financial performance was strong 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 supportyear of KYPROLIS as a backbone therapy for multiple myeloma.
ªWe Realized Our Functional Transformational Objectives.transition.
We realized approximately $400 million in savings asdelivered a resultone-year total shareholder return, or TSR, of initiatives at28%. We outperformed our peer group average for the Company level as well as activities within each function designed to transform approachesone-, three-, and improve processes with specific savings targets establishedfive-year TSRs and significantly outperformed the Standard & Poor’s 500 Index for each area.the three-year period.
Together withIn March 2019, when we established our progress this year, since 2014,2019 performance goals, we have realized approximately $1.5 billion of transformation and process improvement savings. These savings were reinvestedexpected to drive volume growth 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,newer products, but we also returned a total of $6.5 billion of capitalanticipated substantial competition against our legacy products due to our stockholders through dividends and stock repurchases.patent expiries that would more than offset newer product sales growth. Our early 2019 investor guidance also reflected this anticipated competitive intensity.
| • |
|
Our strong cash flows and balance sheet allowed continued investment for long-term growth in 2019 through internal research and development, capital expenditures, and external business development transactions.
Our quarterly 2019 dividend of $1.45 per share represented a 10% increase from the quarterly dividend for 2018.
In 2019, we returned $11.2 billion to our stockholders in the form of repurchases of our Common Stock ($7.7 billion) and dividends paid ($3.5 billion).
We progressed our pipeline.
We develop innovative and biosimilar medicines that address unmet medical needs to treat serious illnesses.
| • | In 2019, we launchedEVENITY®(1), an innovative product for the |
We made investments in next-generation biomanufacturing that buildadvanced our early pipeline and executed key clinical studies and regulatory filings.
We delivered on our existing industry leadershipannual priorities.
| • | We executed critical launches and long-term commercial objectives. Our revenues benefited from volume-driven growth from a number of innovative medicines, includingProlia®,Aimovig®(3), andRepatha®. |
We achieved our productivity objectives. We realized gross savings of approximately $286 million as a result of our focus on productivity to support continued reinvestment opportunities (such as our early pipeline).
We continued to deliver on our other strategic priorities.
We launched our first product in biologic manufacturing. ThisChina and made significant progress in expanding our presence in China and Japan, the second and third largest pharmaceutical markets, respectively.
We successfully operated our next-generation biomanufacturing dramatically reducesmanufacturing facility in Singapore and continued to work on the scaleconstruction of our U.S facility in Rhode Island.
Positive 2019 Say on Pay Vote Outcome and costs of making biologics while maintaining a reliable, high-quality, compliant supply of medicines. Engagement With Our Stockholders
In 2017,2019, we received approximately 93% stockholder support on 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 directlysay on pay advisory vote. In addition to our stock performanceoutreach by our executives and aligns with the interestsour Investor Relations department to our investors owning approximately 58% of our stockholders.outstanding shares, since our 2019 annual meeting of stockholders, we have engaged in governance-focused outreach activities and discussions with stockholders comprising approximately 51% of our outstanding shares. The compensation-related feedback is
reviewed by our Compensation and Management Development Committee, or Compensation Committee. In 2019, the predominant feedback from investors with respect to our compensation and governance practices was that they are satisfied with our compensation program and governance practices. For more detail regarding our stockholder engagement, see page 46.
Long-Term Incentive Program
|
Equity
| % of Target
| ||||
Performance Units
|
|
50% |
|
93.4% | ||
(2015-2017 performance period)
| ||||||
| (1) | Jointly developed in collaboration with UCB. Developed in Japan by Amgen Astellas BioPharma K.K., our joint venture with Astellas Pharma Inc. |
| (2) | Jointly developed in collaboration with Allergan plc. |
Jointly developed in collaboration with Novartis AG. |
3036 ï 20182020 Proxy Statement
|
Item 2 — Advisory Vote to Approve Our Executive Compensation
|
|
|
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 of Directors, or 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 20192021 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 20182020 Proxy Statement 3137
|
Compensation Discussion and Analysis
|
|
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes our compensation strategy, philosophy, policies, programs and practices, or compensation program, for our Named Executive Officers, or NEOs, and the positions they held in 2017 below.
Table of Contents
This Compensation Discussion and Analysis describes our compensation strategy, philosophy, policies, programs, and practices for our Named Executive Officers, or NEOs, and the positions they held in 2019 below.
| Name | Title | |
Robert A. Bradway | Chairman of the Board, Chief Executive Officer and President | |
| Executive Vice President, Global Commercial Operations | |
|
| |
David W. Meline | Executive Vice President and Chief Financial Officer(1) | |
David M. Reese | Executive Vice President, Research and Development | |
Jonathan P. Graham |
| |
| (1) | Mr. Meline retired as Chief Financial Officer on December 31, 2019. Peter H. Griffith became Executive Vice President and Chief Financial Officer effective January 1, 2020. As he was not an executive officer in 2019, Mr. Griffith is not considered a Named Executive Officer in this proxy statement. |
3238 ï 20182020 Proxy Statement
|
Compensation Discussion and Analysis
|
|
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 activitiesSelect 2019 activity that align our NEO pay with performance and supportsupports the execution of theseour strategic priorities and delivery of performance are summarized below and discussed further in the following pages.
Strategic Priorities
Innovative Medicines |
| Transforming Amgen for the Future | ||||||
Capital Allocation and Investing for Long-Term Growth
|
| |||||||
|
Global Geographic Reach | Next-Generation Biomanufacturing |
| Description | Selected 2019 Activity | |||||||
Innovative Medicines | Innovation is at the core of our strategy. Our focus on developing innovative, “breakaway” medicines to address important unmet needs guides how we allocate resources across internal and external program possibilities. This results in a productive balance of internal development and external programs and collaborations reflected in our current product portfolio and pipeline.
| |||||||
•Launched EVENITY®(1) (osteoporosis) •Acquired Otezla® (apremilast) • Progressed innovative pipeline: –8 product teams formed(2) –7 first-in-human studies initiated –4 programs advanced throughearly-to-late stage portal(3) | ||||||||
Branded
| We believe our deep experience in biologics development and biotechnology manufacturing position us for leadership in the emerging biosimilars market. Our branded biosimilar medicines have the potential to expand access to important medicines for patients while delivering volume-based sales growth in our therapeutic areas. | • Launched our first biosimilars in the U.S.:
–KANJINTI®(4) (biosimilar trastuzumab (Herceptin®)) •AVSOLA™ (biosimilar infliximab (Remicade®))approved in U.S. •ABP 798(4) (biosimilar rituximab (Rituxan®))Biologics License Application submitted to U.S. Food and Drug Administration | ||||||
Transforming Amgen for the Future | In 2019, we began realizing the benefit of productivity initiatives embedded in our business. The savings from the productivity initiatives have contributed, and we expect will continue to | |||||||
development. |
development programs | |||||||
| ||||||||
| �� | Capital Allocation and Investing for Long-Term Growth | Our | ||||||
|
| |||||||
|
| |||||||
| • Invested $16B for long-term growth:
–20.5% equity stake in • Returned capital to stockholders: – $7.7B in – $3.5B of dividends paid ◾$1.45 per share per quarter,a 10% per share dividend increase over 2018 | |||||||
Global Geographic Reach | We are leveraging our global presence to deliver the potential of our products to patients globally. Amgen medicines are now available to patients in approximately 100 countries worldwide (up from 50 in 2011). | • Launched Repatha® in China • Launched EVENITY in Japan • Expanded oncology presence in China through strategic collaboration with BeiGene Ltd. | ||||||
| Next-Generation Biomanufacturing | Next-generation biomanufacturing plants have a smaller manufacturing footprint and reduce environmental impact, including reducing consumption of water and energy and lower levels of carbon emissions. Next-generation biomanufacturing plants can be built in less time than traditional plants and have lower operating costs. | • Singapore next-generation biomanufacturing facility operating and delivering cost and environmental efficiencies • Continued work on the construction of our first U.S. next-generation biomanufacturing plant | ||||||
| (1) |
|
| (2) | Formed when a molecule has been judged to have the potential to be safe and effective in humans. |
| (3) | The period covering Phase 2 through Phase 3. |
| (4) | Jointly developed in collaboration with Allergan plc. |
| (5) | Entered into strategic collaboration with BeiGene Ltd. in October 2019; closed in January 2020. |
ï 20182020 Proxy Statement 3339
Compensation Discussion and Analysis |
| Our Compensation and Governance Best Practices |
What we do
| ✓ | Majority of compensation is performance based: A substantial majority of NEO compensation is performance based andat-risk. |
| ✓ | Recoupment: Our incentive compensation plans contain recoupment provisions applicable to all staff members that expressly allow the Compensation and Management Development Committee, or Compensation Committee, to determine that annual cash incentive awards are not earned fully or in part where such employee has engaged in misconduct that causes serious financial or reputational damage to the Company. |
| ✓ | Clawback policy: Our Board of Directors, or Board, is required to consider the recapture of past cash or long-term incentive, 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. |
| ✓ | Robust stock ownership and retention guidelines: We have a six times base salary ownership requirement for our Chief Executive Officer, or CEO. Our Executive Vice Presidents and Senior Vice Presidents have three times and two times base salary ownership requirements, respectively. Officers are required to hold shares of our Common Stock acquired through the vesting of restricted stock units, or RSUs, the payout of performance units, or the exercise of stock options until they have reached the required stock ownership level. Compliance with this policy is assessed annually and all executive officers, including our NEOs, who were expected to meet such guidelines by December 31, 2019, were in compliance. |
| ✓ | 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. |
| ✓ | Performance-based equity: Our LTI equity award grants are primarily (80%) performance-based, with 50% in the form of three-year performance units. |
| ✓ | Independent compensation consultant: The Compensation Committee retained and sought advice from Frederic W. Cook & Co., or FW Cook, to assist the Compensation Committee in its review and determination of executive compensation. |
| ✓ | Amgen Values:The Amgen Values overlay our Company performance goals and the Compensation Committee assesses each NEO’s annual compensation, including the annual incentive award, based on compliance with these internal standards. |
What we don’t do
⨯ | No hedging or pledging: With respect to our Common Stock, all of our staff members and Board members are prohibited from engaging in short sales, purchasing or pledging our Common Stock on margin, or entering into any hedging, derivative, or similar transactions. | |
⨯ | Nore-pricing or backdating: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 relocation expenses on behalf of newly hired and current executives who agree to relocate to work on the Company’s behalf. | |
⨯ | No single-trigger and nogross-ups 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. | |
⨯ | No excessive perks:Our perquisites are limited to those with a clear business-related rationale. | |
⨯ | No employment agreements: We do not have employment contracts or guaranteed bonuses, other than in countries where they are required by law. | |
⨯ | No dividends paid on unvested equity: Dividends equivalents accrue on our performance units and RSUs, but are paid out in shares of our Common Stock only when and to the extent the underlying award is earned and vested. Stock options do not have dividend equivalent rights. | |
⨯ | No defined benefit pension or supplemental executive retirement plan (SERP) benefits or “above market” interest on deferred compensation. |
40 ï 2020 Proxy Statement
|
Compensation Discussion and Analysis
|
|
Aligning Pay With Performance and Execution of Our Strategic Priorities
A significantsubstantial majority of each NEO’s compensation is dependent“at risk” and earned based on our performance and execution of our strategic priorities.strategy and performance. Our annual cash incentive and long-term equity incentive programs together promote focus on bothactivities supporting the execution of our strategic priorities as well as near- and long-term stockholder value creation by providingcreation. This incentive compensation that is earned based on our financial, operating, and stock price performance and is “at risk.” We have been pleased with the level of stockholder support we have received on our say on pay advisory vote over time, receiving in excess of 95% support over the last three years (2015-2017).performance. In 2017,2019, we made significant progress on our 2017 performance goals and advancing our strategic priorities, which facilitatefacilitating execution of our strategy.strategy and mission to serve patients.
We delivered a one year total shareholder return, or TSR, of 28%. As depicted below, we outperformed our peer group average TSR for each of theone-, three-, and five-year periods, and strongly outperformed the Standard and Poor’s 500 Index, or S&P 500, TSR for the three-year period.
Annual Cash Incentive Program Results
| ||||
| Goal | Weighting
|
% of Target | ||||
Financial Performance
| ||||||
Revenues
|
| 30%
|
| 110.6%
| ||
Non-GAAP Net Income(1)
|
| 30%
|
| 116.8%
| ||
Progress Innovative Pipeline
| ||||||
Execute Key Clinical Studies and Regulatory Filings
|
| 20%
|
| 123.0%
| ||
Advance Early Pipeline
|
| 5%
|
| 201.7%
| ||
Deliver Annual Priorities
| ||||||
Execute Critical Launches and Long-Term Commercial Objectives
|
| 10%
|
| 76.0%
| ||
Realize Functional Transformation Objectives
|
| 5%
|
| 90.4%
| ||
Composite Score
|
| Achieved 115.0%
| ||||
1. Our financial performance was strong.strong cash flows and balance sheet allowed continued investment for long-term growth in 2019 through internal research and development and capital expenditures, and external business development transactions (including the acquisition of Otezla and our equity stake in BeiGene), while simultaneously providing substantial returns to stockholders.
• |
|
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.
2. We progressed our pipeline.
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.
Bone Health Therapeutic Area
|
|
|
|
|
|
INNOVATIVE MEDICINES
34 ï 2018 Proxy Statement
|
Cardiovascular Therapeutic Area
Cardiovascular disease is the most costly disease for society today. In the absence of new therapies to reduce the risk of cardiovascular events for the millions of high risk patients in the U.S. and around the world, the burden of this disease is set to rapidly rise.
ForRepatha® (our medicine for certain patients who are unable to get their low-density lipoprotein, or LDL, cholesterol (bad cholesterol) under control):
|
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
|
|
|
|
|
|
|
|
|
|
ï 2018 Proxy Statement 35
|
| • |
|
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 clinicalIn 2019, whileinvesting $4.1 billion in research and development program has delivered results,$618 million in supportcapital expenditures, and$13.6 billion in acquisitions, we also allocated$11.2 billion of KYPROLIS as a backbone therapycapital for multiple myeloma.return to our stockholders ($7.7 billion in stock repurchases and $3.5 billion of dividends)
|
|
|
|
|
We launchedincreased our quarterly dividend per share 10% over 2018 (to $1.45 per share per quarter for 2019). Our dividend per share increased 418% since 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 inception 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 reinvesteddividend in product launches, clinical programs and external business development. Consequently, net savings in the same period have not been significant.2011.
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 20182020 Proxy Statement 3741
|
Compensation Discussion and Analysis
|
|
Earned amounts from our 2019 annual cash incentive compensation program are tied directly to our performance based onPerformance Underpre-established financial and operating performance goals designed to drive execution of our strategic priorities.
Goal
|
| Weighting
|
|
% of Target Earned
| ||
1. Financial Performance | ||||||
Revenues Target $22.1B Results $23.4B
|
|
30%
|
|
177%
| ||
Non-GAAP Net Income(1) Target $8.2B Results $9.0B
|
|
30%
|
|
168%
| ||
2. Progress Innovative Pipeline
| ||||||
Advance Early Pipeline
|
|
10% |
|
100% | ||
Execute Key Clinical Studies and Regulatory Filings
|
|
20%
|
|
80%
| ||
3. Deliver Annual Priorities
| ||||||
Execute Critical Launches and Long-Term Commercial Objectives
|
|
5%
|
|
77%
| ||
Achieve Productivity Objectives
|
|
5%
|
|
107%
| ||
Final Score
|
|
Achieved 138.9%
| ||||
1. Our financial performance was strong in a year of transition.
In March 2019, when we established our 2019 performance goals, we expected to drive volume growth in our newer products, but we also anticipated substantial competition against our legacy products due to patent expiries that would more than offset newer product sales growth. Our early 2019 investor guidance also reflected this anticipated competitive intensity.
In 2019, we grew product volumes by 3% globally. And, despite the anticipated competitive headwinds, we outperformed our budgeted financial targets and exceeded our original guidance as we retained more of our legacy product sales than expected, drove our newer product volume growth, and added Otezla to our product portfolio.
Our 2019 revenues benefited from volume-driven growth from a number of our newer innovative medicines that grew units double digit or better, including Repatha®, Parsabiv®, BLINCYTO, Aimovig®(2), and Prolia®. Overall 2019 revenues decreased 2% to $23.4 billion reflecting
the impact of biosimilar and generic competition against our mature products. Lower product sales were affected by lower net selling price, offset partially by higher unit demand.
Ournon-GAAP net income performance also benefited from our success in retaining more of our mature product sales, driving unit growth of our newer products, and the favorable productivity savings resulting from our strong performance of our “Achieve Productivity Objectives” annual goal discussed further below.
2. We progressed our pipeline(3).
2019 Pipeline Launches.
| • We launched EVENITY, an innovative product for the treatment of osteoporosis in postmenopausal women at high risk of fracture, in the U.S., Canada, Japan, South Korea, and Australia(4). | |
| • We also launched two oncology biosimilars in the U.S.: -MVASI(biosimilar bevacizumab (Avastin®)), the first oncology therapeutic biosimilar approved by the U.S. Food and Drug Administration, or FDA, was approved for all approved indications of Avastin. | |
-KANJINTI (biosimilar trastuzumab (Herceptin®)) was approved for all approved indications of Herceptin. |
In 2019, we advanced our early pipeline and executed key clinical studies and regulatory filings.
We generated eight new product teams (formed when a molecule has been judged to have the potential to be safe and effective in humans).
We initiated sevenfirst-in-human studies.
We advanced four programs through theearly-to-late stage portal (the period covering Phase 2 through Phase 3).
Oncology:
We advanced ourearly oncology programs with approximately 17 individual therapeutics in development.Early data readouts from this pipeline have been promising, including forAMG 510
| (1) | Non-Generally Accepted Accounting Principles, ornon-GAAP, net income for purposes of the 2019 Company performance goals of our annual cash incentive award program is reported and reconciled inAppendix B. |
| (2) | Jointly developed in collaboration with Novartis AG. |
| (3) | For complete information regarding our significant pipeline advancements, please refer to ourForm 10-K for the year ended December 31, 2019. |
| (4) | EVENITY is also approved in Japan and South Korea for men at high risk for fracture and in Australia as a treatment to increase bone mass in men with osteoporosis at high risk of fracture. |
42 ï 2020 Proxy Statement
Compensation Discussion and Analysis |
(our KRASG12C small molecule inhibitor being investigated as a treatment for a variety of solid tumors): |
| - | The FDA grantedOrphan Drug Designation for previously treated metastaticnon-small cell lung cancer, or NSCLC, and colorectal cancer with KRASG12C mutation andFast Track Designation for previously treated metastatic NSCLC with KRASG12C mutation. |
| - | We enrolled a potentially pivotal Phase 2 monotherapy study in advanced NSCLC, and began enrollment of colorectal cancer patients in a Phase 2 monotherapy study. |
| • | We submitted an FDA Biologics License Application forABP 798 (biosimilar rituximab (Rituxan®)). |
In ourmarketed oncology therapeutics, we invested in studies that expanded treatment options for patients:
| - | For KYPROLIS (our medicine for patients with relapsed or refractory multiple myeloma), the Phase 3 CANDOR(1)study (evaluating KYPROLIS in combination with dexamethasone and DARZALEX® compared to KYPROLIS and dexamethasone alone) met its primary endpoint of progression-free survival. |
| - | Nplate®(our medicine to treat low blood platelet count) was approved for earlier use in adults with immune thrombocytopenia; and |
| - | BLINCYTO (our medicine for patients with acute lymphoblastic leukemia) was approved for patients with Philadelphia chromosome negative minimal residual disease-positiveB-cell precursor acute lymphoblastic leukemia in the European Union. |
Cardiovascular Disease:
We launchedRepatha® in China as the first PCSK9 inhibitor for adults with established atherosclerotic cardiovascular disease to reduce the risk of myocardial infarction, stroke, and coronary revascularization.
Inflammatory Disease:
| • | Received aBreakthrough Therapy designation forTezepelumab(2) (our medicine in Phase 3 development for asthma) in patients with severe asthma without an eosinophilic phenotype. |
| • | The FDA approvedAVSOLA (biosimilar infliximab (Remicade®)) for all approved indications of Remicade. |
Bone Health:
Received approval forEVENITY in the European Union for the treatment of severe osteoporosis in postmenopausal women at high risk of fracture.
3. We delivered on our annual priorities.
We executed on our critical launches and long-term commercial objectives.
As discussed above, our revenues benefited from volume-driven growth from a number of our newer innovative medicines, including those medicines that were the focus of our annual priorities to execute critical launches:
| • | Prolia(our medicine for patients with osteoporosis) worldwide sales increased 17% in 2019. |
Aimovigworldwide sales increased 157% in 2019.
Repatha worldwide sales increased 20% in 2019. Given the gravity of the impact of cardiovascular disease, we took significant actions to address access challenges for patients who would benefit from Repatha, including:
| - | Efforts to Improve Access.To address access challenges, we have offered payers significant rebates on Repatha in exchange for improved patient access. |
| - | Action to Increase Affordability.In the U.S. we established a 60% lower list price to address affordability for patients, particularly those on Medicare. Beginning January 2020, Repatha is available exclusively at this 60% lower list price. |
We achieved our productivity objectives.
We began realizing the benefit of the productivity initiatives embedded in our business. In 2019, as a result of our focus on productivity to support continued reinvestment opportunities, we achieved gross savings of approximately $286 million. Part of these savings have been invested into our research and development activities. We expect savings from these productivity initiatives will continue to contribute to funding strategic growth investments, such as investment in our early oncology programs.
We delivered on additional strategic priorities.
In 2019, in addition to launching Repatha as our first product in China, we made significant progress in expanding our presence in China and Japan, the second and third largest pharmaceutical markets, respectively.
| (1) | Carfilzomib, Daratumumab and Dexamethasone for Patients With Relapsed and/or Refractory Multiple Myeloma. |
| (2) | Jointly developed in collaboration with AstraZeneca plc. |
ï 2020 Proxy Statement 43
Compensation Discussion and Analysis |
We entered into a strategic collaboration with BeiGene Ltd. to collaborate on the commercialization of XGEVA, KYPROLIS, and BLINCYTO in China and the global development and commercialization of 20 Amgen oncology pipeline products.
With EVENITY, we realized our third product approval in three years in Japan through our Amgen Astellas BioPharma K.K. joint venture.
We executed our first biosimilar launch in the Asia-Pacific region with the launch of MVASI in Thailand. This was also the fourth biosimilar launch for Amgen globally.
We acquired Otezla, with approvals around the world, providing an attractive international growth opportunity.
In 2019, we successfully operated our next-generation manufacturing facility in Singapore and continued to work on the construction of our U.S. facility in Rhode Island.
• | Rhode Island Facility.In 2019, to support expected product volume growth, we continued construction on our first U.S. next-generation biomanufacturing plant in Rhode Island. This new plant will be the first of its kind in the U.S., is anticipated to create a substantial number of additional highly skilled manufacturing positions in the U.S., and will employ our next-generation biomanufacturing capabilities. |
Performance Under Our Long-Term Incentive Program
Our long-term incentive, orPay delivery from our LTI equity award compensation plan is tied directly to our stock performance and aligns with the interests oflong-term value creation for our stockholders.
80% of our annual LTI equity award grants are performance-based, thus aligning compensation with long-term value creation for our
stockholders. OurThree-year performance units forcomprise 50% of our annual LTI equity award grants. The goal design and all measurement targets are established at the beginning of the three-year performance period ending January 30, 2018and, for the 2017-2019 performance period, were earned based on our relative total shareholderperformance as measured against thesepre-established annual targets for the three equally weightednon-GAAP operating measures of earnings per share, or EPS, growth, operating margin, and operating expense (in 2017 and 2018) and EPS growth, operating margin, and return on invested capital, or TSR. Our beginning stock priceROIC (for 2019). Thesenon-GAAP operating measures were chosen to drive performance in alignment with, and ending stock price for purposesfocus our executives on, our 2014-2018 investor commitments, which included EPS growth, operating margin improvement, and operating expense reduction through significant transformation improvement efforts. For the third year of the 2015-20172017-2019 performance period are each(2019), the average daily closing priceCompensation Committee replacednon-GAAP operating expense withnon-GAAP ROIC in response to stockholder feedback, as well as our goal of a share of our Common Stock fordelivering an efficient disciplined business model beyond 2018. At the beginning and last twenty trading daysend of the 2017-2019 performance period, ($154.49 and $186.61, respectively), representingour performance under the three annual operating measure percentages was averaged, resulting in a total operating measures score of 103.7% driven by our strongnon-GAAP EPS growth over the period.
The total operating measures score was then increased or decreased based on our relative TSR performance as compared to the companies in the S&P 500 over the three-year performance period. Our strong TSR of 30%.
Payout under our LTI performance award program for our 2015-2017 performance period at 93.4% reflects our three-year TSRperformance at the 46.7ranking (77.8th percentilepercentile) relative to the TSRs of the companies in the Standard & Poor’s 500 Index, or S&P 500, for this performance period.
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 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 three-year performance period that commences withresulted in a TSR modifier for 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 the2017-2019 performance period are established atof +50 percentage points and a payout of 153.7% of performance units granted. A detailed depiction of this calculation is on the commencement of the three-year performance period.next page.
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2017-2019 Performance Period Goal Design and Award Calculation
All operating measures and goals were established at the
beginning of the three-year performance period
2019 Operating Measures and Performance
| Non-GAAP(1) Operating Measures | Minimum (50%) | Target (100%) | Intermediate (125%) | Maximum (150%) | 2019 Performance | |||||||||||||||||||||||
| EPS Growth ($) | 136.8% $14.75 | ||||||||||||||||||||||||||
£$11.60 | $12.75 | $14.35 | ³$15.20 | |||||||||||||||||||||||||
Operating Margin (%) | 75.3% 50.0% | |||||||||||||||||||||||||||
£48% | 52% | 54% | ³58% | |||||||||||||||||||||||||
ROIC (%) | 66.6% 30.7% | |||||||||||||||||||||||||||
£30% | 32% | – | ³36% | |||||||||||||||||||||||||
| 92.9% | |||||||||||||||||||||||||||
2017-2019 Operating Measures Score (Operating Measure Percentages 50 – 150% with linear
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| Operating Measure Percentages are Equally Weighted for Each of the Three Years | ||||||||
| Non-GAAP(1) Operating Measures | 2017(2) | 2018(2) | 2019 | 2017-2019 Average Operating Measures | ||||
EPS Growth ($) | 133.8% ($12.74) | 142.9% ($14.37) | 136.8% ($14.75) | 137.8% | ||||
Operating Margin (%) | 114.5% (54.2%) | 106.6% (52.5%) | 75.3% (50.0%) | 98.8% | ||||
Operating Expense Years 1 & 2 (in billions) | 107.0% ($11.04) | 50.0% ($11.91) | 74.5% | |||||
ROIC (%) Year 3 | 66.6% (30.7%) | |||||||
118.4%
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2017-2019 S&P 500 Relative TSR(3) Modifier | ||||||||||
| Payout for Performance Relative to S&P 500 TSR Percentage | ||||||||||
Amgen TSR³ 75th percentile = 50% (Maximum) | Actual Amgen percentile ranking 77.8th percentile resulting in a +50% score | |||||||||
Amgen TSR = 50th percentile | ||||||||||
Amgen TSR£ 25th percentile =-50% (Minimum) | ||||||||||
 | If Amgen’s TSR is less than 0, the relative TSR modifier can be no greater than 0% (target). |
| (1) | The operating measures of the 2017-2019 performance units were based onNon-GAAP financial results for 2017, 2018, and 2019 as reported and reconciled inAppendix B, except that operating measures were further adjusted for the impacts of Hurricane Maria as prescribed by the terms of the 2017-2019 performance goals document. For this purpose, operating expense was reduced by $147 million ($0.16 in EPS) for 2017 and increased by $21 million ($0.03 in EPS) for 2018, and increased by $49 million ($0.07 in EPS) for 2019. |
| (2) | Our targets for our 2017 and 2018 performance were disclosed under the 2017-2019 performance goals in our 2018 and 2019 proxy statement, respectively, filed with the Securities and Exchange Commission on April 11, 2018 and April 8, 2019, respectively. |
| (3) | TSR Measurement Points = Average daily closing price of stock for the first 20 trading days beginning on the grant date (May 1, 2017) and the last 20 trading days of the performance period (December 31, 2019). |
ï 2020 Proxy Statement 45
Compensation Discussion and Analysis |
Positive 20172019 Say on Pay Vote Outcome and Engagement With Our Stockholders
In 2017,2019, we received approximately 95%93% stockholder support on our say on pay advisory vote. We have engaged consistently in broad direct governance-focused stockholder outreach over the past several years.since 2011. Since our 20172019 annual meeting of stockholders, in addition to our outreach by our executives and our Investor Relations department to our investors owning approximately 58% of our outstanding shares, we have engaged in governance-focused outreach activities and discussions with stockholders owning approximately 52%51% of our outstanding shares. These discussions have been valuable and informative and we will
will continue to engage with our stockholders to further enhance our understanding of the perspectives of our investors.
In 2017,2019, the predominant feedback from investors with respect to our compensation and governance practices was that they are satisfied with our compensation program and governance practices. We are pleased with our say on pay results and stockholder feedback, and will continue to engage with our stockholders to be sure we understand and address any concerns.
Long-Term Incentive Equity Award Design in 2019
Annual Meeting of Stockholders Executive compensation website available year-round that invites stockholders to provide feedback directly to
In December 2018 and March 2019, the Compensation Committee www.amgen.com/executivecompensation Post-Proxy Filingevaluated and established a performance award goal design for Annual Meeting Post-Annual Meeting Targeted outreachthe 2019-2021 performance period (January 1, 2019 to investors requestingfollow-uppre-proxy filing or relatedDecember 31, 2021) with input from management and FW Cook, to key issues •Discuss vote outcomes •Consider existing governancetake into account discussions with our stockholders, and compensation practices in light of feedback Year-Round Stockholder Outreachto continue to drive operating performance and EngagementPre-Proxy Filing for Annual Meeting •Compensation-related feedback reviewed byfinancial discipline. For the 2019-2021 performance period, the Compensation Committee •Governance-related feedback reviewed by Governanceretained the same general performance award goal design as for the 2018-2020 performance period, including the requirement that the TSR modifier cannot exceed target (100%) regardless of our relative TSR performance if our absolute TSR over the performance period is less than zero. This feature provides a greater tie to stockholders’ interests and investment
experience. The Compensation Committee •Insights from investors providedmoved to using two operating measures, retaining the full Board •Appropriate committeestwonon-GAAP operating measures of EPS growth and Board (as necessary) evaluate potential changesROIC used for the last two years of the 2018-2020 performance period for the entire 2019-2021 performance period to continue to incentivize focus on delivering stockholder value and to emphasize our goal of remaining disciplined in lightour management of stockholder feedbackthe business and use of capital, respectively. These operating measures are weighted equally(one-half per measure). A depiction of the 2019-2021 performance period goal design can be found in “Performance Award Goal Design for the 2019-2021 Performance Period—2019-2021 Performance Period Goal Design and Award Calculation.”
3846 ï 20182020 Proxy Statement
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Compensation Discussion and Analysis
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LTI Equity Award Design Changes in 2017Our 2019 Compensation Program Highlights and Objectives
In 2017, the Compensation and Management Development Committee, or Compensation Committee, constructed the 2017-2019 performance period award goal design to take into account feedback from dialogue with our stockholders and was designed to drive operating performance and increase performance hurdles. The 2017-2019 performance period performance award goal design mirrors much of the 2016-2018 performance period goal design. While retaining most of the elements of the 2016-2018 performance period goal design, the Compensation Committeereplacednon-GAAP operating expense with non-GAAP return on invested capital (or
Total Target Direct Compensation Focuses on “At Risk” Compensation (91% for our CEO and 82% for our other NEOs) |
ROIC)for the third year of this performance period. The other two financial measures that apply for the full three-year period are annualnon-GAAP earnings per share, or EPS, andnon-GAAP operating margin. The Compensation Committee’s replacement ofnon-GAAP operating expense withnon-GAAP ROIC as one of the three financial performance measures 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.
ï 20182020 Proxy Statement 3947
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Compensation Discussion and Analysis
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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
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LTI Equity Awards (“At Risk”)
Performance Units (50%). The Compensation Committee establishes the performance award goal design at the commencement of each three-year period of the performance award program. There is no guarantee of any value realized from the grants as they are earned only if specific long-term performance goals are achieved.
Stock Options (30%). Aligned with stockholder interests as they only have value if the Company’s stock price increases after grant.
Restricted Stock Units, or RSUs (20%). Designed to encourage retention and long-term value creation.
Stock options and RSUs vest in three approximately equal installments on the second, third and fourth anniversaries of the grant date. The delay in the commencement of vesting further emphasizes the long-term performance focus of our LTI equity award program and enhances retention.
Performance Units Earned for the 2015-2017 Performance Period
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Annual Cash Incentive Awards (“At Risk” and Designed to Drive Execution of Our Strategic Priorities)
Our Compensation Committee annually approves Company performance goals that are designed to focus our staff on delivering on our financial performance, operational objectives and specific strategic priorities to drive annual performance and position us to execute on our strategy in the near- and longer-term. Our Executive Incentive Plan, or EIP, establishes a maximum award possible for each participant and annual cash incentive awards are generally made to our NEOs under the EIP based on the Company’s performance against thepre-established Company performance goals.
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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.
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ï 2018 Proxy Statement41
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42 ï 2018 Proxy Statement
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How Compensation Decisions Are Made For Our Named Executive Officers
Roles and Responsibilities
Compensation Committee Composed solely of independent directors and reports to the Board
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• 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 of our CEO and other members of Senior Management annually. • Exercises the sole authority to select, retain, replace, and/or obtain advice from compensation consultants, legal counsel, and other outside advisors and assesses the independence of each such advisor, taking into consideration the factors set forth in the Securities and Exchange Commission, or SEC, rules and The NASDAQ Stock Market listing standards.
• Oversees the Board’s relationship with and response to stockholders on executive compensation matters and the Compensation Discussion and Analysis.
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Consultant to the Compensation Committee Frederic W. Cook & Co., Inc., Independent consultant retained directly by the Compensation Committee
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• 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 for our NEO compensation.
• 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 compensation program designs and practices to support our business strategy and objectives.
• Coordinates and reviews the appropriateness of market data compiled by management.
• Works with management to assess the potential risks arising from our compensation policies and practices. |
CEO Assisted by the |
• Conducts performance reviews of the other NEOs and makes recommendations to the Compensation Committee with respect to compensation of Senior Management other than himself.
• Provides recommendations on the development of and succession planning for the members of Senior Management other than himself. |
Annual performance reviews for each staff member (including NEOs) include an assessment of delivery of performance in alignment with our Amgen Values, a set of principles established in 1996 that guide the way we conduct business: | ||||||
| Amgen Values: | ||||||
• Be science-based; | • Trust and respect each other; | |||||
• Compete intensely and win; | • Ensure quality; | |||||
• Create value for patients, staff, and stockholders; | • Work in teams; and | |||||
• Be ethical; | • Collaborate, communicate, and be accountable. | |||||
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
48 ï 20182020 Proxy Statement 43
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Compensation Discussion and Analysis
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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 FW Cook, & Co., an independent consultant. George B. Paulin, the Chairman of FW Cook, & Co., worked directly with the Compensation Committee in the roles and undertaking the responsibilities previously described in “How Compensation Decisions Are Made For Our Named Executive Officers” and specifically in 20172019 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 2017,2019, the Compensation Committee, as in past years, had responsibility for engaging FW Cook & Co. and directed the nature of the activity and interchange of data between FW Cook & Co. and management. In addition, during 2017, the Governance Committee engagedThe Company did not engage FW Cook & Co. to provide advice regarding director compensation. Cook & Co. reported directlyfor any other services to the Governance Committee in its evaluation of director compensation.Company.
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 treatmentsmedicines 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, specific scientific expertise to oversee research and development activities and the complex manufacturing requirements for biologic products. Further, the Compensation Committee believes that these very particular 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.
On an annual basis, FW Cook & Co. reviews our peer group with the Compensation Committee to determine whether itthe peer group remains appropriate. In 2019, FW Cook recommended continuing the objective criteria previously established and making no changes to the peer group. Based, in part, on these recommendations from FW 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 current peer group remained appropriate and continued to meet the criteria.appropriate.
44 ï 20182020 Proxy Statement 49
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Compensation Discussion and Analysis
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How We Establish Our Peer Group
Biotechnology and pharmaceutical companies with which we compete for executive talent. | ||||
Objective Criteria Considered
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(Companies in blue also list Amgen as a peer)
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• GICS codes of biotechnology (352010) and pharmaceuticals (352020);
• 12-month average market capitalization between 0.25 and 4.0x that of Amgen’s average market capitalization for the same period(1);
• Trailing four-quarter revenues between 0.25 and 4.0x that of Amgen’s revenues(1);
• Non-U.S. peers limited to those commonly identified as a “peer of peers”;
• Competitors for executive talent;
• Companies of comparable scope and complexity;
• Competitors for equity investor capital;
• Companies that identify us as their direct peer; and
• Companies with similar pay practices. | • AbbVie Inc.
• Allergan plc
• AstraZeneca plc
• Biogen Inc.
• Bristol-Myers Squibb Company
• Celgene Corporation
• Eli Lilly and Company
• Gilead Sciences, Inc. • GlaxoSmithKline plc
• Johnson & Johnson
• Merck & Co., Inc.
• Novartis AG
• Pfizer Inc.
• Regeneron Pharmaceuticals, Inc. • Roche Holding AG
• Sanofi S.A. | |||
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Amgen | $122 billion |
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Relative Peer Group Position | 3rd Quartile (above median) |
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| (a) | Represents the12-month average market capitalization as of May 31, 2019. |
| (b) | Represents revenues for the trailing four quarters ended March 31, 2019. Revenues for GlaxoSmithKline plc, Roche Holding AG, and Sanofi S.A. were converted into U.S. dollars using |
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
ï 2018 Proxy Statement 45
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Peer Group Data Sources
Our primary data sources for evaluating all elements of compensation forourCEOisdatacompiledby FW Cook &Co.fromSECfilingsofourpeer group, including 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).group. 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. The Executive Vice President, Global Commercial Operations role is well-matched in the PHRA Survey. However, the role
is not consistently well-represented in the peer group. Solely forgroup proxy statements and, as a result, to reflect the determinationscope and criticality of LTI equity awards, we also provide data from the Cook & Co. Survey of Long-Term Incentives (Cook & Co. Survey).role, is instead benchmarked to the second highest paid named executive officers in such filings. 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
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• 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 except for the Executive Vice President, Global Commercial Operations role as described above. |
50 ï 2020 Proxy Statement
Compensation Discussion and Analysis |
Elements of Compensation and Specific Compensation Decisions
Described below are our three primary elements of executive compensation in order of magnitude: LTI equity awards; annual cash incentive awards; and base salaries.
Long-Term Incentive Equity Awards
Our compensation program aims to achieve the appropriate balance of compensation elements relative to the responsibilities of our staff members, with the result that the largest proportion of compensation for our CEO and the other NEOs is in the form of LTI equity awards that are risk-based and closely aligned with the creation of long-term stockholder value. Equity-basedFor 2019, equity-based compensation represents 75%78% of our CEO’s target compensation and 64%65% of target compensation for our
other NEOs.NEOs, and 50% of annual equity awards are in the form of long-term performance units. In addition, while being mindful of stockholder dilution (see below), we also grant LTI equity awards each year to nearly all of our staff members worldwide to increase individualstaff awareness of how our performance impacts stockholder value. We believe that our capacity to grantpractice of granting equity-based compensation broadly has been a significant factor in achievingadvancing our strategic priorities by aligning all of our staff members’ (including our NEOs’) interests with those of our stockholders, rewarding execution of our strategy, and stock price appreciation, aligning our NEOs’ and staff members’ interests with stockholders and fostering long-term focus, and enhancing retention.
46 ï 2018 Proxy Statement
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Company ContinuesWe Continue to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards – Awards—Monitoring Dilution and Annual Equity Usage
Our compensation philosophy, practices and approach balanceCompensation Committee balances the use of equity to align employeesstaff members with our stockholders while being mindfulstriving to limit stockholder dilution to that amount which investors would expect to experience with members of the level of dilution that our stockholders experience.peer group. Annually, LTI equity award grant guidelines are established for each Company job level within the Company targeting the 50th percentile of our peer group for levels for which equity data is broadly available. Foravailable, setting an annual LTI equity award budget at approximately the 50th percentile of our peer group, and reviewing the Shareholder Value Transfer (SVT) associated with the proposed aggregate LTI equity award grants to ensure that our SVT is aligned with our peer group practices. (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) As illustrated, 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 CompositionMix
As part of its annual evaluation of our LTI equity award practices, the Compensation Committee reviewed our LTI equity award mix with FW Cook & Co. and maintainedelected to maintain the currentprevious year’s LTI equity award allocation.allocation for 2019 given itspay-for-performance alignment. As such, 80% of our annual equity award value continued to be delivered as performance-based LTI equity awards consisting of performance units (50%) and stock options (30%). Time-vested RSUs, designed to foster retention, continued to comprise the remaining 20% of equity value. Both our stock options and RSUs 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). The delay in the commencement of vesting furthers the longer-term performance emphasis of our LTI equity award program and enhances retention.
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 equal annual installments on the second, third and fourth anniversaries of the grant date. The delay in the commencement of 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
|
Value of Long-Term Incentive Equity Awards
Granted to Named Executive Officers in 2017
2017 Annual Long-Term Incentive Equity Awards
Based on a review of Company and executive performance and market data, the Compensation Committee determined to grant the following LTI equity awards to our CEO and the other NEOs in March 2017, with an effective grant date of May 1, 2017, the third 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
| )
| ||||||
|
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 for Executive Vice President roles as Market Median LTI equity award grant values had increased for these roles among our peer group. 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 higher LTI equity award Market Median value for the Executive Vice President, Research and
Development role. As a result, the Compensation Committee approved a higher grant value for Dr. Harper that was matched to the Market Median for his role of Executive Vice President, Research and Development. The Compensation Committee determined 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 for 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 Market Median for his position.
Performance Units (50% of LTI Equity Awards)
Performance units are rights to earn shares of our Common Stock, based onpre-established performance goals achieved over a performance period of generally three years. The number of performance units earned is determined by our performance as measured against thepre-established performance goals at the end of the related performance period. Each performance unit earned entitles the participant to one share of our Common Stock. Given the design of our performance award program, there is no guarantee of any value realized from grants of performance units.
48 ï 2018 Proxy Statement
|
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)
|
|
|
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
|
Performance Units Granted in 2016 for the 2016–2018 Performance Period
The Compensation Committee approved the 2016-2018 performance period performance award goal design that contained relative TSR as a modifier and had the following annual operating performance measures to drive operational performance and increase performance hurdles:
|
|
|
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 50% to 150% for 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 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 in which we perform better than the S&P 500 for the period but investors do not recognize stock price growth.
The 2016-2018 performance awards have a performance period that commences on January 1, 2016 and ends on December 31, 2018.
|
50 ï 2018 Proxy Statement
|
2016-2018 Performance Period Performance Award Goal Calculation
All operating goals (for each year) are established at the commencement of the three-year performance period.
|
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 PeriodNon-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 $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 $10.7
ï 20182020 Proxy Statement 51
|
Compensation Discussion and Analysis
|
|
Performance Award Goal Design—Performance Units Granted in 2017 for the 2017–Value of 2019 Performance PeriodAnnual Long-Term Incentive Equity Awards
To ensure that theBased on a review of Company and executive performance award program continues to strongly align with the interests of our stockholders and motivates management to create long-term value,market data, the Compensation Committee regularly reviewsdetermined to grant the following annual LTI equity award grant values to our CEO and considers whether to update the performance award goal designother NEOs in March 2019, with input from management and Cook & Co. an effective grant date of May 3, 2019, the third business day after the announcement of our first quarter 2019 earnings results. (For more information regarding the determination of the Market Median, see “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources” previously discussed.)
| Named Executive Officer | Performance Units(1) ($) | Stock Options ($) | Restricted Stock Units ($) | Total Equity Value Granted ($) | 2018 Market Median ($) | Difference vs. Market Median Over/ (Under) (%) | ||||||||||||||||||
Robert A. Bradway | 7,000,000 | 4,200,000 | 2,800,000 | 14,000,000 | 11,209,000 | 24.9 | ||||||||||||||||||
Murdo Gordon | 2,000,000 | 1,200,000 | 800,000 | 4,000,000 | 3,918,612 | 2.1 | ||||||||||||||||||
David W. Meline | 2,000,000 | 1,200,000 | 800,000 | 4,000,000 | 3,399,988 | 17.6 | ||||||||||||||||||
David M. Reese | 2,000,000 | 1,200,000 | 800,000 | 4,000,000 | 4,010,465 | (0.3) | ||||||||||||||||||
Jonathan P. Graham(2)
|
| 1,400,000
|
|
| 840,000
|
|
| 560,000
|
|
| 2,800,000
|
|
| 2,594,725
|
|
| 7.9
|
| ||||||
| (1) | The 2019-2021 performance period runs from January 1, 2019 through December 31, 2021. |
| (2) | Mr. Graham was promoted to Executive Vice President, General Counsel and Secretary, effective October 22, 2019. Prior to that date, and at the time that the 2019 annual LTI equity awards were granted, Mr. Graham served as Senior Vice President, General Counsel and Secretary and the grant amounts reflect his role prior to his promotion, and does not give effect to his promotion grant. |
Based on the March 2019 Compensation Committee review of the market data, the Compensation Committee approved an increase in Mr. Bradway’s LTI equity award from $12.5 million to $14 million to reward Mr. Bradway for strong performance and deliberationexcellent leadership of the Company since 2012, noting that, since 2012 Mr. Bradway’s base salary and/or total target annual cash compensation had been below the Market Median, and to differentiate his pay with equity that is substantially performance-based. In making its decision, the Compensation Committee noted that, while the Market Median for CEO pay had declined as a result of turnover in December 2016 and March 2017, and having considered the performance award goal designsleadership at four of our peer group companies, among continuing incumbents at our peer group companies, the Market Median increased. The March 2019 Compensation Committee review of the market data also resulted in granting Mr. Meline the same LTI equity award value ($4 million) that he had received in 2018 in recognition of Mr. Meline’s lengthy tenure in the role of Chief Financial Officer of large public companies and stockholder feedback,the value of his expertise. The Compensation Committee also granted Mr. Gordon and Dr. Reese LTI equity award grant values of $4 million each to position their respective total target direct compensation closer to the Market Median for their respective roles. Further, in continued recognition of Mr. Graham’s tenure and diversity of experience in the
role of General Counsel at other complex publicly traded companies, the Compensation Committee approvedgranted Mr. Graham the 2017-2019 performance period (January 1, 2017 to December 31, 2019).same LTI equity award value ($2.8 million) that he had received in 2018. The Compensation Committee constructedconcluded that the 2017-2019 performance period performanceLTI equity award goal designvalues granted were appropriate because they recognize and reward strong execution by our executives with compensation that is substantially “at risk,” performance-based, and focused on the longer-term.
Promotion Equity Awards
Mr. Graham was promoted to leverageExecutive Vice President, General Counsel and Secretary effective October 22, 2019 to recognize the 2016-2018 performance period goal design, retaining allscope and impact of his service to the elements of the 2016-2018 performance period goal design for 2017 and 2018, but changing one operating measure for the last year of the three-year performance period. For the first and second years of the 2017-2019 performance period,Company. In connection with Mr. Graham’s promotion, the Compensation Committee retained the threegranted Mr. Graham a promotional RSU award on November 1, 2019 with a value of $2 million. This grant was intended to bring Mr. Graham’s 2019 annual LTI equity award grant morenon-GAAPin-line operating measures:
|
|
|
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 his role as Executive Vice President and will vest 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 alignmentaccordance with our operating performance commitments to stockholders through 2018;
Focus our executives onstandard vesting schedule over four years, with no vesting in the transformation of our businessfirst year 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 forapproximately equal installments 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 can range from 50% to 150% for 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 TSRs of the companies in the S&P 500 from the grant date of May 1, 2017 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 in which we perform better than the S&P 500 for the period but investors do not recognize stock price growth.thereafter.
|
52 ï 20182020 Proxy Statement
|
Compensation Discussion and Analysis
|
|
Performance Award Program 2017-2019 Performance Period Performance Award Goal CalculationUnits Earned
At the end of the 2017-2019 performance period, our performance for each of the three annualAllnon-GAAP operating goals (for each year) are established atmeasures was averaged, resulting in 137.8% earned for EPS growth, 98.8% earned for operating margin, and 74.5% earned for operating expense and ROIC over the commencementthree-year period. These threenon-GAAP operating measure percentages were then averaged for a total operating measures score of 103.7% for the three-year performance period. Based on our strong TSR ranking of 77.8th percentile relative to the TSRs of the companies in the S&P 500, the total operating measures score of 103.7% was increased by the maximum TSR adjustment of 50 percentage points to 153.7%. This actual earned performance of 153.7% for the 2017-2019 performance period resulted in the following number of shares of Common Stock being earned. Each earned performance unit converted to one share of Common Stock upon the payout date of March 20, 2020. See the detailed description of the 2017-2019 performance period previously discussed.
| Named Executive Officer | Performance Units Value Granted (Target) ($) | Number of Performance Units Granted (#) | Number of Shares of our Common (#) | |||||||||
Robert A. Bradway | 6,000,000 | 33,543 | 56,106 | |||||||||
Murdo Gordon(2) | n/a | n/a | n/a | |||||||||
David W. Meline | 1,750,000 | 9,783 | 16,363 | |||||||||
David M. Reese | 400,000 | 2,236 | 3,740 | |||||||||
Jonathan P. Graham
|
| 1,250,000
|
|
| 6,988
|
|
| 11,688
|
| |||
| (1) |
|
| (2) | Mr. Gordon commenced employment with the Company in |
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 $10.7
ï 20182020 Proxy Statement 53
|
Compensation Discussion and Analysis
|
|
2018-2020 Performance Period Goal Design and Award Calculation
All operating measures and goals were established at the
beginning of the three-year performance period
Based on review and deliberation in December 2017 and March 2018, the Compensation Committee with input from management and FW Cook constructed the 2018-2020 performance period (January 1, 2018 to December 31, 2020) design to be similar to that of the 2017-2019 performance period design. All operating measures and goals were established at the beginning of the 2018-2020 performance period. For 2018, the three annualnon-GAAP operating measures established for 2018 under the 2017-2019 performance period were employed. For 2019 and 2020,non-GAAP EPS growth and ROIC, two measures included among the three operating measures established for 2019 under the 2017-2019 performance period, are the operating measures under the 2018-2020 performance period. The TSR modifier was rebalanced for the 2018-2020 performance period from 50 to 30 percentage points to shift the weighting of the TSR modifier to be in greater alignment with the value of each of the operating measures. For our 2019 operating performance measures (after weighting), we performed at 110.6%.
2019 Operating Measures and Performance
Non-GAAP(1) Operating Measures | Minimum (30%) | Low (65%) | Target (100%) | High (135%) | Maximum (170%) | 2019 Performance | ||||||||||||||||||||||||||||
| EPS Growth ($) | 131.8% ($14.82) | ||||||||||||||||||||||||||||||||
£$9.05 | $10.05
| $12.55 | $15.05 | ³$16.05 | ||||||||||||||||||||||||||||||
ROIC (%) | 89.5% (30.8%) | |||||||||||||||||||||||||||||||||
£26% |
28%
| 32% | 36% | ³38% | ||||||||||||||||||||||||||||||
|
110.6%
| |||||||||||||||||||||||||||||||||
2018-2020 Operating Measures Score (Operating Measure Percentages 30 – 170% with linear | ||||||||
Operating Measure Percentages are Equally Weighted for Each of the Three Years | ||||||||
| Non-GAAP(1) Operating Measures | 2018(2) | 2019 | 2020 | 2018-2020 Average Operating Measures | ||||
Operating Margin (%) Year 1 | 105.4% (52.6%) | TBD | ||||||
Operating Expense Year 1 (in billions) | 30.0% ($11.89) | TBD | ||||||
EPS Growth ($) Years 1, 2, and 3 | 132.7% ($14.40) | 131.8% ($14.82) | Pre-established and to be disclosed(3) | TBD | ||||
ROIC (%) Years 2 and 3 | 89.5% (30.8%) | TBD | ||||||
89.4%
|
110.6%
|
TBD
|
TBD
| |||||
2018-2020 S&P 500 Relative TSR(4) Modifier |
| Payout for Performance Relative to S&P 500 TSR Percentage |
Amgen TSR³75th percentile = 30% (Maximum) |
Amgen TSR = 50th percentile |
Amgen TSR£25th percentile = -30% (Minimum) |
| If Amgen’s TSR is less than 0, the relative TSR modifier can be no greater than 0% (target). |
Final 2018-2020 Performance Period Calculation 2018-2020 Non-GAAP(1) Operating Measures 2018 2019/2020 EPS Growth EPS Growth Operating Margin ROIC Operating Expense 2018-2020 Relative TSR Performance Final Payout Multiplier (0-200%) of target)
| (1) | The 2018non-GAAP operating measures (EPS growth, operating margin, and operating expense) and the 2019non-GAAP operating measures (EPS growth and ROIC) with respect to the 2018-2020 performance period are as reported and reconciled inAppendix B. |
| (2) | Our targets for our 2018 performance were disclosed under the 2018-2020 performance goals in our 2019 proxy statement filed with the Securities and Exchange Commission on April 8, 2019. |
| (3) | 2020 targets arepre-established, but are not being disclosed at this time as they are competitively sensitive. |
| (4) | TSR Measurement Points = Average daily closing price of stock for the first 20 trading days beginning on the grant date and the last 20 trading days of the performance period. |
54 ï 2020 Proxy Statement
Compensation Discussion and Analysis |
2019-2021 Performance Period Goal Design and Award Calculation
All operating measures and goals were established at the
beginning of the three-year performance period
The Compensation Committee constructed the 2019-2021 performance period (January 1, 2019 to December 31, 2021) design with twonon-GAAP operating measures of EPS growth and ROIC weighted equally in each year(one-half per measure). See the detailed description of the 2019-2021 performance period previously discussed.
2019 Operating Measures and Performance
Non-GAAP(1) Operating Measures | Minimum (30%) | Low (90%) | Target (100%) | High (110%) | Maximum (170%) | 2019 Performance | ||||||||||||||||||||||||||||
| EPS Growth ($) | 108.8% ($14.82) | ||||||||||||||||||||||||||||||||
£$10.00 | $12.00
| $13.45 | $15.00 | ³$17.00 | ||||||||||||||||||||||||||||||
ROIC (%) | 92.2% (30.8%) | |||||||||||||||||||||||||||||||||
£25% | 29%
| 37% | 45% | ³49% | ||||||||||||||||||||||||||||||
|
100.5%
| |||||||||||||||||||||||||||||||||
2019-2021 Operating Measures Score (Operating Measure Percentages 30 – 170% with linear
| ||||||||
Operating Measure Percentages are Equally Weighted for Each of the Three Years
| ||||||||
| Non-GAAP(1) Operating Measures
| 2019
| 2020
| 2021
|
2019-2021
| ||||
EPS Growth ($) |
108.8% ($14.82) | Pre-established and to be disclosed(2) | TBD | |||||
ROIC(%) | 92.2% (30.8%) | TBD | ||||||
100.5%
|
TBD
|
TBD
|
TBD
| |||||
2019-2021 S&P 500 Relative TSR(3) Modifier |
Payout for Performance Relative to S&P 500 TSR Percentage |
Amgen TSR³75th percentile = 30% (Maximum) |
Amgen TSR = 50th percentile |
Amgen TSR£25th percentile = -30% (Minimum) |
| If Amgen’s TSR is less than 0, the relative TSR modifier can be no greater than 0% (target). |
Final 2019-2021 Performance Period Calculation 2019-2021 Non-GAAP(1) Operating Measures EPS Growth ROIC 2019-2021 Amgen Relative TSR Performance Final Payout Multiplier (0-200% of target)
| (1) | The 2019non-GAAP operating measures (EPS growth, and ROIC) with respect to the 2019-2021 performance period are as reported and reconciled inAppendix B. |
| (2) | 2020 and 2021 targets arepre-established, but are not being disclosed at this time as they are competitively sensitive. |
| (3) | TSR Measurement Points = Average daily closing price of stock for the first 20 trading days beginning on the grant date and the last 20 trading days of the performance period. |
ï 2020 Proxy Statement 55
Compensation Discussion and Analysis |
Change to Performance Award Goal Design—2018–2020Design for the 2020–2022 Performance Period
As part of its regular review and consideration of the performance award program, the Compensation Committee evaluated potential performance award goal designs for the 2018-20202020-2022 performance period (January 1, 20182020 to December 31, 2020)2022) with input from management and FW Cook & Co. at its December 20172019 and March 20182020 meetings. The Compensation Committee constructedBased on such evaluations, the 2018-2020 performance period performance award goal design to leverage the current design of the Company’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)2019-2021 performance period goals for the first year of the 2018-20202020-2022 performance period as 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 areofnon-GAAP EPS and ROIC remain weighted equally in each year(one-third per measure for 2018 andone-half per measure for 2019 and 2020)measure) 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 calculatedand goalspre-established for each year of the 2018-2020 performance period and are averaged at the endbeginning of the performance period, resulting in a total 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 on the TSR modifier.period. The Compensation Committee believesselectednon-GAAP EPS to measure delivery of value to stockholders, including, among other things, the effectiveness of our execution of our strategic priority of “Capital Allocation and Investing for Long Term Growth” over an appropriate period. The Compensation Committee also retained the requirement that rebalancing the weighting in favor of the operating measures relative to the TSR modifier further emphasizes the Company’s operational prioritiescould not effect a payout greater than target if our absolute TSR over the performance period while maintaining alignmentwas less than 0. The Compensation Committee revised the calculation of our performance withnon-GAAP ROIC for the experience of our stockholders. Consistent with the design of our 2016-2018 and 2017-20192020-2022 performance period performance awards, the total operating measures score and the relative TSR modifier resultto include cash in a payout range of 0% to 200% of target awards granted and, in the event our absolute TSR is less than zero, the TSR modifier shall not add any percentage points notwithstanding our ranking.invested capital.
Stock Options
Stock options comprise 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 for each vested RSU and serve as an important and cost-effective retention tool because RSUs have intrinsic value on the grant date and going forward.
Dividend Equivalents
RSUs and performance units have dividend equivalent rights. Such dividend equivalents are payable only when, and to the extent, the underlying RSUs and performance units are vested, 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 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 20182020
In March 2018,2020, the Compensation Committee reviewed the LTI equity award grant values proposed to be granted to NEOs in 2018.2020. The Compensation Committee approved an increase in Mr. Bradway’s LTI equity award from $12$14 million to $12.5$14.4 million to reward Mr. Bradway for strong performancerecognize his
sustained and successful leadership of the Company inthrough a yearperiod of transition fortransformation to meet the Company. In making its decision,challenges of 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%.evolving biopharmaceutical marketplace. The Compensation Committee granted Mr. Hooperapproved an increase in 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 $2.5to $4.1 million in 2017for Dr. Reese to $2.8 million in 2018 as these increases positioned their respective targetbring Dr. Reese’s total direct compensation closer to the Market Median and to reflect the importance of his contributions to the Company since his promotion to Executive Vice President. The Compensation Committee also approved an increase in the LTI equity award from $4 million to $4.1 million for their respective roles.Mr. Gordon to recognize his leadership of our Commercial team through a period of transition and his positioning of our Commercial team for a period of growth. The Compensation Committee granted Mr. Graham an LTI equity award grant value of $3.9 million to position his 2020 annual LTI equity award grantin-line with his role as Executive Vice President and to reflect the value to Amgen stockholders of the work in which his team is engaged. As Mr. Meline remains with the Company to assist in the transition of our new Chief Financial Officer, he was granted an LTI equity award grant value equal to the same value as he received in 2019 ($4 million) which will bepro-rated according to the number of complete months of employment in 2020. The Compensation Committee concluded that the LTI equity award values granted were appropriate because they recognize and reward strong execution by our executives with compensation that is substantially “at risk,” performance-based, and focused on the longer-term.
Annual Cash Incentive Awards
Executive Incentive Plan
Annual cash incentive awards to our NEOs are generally made under our stockholder-approved Executive Incentive Plan, or EIP, which employs a formula that establishes a maximum award possible for each participant based on ournon-GAAP net income(1). For 2019, each of our NEOs was a participant in the EIP. This year, as in the past, actual awards under the EIP are determined by the Compensation Committee using its negative discretion under the EIP, with award determinations based on Company performance against the composite final score of thepre-established 2019 Company performance goals. In evaluating and confirming this approach, the Compensation Committee also considers the contributions of each participant’s role to our success during the year.
In March 2019, the Compensation Committee determined for the EIP participants, the definition ofnon-GAAP net income(1), the maximum award payable for each participant, the target annual cash incentive award opportunities. In addition, the Compensation Committee determined the plan design for the Global Management Incentive Plan, or GMIP, and Global Performance Incentive Plan, or GPIP, and the 2019 Company performance goals and weightings, and the percentages payable for threshold, target, and maximum performance.
Target Annual Cash Incentive Award Opportunity
After review of market data, the Compensation Committee determined that the target annual cash incentive award opportunities for our NEOs
| (1) | Non-GAAP net income for purposes of the EIP is as reported and reconciled inAppendix B. |
5456 ï 20182020 Proxy Statement
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Compensation Discussion and Analysis
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|
Annual Cash Incentive Awards
Executive Incentive Plan
Annual cash incentive awards to our NEOs are generally made under our stockholder-approved EIP, which employs a formula that establishes a maximum award possiblewould remain the same as 2018 (150% of base salary for Mr. Bradway and 100% for each participant based on ournon-GAAP net 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,Executive Vice President NEOs). In connection with Mr. Graham’s promotion to Executive Vice President, General Counsel and in the past, actual awards under the EIP are determined by the Compensation Committee using their negative discretion under the EIP, based on thepre-established Company performance goals for the year designed to advance our strategic priorities. In confirming this approach, the Compensation Committee also considers the contributions of each participant’s role to our success during the year.
In March 2017, the Compensation Committee determined for the EIP participants, the definition ofnon-GAAP net income(1), the maximum award payable for each participant, theSecretary effective October 22, 2019, Mr. Graham’s target annual cash incentive award opportunitiesopportunity was increased in alignment with other Executive Vice President NEOs to 100%, and forhis 2019 target opportunity waspro-rated based on the EIP, Global Management Incentive Plan, or GMIP,number of days before and Global Performance Incentive Plan, or GPIP,after the Company performance goals andeffective date of his promotion.
The maximum award under the weightings and percentages payable for threshold, target and maximum performance.
For 2017, each of our NEOs was a participant in the EIP and the maximum award continued to be expressed as the EIPnon-GAAP net income(1) 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 the Senior Vice President NEO. Historically,Mr. Graham. As discussed previously, both historically and in 2017,2019, the Compensation Committee has 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 participant by using the Company performance goals composite final score under our GMIP as applied to the participant’s target annual cash incentive award foropportunity to determine actual awards.
Target Incentive Opportunity
The target annual cash incentive award opportunity for each of our NEOs remained the same in 2017 as it was for 2016. Mr. Bradway’s target annual cash incentive award opportunity 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 role.
20172019 Company Performance Goals
The 2017 Company performance goals approved by the Compensation Committee were:
“Deliver Results” goals (60%):
|
“Progress Innovative Pipeline” goals (25%):
|
“Deliver Annual Priorities” goals (15%):
|
|
While all of the goals measure single–yearsingle-year performance, taken as a whole, they are intended to positively position us for both near- and longer-term
long-term success, delivery onsupport our strategic priorities, and create stockholder value. There are no payouts for below-thresholdThe 2019 Company performance on the two financial metrics. Measurements 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. Annual cash incentive awards are paid in March of the year following the annual performance period and certification of the resulting payoutsgoals approved by the Compensation Committee.Committee were based on our 2019 budget and forecast at the time of such approval and are discussed on the following page.
For the 2019 Company performance goals, management recommended, and the Compensation Committee concurred with, (i) an increase in the weighting for “Advance Early Pipeline” (from 5% to 10%) to focus on progressing programs in development, with a concurrent decreased weighting for “Execute Critical Launches and Long-Term Commercial Objectives” (from 10% to 5%); and (ii) replacing “Achieve Transformation Objectives” with “Achieve Productivity Objectives” to reflect the Company’s movement beyond its 2014-2018 investor commitments and its focus on productivity to support continued reinvestment in opportunities (such as the early pipeline) while striving to maintain appropriate expense discipline. The goals also reflected the wide range of revenue uncertainty for 2019 given patent expiries, with targets consistent with the budget and forecast at the time of such goal setting, and both the 2019 financial andnon-financial goals continuing to increase the level of execution necessary to deliver the required performance.
| (1) |
|
|
ï 20182020 Proxy Statement 5557
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Compensation Discussion and Analysis
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20172019 Company Performance Goals and Results
The table below illustrates the goals established, the weighting of each goal, the goals established and our actual performance for 2017. No amounts2019. Payouts can be earnedrange from 0% to a maximum of 225% of target annual cash incentive award opportunity for below thresholdeach metric and the final company performance goals score cannot exceed 225%. For additional discussion regarding our performance, please see “Aligning Pay With Performance and Execution of Our Strategic Priorities.”
Deliver Results (60% weighting) |
|
|
Weighted Score Achieved 103.7% |
| ||||||||||||||||
($ In Millions)
Equally focused ontop- and bottom-line growth and assigned the largest percentage, consistent with the fundamental importance of financial performance to us and our stockholders in both the near- and long-term. No amounts can be earned for below-threshold performance for our financial metrics.
|
| |||||||||||||||||||
Goals |
| Weighting |
|
| Threshold |
|
| Target |
|
| Maximum |
|
| Achieved |
| |||||
Revenues |
|
30% |
|
|
$20,453 |
|
$ |
22,100 |
|
|
$23,747 |
|
|
$23,362 177.3% |
| |||||
Non-GAAP Net Income(1) | 30% | $7,084 | $8,213 | $9,342 | | $9,028 168.3% |
| |||||||||||||
Certain measurements of performance for our financial metrics. For a more detailed description of our performance under each of thenon-financial measures, please see the “Executive Summary” section above.metrics are subjective in nature and could result in a very small payout percentage (less than 1% of an annual cash incentive award).
Deliver Results (60% weighting)
|
|
Weighted Score Achieved 68.2%
|
| |||||||||||||||||
Financial Goals (60%) ($ In Millions)
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Weighting
|
|
|
Achieved
|
| |||||
Revenues |
|
$21,085 |
|
|
$22,525 |
|
|
$24,325 |
|
|
30% |
|
|
$22,849 110.6% |
| |||||
Non-GAAP Net Income(1) | $8,000 | $8,890 | $9,955 | 30% | | $9,246 116.8% |
| |||||||||||||
Progress Innovative Pipeline (25% weighting)
|
Weighted Score Achieved 34.7%
| |||||||||
Goals
|
Results
|
Weighting
|
Achieved
| |||||||
Execute Key Clinical Studies and |
• Executed key clinical studies for KYPROLIS, BLINCYTO, EVENITY, IMLYGIC®, omecamtiv mecarbil, AMG 301, and ABP 980 (biosimilar trastuzumab (Herceptin®)). |
|
20% |
|
|
123.0% |
| |||
• 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)
|
Weighted Score Achieved 12.1%
| |||||||||
Goals
|
Results
|
Weighting
|
Achieved
| |||||||
Execute Critical Launches and Long-Term Commercial Objectives |
• Prolia—increased worldwide net sales. |
|
10% |
|
|
76.0% |
| |||
• 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% | |||||||
Progress Innovative Pipeline (30% weighting) | Weighted Score Achieved 26.0% | |||||||||
Measures 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 long-term.
|
| |||||||||
Goals | Weighting | Results | Achieved | |||||||
Advance Early Pipeline |
|
10% |
|
• We generated a total of eight product teams (formed when a molecule has been judged to have the potential to be safe and effective in humans). |
|
100.0% |
| |||
• We initiated sevenfirst-in-human studies, including with product candidates for prostate and other solid tumor cancers, multiple myeloma, cardiovascular disease, and respiratory diseases. | ||||||||||
• We advanced four programs through theearly-to-late stage portal (the period entering Phase 2 through Phase 3). | ||||||||||
Execute Key Clinical Studies and Regulatory Filings | 20% | • We achieved key clinical study milestones for Omecamtiv Mecarbil, KYPROLIS, Nplate, and ABP 798 (biosimilar rituximab (Rituxan®)). | 80.0% | |||||||
• We completed regulatory filings for EVENITY, Prolia, KYPROLIS, AVSOLA (biosimilar infliximab (Remicade®)), and ABP 215 (biosimilar bevacizumab).
| ||||||||||
Deliver Annual Priorities (10% weighting) | Weighted Score Achieved 9.2% | |||||||||
Goals | Weighting | Results | Achieved | |||||||
Execute Critical Launches and Long-Term Commercial Objectives– Focuses on executing on our key product launches. |
|
5% |
|
• We set aspirational internal goals to focus our entire Company on delivering on the promise of three important medicines – Repatha, Prolia, and Aimovig. While all three products delivered significant volume-driven growth, we did not meet our aspirational goals for Repatha and Aimovig. |
|
77.2% |
| |||
Achieve Productivity Objectives – Focuses on productivity to support continued reinvestment in opportunities (such as the early pipeline). | 5% | • We established a target $280 million of gross operating expense savings. We realized approximately $286 million of gross savings that we reinvested in the business. | 106.8% | |||||||
|
|
Achieved
|
|
| (1) | Non-GAAP net income for purposes of the |
5658 ï 20182020 Proxy Statement
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Compensation Discussion and Analysis
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20172019 Annual Cash Incentive Awards
As shown in the table above, our performance against the 20172019 Company performance goals yielded a composite final score of 115%138.9% and the Compensation Committee awarded actual annual cash incentive awards under the EIP to our NEOs based on this composite final score. No further discretion was employed.
| Named Executive Officer |
Target Opportunity | Target 2017 Award($) | Actual 2017 Award($)(1) | Target Opportunity (% of Base Salary) | Target 2019 Award($) | Actual 2019 Award($)(1) | ||||||||||||||||||
Robert A. Bradway
|
| 150
|
|
| 2,333,077
|
|
| 2,683,000
|
|
| 150 |
|
| 2,390,769 |
|
| 3,321,000 |
| ||||||
Anthony C. Hooper
|
| 100
|
|
| 1,049,769
|
|
| 1,207,000
|
| |||||||||||||||
Sean E. Harper
|
| 100
|
|
| 970,308
|
|
| 1,116,000
|
| |||||||||||||||
Murdo Gordon |
| 100 |
|
| 1,021,154 |
|
| 1,418,000 |
| |||||||||||||||
David W. Meline
|
| 100
|
|
| 970,308
|
|
| 1,116,000
|
|
| 100 |
|
| 994,646 |
|
| 1,382,000 |
| ||||||
David M. Reese |
| 100 |
|
| 970,139 |
|
| 1,348,000 |
| |||||||||||||||
Jonathan P. Graham
|
| 80
|
|
| 745,785
|
|
| 858,000
|
|
| 92 | (2) |
| 878,494 |
|
| 1,220,000 |
| ||||||
| (1) | Calculated in accordance with the |
| (2) | Mr. Graham’s target annual cash incentive award opportunity was increased from 90% to 100% of base salary in connection with his promotion to Executive Vice President, General Counsel and Secretary, effective as of October 22, 2019. The target opportunity is apro-rated bonus target based on the number of days at each target level before and after the effective date of his promotion. |
20182020 Company Performance Goals
In March 2018,2020, the Compensation Committee established Company performance goal categoriesgoals for 20182020 performance under our GMIP as follows:
| ||
60% |
Deliver Results | |
• Revenues (30%)
• Non-GAAP Net Income (30%) | ||
|
Progress Innovative Pipeline | |
• Execute Key Clinical Studies and Regulatory Filings (20%)
• Advance Early Pipeline | ||
|
Deliver Annual Priorities | |
•
• |
The Compensation Committee replaced “Execute Critical Launches and Long-Term Commercial Objectives” and “Achieve Productivity Objectives” with the new annual priorities of “Fund Innovation Through Productivity” and “Ensure Successful Integrations and Transitions” as goals that create productivity and add an emphasis on integration-related priorities given the Company’s 2019 acquisitions and the BeiGene collaboration.
In March 2018,2020, the Compensation Committee reviewed the target incentive award opportunity for each NEO. Mr. Graham’sNEO and determined that the existing target annual cash incentive award opportunity was increased from 80% of base salary to 90% of base salary to align with the Market Median for his role.each NEO remains appropriate. No changes were made to the target incentive award opportunity for any other 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 ofCommittee reviews the peer group data compared with the Market Median, as previously described under “How Compensation Decisions Are Made For Our
Named Executive Officers—Peer Group Data Sources.” In addition, the Compensation Committee considers our performance, market conditions, retention, and other such other factors deemed relevant. Further, the Compensation Committeerelevant, and 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 CEO’s evaluation of the performance of the NEOs that report to our CEO,(other than himself), the Compensation Committee’s own evaluation of our CEO’s performance, information with respect to each NEO’s experience and other qualifications, the Market Median for each position and environmentalmarket conditions to determine each NEO’s base salary. No increase in base salary is automatic or guaranteed. For more information on how decisions are made, see “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources” previously described.
In March 2017,2019, the Compensation Committee reviewed the market competitiveness of each NEO’s base salary employed at the time based on Market Median data and such executive officer’s performance, experience and other qualifications, as well as the Company’s overall performance. Based onIn alignment with the data providedbase salary increases made to staff members generally, the Compensation Committee including recommendations of Cook & Co., an overall merit increase of 2% was recommended for our NEOs, adjusted to align with the Market Median for each position. The Compensation Committee approved a 2017increased Mr. Bradway’s base salary increaseby 2.6% and each 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 increase to other senior executives. Dr. Harper and Mr. Meline each received base salary increases ofNEOs by 2.5% to raise their base salaries nearer to the Market Median for their respective positions. Messrs. Hooper and Graham each received a base salary increase of 2% for 2017 consistent with the increase to other senior executives..
ï 20182020 Proxy Statement 5759
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Compensation Discussion and Analysis
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20172019 Base Salary Market Position
The 20172019 base salaries as in effect at the end of 2019 and the Market Median position as reviewed by the Compensation Committee in March 2019 are shown in the table below:
| Named Executive Officer | 2016 Base Salary ($) | Increase (%) | 2017 Base Salary ($) | 2016 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | 2018 Base Salary ($) | Increase (%) | 2019 Base Salary ($) | 2018 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | ||||||||||||||||||||||||||||||
Robert A. Bradway
|
| 1,530,000
|
|
| 2.0
|
|
| 1,560,000
|
|
| 1,588,000
|
|
| (1.8
| )
|
| 1,560,000 |
|
| 2.6 |
|
| 1,600,000 |
|
| 1,586,000 |
|
| 0.9 |
| ||||||||||
Anthony C. Hooper
|
| 1,032,000
|
|
| 2.0
|
|
| 1,053,000
|
|
| 999,440
|
|
| 5.4
|
| |||||||||||||||||||||||||
Sean E. Harper
|
| 950,000
|
|
| 2.5
|
|
| 974,000
|
|
| 1,004,107
|
|
| (3.0
| )
| |||||||||||||||||||||||||
Murdo Gordon |
| 1,000,000 |
|
| 2.5 |
|
| 1,025,000 |
|
| 1,033,452 |
|
| (0.8 | ) | |||||||||||||||||||||||||
David W. Meline
|
| 950,000
|
|
| 2.5
|
|
| 974,000
|
|
| 996,373
|
|
| (2.2
| )
|
| 974,000 |
|
| 2.5 |
|
| 998,400 |
|
| 1,033,767 |
|
| (3.4 | ) | ||||||||||
David M. Reese |
| 950,000 |
|
| 2.5 |
|
| 973,800 |
|
| 1,098,716 |
|
| (11.4 | ) | |||||||||||||||||||||||||
Jonathan P. Graham
|
| 917,000
|
|
| 2.0
|
|
| 935,000
|
|
| 876,479
|
|
| 6.7
|
|
| 935,000 |
|
| 2.5 |
|
| 958,500 |
|
| 953,708 |
|
| 0.5 |
| ||||||||||
20182020 Base Salary Adjustments
In March 2018,2020, the Compensation Committee reviewed the market competitiveness of each NEO’s base salary 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 consistentalignment with the market for talent as well as with our continuing exercise of financial discipline, the Compensation Committee decided to provide no base salary increases made to our NEOs.staff members generally, the Compensation increased Messrs. Bradway, Gordon, Meline, and Graham’s respective base salaries by 2.5%. The Compensation Committee increased Dr. Reese’s base salary by 4% to bring his base salary closer to the Market Median for his position.
Total Target Total Annual Cash Compensation
Target totalTotal target 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 comparedin addition to the Market Median for each element of compensation, provides a useful check in making compensation decisions.
In March 2017,2019, the Compensation Committee reviewed total target total annual cash compensation for each NEO comparing itcompared to the market data
and historical target total annual cash compensation figures. Our prior year target annual cash compensation reviewed by thefigures as depicted below. The Compensation Committee noted such total target annual cash compensation was generally below the Market Median with the exception of Messrs. Bradway and Graham. For Mr. Bradway, who was slightly above the CEO, for the reasons previously discussed, and Mr. Graham asMarket Median, the Market Median for all peers declined as a result of turnover in leadership at four of our peer group companies where new incumbents were paid less than their predecessors, but among continuing incumbents, the Market Median increased. The Market Median for Mr. Graham’s position had declined in prior years causing Mr. Graham’s total target annual cash compensation to be above Market Median. The Compensation Committee took these metrics into account and decided to increase the value of LTI equity awards to Mr. Bradway for 2019 to bring his position declined overtarget total annual direct compensation (composed of base salary, target annual cash incentive award, and target LTI equity award) closer to the prior year.Market Median of continuing incumbents, in lieu of increasing total target annual cash compensation, resulting in compensation that is more “at risk” and performance-based. For more information regarding the determination of Market Median and the peer group data reviewed, see “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources” previously described.
Total Target Total Annual Cash Compensation
Target totalTotal target annual cash compensation reviewed by the Compensation Committee in March 20172019 prior to the compensation changes being made are shown in the table below:
| Named Executive Officer | 2016 Amgen Target Total Annual Cash ($) | 2016 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | 2019 Amgen Target Total Annual Cash ($) | 2018 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | ||||||||||||||||||
Robert A. Bradway
|
| 3,825,000
|
|
| 3,750,000
|
|
| 2.0
|
|
| 4,000,000 |
|
| 3,966,000 |
|
| 0.9 |
| ||||||
Anthony C. Hooper
|
| 2,064,000
|
|
| 2,195,771
|
|
| (6.0
| )
| |||||||||||||||
Sean E. Harper
|
| 1,900,000
|
|
| 1,965,625
|
|
| (3.3
| )
| |||||||||||||||
Murdo Gordon |
| 2,050,000 |
|
| 2,083,471 |
|
| (1.6 | ) | |||||||||||||||
David W. Meline
|
| 1,900,000
|
|
| 1,979,256
|
|
| (4.0
| )
|
| 1,996,800 |
|
| 2,026,322 |
|
| (1.5 | ) | ||||||
David M. Reese |
| 1,947,600 |
|
| 2,221,552 |
|
| (12.3 | ) | |||||||||||||||
Jonathan P. Graham
|
| 1,650,600
|
|
| 1,546,353
|
|
| 6.7
|
|
| 1,821,150 |
|
| 1,659,523 |
|
| 9.7 |
| ||||||
5860 ï 20182020 Proxy Statement
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Compensation Discussion and Analysis
|
|
Perquisites
Perquisites are limited in both type and monetary value. The Compensation Committee believes, however, that certain perquisites facilitate the efficient operation of our business, allowing our NEOs to better focus their time, attention, and capabilities on our Company, permit them to be accessible to the business as required, alleviate safety and security concerns, and assist us in recruiting and retaining key executives. The perquisites provided to our NEOs generally include an allowance for personal financial planning services, including tax preparation services (not to exceed $15,000 annually in aggregate), annual physical examinations, Company-paid moving and relocation expenses paid on behalf of newly-hirednewly 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. 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 believe that providing taxgross-up reimbursements on the applicable moving and relocation expenses paid on behalf of newly-hirednewly 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 allocationincentivize optimal deployment of our human resources in the best interestsupport of the Company.Company’s strategy. It also assists in the attraction and retention of the executive talent necessary to compete successfully.
We provide limited home sale loss assistance for Senior Vice Presidents and above in connection with relocations that benefit the Companyus and are at the Company’sour 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) that requires a new staff member hired from outside the Company or staff members who accept an assignment and relocate, to repay us for moving and relocation expenses 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
Recoupment Provisions
Our cash incentive award programs (EIP, GMIP, and 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.
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 award programs (EIP, GMIP and 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 alignaligning the interests of our executives and stockholders and mitigatemitigating potential compensation-related risk. Since December 2015, ourOur 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 20182020 Proxy Statement 5961
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Compensation Discussion and Analysis
|
|
Stock Ownership Guidelines Requirements
The stock ownership guidelines for 20172019 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 |
The following holdings count towards satisfying these stock ownership requirements:
shares of our Common Stock beneficially held that are not subject to forfeiture 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 currenta given 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 required to maintain such ownership until they change job levels or are no longer employed by the Company.us. As of October 20, 2017,18, 2019, the effective date of our executive certifications, all executive officers, including our NEOs, who were expected to meet such guidelines, were in compliance. Messrs. Meline and GrahamMr. Gordon commenced employment with our Company on September 3, 2018 and has until 2023 to meet his guidelines. Dr. Reese and Mr. Graham were promoted from Senior Vice President to Executive Vice President roles on July 21, 201426, 2018 and July 13, 2015October 22, 2019, respectively, and, as a result, now have until 20192021 and 2020, respectively,2023 to meet their guidelines.comply with the new ownership level associated with the Executive Vice President role.
Insider Trading Policy and Practices
All staff members and our Board are prohibited from: (i) buying or selling our Common Stock while aware of any material nonpublic information; (ii) engaging in short sales with respect to our Common Stock; (iii) pledging or purchasing our Common Stock on margin; or (iv) entering into any derivative, hedging, or similar transactions with respect to our Common Stock.Stock, including any transactions that hedges or offsets, or is designed to hedge or offset, any decrease in the market value of Amgen stock. Examples of prohibited derivative transactions include, but are not limited to, purchases or sales of puts and calls (whether written or purchased or sold), options (whether “covered” or not), forward contracts, including but not limited to prepaid variable forward contracts; put and call “collars” (“European” or “American”),
“equity” or “performance” swap or exchange agreements or any similar agreements or arrangements, however denominated, in our securities.
Policies for Grants of Long-Term Incentive Equity Awards
In accordance with our equity awards policy, our regular annual LTI equity award grants are typically approved at anin-person or telephonic meeting ofby the Compensation Committee (for grants of equity awards to executive management,Senior 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. Our NEOs may also receive special equity awards 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.Committee and the relevant new hire, promotion, or other date.
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, theThe 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.CEO, and use the information provided by these tally sheets to make such determination. 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 2017.2019.
62 ï 2020 Proxy Statement
Compensation Discussion and Analysis |
Stockholder Outreach—Executive Compensation Website
We maintain a website accessible throughout the year atwww.amgen.com/executivecompensation, which provides a link to our 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.
Approach to Pricing Our Products
We take a thoughtful approach to pricing our products and have internal processes and controls in place to ensure that pricing decisions are thoroughly and appropriately vetted prior to implementation with involvement from senior management. This process includes routine presentations to our Corporate Responsibility and Compliance Committee
and our Board on drug pricing practices. Our strategy includes a focus on innovative drugs that can deliver volume-driven growth, not simply price. And, in 2019, our revenues benefited from volume-driven growth from a number of our newer innovative medicines that grew units double digit or better, including Repatha, Parsabiv, BLINCYTO, Aimovig, and Prolia, rather than price increases. We have and continue to disclose in our annual report on Form 10-K and our quarterly reports on Form 10-Q, the pricing trends impacting our business, including, for 2019, that we continued to expect a lower net selling price in the aggregate compared with that of 2018. We believe that we have the appropriate governance mechanisms, oversight and processes in place to ensure that pricing decisions are made in-line with our values and our mission to serve patients. In addition, our Compensation Committee annually completes a thoughtful and rigorous evaluation of our executive compensation program for alignment with our mission to serve patients and deliver stockholder value without encouraging excessive or inappropriate risk-taking by our executives.
60 ï 2018 Proxy Statement
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Non-Direct Compensation and Payouts in Certain Circumstances
Change of Control Benefits and Offer Letter With Limited Severance Benefits
Our CEO and other NEOs are participants in our double-trigger Change of Control Severance Plan discussed below. In connection with new hires, we typically enter into offer letters 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 Companyus and occur for reasons other than for “cause” within three years from the date of hire. These benefits are sometimesgenerally 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—Mr. GrahamGordon
Mr. GrahamGordon, who commenced employment as our SeniorExecutive Vice President, General Counsel and SecretaryGlobal Commercial Operations, effective July 13, 2015. HisSeptember 3, 2018, is currently subject to an offer letter containsthat was negotiated in connection with his hiring. The terms of the offer letter were approved by the Compensation Committee. Mr. Gordon’s offer letter included our standard relocation assistance to facilitate Mr. Gordon’s relocation from New Jersey to California. We also agreed to provide Mr. Gordon with RSUs valued at $6.4 million. To align with the value being replaced, this grant vests over three years beginning on the first anniversary of the grant date through the third anniversary at a rate of 35%, 35%, and 30% each year, respectively, contingent upon Mr. Gordon being actively employed with us through each vesting date. To further induce
Mr. Gordon to join our Company, we also agreed to provide Mr. Gordon with performance units valued at $3.5 million which vest at the end of the performance period (November 2, 2018 to December 31, 2020) contingent upon Mr. Gordon being actively employed through the vesting date. The Compensation Committee concluded that these LTI equity award values were appropriate because they provide compensation that is focused on the longer-term to compensate Mr. Gordon 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. Gordon’s compensation to the value of our stock in alignment with our stockholders’ interests. To compensate for Mr. Gordon’s forfeiture of certain pension benefits at his previous employer, Mr. Gordon was also provided with a contribution to his Deferred Compensation Plan of $1 million which vests at a rate of 33%, 33%, and 34% each year through the third anniversary of his date of employment with us as long as Mr. Gordon remains actively and continuously employed by us. We also agreed to reimburse Mr. Gordon for any claim resulting from Mr. Gordon’s employment with us due to any recoupment from Mr. Gordon by his previous employer for previously earned compensation (up to $2 million). Mr. Gordon’s offer letter provides for cash severance protection terms that are payable only if Mr. Graham is terminated other than for cause that expire on July 13, 2018. For a qualifying termination that occurs before July 13, 2018, Mr. Graham would be entitled to a cash paymentthree years following his employment date equal to a multiple of two timesyear’s annual base salary plusand target annual cash incentive award, (currently 90% of his annual base salary) andplus up to 18 months of COBRA(1) medical and dental coverage paid for by us. As discussed above, benefits of this type are often provided to officer-level candidates to provide an incentive to them to join our Company by reducing the risk of making such a job change. These severance benefits expire on September 3, 2021, and are payable only if Mr. Gordon is terminated other than for “cause.”
| (1) | The Consolidated Omnibus Budget Reconciliation Act of 1985. |
ï 2020 Proxy Statement 63
Compensation Discussion and Analysis |
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 1,6131,661 U.S. staff members (as of December 31, 2017)2019), including each NEO. There are no taxgross-up payments provided under the plan. The plan is 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:
To reinforce and encourage the continued attention and dedication of members of management to their assigned duties without the distraction arising from the possibility of a change of control;
To enable and encourage management to focus their attention on obtaining the best possible deal for our stockholders and making an independent evaluation of all possible transactions, without being influenced by their personal concerns regarding the possible impact of various transactions on the security of their jobs and benefits; and
To provide severance benefits to any participant who incurs a termination of employment under the circumstances described within a certain period following a change of control in recognition of their contributions to the Company.
Change of Control Treatment of Long-Term Incentive Equity Awards
Restricted Stock Units and Stock Options
All unvested RSUs and stock options have “double-trigger” acceleration of vesting that requires a qualifying termination in connection with a change of control. All RSUs and stock options 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,” in each case within two years following a change of control.
Performance Units
The Compensation Committee has maintained change of control features for each of the performance periods under our performance award programs to ensure that these programs reward participants for our performance until the successful closing of any 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 inof control occurs in the first year of a performance period). If the change of control occurs 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 based on the 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
Health, retirement, and other benefits programs are generally available to our U.S.-based staff members, including our NEOs, and are typically targeted to align in value with our peer group. The primary survey used to make this comparison is the Aon Hewitt Benefit Index®, last updated as of April 2017May 2018, using a samplecomparator group of 14 companies chosen soby Amgen as
|
ï 2018 Proxy Statement 61
|
to have the greatest representation from our representative of its 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 these health, retirement, and other benefit 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 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
64 ï 2020 Proxy Statement
Compensation Discussion and Analysis |
members (including Puerto Rico) at director level and above the opportunity to defer eligible base salary and annual cash incentive awards, up to maximum amounts typical at our peer group. We also have the discretion to make contributions to this plan, but we do not make such contributions on a regular basis. We believe that offering the NDCP is appropriate because it provides executives the opportunity to save for retirement in atax-effective fashion that is not readily available without our sponsorship.
Health Savings Account and Retiree Medical Savings Account Plan for all U.S.-based Staff Members
Effective January 1, 2016, we offeredWe offer 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 U.S.-based (excluding Puerto Rico) staff members that allows all staff members to makeafter-tax deferrals to be used post-termination to reimburse them for eligible medical expenses. Under this plan,the Retiree Medical Savings Account 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.
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) placedof the Internal Revenue Code places a $1,000,000$1 million limit on the amount of compensation that we may deduct for income tax purposes for any year with respect to compensation paid to “covered employees.” For tax years beginning after December 31, 2017, a covered employee includes an executive officer who holds the positions of either principal executive officer, or PEO, or principal financial officer, or PFO, at any time during the tax year, as well as an executive officer whose total compensation for the tax year is required to be reported to shareholders under the Securities Exchange Act of 1934 by reason of such employee being among the three highest compensated officers for the taxable year (excluding the PEO and PFO), regardless of whether the executive who serves as our CEOofficer is serving at year end. In addition, if an individual is a covered employee for a tax year beginning after December 31, 2016, the individual remains a covered employee for all future years. Because of thisyear-end,“once-a-covered-employee,always-a-covered-employee” and anyrule, the total number of our three other most highly compensatedcovered employees who serve as executive officers atyear-end, otherin 2019 is higher than our Chief Financial Officer.in 2018.
In 2017, The $1,000,000Tax Cuts and Jobs Act, or Tax Reform Act, was signed into law effective for taxable years beginning after December 31, 2017. Prior to the Tax Reform Act, the $1 million limit did not apply to performance-based compensation, as defined under Section 162(m). Ourdefined. While the Tax Reform Act eliminated the exception for performance-based compensation, a transition rule continues the exception of performance-based compensation provided pursuant to a written binding contract that was
in effect on November 2, 2017 executiveand not modified in any material respect on or after such date. Under the transition rule, compensation program was designedrelated to the exercise of stock options granted on or before November 2, 2017, and compensation earned with the intentrespect to provide cash incentive compensation under our EIP, performance units under our performance award program and stock options under our equity incentive plan as qualifying performance-based compensation. Duegranted prior to competitive or other factors,November 2, 2017, is anticipated to qualify for 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 2017 exceeded thetax-deductible limit.
The use of RSUs as part (20%) of the annual LTI equity award mixexception 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 transition rules, provided that such contracts are not materially modified after that date. The fiscalcash tax impact for 20172019 of the RSUscompensation not being performance-baseddeductible due to the Section 162(m) limit is approximately $2.3$4.8 million, assuming the Company’s U.S. combined effective tax rate for 2017.2019.
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, and bonuses paid under our GMIP to executives who are hired past the eligibility date of our EIP.
62 ï 2018 Proxy Statement
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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 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.
ï 20182020 Proxy Statement 6365
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Executive Compensation Tables
|
|
Summary Compensation Table
The following table sets forth summary information concerning the compensation awarded to, paid to, or earned by each of our Named Executive Officers, or NEOs.
| Name and Principal Position | Year | Salary ($) | (1) | Bonus ($) | Stock Awards ($) | (2) | Option
($) |
|
| Non-Equity Incentive Plan Compensation
|
|
($) | (4) | All Other Compensation ($) | (5) | Total ($) | ||||||||||||||||||||||||||||||||
Performance Units and Restricted Stock Units | Stock Options | |||||||||||||||||||||||||||||||||||||||||||||||
Robert A. Bradway Chief and President
|
|
|
|
|
|
|
|
0 0 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Executive Vice President, Global Commercial Operations
| 2019 2018 | 1,025,673 330,769 | 0 2,000,000 | 2,799,711 9,899,861 | 1,199,970 0 | 1,418,000 513,000 | 212,482 1,336,604 | 6,655,836 14,080,234 | ||||||||||||||||||||||||||||||||||||||||
David W. Meline Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
0 0 0 |
|
|
|
|
|
1,199,995
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Executive Vice President, Research and Development
|
| 2019 2018 |
|
| 0 300,000 | 2,799,711 3,029,787 | 1,199,970 269,966 | 1,348,000 913,000 | 215,811 129,019 | 6,537,925 5,339,272 | ||||||||||||||||||||||||||||||||||||||
Jonathan P. Graham Executive Vice President, General Counsel and Secretary | 2019 2018 2017 |
|
|
|
|
|
0 0 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| 5,345,358 4,522,208
|
| ||||||||||||||||||||||||||||||||||||||
| (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 plan, or NDCP. Under payroll practices for salaried staff members of our U.S. entities, including our NEOs, base salary earned in a pay period is computed by dividing the annual base salary then in effect by 26, which is the number of fullbi-weekly pay periods in a year. |
| (2) | For |
66 ï 2020 Proxy Statement
Executive Compensation Tables |
The number of units to be earned for the performance units granted during |
64 ï 2018 Proxy Statement
|
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 | ||||||||||||||||
| Fair Value of Performance Units for the 2019-2021 Performance Period | Fair Value of Performance Units for the 2019-2021 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 | Based on the Maximum Performance Regarding the 2019-2021 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
|
|
| $11,899,532 |
|
| $13,999,627 |
| ||||
Anthony C. Hooper
|
|
2,999,829
|
|
|
3,999,891
|
| ||||||||||
Sean E. Harper
|
|
2,774,810
|
|
|
3,699,747
|
| ||||||||||
Murdo Gordon |
| $3,399,678 |
|
| $3,999,732 |
| ||||||||||
David W. Meline
|
|
2,624,738
|
|
|
3,499,770
|
|
| $3,399,678 |
|
| $3,999,732 |
| ||||
David M. Reese |
| $3,399,678 |
|
| $3,999,732 |
| ||||||||||
Jonathan P. Graham
|
|
1,874,915
|
|
|
2,499,887
|
|
| $2,379,680 |
|
| $2,799,624 |
| ||||
| (3) | For |
| (4) | Reflects amounts that were earned under our Executive Incentive Plan, or EIP, for |
| (5) | See the subsection “All Other Compensation—Perquisites and Other Compensation” immediately following these footnotes. |
|
|
All Other Compensation—Perquisites and Other Compensation
Perquisites. The amounts reported reflect the aggregate incremental cost of perquisites and other personal benefits provided to our NEOs and are included in the “All Other Compensation” column of the “Summary Compensation Table.” The following table sets forth the perquisites provided to our NEOs in 2017.2019.
| Personal Use of Company Aircraft(1) | Personal Use of Company Car and Driver(2) | Personal Financial Planning Services | Other(3) | Personal Use of Company Aircraft(1) | Personal Use of Company Car and Driver(2) | Personal Financial Planning Services | Moving and Relocation Expenses(3) | Other(4) | ||||||||||||||||||||||||||||||||||||||||
| Name | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Total($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Tax Gross- Up($) | Aggregate Incremental Cost($) | Total($) | ||||||||||||||||||||||||||||||||||||
Robert A. Bradway
|
|
111,098
|
|
|
3,866
|
|
|
15,000
|
|
|
10,539
|
|
|
140,503
|
|
| 106,505 |
|
| 4,306 |
|
| 15,000 |
|
| 0 |
|
| 0 |
|
| 16,173 |
|
| 141,984 |
| ||||||||||||
Anthony C. Hooper
|
|
805
|
|
|
1,455
|
|
|
15,000
|
|
|
9,330
|
|
|
26,590
|
| |||||||||||||||||||||||||||||||||
Sean E. Harper
|
|
0
|
|
|
0
|
|
|
15,000
|
|
|
7,500
|
|
|
22,500
|
| |||||||||||||||||||||||||||||||||
Murdo Gordon |
| 209 |
|
| 47 |
|
| 15,000 |
|
| 4,347 |
|
| 34,879 |
|
| 10,354 |
|
| 64,836 |
| |||||||||||||||||||||||||||
David W. Meline
|
|
90
|
|
|
2,388
|
|
|
15,000
|
|
|
6,842
|
|
|
24,320
|
|
| 204 |
|
| 3,113 |
|
| 15,000 |
|
| 0 |
|
| 0 |
|
| 12,758 |
|
| 31,075 |
| ||||||||||||
David M. Reese |
| 0 |
|
| 0 |
|
| 15,000 |
|
| 0 |
|
| 0 |
|
| 12,497 |
|
| 27,497 |
| |||||||||||||||||||||||||||
Jonathan P. Graham
|
|
90
|
|
|
40
|
|
|
15,000
|
|
|
6,842
|
|
|
21,972
|
|
| 209 |
|
| 76 |
|
| 15,000 |
|
| 0 |
|
| 0 |
|
| 10,221 |
|
| 25,506 |
| ||||||||||||
| (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 |
| (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 or rental costs and driver salaries are not included. |
ï 20182020 Proxy Statement 6567
|
Executive Compensation Tables
|
|
| (3) | Mr. Gordon agreed to relocate from New Jersey to Thousand Oaks, California to serve as Executive Vice President, Global Commercial Operations commencing in September 2018. The incremental cost of certain relocation benefits that were provided to Mr. Gordon in 2019 in connection with his relocation in accordance with our relocation policies, include: |
| (a) | $4,347 for reimbursed relocation-related travel expenses and miscellaneous other relocation expenses; and |
| (b) | $34,879 for taxgross-up payments on moving and relocation benefits provided. |
| (4) | Other expenses |
| (a) | Company contributions tonon-profit charities designated by the executive in the amount of |
| (b) | Executive physicals, expenses related to guests accompanying the NEOs on business travel, gifts, and |
Other Compensation. The following table sets forth compensation for our NEOs in 20172019 incurred in connection with our 401(k) Retirement and Savings Plan, or 401(k) Plan, our NDCP, and our Supplemental Retirement Plan, or SRP. These amounts, along with the perquisites and other compensation discussed above, are included in the “All Other Compensation” column of the “Summary Compensation Table.” See “Nonqualified Deferred Compensation” below for a description of these plans.
| Name | Company Contributions to 401(k) Retirement and Savings Plan($) | Company Credits to Supplemental Retirement Plan($) | Total($) | Company Contributions to 401(k) Retirement and Savings Plan($) |
Company Credits to Non-Qualified |
Company Credits to Supplemental Retirement Plan($) | Total($) | |||||||||||||||||||||
Robert A. Bradway
|
|
27,000
|
|
|
493,538
|
|
|
520,538
|
|
| 28,000 |
|
| 0 |
|
| 521,185 |
|
| 549,185 |
| |||||||
Anthony C. Hooper
|
|
27,000
|
|
|
241,877
|
|
|
268,877
|
| |||||||||||||||||||
Sean E. Harper
|
|
27,000
|
|
|
220,231
|
|
|
247,231
|
| |||||||||||||||||||
Murdo Gordon |
| 22,231 |
|
| 0 |
|
| 125,415 |
|
| 147,646 |
| ||||||||||||||||
David W. Meline
|
|
27,000
|
|
|
220,331
|
|
|
247,331
|
|
| 28,000 |
|
| 0 |
|
| 233,765 |
|
| 261,765 |
| |||||||
David M. Reese |
| 28,000 |
|
| 0 |
|
| 160,314 |
|
| 188,314 |
| ||||||||||||||||
Jonathan P. Graham
|
|
27,000
|
|
|
182,723
|
|
|
209,723
|
|
| 28,000 |
|
| 0 |
|
| 207,688 |
|
| 235,688 |
| |||||||
68 ï 2020 Proxy Statement
Executive Compensation Tables |
Grants of Plan-Based Awards
The following table sets forth summary information regarding all grants of plan-based awards made to our NEOs for the year ended December 31, 2017.2019. All of our equity based awards were granted under the Amgen Inc. 2009 Equity Incentive Plan, as amended.
Estimated Future Payouts |
Estimated Future | All Other Stock Awards: Number of Shares of Stock or Units(#)(4) | All Other Option Awards: Number of Securities Underlying Options (#)(5) | Exercise ($/Sh) | Grant Date Fair Value of Stock and Option Awards($) |
Estimated Future Payouts |
Estimated Future Payouts | All Other | All Other (#)(5) | Exercise ($/Sh) | Grant Date
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Approval Date(1) | Threshold | Target | Maximum | Threshold | Target | Maximum | Grant Date | Approval Date(1) | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EIP | Performance Units | RSUs | Stock Options | EIP/GMIP | Performance Units | RSUs | Stock Options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert A. Bradway | 3/7/17 | 3/7/17 | (2) | (2) | 11,702,500 | 3/6/19 | 3/6/19 | (2) | (2) | 11,285,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | (3) | 33,543 | 67,086 | 5,999,836 | (6) | 5/3/19 | 3/6/19 | (3) | 37,154 | 74,308 | 6,999,814 | (6) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | 14,760 | 2,399,976 | (7) | 5/3/19 | 3/6/19 | 15,791 | 2,799,902 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/1/17
|
|
| 3/7/17
|
|
| 130,718
|
|
| 162.60
|
|
| 3,599,974
| (8)
|
| 5/3/19
|
|
| 3/6/19
|
|
| 137,840
|
|
| 177.31
|
| 4,199,985 | (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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Murdo Gordon | 3/6/19 | 3/6/19 | (2) | (2) | 6,771,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | (3) | 10,342 | 20,684 | 1,849,874 | (6) | 5/3/19 | 3/6/19 | (3) | 10,615 | 21,230 | 1,999,866 | (6) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | 4,551 | 739,993 | (7) | 5/3/19 | 3/6/19 | 4,511 | 799,845 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/1/17
|
|
| 3/7/17
|
|
| 40,305
|
|
| 162.60
|
|
| 1,110,000
| (8)
|
| 5/3/19
|
|
| 3/6/19
|
|
| 39,382
|
|
| 177.31
|
| 1,199,970 | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David W. Meline | 3/7/17 | 3/7/17 | (2) | (2) | 7,021,500 | 3/6/19 | 3/6/19 | (2) | (2) | 6,771,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | (3) | 9,783 | 19,566 | 1,749,885 | (6) | 5/3/19 | 3/6/19 | (3) | 10,615 | 21,230 | 1,999,866 | (6) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | 4,305 | 699,993 | (7) | 5/3/19 | 3/6/19 | 4,511 | 799,845 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/1/17
|
|
| 3/7/17
|
|
| 38,126
|
|
| 162.60
|
|
| 1,049,990
| (8)
|
| 5/3/19
|
|
| 3/6/19
|
|
| 39,382
|
|
| 177.31
|
| 1,199,970 | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David M. Reese | 3/6/19 | 3/6/19 | (2) | (2) | 6,771,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/3/19 | 3/6/19 | (3) | 10,615 | 21,230 | 1,999,866 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/3/19 | 3/6/19 | 4,511 | 799,845 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/3/19
|
|
| 3/6/19
|
|
| 39,382
|
|
| 177.31
|
| 1,199,970 | (8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan P. Graham | 3/7/17 | 3/7/17 | (2) | (2) | 4,681,000 | 3/6/19 | 3/6/19 | (2) | (2) | 4,514,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | (3) | 6,988 | 13,976 | 1,249,944 | (6) | 5/3/19 | 3/6/19 | (3) | 7,430 | 14,860 | 1,399,812 | (6) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | 3,075 | 499,995 | (7) | 5/3/19 | 3/6/19 | 3,158 | 559,945 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/1/17
|
|
| 3/7/17
|
|
| 27,233
|
|
| 162.60
|
|
| 749,997
| (8)
| 11/1/19 | 10/21/19 | 9,176 | 1,999,909 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/3/19
|
|
| 3/6/19
|
|
| 27,568
|
|
| 177.31
|
| 839,997 | (8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Reflects the date on which the grants were approved by the |
| (2) | Represents awards to our NEOs made under our EIP. For our EIP participants, the “maximum” amounts shown in the table above reflect the largest possible payments under our EIP for the |
66 ï 20182020 Proxy Statement 69
|
Executive Compensation Tables
|
|
|
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards($) | Non-Equity Compensation($) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards($) | Non-Equity Compensation($) | |||||||||||||||||||||||||||||
| Name | Threshold | Target | Maximum | Actual | Threshold | Target | Maximum | Actual | ||||||||||||||||||||||||
Robert A. Bradway
|
|
—
|
|
|
2,333,077
|
|
5,249,423
|
2,683,000
|
| — |
|
| 2,390,769 |
|
| 5,379,230 |
|
| 3,321,000 | |||||||||||||
Anthony C. Hooper
|
|
—
|
|
|
1,049,769
|
|
2,361,980
|
1,207,000
| ||||||||||||||||||||||||
Sean E. Harper
|
|
—
|
|
|
970,308
|
|
2,183,193
|
1,116,000
| ||||||||||||||||||||||||
Murdo Gordon |
| — |
|
| 1,021,154 |
|
| 2,297,597 |
|
| 1,418,000 | |||||||||||||||||||||
David W. Meline
|
|
—
|
|
|
970,308
|
|
2,183,193
|
1,116,000
|
| — |
|
| 994,646 |
|
| 2,237,954 |
|
| 1,382,000 | |||||||||||||
David M. Reese |
| — |
|
| 970,139 |
|
| 2,182,813 |
|
| 1,348,000 | |||||||||||||||||||||
Jonathan P. Graham
|
|
—
|
|
|
745,785
|
|
1,678,016
|
858,000
|
| — |
|
| 878,494 |
|
| 1,976,612 |
|
| 1,220,000 | |||||||||||||
| (3) | Reflects estimated payouts regarding performance units granted during |
|
All performance units accrue dividend equivalents deemed reinvested in shares and that are payable in shares only to the extent and when the underlying performance units are earned. For more information, see “Elements of Compensation and Specific Compensation Decisions—Long-Term Incentive Equity Awards” in our Compensation Discussion and Analysis. All 2019 operating measures with respect to the 2019-2021 performance period discussed above are reported and reconciled in Appendix B. |
| (4) | Reflects the RSUs granted during |
| (5) | Reflects the |
| (6) | Reflects the grant date fair values of performance units granted |
| (7) | Reflects the grant date fair values of RSUs granted during |
| (8) | Reflects the grant date fair values of stock options granted during |
70 ï 20182020 Proxy Statement 67
|
Executive Compensation Tables
|
|
Outstanding Equity Awards at Fiscal Year EndYear-End
The following table sets forth summary information regarding the outstanding equity awards at December 31, 20172019 granted to each of our NEOs.
= 0% (Target)
= 0% (Target)
Printed on recycled paper
