2018 Proxy Statement and Notice of Annual Meeting of StockholdersPROXY STATEMENTAND NOTICE OFANNUAL MEETINGOF STOCKHOLDERS2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Preliminary Proxy Statement
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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 StockholdersPROXY STATEMENTAND NOTICE OFANNUAL MEETINGOF STOCKHOLDERS2021
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, 20186, 2021
Dear Fellow Stockholder:
You are invited to attend the 20182021 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc. to be held on Tuesday, May 22, 2018,18, 2021, at 11:00 A.M., local time,Pacific Time, via the internet at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362.www.virtualshareholdermeeting.com/AMGN2021.
Our Company:Mission:At 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 innovativemedicinesinnovativemedicines 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 setmission to serve patients is supported by our long-standing focus on using our resources responsibly to support the sustainability of activitiesour business and the global environment in which we are pursuingand our patients live.
Unprecedented Year: 2020 was a year like no other in our 40-year history. We’ve experienced a global pandemic, worldwide economic disruption, widespread social unrest, and yet have continued to deliver for patients (both those currently on Amgen medicines and those who stand to benefit from the potential new medicines in our pipeline), while keeping our staff safe, contributing to the efforts to address COVID-19, and supporting the communities where we live and work.
Execution of Our Strategy: While successfully managing the effects of the COVID-19 pandemic on our global operations, we have remained focused on our strategic priorities, advancing key strategic goals in 2020 that will drive our long-term growth. We invested to strengthen our competitive positiondiscovery capabilities, accelerate the number of product teams formed to develop genetically validated medicines that address serious diseases, and advanced two late-stage medicines – sotorasib, our KRAS G12C small molecule inhibitor for advanced non-small cell lung cancer, and tezepelumab for severe asthma – through pivotal trials. Of note, demonstrating our commitment to bringing the promise of our therapies to patients as quickly as possible, sotorasib was on file with regulators in the U.S. and Europe just 28 months after we dosed our first patient. We successfully integrated Otezla®, launched an oncology collaboration with BeiGene, Ltd. in China, and also established our wholly-owned affiliate in Japan. We continued to advance our biosimilar program with the launches of AVSOLA® and RIABNI™ in the U.S. We are in our industry. In additionfourth year of successfully operating our smaller footprint, highly resource efficient next-generation biomanufacturing facility in Singapore that dramatically reduces the scale and costs of making biologics, and vastly reduces water and energy use, while maintaining a reliable, high-quality, compliant supply of medicines. This success, along with U.S. corporation tax incentives to invest in innovation and advanced technologies, led to our significant commitmentbuilding a second such plant in Rhode Island that, upon approval by global regulatory authorities, will expand our manufacturing capacity, while also delivering these efficiencies. We continue to innovative research and development, we are developing branded biosimilars, expanding our global geographic reach, deploying next-generation biomanufacturing facilities, improving drug delivery systems, adhering tomaintain a disciplined approach to capital allocation, investing 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 discuss further discuss our progress for 2017 against these objectives. In 2017, we had consistent, strong execution2020 strategic progress.
Our Commitment to Society: As part of our strategymission to serve patients, we take our environmental sustainability, social responsibility, and remainedcorporate governance, or ESG, responsibilities seriously. In January, we launched our new environmental sustainability plan, our third since 2007, that includes a goal of achieving carbon neutrality in our owned and operated facilities by 2027 (while also reducing water use by 40% and waste disposed by 75%(1)). Since its inception, the Amgen Foundation has contributed more than $350 million to non-profit organizations across the world that reflect our core values and complement Amgen’s purpose-driven dedication to impacting lives in inspiring and innovative ways. Through patient assistance programs, expanded access to investigational therapies, donations, and other initiatives, we have developed patient support programs worldwide to assist eligible patients to obtain the medicines they need. We increased our focus on diversity, inclusion, and belonging, including by becoming a founding member of OneTen, a coalition of more than 40 of the world’s largest, best-known companies, that aims collectively to hire one million Black Americans (with a specific focus on those without four-year college degrees) into good-paying family-sustaining jobs over the next ten years, and as a founding sponsor of Lazarex Cancer Foundation’s IMPACT (Improving Patient Access to Cancer Clinical Trials) program, focused on generating long-term stockholder valueimproving patient enrollment, minority participation, and built on a strong record of delivering superior returns to our stockholders. A clear measure of our success is the number of patients reached and helped by our medicines throughout the world.equitable access in cancer clinical trials.
Stockholder Engagement:We are also guided by, and appreciative of, the perspectives of our stockholders as expressed through directtheir engagement with us throughout the year and at our Annual Meeting. SinceConsistent with prior years’ practices, since our 20172020 annual meeting of stockholders, in addition to our outreach by our executives and Investor Relations department to investors, we have engaged in governance-focused outreach activities and discussions with the governance teams for stockholders comprising approximately 52%54% of our outstanding shares. Topics discussed includedIn addition to our businessstrategic and financial performance,outlook, investors have conversed with us about how we are managing the impact of the pandemic, our governanceESG programs, our efforts around diversity, 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 the course of these meetingsactivities is shared with the fullour Board of Directors and informedinforms Board 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.
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 2017,2020, 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 22.18. As a final note, and also on behalf of theour Board, of Directors, I would like to thank David BaltimoreFred Hassan, who will retire from our Board and François de Carbonnel who areis not standing forre-election at the Annual Meeting, for theirhis years of wise counsel and guidance forto Amgen.
Sincerely,
Robert A. Bradway
Chairman of the Board,
Chief Executive Officer and President
| (1) | Reductions take into account only verified reduction projections, and do not take into account changes associated with the contraction or expansion of the Company. |
Amgen Inc. One Amgen Center Drive Thousand Oaks, California 91320-1799 |
Notice of Annual Meeting of Stockholders
To be Held on May 22, 201818, 2021
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 at www.virtualshareholdermeeting.com/AMGN2021 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, | |||
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| 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,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, 20186, 2021
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Table of Contents
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| Proxy Statement Summary | 1 | |||
| Item 1—Election of Directors | 7 | |||
| Corporate Governance | 15 | |||
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Process for Selecting Directors, Director Qualifications, and | 23 | |||
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Governance Committee Processes and Procedures for Considering and Determining Director Compensation | 26 | |||
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| 33 | ||||
| 34 | ||||
| 35 | ||||
| 35 | ||||
| Item 2—Advisory Vote to Approve Our Executive Compensation | 36 | |||
| Executive Compensation | 41 | |||
| Compensation Discussion and Analysis | 41 | |||
ï 20182021 Proxy Statement
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Proxy Statement Summary
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This summary contains highlights about our Company and the upcoming 20182021 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.
20182021 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 at www.virtualshareholdermeeting.com/AMGN2021 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
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Our Board Vote Recommendation
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Management Proposals: | ||||
Item 1: | Election of | FOR each Director Nominee | ||
Item 2: | Advisory Vote to Approve Our Executive Compensation (page 36) | FOR | ||
Item 3: | Ratification of Selection of Independent Registered Public Accountants (page | |||
94) | FOR
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How 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, visit www.virtualshareholdermeeting.com/AMGN2021. 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. |
ï 20182021 Proxy Statement1
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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/CFOs
Item 1: Election of 1311 Nominees to the Board of Directors (Page 7)
Nominee | Age | | Director Since |
| Audit | | Governance and Nominating |
| Executive | | Compensation and Management Development |
| | Equity Award |
| | Corporate Responsibility and Compliance | |||||||||||||||||
Wanda M. Austin
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| 63
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| 2017
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| M
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Robert A. Bradway
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| 2011
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| C
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Brian J. Druker(1)
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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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Greg C. Garland
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| 2013
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Fred Hassan
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| 72
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| 2015
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Rebecca M. Henderson
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| 2009
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Frank C. Herringer
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Charles M. Holley, Jr.
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Tyler Jacks
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| 2012
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Ellen J. Kullman
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Ronald D. Sugar
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R. Sanders Williams
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| 2014
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Corporate Governance Highlights and Best Practices
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2 
ï 2018 Proxy Statement
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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:
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ï 2018 Proxy Statement 3
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Item 2: Advisory Vote to Approve Our Executive
Compensation (Page 27)
2017 Target Total Direct Compensation Mix
We pay for performance,Board Tenure ~ 6Years Average Board Tenure <3 Years 3-6 Years 7-9 Years >9 Years Diverse Independent Director Perspectives Experienced Current 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 approvesFormer Public 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.
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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
CEOs/ CFO Scientific Research and/orHealthcare Experience Financial Industry Experience Women Racially /Ethnically Diverse Proxy Access FOR DIRECTOR NOMINATIONS ~92% INDEPENDENT DIRECTORS Lead INDEPENDENT DIRECTOR NEW DIRECTORS SINCE 2015 ~ 6 years AVERAGETENURE CURRENT/ FORMER PUBLIC COMPANY CEO/CFOs 2 5 4 ï 2018 Proxy Statement
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2017 Performance
2017 Annual Cash Incentive Program
Goal
| Weighting
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% of Target
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1. Financial Performance
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Revenues
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| 30%
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| 110.6%
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Non-GAAP Net Income(1)
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| 30%
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| 116.8%
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2. Progress Innovative Pipeline
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Execute Key Clinical Studies and Regulatory Filings
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| 20%
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| 123.0%
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Advance Early Pipeline
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| 5%
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| 201.7%
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3. Deliver Annual Priorities
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Execute Critical Launches and Long-Term Commercial Objectives
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| 10%
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| 76.0%
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Realize Functional Transformation Objectives
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| 5%
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| 90.4%
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Composite Score
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| Achieved 115.0%
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Long-Term Incentive Performance Award Program
Long-Term Incentive Program
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Equity
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% of Target
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Performance Units | 50% | 93.4% | ||||
(2015-2017 performance period)
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ï 2018 Proxy Statement 5
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Item 3: Ratification of Selection of Independent Registered Public Accountants (Page 86)
The Audit Committee of the Board has selected Ernst & Young LLP, or Ernst & Young, as our independent registered public accountants for the fiscal year ending December 31, 2018.
Ernst & Young has served as our independent registered public accounting firm since the Company’s inception in 1980.
Each year, the Audit Committee evaluates the qualifications and performance of the Company’s independent registered public accountants and determines whether tore-engage the current independent registered public accountants.
Based on this evaluation, the Audit Committee believes that the continued retention of Ernst & Young is in the best interests of the Company and its stockholders.
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Item 4: Stockholder Proposal (Page 88)
Stockholders have informed the Company that they intend to present a proposal at our Annual Meeting.
The proposal relates to the request for an annual report on the extent to which risks related to public concern over drug pricing strategies are integrated into our executive incentive compensation.
The 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:
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1 8 6 ï 2018 Proxy Statement4 3 2 6 8
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Election of Directors
Under our governing documents, the Board of Directors, or Board, has the power to set the number of directors from time to time by resolution. We currently have 14 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, or in thecaseofDr. AustinandBrianJ.Drukertostandforinitialelectionby ourstockholders,ineachcasefor aone-yeartermexpiringatour2019 annualmeetingofstockholdersanduntilhisorhersuccessoriselected andqualified,oruntilhisorherearlierretirement,resignation,
disqualification, removal or death. David Baltimore and François de Carbonnelwill retire from our Board and have not been nominated forre-election at the 2018 Annual Meeting of Stockholders, or Annual Meeting. The Board has fixed the authorized number of directors at 13 to be effective as of the close of the Annual Meeting and the election by stockholders of the nominees standing for election. The independent members of the Board have elected Robert A. Eckert to continue to serve as our lead independent director, subject to hisre-election to the Board by our stockholders at the Annual Meeting. As lead independent director, Mr. Eckert will continue to have the specific and significant duties as discussed under “Corporate Governance.”
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
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| 2017
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| M
| M
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Robert A. Bradway
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| 55
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| 2011
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| 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
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| 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
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| M
| M
| ||||||||||||
Rebecca M. Henderson
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| 57
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| 2009
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| M
| M
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Frank C. Herringer
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| 75
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| 2004
|
| M
| M
| M
| |||||||||||
Charles M. Holley, Jr.
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| 61
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| 2017
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| C
| M
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Tyler Jacks
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| 57
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| 2012
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| M
| M
| ||||||||||||
Ellen J. Kullman
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| 62
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| 2016
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| M
| M
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Ronald D. Sugar
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| 69
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| 2010
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| M
| M
| C
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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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| ✓
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| 66
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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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| 58
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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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| 65
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| 2018
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| M |
| M
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Robert A. Eckert
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| ✓
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| 66
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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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| 63
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| 2013
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| C
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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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| 64
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| 2017
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| C
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| M |
| M
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Tyler Jacks
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| ✓
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| 60
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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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| 65
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| 2016
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| M
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| M
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Amy E. Miles
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| ✓
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| 54
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| 2020
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| M |
| M
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Ronald D. Sugar
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| ✓
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| 72
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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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| ✓
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| 72
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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. |
2 ï 2021 Proxy Statement
| Proxy Statement Summary |
We Have Implemented Governance Best Practices
We continuously monitor developments and best practices in corporate governance and consider stockholder feedback when enhancing our governance structures. Below are highlights of our key governance practices:
Effective Board �� Leadership and Independent Oversight | ✓ Highly Independent Board – 10 of our 11 director nominees (page 25) ✓ Regular Executive Sessions of Independent Directors and Access to Management (pages 15, 17, and 24) ✓ Continuous Refreshment Practices (pages 15 and 22-23) – 6 New Directors Since 2015 – 3 Women and 2 Diverse Directors – Average Board Tenure of Approximately 6 Years for ✓ Annual Anonymous Board and Committee Evaluation Process (pages 15 and ✓ All Directors Meet Our Board of Directors Guidelines for Director Qualifications and Evaluations (Appendix A) ✓ Robust Lead Independent Director Role (pages 15-17) ✓ Limitation on Number of Other Boards (page 15) ✓ Corporate Responsibility and Compliance Committee ✓ Enterprise Risk Management Program and Annual Detailed Compensation Risk Analysis – overseen by Board and Compensation and Management Development Committee, respectively (pages 18-19 and 33-34) | |||
Focus on Stockholder Rights | ✓ Single Class of Shares – One share equals one vote (page 16) ✓ Proxy Access – Up to 20 eligible stockholders that own 3% of shares for 3 years who meet the requirements set forth in our Bylaws may have their director nominees constituting up to the greater of 20% of the total directors or two nominees included in our proxy materials (pages 16 and 102) ✓ Majority Voting Standard for Director Elections (pages 15 and 100) ✓ Stockholders (1) May Act By Written Consent (page 16) ✓ Stockholders (1) Have a Right to Call Special Meetings (15% threshold requirement) (page 16) ✓ No Supermajority Vote Provisions in Certificate of Incorporation or Bylaws (page 16) ✓ No Poison Pill (page 16) | |||
History of Transparency and Accountability | ✓ Regular Engagement With Stockholders to Seek Feedback (pages 15, 39, and 50) ✓ Our Approach to Environmental Sustainability, Social Responsibility, and Corporate Governance (ESG), Has Delivered Environmentally Responsible Operations, Improved Patient Access to Medicines, High Quality, Free Science Education Resources, and Benefited the Communities Where We Live and Work (pages 28-31) ✓ Significant Stock Ownership Requirements for Officers and Directors (pages 33-34, 43, 66-67, and 87) |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE 11 NAMED NOMINEES. | ||||
| (1) | Who meet the requirements set forth in our Restated Certificate of Incorporation or our Amended and Restated Bylaws, as applicable. |
ï 2021 Proxy Statement3
Proxy Statement Summary |
Item 2: Advisory Vote to Approve Our Executive
Compensation (Page 36)
Since the declaration of the COVID-19 pandemic, we have remained focused on our strategic priorities while successfully managing the effects of the pandemic on our global operations. Despite the pandemic, we have delivered strong performance in the COVID-19 environment: our remote working arrangements have not significantly affected our ability to maintain critical business operations; we have completed key clinical trials; and we have been able to supply physicians and patients as we have avoided disruptions or shortages of our supply of medicines.
We Have Implemented Compensation Best Practices
What we do |
| ✓ | Long-term performance-based equity awards (80% of total target equity, of which 50% are three-year performance awards and 30% are stock options) |
| ✓ | A substantial majority of NEO compensation is performance based and at-risk |
| ✓ | Recently updated recoupment provisions for misconduct to include forfeiture and cancellation of unvested or unexercised equity awards, in addition to our existing annual cash incentive award recoupment policy |
| ✓ | Clawback policy tied to financial restatement |
| ✓ | Robust stock ownership and retention guidelines |
| ✓ | Minimum vesting periods for equity compensation |
| ✓ | Independent compensation consultant |
| ✓ | Amgen Values overlay our performance goals |
What we don’t do |
× | No hedging or pledging | |
× | No re-pricing or backdating | |
× | No tax gross-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
| 2020 Total Target Direct Compensation Mix | ||
• A significant amount of each Named Executive Officer’s, or NEOs, compensation is at-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. |
91% pay at risk76% performance based 83% pay at risk70% performance based Other NEOs CEO LTI Equity Awards Annual |
4 ï 20182021 Proxy Statement
Proxy Statement Summary |
72020 Annual and Long-Term Awards Reflect Performance Against Pre-Established Goals and Measures
We established the goals for our annual cash incentive award and long-term incentive, or LTI, equity award programs prior to
the World Health Organization (WHO) declaration of the COVID-19 global pandemic. Since then, we have not made any
changes to these goals. Thus, performance reported is against goals established prior to the pandemic.
2020 Annual Cash Incentive Plan
| 2018-2020 Long-Term Incentive Performance Award Payout
| |||||||||
Our annual cash incentive plan 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 LTI equity award grants are performance-based, aligning compensation with long-term value creation for our stockholders. Performance units comprise 50% of our annual LTI equity award grants, with the goal design and all measurement targets established at the beginning of the three-year performance period. | |||||||||
Goal | Weighting |
% of Target Earned |
|
2018-2020 Performance Period Award Calculation 2018-2020 Non-GAAP(2) Operating Measures 2018 2019/2020 EPS Growth Operating Margin Operating Expense ROIC 93.4% 2018-2020 RelativeTSR Performance 62.8th percentilerelative to S&P 500 TSRs Fina lPayout Multiplier108.8% | ||||||
Financial Performance | ||||||||||
Revenues | 30% | 109.9% | ||||||||
Non-GAAP Net Income(1) | 30% | 225.0% | ||||||||
Progress Innovative Pipeline | ||||||||||
Advance Early Pipeline | 10% | 125% | ||||||||
Execute Key Clinical Studies and Regulatory Filings | 20% | 77.8% | ||||||||
Deliver Annual Priorities | ||||||||||
Ensure Successful Integrations and Transitions | 5% | 177.9% | ||||||||
Fund Innovation Through Productivity | 5% | 104.2% | ||||||||
Final Score | Achieved 142.6% | |||||||||
| (1) | Non-GAAP net income for purposes of the 2020 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B. |
| (2) | The operating measures of the 2018-2020 performance goals were based on non-GAAP financial results for 2018, 2019, and 2020 as reported and reconciled in Appendix B. |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. |
ï 2021 Proxy Statement5
Proxy Statement Summary |
Item 3: Ratification of Selection of Independent Registered Public Accountants (Page 94)
Each year, the Audit Committee evaluates the qualifications and performance of the Company’s independent registered public accountants and determines whether to re-engage the current independent registered public accountants.
Based on this evaluation, the Audit Committee believes that the continued retention of Ernst & Young LLP, or EY, is in the best interests of the Company and its stockholders.
The Audit Committee of the Board has selected EY as our independent registered public accountants for the fiscal year ending December 31, 2021.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS. |
6 ï 2021 Proxy Statement
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Item 1 — Election of Directors
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Election of Directors
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Under our governance 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 12 authorized directors serving on our Board. Based upon the recommendation of our Governance and Nominating Committee, the Board has nominated each of the director nominees set forth below to stand for re-election as a director, in each case for a one-year term expiring at our 2022 annual meeting of stockholders and until his or her successor is elected and qualified, or until his or her earlier retirement, resignation, disqualification, removal, or death. Fred Hassan will retire from our Board and is not standing for re-election at the 2021 Annual Meeting of Stockholders, or Annual Meeting.
The Board has fixed the authorized number of directors at 11 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.
Each nominee has agreedThe independent members of the Board have elected Robert A. Eckert to continue to serve if elected andas our lead independent director, subject to his re-election to 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 toby our stockholders at the Annual Meeting (an event that currently is not anticipated byMeeting. As lead independent director, Mr. Eckert will continue to have 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.specific and significant duties as discussed under “Corporate Governance.”
Nominees to the Board
Nominee | Independent | Age | | Director Since |
| Audit | | Governance and Nominating |
| Executive |
|
Compensation and Management Development |
| | Equity Award |
| | Corporate Responsibility and Compliance |
| |||||||||||||||||||
Wanda M. Austin |
| ✓ |
|
| 66 |
|
| 2017 |
|
| M |
|
| M |
| |||||||||||||||||||||||
Robert A. Bradway |
| 58 |
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| 2011 |
|
| C |
|
| M |
| ||||||||||||||||||||||||||
Brian J. Druker |
| ✓ |
|
| 65 |
|
| 2018 |
|
| M |
|
| M |
| |||||||||||||||||||||||
Robert A. Eckert |
| ✓ |
|
| 66 |
|
| 2012 |
|
| M |
|
| M |
|
| C |
| ||||||||||||||||||||
Greg C. Garland |
| ✓ |
|
| 63 |
|
| 2013 |
|
| C |
|
| M |
|
| M |
| ||||||||||||||||||||
Charles M. Holley, Jr. |
| ✓ |
|
| 64 |
|
| 2017 |
|
| C |
|
| M |
|
| M |
| ||||||||||||||||||||
Tyler Jacks |
| ✓ |
|
| 60 |
|
| 2012 |
|
| M |
|
| M |
| |||||||||||||||||||||||
Ellen J. Kullman |
| ✓ |
|
| 65 |
|
| 2016 |
|
| M |
|
| M |
| |||||||||||||||||||||||
Amy E. Miles |
| ✓ |
|
| 54 |
|
| 2020 |
|
| M |
|
| M |
| |||||||||||||||||||||||
Ronald D. Sugar |
| ✓ |
|
| 72 |
|
| 2010 |
|
| M |
|
| M |
|
| C |
| ||||||||||||||||||||
R. Sanders Williams |
| ✓ |
|
| 72 |
|
| 2014 |
|
| M |
|
| M |
| |||||||||||||||||||||||
| “C” | indicates Chair of the committee. |
| “M” | indicates member of the committee. |
ï 2021 Proxy Statement7
Item 1 — Election of Directors |
Summary of Director Nominee Core Experiences and Skills
Our Board consists of a diverse group of highly qualified leaders in their respective fields. Most of our directors have senior leadership experience at large companies, have gained significant and wide-ranging management experience (including strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development). Many directors also have public company experience (serving as chief executive officers or chief financial officers, on boards of directors and board committees), an understanding of corporate governance practices and trends, and bring unique perspectives to the Board. A number of our directors have extensive scientific and healthcare expertise relevant to our industry, including pioneering scientific research in the areas of oncology and cardiology and leadership of important academic institutions. The Board and the Governance and Nominating Committee believe the skills, qualities, attributes, experience and diversity of backgrounds of our directors provide us with a diverse range of perspectives to effectively address our evolving needs and represent the best interests of our stockholders.
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.nominee. The details of each director’snominee’s competencies are included in each director’snominee’s profile.
Experience/Skills Austin Bradway Druker Eckert Garland Holley Jacks Kullman Miles 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 a particular strength in that area.
9 new Directors since 2012 8 Experienced Current and Former Public Company 6 Directors w/ Scientific Research and/or CEO/CFO Healthcare Experience 5 Directors with Financial Industry Experience 3 Women Experience / Skills Austin Bradway Druker Eckert Garland Hassan Henderson Herringer Holley Jacks Kullman Sugar Williams Healthcare Industry, Providers and Payers Science/Technology Public Company CEO/COO/CFO Regulatory Compliance Financial/Accounting Government/Public Policy International
8 ï 20182021 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 was the Interim President of the University of Southern California, or USC, from 2018 to 2019 and has served as an Adjunct Research Professor at | |||
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
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 20182021 Proxy Statement9
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Item 1 — Election of Directors
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Brian J. Druker
Director since:
Age:
Committees: • • Corporate Responsibility and Compliance
Other Public Company Boards: • Vincerx Pharma, Inc. |
Brian J. Druker
Dr. Druker has been a director of Vincerx Pharma, Inc., a biopharmaceutical company, since December 2020, and serves on its Nominating and Corporate Governance Committee. 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 FFL Partners, LLC (formerly known as Friedman Fleischer & Lowe, LLP), 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 and, since March 2021, as non-executive Chair of the board. 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.
10 ï 20182021 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. |
Director since:
Age:
Committees: • Audit
|
| |||
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ï 2018 Proxy Statement 11
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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 2019 and serves on the Audit and Finance, and Public Policy Committees. Mr. Holley has also been a director of Carrier Global Corporation, a provider of heating, ventilating, air conditioning (HVAC), refrigeration, fire, and security solutions, since April 2020 and chairs the Audit Committee and serves as a member of the Compensation Committee. Mr. Holley serves on the Advisory Council for the McCombs School of Business at the University of Texas at Austin and the University of Texas Presidents’ Development Board. |
Qualifications
The Board concluded that Mr. Holley should serve on the Board based on his experience as a chief financial officer of a global public company, his financial acumen, and his management and leadership skills. Given his financial and leadership experience, Mr. Holley has been determined to be an Audit Committee financial expert by our Board. | ||
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ï 20182021 Proxy Statement 1311
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Item 1 — Election of Directors
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Tyler Jacks
Director since:2012 Age:60 Committees: • Compensation and Management Development • Corporate Responsibility and Compliance Other Public Company Boards: • Thermo Fisher Scientific, Inc. | Tyler Jacks joined the faculty of Massachusetts Institute of Technology, or MIT, in 1992 and is currently the David H. Koch Professor of Biology, a position he has held since 2007, and founding 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, having served as director from 2007 to 2021. Dr. Jacks is the President of Break Through Cancer, a new foundation bringing together multidisciplinary research teams selected from across five participating institutions(1), a position he has held since February 2021. Dr. Jacks was an investigator with the Howard Hughes Medical Institute, a nonprofit medical research organization, from 1994 until 2021. Dr. Jacks has been a director of Thermo Fisher Scientific, Inc., a life sciences supply company, since 2009, and, until 2019, served on its Strategy and Finance Committee and scientific advisory board and chaired its Science and Technology Committee. In 2006, he co-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 Biotechnologies Company, a biotechnology company, since 2015. Dr. Jacks served on the scientific advisory board of Aveo Pharmaceuticals Inc., a biopharmaceutical company, from 2001 until 2013. In 2015, Dr. Jacks founded Dragonfly Therapeutics, Inc., a privately-held biopharmaceutical company, and serves as Chair of its scientific advisory board. He was appointed to the National Cancer Advisory Board, which advises and assists the Director of the National Cancer Institute with respect to the National Cancer Program, in 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 as co-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.
| (1) | Dana-Farber Cancer Institute, the Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins, The University of Texas MD Anderson Cancer Center, Memorial Sloan Kettering Cancer Center, and the Koch Institute for Integrative Cancer Research at MIT. |
12 ï 2021 Proxy Statement
Item 1 — Election of Directors |
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 is President and Chief Executive Officer of Carbon, Inc., or Carbon, a privately-held 3D printing company, having held this position since 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 a public company 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.
Amy E. Miles
Director since: 2020 Age:54 Committees: • Audit • Governance and Nominating Other Public Company Boards: • Gap Inc. • Norfolk Southern Corporation Audit Committee financial expert | Amy E. Miles has served as a director of the Company since July 2020. Ms. Miles was first identified to the Governance and Nominating Committee as a potential director candidate by Ms. Miles has been a director of Norfolk Southern Corporation, a transportation company, since 2014, and serves on the Executive Committee, the Governance and Nominating Committee, and chairs the Audit Committee. Ms. Miles has been a director of The Gap, Inc., an apparel retail company, since April 2020, and serves on the Audit and Finance Committee. Ms. Miles was a director of National CineMedia, Inc., a cinema advertising company, from 2011 to 2015. She was a director of Townsquare Media, Inc., a radio, digital media, entertainment, and digital marketing solutions company, from 2014 until 2016. Ms. Miles has been a director of ASM Global, a privately-held entertainment and venue management company, since 2019. Ms. Miles serves on the boards of trustees of the University of Tennessee and the Boys and Girls Club of Eastern Tennessee. |
Qualifications
The Board concluded that Ms. Miles should serve on our Board based on Ms. Miles’ board and senior executive-level expertise, including her experience as chief executive officer and chief financial officer of a large public company and her extensive finance, accounting, and management expertise in marketing and strategic planning, and public board experience.
ï 2021 Proxy Statement13
Item 1 — Election of Directors |
Ronald D. Sugar
Director since: 2010
Age:
Committees: • Corporate Responsibility and Compliance (Chair) • Executive • Governance and Nominating
Other Public Company Boards:
• 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 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. Dr. Sugar served as a director of Air Lease Corporation, an aircraft leasing company, | |||
Qualifications
The Board concluded that Dr. Sugar should serve on our Board because of 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 2018 Proxy Statement
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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, a non-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 Committee and chairing the Quality and Compliance Committee. Dr. Williams was a director of Bristol-Myers Squibb Company, a pharmaceutical |
company, from 2006 until 2013. Dr. Williams has served on the board of directors of the Gladstone Foundation, anon-profit institution that is distinct from Gladstone Institutes, since |
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.
14 ï 20182021 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(1) 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 General Counsel, and the Audit Committee members have regular meetings in executive session with our internal and external auditors, our Chief Financial Officer and General Counsel, 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 pages 39 and 50. |
| • | Majority Approval Required for Director Elections. If an incumbent director up for re-election at a meeting of stockholders fails to receive a majority of 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 Actively 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 |
| • | 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. |
| • | Active Management of 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 |
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| (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. |
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director must promptly inform the Chairman of the Board or the Chair of the Governance Committee. All directors are expected to recuse themselves from any discussion or decision found to affect their personal, business, or professional interests. |
Stockholder Rights
| • | Single Class of Shares. We have a single class of shares with equal voting rights. One share equals one vote. |
| • | 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 |
stockholders as a whole, including that the number of stockholders who may group together (20) would afford those stockholders likely to utilize proxy access with the opportunity to do so. |
| • | Action by 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 |
| • | 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 leadBoard 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 director is elected byBoard 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.
In the circumstance that the Board determines that it remains in the best interests of the Company and its stockholders that the CEO serve
as Chairman, the independent members of the Board on an annual basis. Mr. Eckert has been elected asthen elects a lead independent director.
Overview of Lead Independent Director Responsibilities. The responsibilities of the lead independent director effective since the 2016 Annual Meeting and wasre-elected by our Board on March 7, 2018 to continue to serve asare well-defined. The 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 include:
Presiding at meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;
Serving as a liaison between the Chairman and the independent directors;
Previewing the information to be provided to the Board;
Approving meeting agendas for the Board;
Assuring that there is sufficient time for discussion of all meeting agenda items;
Organizing and leading the Board’s evaluation of the CEO;
Being responsible for leading the Board’s annual self-assessment;
Having the authority to call meetings of the independent directors; and
If requested by major stockholders, ensuring that he/she is available for consultation and direct communication.
Key Committees Composed of Independent Directors. The Audit, Compensation, Compliance and Governance Committees are each composed solely of independent directors and provide independent oversight of management. In addition, the Audit, Compensation and Compliance Committees meet in executive session on a regular basis with no members of management present (unless otherwise requested by the committee). Each of our committees effectively manages its Board-delegated duties and communicates regularly with the Chairman and members of management. In addition, the Compensation Committee has an effective process for monitoring and evaluating Mr. Bradway’s compensation and performance. Each committee chair provides a report on committee meetings held to the full Board at each regular meeting of the Board.
Independent Directors Sessions. On a regular basis, the independent directors meet in an executive session without Mr. Bradway to review Company performance, management effectiveness, proposed programs and transactions and the Board meeting agenda items. These independent sessions are organized and chaired by our lead independent director.
Lead Independent Director Responsibilities The lead independent director’s responsibilities outlined in our Corporate Governance Principles include: • Approving meeting agendas for the Board; • 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 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-evaluation; • 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.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, our lead independent director also:
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 who attends Board meetings, such as members of management or outside advisors, and presenters;
Has one-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 has 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 composed solely of and 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, lead independent director, the Board, and members of management.
Furthermore, the Compensation Committee has an effective process for monitoring and evaluating Mr. Bradway’s compensation and performance, as well as succession planning.
Lead Independent Director. Mr. Eckert has been elected annually as the lead independent director since the May 2016 annual meeting of stockholders and was re-elected by our Board on March 3, 2021 to continue to serve as lead independent director subject to his re-election to the Board by our stockholders at the 2021 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.interests. 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, (includingincluding 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 risks associated with COVID-19 are in areas of enterprise risk with respect to which our Board, Audit, Compensation, and Compliance Committees 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 or as-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, as well as 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 | • Oversees non-financial compliance risk, such as regulatory risks associated with the requirements of the U.S. federal health care program, Food and Drug Administration and other regulatory agencies, and risks associated with privacy, antitrust and competition, anti-corruption, information systems and security (including cybersecurity), pricing and access, government affairs, human resources (including diversity, inclusion, and belonging), aspects of ESG (including environmental sustainability, corporate philanthropy, and pricing philosophy and practice), and our reputation. Also oversees staff member compliance with the Code of Conduct. | |||
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WhileCOVID-19 Impacts to Enterprise Risk and Our Response. The far-reaching effects of COVID-19 prompted the Company to consider enterprise risk focused on rare, but high-impact events, such as global pandemics. Our business resilience program is designed to enable us to effectively prepare for and respond to crisis incidents at the global,
regional, and local levels. As the global pandemic began, we activated appropriate crisis management and business continuity plans in a timely manner and communication channels were established with executive leadership and the Board hasreceived regular updates. Certain of our risks were identified as amplified by COVID-19.
In a year that brought health and safety sharply into focus, we have been committed to helping to address the ultimate oversight responsibility for the risk management process, various committees of the Board are structured to oversee specific risks, as follows:pandemic.
Amgen’s Response to the COVID-19 Pandemic As a leading global healthcare company and responsible corporate citizen, Amgen is committed to helping address the COVID-19 pandemic. During 2020, we prioritized: • Ensuring the safety and well-being of our 24,000+ Amgen employees around the world; • Continuing to supply patients – both those currently on Amgen medicines and those who stand to benefit from potential new medicines in our pipeline; • Contributing to the fight against COVID-19: – Utilizing the capabilities of our subsidiary, deCODE Genetics, to study SARS-CoV-2 to contribute to the understanding of COVID-19; – Investigating Otezla®as a potential immunomodulatory treatment for patients hospitalized with SARS-CoV-2 infection in multiple COVID-19 platform trials; and – Leveraging our therapeutic antibody expertise through our global antibody manufacturing collaboration with Eli Lilly and Company. • Helping in the communities where we live and work. For information on our evolving response to this unprecedented situation, please visit www.amgen.com/COVID-19(1). |
Our Employees. Creating a safe and healthy workplace for our staff is a priority at Amgen. In response to the COVID-19 pandemic and to continue to work to ensure the safety and well-being of our employees, we have activated our applicable business continuity plans, including having those of our U.S. employees who are able to work from home do so since mid-March 2020. For employees returning to the workplace and the field, we have also taken additional safety measures, including implementing occupancy limits, restricting business travel, providing personal protective equipment, temperature screening and COVID-19 testing.
Supply of Our Medicines to Patients. We have been able to serve physicians and patients as we have avoided disruptions to delivery and shortages of our supply of medicines.
Helping Our Communities. Amgen and The Amgen Foundation, Inc., a separate legal entity entirely funded by Amgen (Amgen Foundation), have been deeply engaged with our communities during the COVID-19 pandemic. Together, we committed $12.5 million to support local emergency response efforts in Amgen’s U.S. and international communities, patient-focused organizations mounting their own response efforts, and international relief efforts by Direct Relief and International Medical Corps. Additionally, the free online learning programs supported by the Amgen Foundation, including LabXchange and the Khan Academy, have helped students continue their science education during school closures.
Our Board has adopted two codes of business conduct, 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 global code of conduct is required and our Board participates in such training. We also have a code of ethics for senior financial officers. To view our codes of business conduct and ethics, please visit our website at
www.amgen.com(1). 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 on our website. There were no waivers of any of our codes of business conduct or code of ethics in 2020.
| (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. |
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Audit Committee
• Oversees financial risk, such as capital risk, financial compliance risk and internal controls over financial reporting.
Corporate Responsibility and Compliance Committee
• Overseesnon-financial compliance risk, such as regulatory risks associated with the requirements of the Federal health care program, Food and Drug Administration, and the Corporate Integrity Agreement, and risks associated with pricing and access, information security, including cybersecurity, and our reputation. Also oversees staff member compliance with the Code of Conduct.
Compensation and Management Development Committee
• Evaluates whether the right management talent is in place and oversees succession planning. Also oversees our compensation policies and practices, including whether such policies and practices balance risk-taking and rewards in an appropriate manner as discussed further below.
Governance and Nominating Committee
• Oversees the assessment of each member of the Board’s independence, as well as the effectiveness of our Corporate Governance Principles and Board of Directors’ Code of Conduct.
At each regular meeting, or more frequently as needed, the Board considers reports from each of the committees set forth above, which reports may provide additional detail on risk management issues and management’s response.
The Board held seven7 meetings in 20172020 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 our directors serving at the time of our 2020 Annual Meeting were present
at our 2020 Annual Meeting. In light of the then-current membersCOVID-19 pandemic, governmental decrees to postpone or cancel gatherings, and in the best interests of public health and the health and safety of our stockholders, Board, were present atand employees, our 2017 annual meeting2020 Annual Meeting was held by means of stockholders, or 2017 Annual Meeting.remote communications via the internet.
Communication Withwith the Board
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 chairmanChair of the Governance Committee.
For information on our engagement with our stockholders since the 20172020 Annual Meeting, please see page 3850 of our Compensation Discussion and Analysis.
The Board has four key standing committees: the Governance Committee; Audit Committee; Compliance Committee; and Compensation Committee. The Compensation Committee has delegated certain responsibilities to an Equity Award Committee. In addition, an Executive Committee of the Board has all of the powers and authority of the Board in the management of our business and affairs, except with respect to certain enumerated matters, including Board composition and compensation, changes to our Certificate of Incorporation, or any other matter expressly prohibited by law or our
Certificate of Incorporation. The Executive Committee did not meet in 2020. The Board maintains charters for each of these standing 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 at www.amgen.com(1).
| (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. |
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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 Boardinthemanagementofourbusinessandaffairs,exceptwith respect to certain enumerated matters, including Board composition and compensation, changes to ourCertificate of Incorporation or any other matter expressly prohibited by law or our Certificate of Incorporation.
The Executive Committee did not meet in 2017. The Board maintains charters for each of these standing committees. In addition, the Board has adopted a written set of Corporate Governance Principles and a Board of Directors’ Code of Conduct that generally formalize practices we have in place. To view the charters of our standing Board committees, our Corporate Governance Principles and the Board of Directors’ code of conduct, please visit our website atwww.amgen.com.
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Summary of Current Director QualificationsCore Experiences and Review of Board DiversitySkills
Our Governance Committee is responsible for determining Board membership qualificationsconsists of a diverse group of highly qualified leaders in their respective fields. Most of our directors have senior leadership experience at large companies, have gained significant and for selecting, evaluatingdiverse management experience (including strategic and recommending to the Board nominees for annual election to the Board and to fill vacancies as they arise. The Governance Committee reviews periodically with the Board the composition and size of the Board, each committee’s performance and makes recommendations, as necessary, so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity advisable for the Board as a whole and contains at least the minimum number of independent directors required by applicable laws and regulations.
The Governance Committee maintains guidelines for selecting nominees to serve on the Board and for considering stockholder recommendations for nominees. The Amgen Inc. Board of Directors Guidelines for Director Qualifications and Evaluations are included in this proxy statement asAppendix A. Among other things, Board
members should possess demonstrated breadth and depth offinancial planning, public company financial reporting, compliance, risk management, and leadership development). Many directors also have public company experience (serving as chief executive officers or chief financial and/or business acumen or relevantofficers, on boards of directors and board committees) and an
understanding of corporate governance practices and trends, scientific expertise and healthcare industry or scientific experience, integrity and high ethical standards, sufficient time to devotebring unique perspectives to the Company’s business,Board. The Board and the ability to oversee, as a director,Governance and Nominating Committee believe the Company’s businessskills, qualities, attributes, experience, and affairs for the benefitdiversity of backgrounds of our stockholders,directors provide us with a diverse range of perspectives to effectively address our evolving needs and represent the ability to comply with the Amgen Boardbest interests of Directors Code of Conduct and a demonstrated ability to think independently and work collaboratively. In addition, although the Governance Committee does not maintain a diversity policy, the Governance Committee considers diversity in its determinations. Diversity includes race, ethnicity, age and gender and is also broadly construed to take into consideration many other factors, including industry knowledge, operational experience and scientific and academic expertise, geography and personal backgrounds.our stockholders.
20 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 biotechnology. The following chart summarizes the competencies of each director currently represented on our Board. The details of each director nominee’s competencies are included in each director nominee’s profile.
Experience/Skills Austin Bradway Druker Eckert Garland Holley Jacks Kullman Miles 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 a particular strength in that area.
Board Tenure Board Diversity Highlights 25% Female Directors 17% Diverse Directors Gender Diversity Racial/Ethnic Diversity ~ 6 Years Average Board Tenure 2 5 4 1 <3 Years 3-6 Years 7-9 Years >9 Years Continuous Board Refreshment new directors since 2015 6 Independent directors on key 25% Female Directors 17% Diverse Directors 100% Independent directors on key standing committees
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RegularProcess for Selecting Directors, Director Qualifications, and Board and Committee Evaluations
The Board and the Audit, Compensation, Compliance and Governance Committees each have an annual evaluation process which focuses on their roles, effectiveness, and fulfillment of their fiduciary duties.
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The Audit, Compensation, Compliance and Governance Committees each completed their assessments in October 2017 for further evaluationbytheGovernanceCommitteeinDecember2017.TheBoard completeditsevaluationinDecember2017.Eachcommitteeandthe
Board was satisfied with its performance and each was considered to be operating effectively, with appropriate balance among governance, oversight, strategic and operational matters.
Director IndependenceDiversity
At least annually,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 six new directors since 2015, including women as well as those from underrepresented communities, adding critical skills and experience to our Board in furtherance of our strategic priorities.
Our Governance Committee reviewsregularly screens and recommends candidates for nomination by the independence of eachnon-employeefull 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 makes recommendationsevaluate 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 regularly and reports to the Board affirmativelyon the composition and size of the Board, 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 maintains at least the minimum number of independent directors required by applicable laws and regulations.
The Governance Committee determines whether eachand 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 as Appendix A. Among other things, Board members should possess:
a demonstrated breadth and depth of management and leadership experience;
financial and/or business acumen or relevant industry or scientific experience;
integrity and high ethical standards;
sufficient time to devote to the Company’s business;
the ability to oversee, as a director, qualifies as independent. Each director must keepthe Company’s business and affairs for the benefit of our stockholders;
the ability to comply with the Amgen Board of Directors Code of Conduct; and
a demonstrated ability to think independently and work collaboratively.
In addition, the Governance Committee fully and promptly informed as to any development that may affect the director’s independence.
The Board has determined that each of ournon-employee directors is and Frank J. Biondi, Jr. and Judith C. Pelham, who served as directors during part of 2017, were independent during 2017 under The NASDAQ Stock Marketing listing standards and the requirements of the SEC. The Board also determined that Brian J. Druker, who is standing for initial election to the Board, is independent. Mr. Bradway is not independent based on his service as our CEO and President. Mr. Bradway is the only director who also serves us in a management capacity. In making its independence determinations, the Board reviewed direct and indirect transactions and relationships between each director, or any member of his or her immediate family, and us or one of our subsidiaries or affiliates based on information provided by the director, our records and publicly available information.
Allofthereviewedtransactionsandarrangementswereenteredintoin theordinarycourseofbusinessandnoneofthebusinesstransactions, donationsorgrantsinvolvedanamountthat(i)exceededthegreaterof
5% of the recipient entity’s revenues or $200,000 with respect to transactions where a director or any member of his or her immediate family or spouse served in any capacity or (ii) exceeded $10,000 with respect to professional or consulting services provided by entities at which directors serve as professors or employees. The following types and categories of transactions, relationships and arrangements were considered by our Board in making its independence determinations:
Each of the independent directors (or their immediate family members) currently serves or has previously served within the last three yearsview diversity as a professor, trustee, director, or memberpriority, considers diversity in its determinations, and seeks representation across a range of a board, advisory board, council or committee for one or more colleges, universities ornon-profit, charitable organizations,attributes. Diversity includes race, ethnicity, age, and gender and is also broadly construed to take into consideration many other factors, including research orindustry knowledge, operational experience, 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.academic expertise, geography, and personal backgrounds.
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,
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.
Current Board Composition:" 6 new directors since 2015" 3 women" 2 ethnically / racially diverse directors" Independent Search Firms" Stockholders" Independent Directors Candidate Pool Sourced,Maintained and Updated Continuous BoardRefreshment Select Directors GovernanceCommittee Review Review by the full Board Recommend Candidates to the Board " Consider Guidelines for Directo rQualifications and Evaluations (Appendix A)" Consider skills matrix" Consider diversity" Review independence and potentialconflicts" Meet candidates
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Director Education
Our Board believes that director education is important to the ability of directors to fulfill their roles, and supports Board members in their continuous learning. The Board encourages directors to participate in continuing education programs, and we reimburse directors for their expenses associated with this participation. During Board and committee meetings, information sessions are also provided on specific subjects by internal and external experts. New directors also participate in our director orientation program.
Regular Board and Committee Evaluations
Board and committee evaluations play a critical role in supporting the effective 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 Review. Our Governance Committee leads an annual evaluation process of the Board and its committees. Directors provide feedback regarding Board and committee composition and structure, role and effectiveness, fulfillment of fiduciary duties, meetings and materials, and interaction with management.
PlanningThe Governance Committee oversees the Board evaluationprocess. In consultation with our Lead Independent Director, and the Committee Chairs, a framework for evaluation is established, including a review of topics for evaluation thatbecome the substance of the forms of evaluation for the Boardand committees.One-on-One DiscussionsOur Lead Independent Director conducts one-on-one discussions with each independent director. These can did conversations allow for direct and honest feedback on variedaspects of our Boards operations and performance.Follow up Policies, practices, and the composition of our Board and itsCommittees are modified, as appropriate, based onevaluation findings, ongoing feedback, and one-on discussions, and follow-up items are discussed at subsequent Board and Committee meetings. Ongoing Our directors are encouraged to convey feedback to our Lead Independent Director or the Governance Committee duringany executive session throughout the year.Board Evaluation and AssessmentAnnual anonymous evaluations of the Board are collected, compiled, and distributed in advance of the scheduled discussion by the full Board in executive session (typically inDecember) and informed by the results of the Committee levelevaluation discussions as well as the one-on-one Follow up discussions conducted by the Lead Independent Director. Committee Evaluations and Assessment Formal annual anonymous evaluations of the Audit,Compensation, Compliance, and Governance Committeesare collected, compiled, and distributed in advance of thescheduled discussion by each Committee in executive session (typically in October). Each Committee Chairreports out to the full Board on these assessments for reviewand discussion.
Evaluation Results. The Audit, Compensation, Compliance, and Governance Committees each completed their assessments in October 2020 for further evaluation by the Governance Committee in December 2020. The Board completed its evaluation in December 2020. Each committee and the 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, and one-on-one discussions between our lead independent director and each independent 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 each non-employee director and makes recommendations to the Board and the Board affirmatively determines whether each director qualifies as independent. Each director must keep the Governance Committee fully and promptly informed as to any development that may affect the director’s independence.
The Board has determined that each of our non-employee directors and Rebecca M. Henderson, who served as a director during part of 2020, was independent during 2020 under The NASDAQ Stock Market listing standards and the requirements of the SEC. Mr. Bradway is not independent based on his service as our CEO and President. Mr. Bradway is the only director who also serves 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 any of our subsidiaries or affiliates based on information provided by the director, our records, and/or publicly available information.
All of the reviewed transactions and arrangements were entered into in the ordinary course of business and none of the business transactions, donations, or grants involved an amount that (i) exceeded the greater of 5% of the recipient entity’s revenues or $200,000 with respect to transactions where a director or any member of his or her immediate family or spouse served as an employee, officer, partner, director, or controlling shareholder, 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
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Drs. Baltimore,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, the board of trustees, or an advisory board for an entity with which Amgen has business transactions or to which Amgen or the Amgen Foundation makes donations or grants. These 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).
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 from the Amgen Foundation.
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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,matters, including in support of the Governance Committee’s periodic review of director compensation practices.
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The Governance Committee last reviewed director compensation in October 2017 and, at that time, determined that amounts were competitive and the structure was well-designed, and no changes were made.
In 2020, the Governance Committee engaged Frederic W. Cook and Co., or FW Cook, to provide advice regarding director compensation. FW Cook reported directly to the Governance Committee and attended the Governance Committee meeting to evaluate director compensation. No executive officer has authority to delegate any role in determining or recommending the form or amount of these functions to a subcommittee of its members. No delegation of this authority was made in 2017.director compensation.
| • | Based on the analysis provided by FW Cook, the Governance Committee determined to make changes to director compensation effective for 2021, the first increase since 2013, to align with market practice and attract and retain high-quality director candidates in a competitive global marketplace. For more information regarding the changes to director compensation, see “Director Compensation—Changes to Director Compensation for 2021.” |
Current Members: Charles M. Holley, Jr.* (Chair)
Wanda M. Austin
Fred Hassan*
Ellen J. Kullman* Amy E. Miles* (since July 2020)
*Audit Committee financial expert
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 • Reviews any violations or alleged violations of the Company’s Code of Ethics for the CEO and Senior Financial Officers. | |||||||
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 without fear of retaliation, including anonymously through a business conduct hotline;
conducting investigations;
responding appropriately to any compliance violations; and
taking appropriate steps to detect and prevent recurrence.recurrence, including by implementing appropriate corrective and preventive actions.
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 Approach to Environmental Sustainability, and Social Responsibility, Effortsand Human Capital Management
Amgen’s environmental sustainability, social responsibility and corporate governance (ESG) strategy begins with our mission to serve patients and is governed at the highest levels. Our executive leadership reports our progress to the full Board as well as 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 our executive leadership, individual programmatic elements are managed at a functional level.
In addition to ethical business practices and strong corporate governance practices (see the subsection “—Board of Directors Corporate Governance Highlights” discussed previously), our approach to ESG includes operating our business in an environmentally responsible manner, helping patients access our medicines, inspiring the next generation of scientists, supporting the communities in which we live and work, and enhancing the diversity and inclusiveness of our workplace.
Environmental Sustainability
As a science-based company committed to advancing human health, Amgen recognizes the impact that climate change is having on human health around the world. We have demonstrated our commitmenta long-standing objective to conduct environmentally responsible operations by reducingand regularly set targets to challenge ourselves to deliver further improvements. Since 2007, we have successfully advanced our impactenvironmental sustainability program while increasing our global production capacity and expanding our presence to approximately 100 countries.
In 2013, we established our second generation of environmental targets to reduce facility and fleet carbon emissions, waste, and water use (each against a 2012 baseline), and we exceeded all of our 2013-2020 conservation targets. Specifically, during this period, we reduced fleet carbon output (by 20%), facility carbon output (by 10%), water consumption (by 10%), and waste disposed (by 35%).(1)
Building on the environment in multiple areassuccessful execution of our 2020 conservation targets, we announced in January 2021 the launch of a new environmental sustainability plan (our third since 2007) that includes the goal of achieving carbon neutrality in our owned and operated facilities by 2027, while also further reducing water use (by 40%) and waste disposed (by 75%).(1)
AMGENS 2027 ENVIRONMENTAL SUSTAINABILITY GOALS ACHIEVE CARBON NEUTRALITY REDUCE WATER CONSUMED REDUCE WASTE DISPOSED THE FUTURE IS IN OUR HAND 100% 40% 75%
Our 2027 Environmental Sustainability Plan. Amgen’s 2027 sustainability plan is focused on harnessing our innovative capabilities to combat climate change and preserve natural resources. Amgen is investing resources towards achieving these 2027 goals and expects these efforts to help us become not just more environmentally sustainable but also more flexible and productive, resulting in reductions in operating costs from such efficiencies over the same period.
Our 2027 plan features a portfolio of specific projects and initiatives across our operations, including continued investment in our smaller footprint, highly resource efficient next-generation biomanufacturing, smart and integrated facility design, use of on-site solar and other renewable energy sources, electric vehicle fleet conversion, treatment and reuse of water, and the reduction and recycling of single use plastics.
The Road to Net Zero. To help achieve our goal of carbon neutrality by 2027, Amgen is launching a comprehensive carbon reduction strategy focusing on the use of innovative technologies to significantly reduce carbon emissions from our owned and operated facilities, in addition to sourcing renewable energy. Where renewable sources are not available, we expect to prioritize offsetting based on the quality of the credit or offset.
| (1) | Reductions take into account only verified reduction projections, and do not take into account changes associated with the contraction or expansion of the Company. |
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Sustainability by Design. Amgen helped invent the processes and tools that created the global business. biotech industry. As we continue to grow and innovate, we are pioneering advanced technologies and implementing more environmentally responsible approaches throughout the Company to increase operational efficiency, improve access to our medicines, and reduce our environmental footprint.
Our Next-Generation Biomanufacturingcompared to conventional manufacturing: Achieved in Singapore* of the capital cost the construction time of the operating expense Reduced solid waste and usage of chemicals 76% reduction in CO, emissions 78% energy reduction 58% water reduction
Our next-generation biomanufacturing facility in Singapore, which began commercial production 2017, 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, and vastly reduces water and energy use, while maintaining a reliable, high-quality, compliant supply of medicines. The success of our facility in Singapore, along with U.S. corporation tax incentives to invest in innovation and advanced technologies, led to our building a second such plant in Rhode Island that, upon approval by global regulatory authorities, will expand our manufacturing capacity to support our future expected product volume growth, while also delivering these efficiencies.
Sustainable Value Chain. Our footprint and focus on sustainability extends beyond our own employees and facilities. We earned placementare engaging with our suppliers and contractors across the entire value chain – from raw materials suppliers to patient delivery – to set goals to reduce carbon emissions.
Climate Risk Transparency. Amgen reports in alignment with the CDP (formerly Carbon Disclosure Project), which fully adopted the
recommendations of the Task-force 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 atClimate-related Financial Disclosures (TCFD).
www.amgen.com/responsibilityUnited Nations Global Compact. . Further, weWe 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 work to avoid the associated consequences. We continuously invest in our end-to-end supply chain, evaluate and improve our business continuity plans, and make infrastructure investments designed to support the ability of our facilities to operate and withstand disruptive events.
Social Responsibility
Improving Patient Access to Medicines. Through patient assistance programs, expanded access to investigational therapies, donations, and other initiatives, Amgen is committedhas developed support programs for eligible patients around the world as they seek to assisting patients with no or limited drug coverage to accessobtain the medicines they need.
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 limitations, by providing our medicines at no cost. In 2020, the commercial value of Amgen’s medicines provided at no cost to uninsured or underinsured patients by ASNF was approximately $1.5 billion(1). Since 2018, Amgen has also donated approximately $140 million worth of Amgen cancer treatment and supportive care medicines(1) for distribution to patients in more than 20 developing countries through Direct Relief, a leading non-governmental organization.
We provide patient supportcontinue to offer and educationimplement value-based contracts, including risk-sharing, cost-cap programs and effectiveness constructs, to help improve patient access to medicines and offer stakeholders greater budget predictability.
Advancing Health Equity. As part of our mission to serve patients, we are working to improve the diversity and representation of racial and ethnic minority populations in financial needclinical trial research at Amgen and advance solutions and increasing dialogue regarding this area across the industry. We are studying potential treatments for several disease areas that disproportionally affect racial and ethnic minorities, including cardiovascular disease, obesity, multiple myeloma, and different types of solid tumors (e.g., colon, prostate, and lung).
As such, we recognize the criticality of a patient-centric approach to clinical research. In the area of clinical trial diversity, we support efforts to improve the diversity of patients who participate in clinical trials and are focused on addressing access and use throughout the drug development process.
Amgen proudly supports the first-ever, industry-wide principles on clinical trial diversity announced by the Pharmaceutical Research and Manufacturers of America in 2020. Additionally, we are a founding
| (1) | Valued at wholesale acquisition cost. |
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sponsor of Lazarex Cancer Foundation’s IMPACT (Improving Patient Access to Cancer Clinical Trials) program, which is focused on improving patient enrollment, minority participation, and equitable access in cancer clinical trials. We also hosted our medicines. We partner with payersfifth-annual Health Equity Summit to explore the history and ongoing challenges of racial disparities in healthcare and to share riskinsights for addressing structural barriers to quality medical care among communities of color.
Responsible Sourcing and accountabilitySupplier Diversity. All staff members are responsible for health outcomes,upholding the Amgen Values and help patients access the medicines they need without significant financial burden.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 been at the forefront of developing innovative contracting and
partnershipsa supplier diversity program designed to improve population healthidentify, develop, and patient access,utilize small, disadvantaged, veteran, LGBTQ(1), minority, disabled, and women-owned business enterprises, as well as outcomes-basedcompanies located in historically underutilized business zones, in our procurement of goods and risk-sharing approaches that directly link the price of our medicines to their effectiveness.services.
Through ourScience Education. The Amgen Foundation established in 1991, we seekseeks 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
Since its inception 30 years ago, the Amgen Foundation has contributed approximately $300more than $350 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
As COVID-19 continues to address the impact of Hurricane Maria. Moreover, through a twelve-year, $50 million commitment from global educational systems, the Amgen Foundation has expanded its support for free online learning programs, including LabXchange and the Khan Academy, to help student learners around the world continue their science education.
LabXchange, developed at Harvard University with the financial sponsorship of the Amgen Foundation, is a free online science education platform that launched in January 2020 and provides students around the world with access to personalized instruction, virtual lab experiences, and networking opportunities across the global scientific community.
The Amgen Foundation is the exclusive biology content partner of the Khan Academy, a leading online learning educational platform. In 2020, the Amgen Foundation announced the expansion of its partnership with the Khan Academy to support science learning and educational equity amid COVID-19 with virtual biology lessons, partnerships with school districts facing budget shortfalls, and a collaboration with LabXchange.
Additionally, the Amgen Foundation continued to expand the Amgen Biotech Experience (ABE), an innovative science education program that empowers high school teachers to bring biotechnology education into their classrooms. In 2020, ABE launched a new online curriculum that explores the COVID-19 pandemic and,
through a partnership with LabXchange, virtual ABE laboratory activities were made available to student learners in twelve languages at no cost. |
In its seventeenth year, the Amgen Scholars Program makes it possible for young scientistsundergraduates across the globe to engage in cutting-edge research experiences and learn more about biotechnology and drug discovery. Additionally,To address the cancellation of the in-person 2020 Amgen Scholars Program due to COVID-19, the Amgen Foundation supportsand Harvard University created a four-week, virtual program for the Amgen Biotech Experience, an innovativeScholars community.
Our Community. In response to the killing of George Floyd and its aftermath, the Amgen Foundation pledged $7.5 million to support established national and local organizations advancing social justice, equal opportunity, and science education programs explicitly reaching communities of color.
Amgen and the Amgen Foundation have been deeply engaged with our community during the pandemic. Information about this engagement can be found above in the subsection “—Responding to COVID-19.”
The Amgen Foundation also provides programs and resources to empower individual Amgen staff in their charitable activities in our community, including through a matching gift program and by providing service grants to non-profit organizations where staff members regularly volunteer.
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 empowers high schoolhuman capital management, including diversity, inclusion, and middle school teachersbelonging initiatives, are important to bring biotechnology intoour success. We conduct regular staff member engagement assessments that gather feedback on topics, including the overall engagement of staff members, engagement during the COVID-19 pandemic, diversity, inclusion, and belonging, and corporate ethics, and the results of these surveys are discussed with the Board.
Amgen places significant value on fostering and enabling growth of staff, both personally and professionally, and we aim to provide a safe, healthy, innovative, and diverse work environment for our staff. (For more information regarding our human capital resources, please refer to our Form 10-K for the year ended December 31, 2020.)
Our Social Architecture. Since Amgen’s founding in 1980, our staff members have directed their classrooms.intelligence and enthusiasm toward our powerful mission to serve patients. The combination of our clear mission, our aspiration to be the world’s best human therapeutics company, our carefully considered strategy (informed by our mission and aspiration), our well-defined set of Amgen Values, and the clear leadership attributes that we expect from our staff members, form the “social architecture” that defines our unique culture. This social architecture is deeply rooted in our culture and has been a key enabler of Amgen’s growth from an early pioneer in the biotech industry to a leading innovator and world-class biologics manufacturer.
| (1) | Lesbian, gay, bisexual, transgender, and queer. |
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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, Staff, and Stockholders | Work in Teams | |
| Be Ethical | Collaborate, Communicate, and Be Accountable |
Diverse and Inclusive Workforce. Consistent with the Amgen Values, we are working to bring the diversity of the world community into the Amgen community. We believe that a diverse and inclusive culture fosters innovation, which supports our ability to serve patients. Further, we also believe our global presence is strengthened by having a workforce that reflects the diversity of the patients we serve. It is with these beliefs in mind that we have continued to strengthen and grow our culture of diversity, inclusion, and belonging. To demonstrate the level of our engagement in this area, we established an executive Diversity, Inclusion, and Belonging Council in 2019 consisting of CEO direct reports and chaired by our CEO. With endorsement from executive management and engagement with senior leaders across the organization, we are implementing a global strategy designed to leverage our diversity and create a more inclusive workplace.
We are engaging in activities and setting goals to improve our focus around diversity, inclusion, and belonging, including, in 2020, the launch of a mandatory unconscious bias training program that was completed by 100% of our U.S., Canada, and Puerto Rico staff members (with the rest of the organization to follow this year) and a global portal devoted to diversity, inclusion, and belonging that includes learning and resources for staff members and managers.
In 2020, Amgen became a founding member of OneTen, a coalition of more than 40 of the world’s largest, best-known companies that aims collectively to hire one million Black Americans (with a specific focus on those without four-year college degrees) into good-paying family-sustaining jobs over the next ten years.
Our participation in OneTen is part of our ongoing work towards building a more just and equitable society.
Further, early in our history as a company, Amgen established global Employee Resource Groups organized to represent and support the diversity of our staff. The chart below lists our Employee Resource Groups.
Amgen Employee Resource Groups
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 Latin Employee Network (ALEN) | Amgen LGBTQ and Allies Network (PRIDE) | |
Amgen Veterans Employees Network (AVEN) | Women Empowered to be Exceptional (WE2) | |
Women in Information Systems Enrichment (WISE) | ||
To enhance transparency around the composition of our workforce, we also intend to disclose our 2020 Consolidated EEO-1 Report after our submission of the report to the U.S. Equal Employment Opportunity Commission.
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 and work-life resources, as well as support employees in giving back and volunteering in their local communities. To support the development of our staff, we provide a variety of programs, including leadership development programs, virtual instructor-led courses, and self-paced learning options.
Our benefit programs are generally broad-based, promote health and overall well-being, and emphasize saving for retirement. Amgen continues to pride itself on industry-leading, family-friendly offerings for families of all compositions, including, in the U.S. and Puerto Rico, on-site child care at certain of our facilities, adoption assistance, resources for elder care and behavioral health, and paid parental leave for all Amgen staff members who have or adopt, or become a foster parent or legal guardian for a child. Comparable programs and benefits are available globally, with the same health and well-being intent, that are consistent with local statutory requirements. Information about our approach to staff member safety and welfare can be found above in the subsection “—Responding to COVID-19” and in our Form 10-K for the year ended December 31, 2020.
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Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 20172020
With respect to our CEO,Compensation Committee Determination of Compensation. Generally, 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.
During 2017, the Compensation Committee engaged Cook & Co. to provide advice regarding executive compensation and executive compensation trends and developments, compensation designs and equity compensation practices, market data as requested, and opinions on the appropriateness and competitiveness of our executive compensation programs relative to market practice. Cook & Co. reported directly to the Compensation Committee and attended regularly scheduled meetings of the Compensation Committee (including meeting in executive session with the Compensation Committee, as requested). Each year the Compensation Committee reviews the independence of Cook & Co., an independent compensation consultant, and whether any conflicts of interest exist. After review and consultation with Cook & Co., the Compensation Committee has determined that Cook & Co. is independent and there is no conflict of interest resulting from retaining Cook & Co. currently or during the year ended December 31, 2017. In performing its analysis, the Compensation Committee considers the factors set forth in the SEC rules and The NASDAQ Stock Market listing standards.
In cooperation with management, Cook & Co. assesses the potential risks arising from our compensation policies and practices. Management interacts with the consultant to provide information or the perspective of management as requested by the consultant or Compensation Committee, coordinates payment to the consultant out of the Board’s budget, notifies the consultant of upcoming agenda items and makes the consultant aware of regular or special meetings of the Compensation Committee.
In setting executive compensation, the Compensation Committee compares the Company’s pay levels and programs to those of the Company’s competitors for executive talent and uses this comparative data as a guide in its review and determination of compensation. Our Compensation Committee considers and selects an appropriate peer group (consisting of biotechnology and pharmaceutical companies), based, in part, on the recommendations of Cook & Co., and, for each Named Executive Officer, or NEO, the Compensation Committee reviews the compensation levels and practices of our peer group, which for our NEOs, other than the CEO, are based on reports prepared by management from information contained in compensation surveys and proxy statements. Cook & Co. provides the Compensation Committee with market data, the practices of our peer group and recommendations for the CEO position.
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 his compensation recommendations for each Named Executive Officer, or NEO, our CEO reviews comparative peer group data.data, as well as the performance of the executive. The Compensation Committee has typically followed these recommendations.
TheExecutive Sessions.Each Compensation Committee generally holdsmeeting includes adequate time for executive sessions (withsession and the Compensation Committee meets in executive session on a regular basis with no members of management present unless(unless otherwise requested by the Compensation Committee) at its regular meetings.
The Compensation Committee has authority to delegate any of the functions described above to a subcommittee of its members. No delegation of this authority was made in 2017.
Following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other staff members, calculated in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K. The Company determined our median employee based on total direct compensation paid to all of our staff members worldwide (consisting of approximately 20,600 individuals) recorded in our global systems as of November 1, 2017. Total direct compensation included base salary (wages earned based on our payroll records), annual cash incentive awards earned for the period (and target sales incentive awards for our sales force), and the
annual grant value of long-term incentive, or LTI, equity awards during 2017. Earnings of our staff members outside of the U.S. were converted to U.S. dollars using the currency exchange rate as of November 1, 2017. Nocost-of-living adjustments were made. We then determined the annual total compensation of our median employee for 2017 which was $132,930. As disclosed in the “Summary Compensation Table” appearing on page 64, our CEO’s annual total compensation for 2017 was $16,899,789. Based on the foregoing, the ratio of the annual total compensation of our CEO to that of the median staff member was 127 to 1.
| (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. |
32 ï 20182021 Proxy Statement 25
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Corporate Governance
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Delegation of Authority. The Compensation Committee has authority to delegate any of its functions to a subcommittee of its members. No delegation of authority was made in 2020.
Independent Compensation Consultant. The Compensation Committee continued to engage FW Cook, 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 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 and whether any conflicts of interest exist. After review and consultation with FW Cook, the Compensation Committee has determined that FW Cook is independent and there is no conflict of interest resulting from retaining FW Cook currently or during the year ended December 31, 2020. In performing its analysis, the Compensation Committee
considers the factors set forth in the SEC rules and The NASDAQ Stock Market listing standards.
Peer Group Review. In setting executive compensation, the Compensation Committee compares the Company’s pay levels and programs to those available for 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 annually considers and selects an appropriate peer group (consisting of biotechnology and pharmaceutical companies), based, in part, on the recommendations of FW Cook, and, for each 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 provides the Compensation Committee with market data, an annual report on the compensation levels and practices of our peer group, and compensation 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. Compensation-related risks from COVID-19 were evaluated as part of this assessment for 2020.
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 the factors described below:including:
| • | Mix of Incentives and Metrics. Our compensation programs consist of a mix of incentives and metrics (financial and operational) 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. |
For 2020, we established the need to position the Companygoals for longer-term success.
Of this mix of incentives, Company-wide results are the most important factor in determining the amount of anour annual cash incentive award for each of our staff members. Additionally, we cap short-term incentives and makelong-term incentive, or LTI, equity award programs prior to the declaration of the COVID-19 global pandemic by the World
Health Organization on March 11, 2020, and we have not made any changes to these goals.
| • | 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 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 |
ï 2021 Proxy Statement33
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.
Corporate Governance |
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.
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.
| • | 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. |
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.
| • | 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. |
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.
| • | Recoupment. 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. |
In December 2020, after discussions of recoupment mechanisms, the Compensation Committee adopted an executive officer equity recoupment policy that provides the Compensation Committee with the ability to cause the forfeiture and cancellation of unvested equity awards and any unexercised portion of any stock options (granted after December 31, 2020) if an executive officer is terminated for
engaging in misconduct that caused serious financial or reputational damage to the Company when determining whether(including, but not limited to, a financial restatement).
| • | Disclosure. Subject to our recoupment and clawback policies and provisions, we intend to disclose the general circumstances of any application of our recoupment or clawback policies and provisions against any executive officer (current or former) and the aggregate amount of compensation recovered. |
| • | No Hedging or Pledging. Our Insider Trading Policy prohibits pledging or purchasing of our Common Stock on margin(1) and hedging the economic risk of our Common Stock (as discussed more fully below). |
| • | Mandatory Compliance Training. We require training on our Code of Conduct and other policies that educate our staff members on appropriate behaviors and the consequences of taking inappropriate actions. |
| • | Pricing Policies and Controls. Amgen’s drug pricing governance framework is designed to help ensure that our pricing actions around the globe are legally compliant, financially sound, and aligned with our values and corporate objectives. Our approach to pricing includes training, standard operating procedures, policies, approval mechanisms for price increases and price policy exceptions, and other controls that balance regional and country autonomy with centrally managed price discipline. Our Board, with the assistance of the Compliance Committee, has a key role in the oversight of pricing risk and regularly receives presentations from management on drug pricing practices and trends. |
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;
Engage in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Amgen stock;
| • | Purchase or pledge Amgen stock on margin or as collateral to secure a loan or other obligation(1); or |
Enter into any derivative or similar transactions with respect to our securities.
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.
| (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”). |
34 ï 2021 Proxy Statement
Corporate Governance |
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 Regulation S-K. The Company determined our median employee has earned anbased on total direct compensation paid to all of our staff members worldwide and recorded in our global human resources systems as of December 31, 2020. Total direct compensation included base salary, annual cash incentive award orawards earned for the amountperiod (and target sales incentive awards for our sales force), and the annual grant value of any such award.
Our Insider Trading Policy prohibits pledging or purchasingLTI equity awards during 2020. Earnings of our Common Stock on margin and hedgingstaff members outside of the economic riskU.S. were converted to U.S. dollars using currency exchange rates
as of December 31, 2020. No cost-of-living adjustments were made. We then determined the annual total compensation of our Common Stock.median employee for 2020 which was $132,520. As disclosed in the “Summary Compensation Table” appearing on page 72, our CEO’s annual total compensation for 2020 was $20,131,408. Based on the foregoing, the ratio of the annual total compensation of our CEO to that of the median staff member was 152 to 1. For information on the determination of executive compensation, please see “Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 2020” above and our Compensation Discussion and Analysis beginning on page 41.
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 20182021 Annual Meeting proxy statement and incorporated by reference into the Company’s Annual Report on Form10-K for the year ended December 31, 2017.2020.
Compensation Committee of the Board of Directors
Robert A. Eckert, ChairmanChair
Wanda M. Austin
Brian J. Druker
Greg C. Garland
Fred Hassan
Tyler Jacks
26 ï 20182021 Proxy Statement35
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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, as required by Section 14A of the Securities and Exchange Act of 1934, as amended, 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 3241 through 63)71) and related compensation tables and the narrative in this proxy statement (pages 6472 through 78)86).
Since the declaration of the COVID-19 pandemic, we have remained focused on our strategic priorities while successfully managing the effects of the COVID-19 pandemic on our global operations. Despite the pandemic, we have delivered strong performance in the COVID-19 environment: our remote working arrangements have not significantly affected our ability to maintain critical business operations; we have completed key clinical trials; and we have been able to supply physicians and patients as we have avoided disruptions or shortages of our supply of medicines.
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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| ✓ | Long-term performance-based equity awards (80% of total target equity, of which 50% are three-year performance awards and 30% are stock options) |
| ✓ | A substantial majority of NEO compensation is |
| ✓ | Recently updated recoupment provisions for misconduct to include forfeiture and cancellation of unvested or unexercised equity awards, in addition to our existing annual cash incentive award recoupment policy |
| ✓ | Clawback policy tied to financial restatement |
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| ✓ | Robust stock ownership and retention guidelines |
| ✓ | Minimum vesting periods for equity compensation |
| ✓ |
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| ✓ | Amgen Values overlay our performance goals |
What we don’t do |
× | No hedging or pledging | |
× | No re-pricing or backdating | |
× | No tax gross-ups (except in connection with relocation) | |
× | No single-trigger for stock options and restricted stock units in the event of a change of control | |
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No excessive perks |
× | No employment agreements | |
× | No dividends paid on unvested equity | |
× | No defined benefit pension or supplemental executive retirement plan (SERP) benefits | |
36 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 20182021 Proxy Statement
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Item 2 — Advisory Vote to Approve Our Executive Compensation
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2020 Executive Compensation Was Aligned With Our Strategy and Performance
As discussed more fully in our Compensation Discussion and Analysis starting on page 41, a significant majority of each NEO’s compensation is ªat-risk We Deliveredand dependent on Our Financial Performance Goals.our performance and execution of our strategic priorities.
| Long-Term Incentive Equity Award Allocation |
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LTI Equity Awards Annual Cash Incentive Awards Base Salary 91% At Risk 9% 13% 78% 17% 67% 16% 83% At Risk 91% pay at risk 76% performance based LTI Equity Awards Annual Cash Incentive Awards Base Salary
2020 Performance Against Pre-Established Goals and Measures
Revenues were $22.8 billion in 2017, a slight decrease from 2016 despite increased competitionWe established the goals 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%) comparedannual cash incentive award and long-term incentive, or LTI, equity award programs prior to 2016 reported sales.
ªWe Progressed Our Pipeline.the World
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.Health Organization (WHO) declaration of the COVID-19 global pandemic. Since then, we have not made any
Innovative Portfolio Developments.changes to these goals. Thus, performance reported is against goals established prior to the pandemic.
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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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2020 Annual Cash Incentive Plan
| 2018-2020 Long-Term Incentive Performance Award Payout
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Goal | Weighting |
% of Target Earned |
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2018-2020 Performance Period Award Calculation 2018-2020 Non-GAAP(2)Operating Measures 2018 2019/2020 EPS Growth Operating Margin Operating Expense EPS Growth ROIC 2018-2020 RelativeTSR Performance 62.8th percentile relative to S&P 500 TSRs Final Payout Multiplier 108.8% 93.4% | ||||||
Financial Performance | ||||||||||
Revenues | 30% | 109.9% | ||||||||
Non-GAAP Net Income(1) | 30% | 225.0% | ||||||||
Progress Innovative Pipeline | ||||||||||
Advance Early Pipeline | 10% | 125% | ||||||||
Execute Key Clinical Studies and Regulatory Filings | 20% | 77.8% | ||||||||
Deliver Annual Priorities | ||||||||||
Ensure Successful Integrations and Transitions | 5% | 177.9% | ||||||||
Fund Innovation Through Productivity | 5% | 104.2% | ||||||||
Final Score | Achieved 142.6% | |||||||||
| (1) | Non-GAAP net income for purposes of the 2020 Company performance goals of our annual cash incentive award program is reported and reconciled inAppendix B. |
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Item 2 — Advisory Vote to Approve Our Executive Compensation
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Biosimilars Portfolio Developments.2020 Alignment of Pay with Performance
Our strategy includes a series of integrated activities in the near- and medium-term to strengthen our long-term competitive position in the industry. Select 2020 activities that support the execution of our strategic priorities and delivery of performance are summarized below.
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Our financial performance was strong despite the effects of the ªCOVID-19 We Advanced Our Early Pipeline.pandemic.
Generated11 product teams (formed when a molecule has the potential to be safe and effective in humans), a record number for our Company.
Initiated4first-in-human studies.
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Prolia worldwide sales increased in 2017 by 20% year-over-year. Prolia is the leading osteoporosis therapy today. There are 3.5 million patients worldwide taking Prolia, and the demand for it continues to grow.
We increased Repatha U.S. net sales and average annual total prescriptions share, as well as E.U. average annual market share. Our focus remains on enabling access to Repatha for appropriate patients as hurdle rates for access and reimbursement for patients remain high.
We increased KYPROLIS U.S. andex-U.S. net sales. Our clinical development program has delivered overall survival results in support of KYPROLIS as a backbone therapy for multiple myeloma.
ªWe Realized Our Functional Transformational Objectives.
We realized approximately $400 millionestablished our 2020 performance goals in savings as a resultMarch 2020, prior to declaration of initiatives at the Company level as well as activities within each function designed to transform approaches and improve processes with specific savings targets established for each area.
Together with our progress this year, since 2014,COVID-19 pandemic. Since then, we have realized approximately $1.5 billion of transformation and process improvement savings. These savings were reinvested in product launches, clinical programs and external business development. Consequently, net savings innot made any changes to these goals. Thus, performance reported is against the same period have not been significant.
Further Progress on Our Strategic Priorities
Capitalizing on our expansion activities, we secured 80 product country launches.
While investing $3.6 billion in research and development, we also returned a total of $6.5 billion of capitalgoals established prior to our stockholders through dividends and stock repurchases.the pandemic.
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Our non-GAAP net income performance also benefited from our strong sales performance, as well as our cost efficient mitigation of the challenges and risks of the pandemic, and continued savings from efficiencies resulting from our strong performance on our productivity objective that was used to reinvest in our business.
In 2020, while investing $4.2 billion in research and development, $0.6 billion in capital projects, and $3.35 billion in BeiGene, Ltd., we also returned in excess of $7 billion of capital to our stockholders in the form of dividends paid ($3.8 billion) and repurchases of our Common Stock ($3.5 billion).
| - | Our quarterly 2020 dividend of $1.60 per share represented a 10% increase from the |
We made investments in next-generation biomanufacturingdelivered long-term stockholder value and returns, including three- and five-year total shareholder return of 44% and 63%, respectively, outperforming our peer group.
We progressed our pipeline while managing the challenges of COVID-19.
We develop innovative medicines that build on our existing industry leadership in biologic manufacturing. This next-generation biomanufacturing dramatically reduces the scale and costs of making biologics while maintaining a reliable, high-quality, compliant supply of medicines. In 2017, our new Singapore facility that utilizes the next-generation biomanufacturing approach was approved for certain commercial scale production by multiple regulatory agencies, including the FDA and the EMA.
Long-Term Incentive Performance Award Program
Our long-term incentive, or LTI, equity award compensation is tied directlyaddress unmet medical needs to our stock performance and aligns with the intereststreat serious illnesses. (For more detail regarding advancement of our stockholders.early pipeline and clinical studies and regulatory filings, please see our Compensation Discussion and Analysis beginning on page 41.) Early in the pandemic, many clinical trials had to be paused to ensure subject safety or data integrity. The majority of such paused clinical trials have resumed, however, enrollment rate and overall study recruitment continue to be affected by the pandemic. We continuously monitor and reevaluate the status of studies, pausing when there is uncertainty with regard to the trial sites’ ability to ensure safety or data integrity. Despite these challenges, we have delivered the following strong performance in the COVID-19 pandemic environment:
Long-Term Incentive Program
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Equity
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Performance Units
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50% |
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93.4% | ||
(2015-2017 performance period)
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We advanced our early pipeline:
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| - | Advanced two programs in |
We executed key clinical studies and regulatory filings:
| - | For sotorasib (our KRASG12C small molecule inhibitor being investigated as a treatment for a variety of solid tumors), we submitted both a New Drug Application, or NDA, to the U.S. Food and Drug Administration, or FDA, and a Marketing Authorization Application to the European Medicines Agency for the treatment of patients with |
3038 ï 20182021 Proxy Statement
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Item 2 — Advisory Vote to Approve Our Executive Compensation
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| - | For tezepelumab (a first-in-class investigational therapy that blocks the action of thymic stromal lymphopoietin (TSLP), an epithelial cytokine that plays a key role across the spectrum of asthma inflammation), the Phase 3 NAVIGATOR(1) study evaluating tezepelumab in adults and adolescents with severe, uncontrolled asthma showed positive results and met its primary endpoint with tezepelumab demonstrating a statistically significant and clinically meaningful reduction in the annualized asthma exacerbation rate in a broad population of patients with severe asthma, including those with low levels of eosinophils, for which we have Breakthrough Therapy Designation in the U.S. |
| - | We launched AVSOLA®(biosimilar infliximab (Remicade®(2)) in the U.S. for all approved indications of Remicade for the treatment of moderate-to-severe rheumatoid arthritis, Crohn’s Disease, and ulcerative colitis, as well as chronic severe plaque psoriasis, psoriatic arthritis, and ankylosing spondylitis. |
| - | The FDA approved RIABNI™(biosimilar rituximab (Rituxan®(3)) for the treatment of adult patients with Non-Hodgkin’s Lymphoma, Chronic Lymphocytic Leukemia, Granulomatosis with Polyangiitis (Wegener’s Granulomatosis), and Microscopic Polyangiitis in 2020, and we launched RIABNI in January 2021. |
| - | We advanced our bone franchise in China, the second largest pharmaceutical market, with the launches of: XGEVA® as the first medicine in China for the prevention of skeletal-related events in patients with bone metastases from solid tumors and in patients with multiple myeloma as part of our strategic collaboration with BeiGene, and Prolia® for the treatment of postmenopausal women with osteoporosis at high risk of fractures. |
We delivered on our annual priorities.
We successfully:
| - | Integrated our acquisition of Otezla, a treatment for moderate-to-severe plaque psoriasis; and |
| - | Executed on our strategic collaboration with BeiGene, a research-based, oncology-focused biotechnology company with an established experienced team in China to jointly develop a portion of our oncology pipeline. |
As a result of our focus on productivity to support continued reinvestment opportunities, we achieved targeted productivity gross savings of approximately $304 million. Part of these savings have been reinvested into our research and development activities. We expect savings from these productivity initiatives will continue to contribute to funding strategic growth investments.
We delivered on additional strategic priorities.
We are in our fourth year of successfully operating our smaller footprint, highly resource efficient next-generation biomanufacturing facility in Singapore that dramatically reduces the scale and costs of making biologics, and vastly reduces water and energy use, while maintaining a reliable, high-quality, compliant supply of medicines. This success, along with U.S. corporation tax incentives to invest in innovation and advanced technologies, led to our building a second such plant in Rhode Island that, upon approval by global regulatory authorities, will expand our manufacturing capacity and support our future expected product volume growth while also delivering these efficiencies, and is anticipated to create a substantial number of additional highly-skilled manufacturing positions in the U.S.
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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 20172020 Say on Pay Vote Outcome and Engagement With Our Stockholders
In 2017,2020, we received approximately 95%93% stockholder support on our sayonpayadvisoryvote.Consistentwithourbroaddirectstockholder outreach over the past several years, prior years’ practices, since our 20172020 annual meeting of stockholders, in addition to our outreach by our executives and our InvestorRelationsdepartmenttoinvestors,wehaveengaged in governance-focusedoutreachactivitiesanddiscussionswith
stockholders comprising approximately 52%54% of our outstanding shares. The compensation-related feedback is reviewed by our Compensation
and Management Development Committee, or Compensation Committee. We have made a number ofIn 2020, the predominant feedback from investors with respect to our compensation changes in response to past discussionsand governance practices was that they are satisfied with our stockholderscompensation program and have implemented the compensation best practices discussed below.governance practices. For more detail regarding our stockholder engagement, see page 38.50.
| (1) | A multicenter, randomized, double-blind, placebo controlled, parallel group, Phase 3 study to evaluate the efficacy and safety of tezepelumab in adults and adolescents with severe uncontrolled asthma. |
| (2) | Remicade is a registered trademarks of Janssen Biotech, Inc. |
| (3) | Rituxan is a registered trademark of Biogen Inc. |
ï 2021 Proxy Statement39
Item 2 — Advisory Vote to Approve Our Executive Compensation |
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 20192022 annual meeting of stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.
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Compensation Discussion and Analysis
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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 executive positions they held in 2020 below.
| Name | Title | |
Robert A. Bradway |
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| Executive Vice President, Global Commercial Operations | |
| Executive Vice President, Research and Development | |
| Executive Vice President and Chief Financial Officer(1) | |
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| (1) | Mr. Griffith commenced employment with the Company on October 23, 2019 as Executive Vice President, Finance, and |
ï 2021 Proxy Statement41
Compensation Discussion and Analysis |
Our strategy includes a series of integrated activities in the near- and medium-term to strengthen our long-term competitive position in the industry. Select 2020 activities that support the execution of our strategic priorities and delivery of performance are summarized below and discussed further in the following pages.
Strategic Priorities
| Innovative Medicines | Branded Biosimilars | Transforming Amgen for the Future | ||||||
| Capital Allocation and Investing for Long-Term Growth | Global Geographic Reach | Next-Generation Biomanufacturing | ||||||
| Description | Select 2020 Activities | |||||||
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. | •Successful Otezla® (apremilast) acquisition integration •Executed key clinical studies and advanced innovative first-in-class pipeline delivering positive registration-enabling results including from: –Phase 2 sotorasib study; and –Phase 3 tezepelumab(1) study • Filed sotorasib with U.S. Food and Drug Administration, or FDA, and European Medicines Agency for the treatment of advancednon-small cell lung cancer • Progressed our early innovative pipeline: –8 product teams formed(2) –6 first-in-human studies initiated –2 programs (AMG 160 in prostate cancer and AMG 404 in solid tumors) advanced through our early-to-late stage portal | ||||||
Branded Biosimilars | 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. | In our biosimilars portfolio, we: •Launched AVSOLA®(biosimilar infliximab (Remicade®(3))) •Received approval of RIABNI™(biosimilar rituximab (Rituxan®(4)) and launched in January 2021 | ||||||
Transforming Amgen for the Future | In 2020, we realized the benefit of our productivity initiatives, the savings from which have contributed to funding strategic growth investments, such as investment in research and development. | •Continued to realize gross productivity savings ($304 million in 2020) which we reinvested in our business | ||||||
| Capital Allocation and Investing for Long-Term Growth | Our strong cash flows and balance sheet also allow us to make substantial investments for long-term growth. We also recognize that stockholders who support investment in developing innovative medicines require an appropriate return on the capital they commit to Amgen. | •Invested in excess of $8B for long-term growth: –$4.2B in research and development, including towards innovative medicines and $0.6B in capital projects –$3.35B in BeiGene, Ltd. (see “Global Geographic Reach” below) •Returned in excess of $7 billion of capital to stockholders: –$3.8B of dividends paid ($1.60 per share per quarter, a 10% per share dividend increase over 2019) – $3.5B in stock repurchases | ||||||
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. | • Began strategic collaboration with BeiGene to expand our oncology presence in China –XGEVA® and BLINCYTO® were approved in China and KYPROLIS®is under review –XGEVA was added to the National Reimbursement Drug List in China • Established our wholly-owned affiliate in Japan with the acquisition of Amgen Astellas BioPharma K.K. | ||||||
| Next-Generation Biomanufacturing | Smaller footprint, highly resource efficient next-generation biomanufacturing plants reduce environmental impact, including reducing consumption of water and energy and lower levels of carbon emissions. They also can be built in less time than traditional plants and have lower operating costs. | •Next-generation Singapore biomanufacturing facility operating since 2017 and delivering cost and environmental efficiencies • Success of our facility in Singapore, along with U.S. corporation tax incentives, led to our building a second such plant in Rhode Island,our first U.S. next-generation biomanufacturing plantthat, upon approval by global regulatory authorities, will expand our manufacturing capacity, while also delivering these efficiencies. | ||||||
| (1) | Being developed in collaboration with AstraZeneca plc. |
| (2) | Formed when a molecule has been judged to have the potential to be safe and effective in humans. |
| (3) | Remicade is a registered trademark of Janssen Biotech, Inc. |
| (4) | Rituxan is a registered trademark of Biogen Inc. |
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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
| Our Compensation Best Practices |
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 PrioritiesWhat we do
| ✓ | Majority of compensation is performance based: A substantial majority of NEO compensation is performance based and at-risk. |
| ✓ | 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. |
| ✓ | Recoupment Provisions for Misconduct: Our recoupment mechanisms include: |
| ✓ | Cash Incentive Compensation Plan Recoupment Provisions: 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. |
| ✓ | Equity Recoupment Policy: In December 2020, the Compensation Committee adopted a policy that provides the Compensation Committee with the ability to cause the forfeiture and cancellation of unvested equity awards and any unexercised portion of any stock options (granted after December 31, 2020) should an executive officer be terminated for engaging in misconduct that caused serious financial or reputational damage to the Company. |
| ✓ | 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, 2020, 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. 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. |
Key 2017 activities that align our NEO pay with performance and support the execution of these strategic priorities are summarized in the following pages.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(1), or entering into any hedging, derivative, or similar transactions. | |
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Our Approach to Environmental Sustainability, Social Responsibility, and Corporate Governance
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). A full description of our ESG efforts can be found in the “CORPORATE GOVERNANCE” section, including the subsection “—Our Approach to Environmental Sustainability, Social Responsibility, and Human Capital Management.”
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Compensation Discussion and Analysis
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Aligning Pay With Performance, and Execution ofExecuting on Our Strategic Priorities, and Delivering During the COVID-19 Pandemic
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 providing incentivewith 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). In 2017, we made significant progress on our 2017 performance goals and advancing our strategic priorities, which facilitate execution of our strategy.performance.
Annual Cash Incentive Program Results
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Financial Performance
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Revenues
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Non-GAAP Net Income(1)
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Progress Innovative Pipeline
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Execute Key Clinical Studies and Regulatory Filings
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Advance Early Pipeline
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Deliver Annual Priorities
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Execute Critical Launches and Long-Term Commercial Objectives
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Realize Functional Transformation Objectives
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Composite Score
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1. Our financial performance was strong.
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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.
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
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Impact of the COVID-19 Pandemic
Since the declaration of the COVID-19 pandemic, we have remained focused on our strategic priorities and our values while successfully managing the effects of the COVID-19 pandemic on our global operations. To minimize risk to our employees, a significant number of staff have been working remotely since the start of the pandemic. Further, we have been actively managing our clinical development on a case-by-case basis. Early in the pandemic, many clinical trials had to be paused to ensure subject safety or data integrity. The majority of such paused clinical trials have resumed, however, enrollment rate and overall study recruitment continue to be affected by the pandemic. We continuously monitor and reevaluate the status of studies, pausing when there is uncertainty with regard to the trial sites’ ability to ensure safety or data integrity. We are intent on supporting our active clinical sites in providing care for these patients and in providing investigational drug supply.
The pandemic also changed demand trends for some of our products as continuing patient access to those products was affected by COVID-19, particularly in the early phases of the pandemic. Our efforts remain focused on assisting patients and providers by improving continuity of care through our activities to increase product access as compared to that of the earlier stages of the pandemic.
Despite the pandemic, we have delivered strong performance in the COVID-19 environment: our remote working arrangements have not significantly affected our ability to maintain critical business operations; we have completed key clinical trials (including the sotorasib Phase 2 and tezepelumab Phase 3 clinical trials); and we have been able to supply physicians and patients as we have avoided disruptions or shortages of our supply of medicines.
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As a leading global healthcare company and responsible corporate citizen, Amgen is committed to helping address the COVID-19 pandemic. During 2020, we prioritized: • Ensuring the safety and well-being of our 24,000+ Amgen employees around the world; • Continuing to supply patients – both those currently on Amgen medicines and those who stand to benefit from potential new medicines in our pipeline; • Contributing to the fight against COVID-19: - Utilizing the capabilities of our subsidiary, deCODE Genetics, to study SARS-CoV-2 to contribute to the understanding of COVID-19; - Investigating Otezla as a potential immunomodulatory treatment for patients hospitalized with SARS-CoV-2 infection in multiple COVID-19 platform trials; and - Leveraging our therapeutic antibody expertise through our global antibody manufacturing collaboration with • Helping in the communities where we live and work. For information on our evolving response to this unprecedented situation, please visit www.amgen.com/COVID-19(1). |
INNOVATIVE MEDICINES
Our strong cash flows and balance sheet allowed continued investment for long-term growth in 2020 through internal research and development, capital projects, and investment in our collaboration partner, BeiGene, while simultaneously providing substantial returns to stockholders.
Capital Allocation and Investing for Long-Term Growth
In 2020, while investing $4.2 billion in research and development, $0.6 billion in capital projects, and $3.35 billion in BeiGene, we also returned in excess of $7 billion of capital to our stockholders ($3.8 billion of dividends and $3.5 billion in stock repurchases) | ||||
We increased our quarterly dividend per share 10% over 2019 (to $1.60 per share per quarter for 2020). Our annualized dividend per share has increased 471% since the inception of our dividend in 2011.
| (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. |
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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):
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Also during 2017, we performed additional analyses of the cardiovascular outcomes study that demonstrated that reducing LDL cholesterol levels with Repatha also reduced:
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Oncology Therapeutic Area
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ï 2018 Proxy Statement 35
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Neuroscience Therapeutic Area
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Inflammation Therapeutic Area
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Nephrology Therapeutic Area
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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:
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3. We delivered on our annual priorities to execute critical launches and long-term commercial objectives and realize our transformational objectives.
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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.
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Our clinical development program has delivered results in support of KYPROLIS as a backbone therapy for multiple myeloma.
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We launched theEnbrel Mini™ single-dose prefilled cartridge with AutoTouch™ reusable auto-injector, a device that is ergonomically designed to meet the needs of rheumatoid arthritis patients; and
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Branded Biosimilars INNOVATIVE MEDICINES Improved Drug Delivery Systems
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In 2017, capitalizing on our expansion activities, we secured 80 country product launches.
Our commitment to improve our business and operating model through significant transformation and process improvement efforts announced in 2014 delivered results in 2017. These transformation and process improvement efforts across Amgen are continuing tore-shape the expense base and enable us to reallocate resources to fund many of our pipeline and growth opportunities that deliver value to patients and stockholders.
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Since 2014, we have realized approximately $1.5 billion of transformation and process improvement savings. These savings were reinvested in product launches, clinical programs and external business development. Consequently, net savings in the same period have not been significant.
Through our next-generation biomanufacturing capability, as well as other efforts to optimize our fixed capital infrastructure, we are on track to meet our 2018 goal of reducing our facility footprint by 23%.
In 2017, we also made strong progress on other strategic priorities:
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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
As depicted below, we delivered long-term stockholder value and returns, including three- and five-year total shareholder return, or TSR, of 44% and 63%, respectively, outperforming our peer group in those periods.
Total Shareholder Returns
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We increased our quarterly dividend per share 15% over 2016 (to $1.15 per share for 2017).2020 Annual Cash Incentive Plan
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.
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manufacturing. This next-generation biomanufacturing dramatically reduces
| Goal | Weighting | % of Target Earned | ||||
| 1. Financial Performance | ||||||
a. Revenues Target $25.25B Results $25.42B | 30% | 109.9% | ||||
b. Non-GAAP Net Income(1) Target $8.88B Results $9.80B | 30% | 225.0% | ||||
| 2. Progress Innovative Pipeline | ||||||
a. Advance Early Pipeline | 10% | 125.0% | ||||
b. Execute Key Clinical Studies and Regulatory Filings | 20% | 77.8% | ||||
| 3. Deliver Annual Priorities | ||||||
a. Ensure Successful Integrations and Transitions | 5% | 177.9% | ||||
b. Fund Innovation Through Productivity | 5% | 104.2% | ||||
| Final Score | Achieved 142.6% | |||||
These goals were established in advance of the COVID-19 pandemic and the performance reported is against these original goals, and no changes were made to address the effects of the global pandemic. | ||||
1. We delivered strong financial performance despite the scale and costseffects of making biologics while maintaining a reliable, high-quality, compliant supply of medicines.the COVID-19 pandemic.
In 2017, our new Singapore facility was approved(a) Revenues and (b) non-GAAP net income
For 2020, particularly during the initial stages of the COVID-19 pandemic, we experienced changes in demand trends 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 potentialsome of our products as physician-patient interactions were interrupted, which led to patients globally.
We announceddelays in 2018 thatdiagnosis and treatment with varying degrees of impact across our portfolio. However, we will investadapted to this and, despite the effects of the pandemic, we outperformed our budgeted financial targets (established in greater manufacturing capacity to supportadvance of the onset of the pandemic) as we drove product volume growth that we foresee. As a result, we plan to build a new drug substance manufacturing plant using(including increases in EVENITY®, Repatha®, Aimovig®, and Prolia® sales) and, following our next-generation biomanufacturing capabilitysuccessful integration, delivered strong Otezla sales in the U.S. and add highly skilled jobs.its first full year
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
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in our product portfolio. Our non-GAAP net income performance also benefited from our strong sales performance, as well as our cost efficient mitigation of the challenges and risks of the pandemic, and continued savings from efficiencies resulting from the strong performance on our productivity objective that were reinvested in our business. (For more detail regarding our “Fund Innovation Through Productivity” objective, see “Elements of Compensation and Specific Compensation Decisions—Annual Cash Incentive Awards” below.)
2. We progressed our pipeline(1)while managing the challenges of Performance Under OurCOVID-19 .
Long-Term Incentive Programa. Early pipeline
Despite the impact to clinical trials activities discussed earlier, we advanced our early pipeline:
We generated eight new product teams (formed when a molecule has been judged to have the potential to be safe and effective in humans), including for inflammation, oncology, and cardiometabolic therapies.
We initiated six Our long-term incentive,first-in-human studies, including for product candidates being studied in prostate cancer, metastatic gastric and gastroesophageal junction cancer, solid tumors, and obesity.
We advanced two programs in our early-to-late portal:
| - | AMG 160 (a half-life extended anti-prostate-specific membrane antigen (PSMA) x anti-CD3 BiTE®) being investigated as a treatment for prostate cancer; and |
| - | AMG 404 (a human anti-programmed cell death-1 (PD-1) monoclonal antibody) being investigated as a treatment for solid tumors. |
b. Key clinical studies and regulatory filings
While we still made good progress on our key clinical studies, including for sotorasib and tezepelumab, we had to pause or LTI, equity award compensation is tied directlydelay enrollment of other clinical studies due to COVID-19 and these delays negatively affected our stock performance and aligns with the interests ofagainst our stockholders.goal to progress our pipeline.
80% of our annual LTI equity award grants are performance-based, thus aligning compensation with value creation for our stockholders. Our performance units
Oncology: |
| • | For sotorasib (our KRASG12C small molecule inhibitor being investigated as a treatment for a variety of solid tumors), we submitted both a New Drug Application, or NDA, to the FDA and a Marketing Authorization Application to the European Medicines Agency for the treatment of patients with previously treated KRAS G12C-mutated locally advanced or metastatic non-small cell lung cancer, or NSCLC, with sotorasib. We made these applications just 28 months after we dosed our first patient, demonstrating our |
commitment to bringing the promise of our therapies to patients. In 2020, the FDA granted Breakthrough Therapy Designation to sotorasib and determined to review our sotorasib NDA submission under the Real-Time Oncology Review pilot program. In January 2021, we also received Breakthrough Therapy Designation for sotorasib in China. In February 2021, the FDA accepted our sotorasib NDA, and the Prescription Drug User Fee Action (PDUFA) target action date is August 16, 2021 which, as a result of Priority Review, is four months earlier than the standard review cycle. Additionally, we have filed sotorasib for approval as a NSCLC treatment in Australia, Brazil, Canada, and the UK. |
| • | The FDA approved RIABNI(biosimilar rituximab (Rituxan®)) for the treatment of adult patients with Non-Hodgkin’s Lymphoma, Chronic Lymphocytic Leukemia, Granulomatosis with Polyangiitis (Wegener’s Granulomatosis), and Microscopic Polyangiitis in 2020, and we launched RIABNI in January 2021. |
The European Commission approved an expanded indication for the three-year performance period ending January 30, 2018 were earneduse of BLINCYTO in patients with Philadelphia chromosome positive B-precursor acute lymphoblastic leukemia, or ALL, that have failed treatment with at least two kinase inhibitors and have no alternative treatment options.
We presented first results from our Phase 1 clinical trials in our early oncology program for:
| - | AMG 701 targeting BCMA (B-cell maturation antigen) for multiple myeloma; and |
| - | AMG 757 targeting DLL3 (delta-like ligand 3) for small cell lung cancer. |
Inflammation: |
| • | For tezepelumab (a first-in-class investigational therapy that blocks the action of thymic stromal lymphopoietin (TSLP), an epithelial cytokine that plays a key role across the spectrum of asthma inflammation), the Phase 3 NAVIGATOR(2)study evaluating tezepelumab in adults and adolescents with severe, uncontrolled asthma showed positive results and met its primary endpoint with tezepelumab demonstrating a statistically significant and clinically meaningful reduction in the annualized asthma exacerbation rate (AAER) in a broad population of patients with severe asthma, including those with low levels of eosinophils, for which we have Breakthrough Therapy Designation in the U.S. |
For Otezla, we received positive results from the Phase 3 ADVANCE study to treat adults with mild-to-moderate plaque psoriasis and, based on our relative total shareholder return, or TSR. Our beginning stock price and ending stock price for purposes of the 2015-2017 performance period are each the average daily closing price ofthese study results, in February 2021, we submitted a share of our Common Stock for the beginning and last twenty trading days of the performance period ($154.49 and $186.61, respectively), representinga three-year TSR of 30%.
Payout under our LTI performance award program for our 2015-2017 performance period at 93.4% reflects our three-year TSRperformance at the 46.7th percentile relativesupplemental NDA to the TSRs of the companies in the Standard & Poor’s 500 Index, or S&P 500,FDA for Otezla for this performance period.indication.
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 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.
| • | ABP 654 (biosimilar ustekinumab (STELARA®(3))) advanced into Phase 3 development. |
Positive 2017 Say on Pay Vote Outcome and Engagement With Our Stockholders
In 2017, we received approximately 95% stockholder support on our say on pay advisory vote. We have engaged consistently in broad direct stockholder outreach over the past several years. Since our 2017 annual meeting of stockholders, in addition to our outreach by our executives and our Investor Relations department to investors, we have engaged in governance-focused outreach activities and discussions with stockholders owning approximately 52% of our outstanding shares. These discussions have been valuable and informative and we
will continue to engage with our stockholders to further enhance our understanding of the perspectives of our investors.
In 2017, 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.
For information regarding our significant pipeline advancements, please refer to our Form 10-K for the year ended December 31, 2020. A multicenter, randomized, double-blind, placebo controlled, parallel group, Phase 3 study to evaluate the efficacy and safety of tezepelumab in adults and adolescents with severe uncontrolled asthma. Stelara is a registered trademarks of Janssen Biotech, Inc. Annual Meeting of Stockholders Executive compensation website available year-round that invites stockholders to provide feedback directly to the Compensation Committee www.amgen.com/executivecompensation Post-Proxy Filing for Annual Meeting Post-Annual Meeting Targeted outreach to investors requestingfollow-uppre-proxy filing or related to key issues •Discuss vote outcomes •Consider existing governance and compensation practices in light of feedback Year-Round Stockholder Outreach and EngagementPre-Proxy Filing for Annual Meeting •Compensation-related feedback reviewed by Compensation Committee •Governance-related feedback reviewed by Governance Committee •Insights from investors provided to the full Board •Appropriate committees and Board (as necessary) evaluate potential changes in light of stockholder feedback(1) (2) (3) 3846 ï 20182021 Proxy Statement
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Compensation Discussion and Analysis
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Cardiovascular: |
For Olpasiran (AMG 890), the FDA granted Fast Track designation for this lipoprotein(a) small interfering RNA currently in Phase 2 development for the treatment of atherosclerotic cardiovascular disease.
For Repatha, a supplemental Biologics License application was submitted to the FDA for the treatment of pediatric patients with heterozygous familial hypercholesterolemia.
| • | Results from the Phase 3 trial of omecamtiv mecarbil(1)for heart failure with reduced ejection fraction met the primary composite efficacy endpoint and demonstrated a statistically significant effect to reduce cardiovascular death or heart failure deaths compared to placebo in patients with standard of care. However, no reduction in the secondary endpoint of cardiovascular death was observed. We subsequently elected to terminate our collaboration with Cytokinetics, Inc.(2)to allow us to focus our resources in our other promising research and development programs. |
Bone Health: |
We advanced our bone franchise in China, the second largest pharmaceutical market, with the launches of:
XGEVA as the first medicine in China for the prevention of skeletal-related events in patients with bone metastases from solid tumors and with multiple myeloma through our strategic collaboration with BeiGene discussed further below. In December 2020, XGEVA was included in the updated National Reimbursement Drug List by the China National Healthcare Securities Administration for the treatment of adults and skeletally mature adolescents with giant cell tumor of the bone that is unresectable or where surgical resection is likely to result in severe morbidity.
Prolia for the treatment of postmenopausal women with osteoporosis at high risk of fractures and included in the National Reimbursement Drug List for menopausal women with severe osteoporosis in December 2020.
Neurology: |
For Aimovig, we submitted a marketing authorization application with the Japan Pharmaceuticals and Medical Devices Agency for the prevention of chronic and episodic migraine.
2020 product launches: |
KYPROLIS (our medicine for patients with relapsed or refractory multiple myeloma) was approved for use in combination with DARZALEX®(3) plus dexamethasone in second-line treatment by the FDA in August 2020.
Innovative Medicines
We launched AVSOLA (biosimilar infliximab (Remicade®)) in the U.S. for the treatment of moderate-to-severe rheumatoid arthritis, Crohn’s Disease, and ulcerative colitis, as well as chronic severe plaque psoriasis, psoriatic arthritis, and ankylosing spondylitis.
Branded Biosimilars
LTI Equity Award Design Changes in 20173. We delivered on our annual priorities.
a. We successfully integrated our acquisition of Otezla and executed on our collaboration with BeiGene |
Since our acquisition of Otezla, the only oral, non-biologic treatment for moderate-to-severe psoriasis and psoriatic arthritis, in November 2019, we have efficiently and successfully integrated Otezla operations into our business in 2020. Our success in these integration activities in 2020 include:
Innovative Medicines
In 2017,Transitioned and integrated Otezla into our business on an accelerated basis, realizing higher efficiencies and cost savings;
Added moderate-to-severe scalp psoriasis data to the CompensationU.S. label;
Received approval in the EU as the first and Management Development Committee, or Compensation Committee, constructed the 2017-2019 performance period award goal designonly medication to take into account feedback from dialoguetreat oral ulcers associated with our stockholdersBehçet’s Disease; 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
ROIC)Received positive clinical trial results for the third yeartreatment of adults with mild-to-moderate plaque psoriasis and, based on these study results, in February 2021, we submitted a supplemental NDA to the FDA for Otezla for this performance period. The other two financial measures that applyindication
In 2020, we commenced our strategic collaboration with, and acquired an approximately 20% ownership stake in, BeiGene, a research-based, oncology-focused biotechnology company with an established, experienced team in China, to jointly develop a portion of our oncology pipeline. Our successful execution on our collaboration with BeiGene for 2020 includes:
Global Geographic Reach
We transitioned commercial and medical responsibilities and materials in China to BeiGene for XGEVA, BLINCYTO, and KYPROLIS and we transferred regulatory responsibility in China for our collaboration products.
XGEVA was added to the National Reimbursement Drug List in China.
We achieved product approvals in 2020 in China for BLINCYTO, for the full three-year period are annualtreatment of adult patients with relapsed or refractory non-GAAPB-cell earnings per share, or EPS,precursor ALL, andnon-GAAPXGEVA operating margin. The Compensation Committee’s replacement(as discussed previously). Approval ofnon-GAAPKYPROLIS operating expense withnon-GAAP ROIC as one, for the treatment of the three financial performance measures in the third year of the 2017-2019 performance periodmultiple myeloma, is designed to support our transformation strategic priority to deliver an efficient, disciplined business model beyond 2018.under review.
| (1) | Developed under a collaboration between Amgen and Cytokinetics, Inc., with funding and strategic support from Servier. |
| (2) | Effective May 20, 2021. |
| (3) | DARZALEX is a registered trademark of Janssen Biotech, Inc. |
ï 20182021 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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Transforming Amgen for the Future
We continued realizing the benefit of productivity initiatives. In 2020, as a result of our focus on productivity to support continued reinvestment opportunities, we achieved targeted productivity gross savings of approximately $304 million. Part of these savings have been reinvested into our research and development activities. The $304 million productivity saving achievement was measured by the difference between actual total operating expense versus original expenses budgeted, and excluded adjustments that are unrelated to productivity, including operating expense savings related to COVID-19. We expect savings from these productivity initiatives will enable us to free up and focus resources on those opportunities that can generate the most value for patients and for our business, such as increasing our investment in research and development.
What we doWe delivered on additional strategic priorities.
We also made significant progress in expanding our presence in Japan, the third largest pharmaceutical market, establishing a wholly-owned affiliate in Japan with the acquisition of Amgen Astellas BioPharma.
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We now directly market three products, BLINCYTO, What we don’t doRepatha, and EVENITY, in Japan.
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Performance Under Our Long-Term Incentive Program
Our LTI compensation plan is tied directly to our stock performance and aligns with long-term value creation for our stockholders.
80% of our annual LTI equity award grants are performance-based, aligning compensation with long-term value creation for our stockholders. Performance units comprise 50% of our annual LTI equity award grants. The goal design and all measurement targets are established at the beginning of each three-year performance period and, for the 2018-2020 performance period, were earned based on our performance as measured against these pre-established annual targets for the equally weighted non-GAAP operating measures of earnings per share, or EPS, growth, operating margin, and operating expense in 2018, and EPS growth and return on invested capital, or ROIC, for 2019 and 2020, with a TSR modifier of +/-30 percentage points. At the end of the 2018-2020 performance period, our operating measure performance for each year of the performance period was averaged, resulting in a total operating measures score of 93.4% driven by our strong EPS growth across all three years, partially offset by the effect of the Otezla acquisition on ROIC for 2019 and 2020 as the cash required to acquire this valuable asset limited our performance under our ROIC calculation methodology.
Our TSR performance ranking (62.8th percentile) relative to the TSRs of the companies in the Standard & Poor’s 500 Index, or S&P 500, for the three-year performance period resulted in a TSR modifier for the 2018-2020 performance period of +15.4 percentage points for a payout of 108.8% of performance units granted. A detailed depiction of our performance under these operating measures and the resulting calculation is on the next page.
4248 ï 20182021 Proxy Statement
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Compensation Discussion and Analysis
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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
2020 Operating Measures and Performance for the 2018-2020 Performance Period
Non-GAAP(1) Operating Measures | Minimum (30%) | Low (65%) | Target (100%) | High (135%) | Maximum (170%) | 2020 Actual Performance | ||||||||||||||||||||||||||||
| EPS Growth ($) | 130.4% | ||||||||||||||||||||||||||||||||
£$10.40 | $11.65 | $14.30 | $16.95 | ³$18.20 | ||||||||||||||||||||||||||||||
($16.60 actual)
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ROIC (%) | 30.0% | |||||||||||||||||||||||||||||||||
£28% | 30% | 34% | 38% | ³40% | ||||||||||||||||||||||||||||||
(27.1% actual)
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80.2%
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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) Performance | 2019(2) Performance | 2020 Performance | 2018-2020 Average Operating Measures Score | ||||
Operating Margin (%) Year 1 | 105.4% (52.6%) | |||||||
Operating Expense (in billions) | 30.0% ($11.89) | |||||||
EPS Growth ($) Years 1, 2, and 3 | 132.7% ($14.40) | 131.8% ($14.82) | 130.4% ($16.60) | |||||
ROIC (%) Years 2 and 3 | 89.5% (30.8%) | 30.0% (27.1%) | ||||||
| 89.4% | 110.6% | 80.2% | 93.4% | |||||
2018-2020 S&P 500 Relative TSR(3) Modifier | ||||||||||
Payout for Performance Relative to S&P 500 TSR Percentage | ||||||||||
Amgen TSR ³ 75th percentile = 30% (Maximum) | Amgen percentile ranking of 62.8th percentile resulted in +15.4% score | |||||||||
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). |
NEOs 2018-2020 Non-GAAP(1) Operating Measures 2018-2020 Relative TSR Performance EPS Growth Operating Margin + Final Payout Multiplier 108.8% = Operating Expense ROIC 93.4% 15.4% 2018-2020 Performance Period Award Calculation EPS Growth2018 2019/2020
| (1) | The operating measures of the 2018-2020 performance units were based on non-GAAP financial results for 2018, 2019, and 2020, as reported and reconciled in Appendix B. |
| (2) | Our targets for our 2018 and 2019 performance were disclosed under the 2018-2020 performance goals in our 2019 and 2020 proxy statement, respectively, filed with the Securities and Exchange Commission, or SEC, on April 8, 2019 and April 7, 2020, respectively. |
| (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 2021 Proxy Statement49
Compensation Discussion and Analysis |
Positive 2020 Say on Pay Vote Outcome and Engagement With Our Stockholders
In 2020, we received 93% stockholder support on our say on pay advisory vote. We have engaged consistently in broad, direct, governance-focused stockholder outreach since 2011. Consistent with prior years’ practices, since our 2020 annual meeting of stockholders, we have engaged in governance-focused outreach activities and discussions with stockholders comprising approximately 54% of our outstanding shares.
We will continue to solicit the perspectives of our investors. Among other topics, we invite dialogue with our stockholders regarding
compensation best practices and policy issues to help inform our compensation program review process.
In 2020, 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. This is reflected in 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.
Pre-Proxy Filing for Annual Meeting Compensation-related feedback reviewed by Compensation Committee Governance-related feedback reviewed by Governance Committee Insights from investors provided to the full Board Appropriate committees and Board (as necessary) evaluate potential changes in light of stockholder feedback Post-Annual Meeting Post-Proxy Filing for Annual Meeting Discuss vote outcomes Consider existing governance and compensation practices in light of feedback Targeted outreach to investors requesting follow-up on key issues Annual Meeting of Stockholders Executive compensation website available year-round that invites stockholders to provide feedback directly to the Compensation Committee www.amgen.com/executivecompensation Year-Round Stockholder Outreach and Engagement Board available to answer stockholder questions
Compensation Design Changes in Response to 2020 Stockholder Engagement
Although stockholders were supportive of our compensation practices, in the course of our engagement activities, we explored with certain stockholders additional recoupment mechanisms. In December 2020, after discussions of recoupment mechanisms, the Compensation Committee adopted an executive officer equity recoupment policy that provides the Compensation Committee with the ability to cause the forfeiture and cancellation of unvested equity awards and any unexercised portion of any stock options (granted after December 31, 2020) should an executive officer be terminated for engaging in misconduct that caused serious financial or reputational damage to the Company (including, but not limited to, a financial restatement). The adoption of the executive officer equity recoupment policy is in addition to our existing cash incentive award recoupment and clawback policies that are described further under “Compensation Policies and Practices—Recoupment” below
Additionally, for our 2021 annual cash incentive compensation plan, we added a two part ESG goal to our Company Goals. The first element of this goal focuses on development of activities across the Company in support of our 2027 environmental sustainability targets of carbon neutrality and reductions of water use and waste. The second element includes development of action plans across the Company to continue to strengthen and improve our focus on diversity, inclusion, and belonging. For additional discussion, please see “Elements of Compensation and Specific Compensation Decisions—Annual Cash Incentive Awards—2021 Company Performance Goals” below.
50 ï 2021 Proxy Statement
Compensation Discussion and Analysis |
Long-Term Incentive Equity Award Design in 2020
In December 2019 and March 2020, the Compensation Committee evaluated and established a performance award goal design for the 2020-2022 performance period (January 1, 2020 to December 31, 2022) with input from management and FW Cook, to take into account discussions with our stockholders, and to continue to drive operating performance and financial discipline. For the 2020-2022 performance period, the Compensation Committee retained the same performance award goal design as for the 2019-2021 performance period. The operating measures of non-GAAP EPS and ROIC remain weighted equally in each year (one-half per measure) and are measured against targets and goals pre-established for each year of the performance period at the beginning of the three-year performance period. The Compensation Committee selected non-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 TSR modifier of +/-30 percentage points and 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 requirement ensures a greater tie to stockholders’ interests and investment experience in a challenging market. As noted above, after review of the effect of ROIC on prior performance periods, the Compensation Committee modified the calculation of non-GAAP ROIC for the 2020-2022 performance period to include cash in invested capital to better align with our strategic priority of “Innovative Medicines” (which contemplates pursuit of innovation both internally and externally) by removing potential disincentives for the use of cash in future acquisitions that could yield innovative medicines and drive stockholder value. A depiction of the 2020-2022 performance period goal design can be found in “Performance Award Goal Design for the 2020-2022 Performance Period—2020-2022 Performance Period Goal Design and Award Calculation.”
| (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 2021 Proxy Statement51
Compensation Discussion and Analysis |
Our 2020 Compensation Program Highlights and Objectives
Total Target Direct Compensation Focuses on “At Risk” Compensation (91% for our CEO and 83% for our other NEOs) |
2020 Total Target Direct Compensation Mix Purpose LTI Equity Awards Provide a direct link to the creation of stockholder value and execution of our strategy. Align NEO's interests with stockholders. Foster long-term focus and retention. Annual Cash Incentive Awards Our Compensation Committee annually approves Company performance goals that are designed to focus and align all staff members on delivering on our financial performance and operational objectives to support our strategic priorities to drive the execution of our strategy in the near- and longer-term. NEO performance is measured against these pre-established Company performance goals. Motivate NEOs to meet or exceed our Company performance goals to drive performance and position us for longer-term success via our strategy. Base Salary Provides a degree of financial certainty that helps us retain talent. Recognizes competitive market conditions and/or rewards individual peformance through periodic increases. LTI Equity Award Allocation: 80% Performance Based 50% Performance Units Rights to earn shares of our Common Stock. Performance goals established at the beginning of each three-year period of the performance award program. Number of performance units earned is determined by our performance as measured against these pre-established performance goals at the end of the three-year performance period. No guarantee of any value realized from the grants; earned only if the specific performance goals are achieved over the performance period. 30% Stock Options Aligned with stockholder interests as they only have value if the Companys stock price increases after grant. 20% Restricted Stock Units Designed to encourage retention and long-term value creation. Vesting: Stock options and RSUs generally vest over four years 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. The preceding pie charts are calculated using (i) the "Salary column from the "Summary Compensation Table" in our Executive Compensation Tables;(ii) the target annual cash incentive award in the "Estimated Possible Payouts Under Non-Equity Incentive Plan Awards – Target" column in the table in footnote 2 to the "Grants of Plan-Based Awards" table in our Executive Compensation Tables; and (iii) the grant date fair value of annual grants of performance units, 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. 2020 Total Target Direct Compensation Mix Purpose LTI Equity Awards Provide a direct link to the creation of stockholder value and execution of our strategy. Align NEO's interests with stockholders. Foster long-term focus and retention. Annual Cash Incentive Awards Our Compensation Committee annually approves Company performance goals that are designed to focus and align all staff members on delivering on our financial performance and operational objectives to support our strategic priorities to drive the execution of our strategy in the near- and longer-term. NEO performance is measured against these pre-established Company performance goals. Motivate NEOs to meet or exceed our Company performance goals to drive performance and position us for longer-term success via our strategy. Base Salary Provides a degree of financial certainty that helps us retain talent. Recognizes competitive market conditions and/or rewards individual peformance through periodic increases. LTI Equity Award Allocation 50% Performance Units Rights to earn shares of our Common Stock. Performance goals established at the beginning of each three-year period of the performance award program. Number of performance units earned is determined by our performance as measured against these pre-established performance goals at the end of the three-year performance period. No guarantee of any value realized from the grants; earned only if the specific performance goals are achieved over the performance period. 30% Stock Options* Aligned with stockholder interests as they only have value if the Companys stock price increases after grant. 20% Restricted Stock Units* Designed to encourage retention and long-term value creation. * Vesting: Stock options and RSUs generally vest over four years 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. The preceding pie charts are calculated using (i) the "Salary column from the "Summary Compensation Table" in our Executive Compensation Tables;(ii) the target annual cash incentive award in the "Estimated Possible Payouts Under Non-Equity Incentive Plan Awards – Target" column in the table in footnote 2 to the "Grants of Plan-Based Awards" table in our Executive Compensation Tables; and (iii) the grant date fair value of annual grants of performance units, 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.
52 ï 2021 Proxy Statement
Compensation Discussion and Analysis |
How Compensation Decisions Are Made For Our Named Executive Officers
Management reviews the Companys compensation programs CEO evaluates performance of the other NEOs and recommends Senior Management compensation to the Compensation Committee Compensation Committee evaluates the CEOs performance within the context of the financial and operational performance of the Company FW Cook advises the Compensation Committee regarding the appropriateness of Amgens 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
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, operational, and • 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
• 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
• 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 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
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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 2017for 2020, 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 2017,2020, 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 and Nominating Committee engaged FW Cook & Co. to provide advice regarding director compensation. Cook & Co. reported directly to the Governance Committeeassist in its evaluation2020 review of director compensation. For more information regarding the 2020 review of director compensation, see “Director Compensation—Changes to Director Compensation for 2021.” The Company did not engage FW Cook for any other services to the 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 July 2020, FW Cook recommended the continued use of the objective criteria previously established and to make no changes to the peer group except to remove Allergan plc and Celgene Corporation from our peer group following their acquisitions by AbbVie Inc. and Bristol-Myers Squibb Company, respectively, both of which are current members of our 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 thethis peer group, remained appropriate and continuedmodified in response to meetthese acquisitions, composed of 14 companies (nine of which are based in the criteria.U.S.) remains appropriate.
4454 ï 20182021 Proxy Statement
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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
|
(Companies in blue also list Amgen as a peer)
| |||
• GICS codes of biotechnology (352010) and pharmaceuticals (352020);
• 12-month average market capitalization between 0.25 and 4.0x that of Amgen’s average market capitalization for the same period(1);
• Trailing four-quarter revenues between 0.25 and 4.0x that of Amgen’s revenues(1);
• Non-U.S. peers limited to those commonly identified as a “peer of peers”;
• Competitors for executive talent;
• Companies of comparable scope and complexity;
• Competitors for equity investor capital;
• Companies that identify us as their direct peer; and
• Companies with similar pay practices. |
• AbbVie Inc.
• AstraZeneca plc
• Biogen Inc.
• Bristol-Myers Squibb Company
• 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. Removed effective July 2020: • Allergan plc • Celgene Corporation | |||
| (1) | For purposes of the |
| Revenues(b) | ||||||||
Amgen | $125 billion |
|
$24 billion | ||||||
|
|
|
| ||||||
Relative Peer Group Position | 3rd Quartile (above median) |
|
2nd quartile |
|
| ||||
| (a) | Represents the 12-month average market capitalization as of May 31, 2020. |
| (b) | Represents revenues for the trailing four quarters ended March 31, 2020. 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,orPHRA PHS Survey,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 PHS Survey. However, this role is not consistently well-represented in the peer group proxy statements and, as a result, to reflect the scope and criticality of the role, is instead benchmarked to the second highest paid named executive officer in such filings. Further, as a result of our single business unit structure,
the Executive Vice President, Operations role is not well-matched in either the PHS Survey or the peer group. Solelygroup proxy statements as this role at our Company oversees a significantly broader scope of responsibilities. Due to this lack of comparability, the compensation for the determinationExecutive Vice President, Operations is compared to that of LTI equity awards, we also provide data from the Cook & Co. Survey of Long-Term Incentives (Cook & Co. Survey).our other Executive Vice President roles that are generally similar in size and scope. Based on this data (to the extent applicable), 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 PHRAPHS 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.
ï 2021 Proxy Statement55
Compensation Discussion and Analysis |
The “Market Median”Median,” as applicable, is determined for our CEO and our other NEOs based on the prior year’s compensation and is reviewed by the Compensation Committee to inform compensation decisions made in March of each year as follows:
Market Median
| ||||||
CEO(compiled by
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Other NEOs
| |||||||||
• 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
| |||||||||
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 2020, equity-based compensation represents 75%78% of our CEO’s target compensation and 64%67% 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.
We Continue to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards—Monitoring Dilution and Annual Equity Usage
Our Compensation Committee balances the use of equity to align staff members with our stockholders while striving to limit stockholder dilution to that amount which investors would expect to experience with members of our peer group. Annually, LTI equity award grant guidelines are established for each Company job level targeting the 50th percentile of our peer group for levels for which equity data is broadly available, 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 trend in-line with
available data and consider internal equity.) As illustrated, the resulting dilutive effect has generally trended downward.
Amgen Historical Outstanding Potential Dilution(% Shares Outstanding)
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Compensation Discussion and Analysis
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Company Continues to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards – Monitoring Dilution and Annual Equity Usage
Our compensation philosophy, practices and approach balance the use of equity to align employees with our stockholders while being mindful of the level of dilution that our stockholders experience. LTI equity award grant guidelines are established for each job level within the Company targeting the 50th percentile of our peer group for levels for which equity data is broadly available. For certain lower job levels where data is not as comprehensive, we have developed guidelines that trendin-line with available data and consider internal equity. The Compensation Committee sets an LTI equity award budget at approximately the 50th percentile of our peer group. The Compensation Committee periodically reviews the Shareholder Value Transfer (SVT) associated with the aggregate LTI equity award grants to ensure that our SVT is aligned with our peer group practices because, while the Compensation Committee supports a broad-based equity plan to align our staff members with our stockholders, the Compensation Committee also strives to limit the amount of stockholder dilution to that which stockholders would expect to experience with our peer group. We regularly review dilution and the rates at which we grant LTI equity awards and the resulting potential dilutive effect has decreased over the last five years and is consistent with that of our peer group.
Long-Term Incentive Equity Award 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 2020 given its pay-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 ofPerformance Units 50% in the form of performance unitsStock Options 30% (earned at the end of a generally three-year performance period) RSUs 20%
Value of 2020 Annual Long-Term Incentive Equity Awards
Based on a review of Company and 30% inexecutive performance and market data, the form of stock options. Time-vested RSUs, designedCompensation Committee determined to incentivize retention, continued to make upgrant 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 equalfollowing 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 programgrant values to our CEO and enhances retention.the other NEOs in March 2020, with an effective grant date of May 5, 2020, the third business day after the announcement of our first quarter 2020 earnings results.
| Named Executive Officer | Performance Units(1) ($) | Stock Options ($) | Restricted Stock Units ($) | Total Equity Value Granted ($) | 2019 Market Median(2) ($) | Difference vs. Market Median Over/(Under) (%) | ||||||||||||||||||
Robert A. Bradway | 7,200,000 | 4,320,000 | 2,880,000 | 14,400,000 | 12,087,000 | 19.1 | ||||||||||||||||||
Murdo Gordon | 2,050,000 | 1,230,000 | 820,000 | 4,100,000 | 3,864,979 | 6.1 | ||||||||||||||||||
David M. Reese | 2,050,000 | 1,230,000 | 820,000 | 4,100,000 | 4,037,510 | 1.5 | ||||||||||||||||||
Peter Griffith | 2,000,000 | 1,200,000 | 800,000 | 4,000,000 | 3,452,188 | 15.9 | ||||||||||||||||||
Esteban Santos(3) | 2,000,000 | 1,200,000 | 800,000 | 4,000,000 | n/a | n/a | ||||||||||||||||||
| (1) | The 2020-2022 performance period runs from January 1, 2020 through December 31, 2022. |
| (2) | 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. |
| (3) | As previously discussed under “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources,” no comparable market data is available for Mr. Santos. |
Based on the Compensation Committee review of the market data in March 2020, the Compensation Committee approved an increase in Mr. Bradway’s LTI equity award value from $14 million to $14.4 million to recognize his sustained and successful leadership of the Company through a period of transformation to meet the challenges of an evolving biopharmaceutical marketplace. The Compensation Committee believes that thisapproved an increase in the LTI equity award mix presentsvalue from $4 million to $4.1 million for Mr. Gordon to recognize his leadership of our Commercial team through a balanced approach to executivetransition period and his positioning of our Commercial team for a period of volume-driven growth. The Compensation Committee approved an increase in the LTI equity awardsaward from $4 million to $4.1 million for Dr. Reese to bring 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 in July 2018. Mr. Griffith became the
Company’s Executive Vice President and Chief Financial Officer on January 1, 2020 and, based on the Compensation Committee’s review of March 2020 market data, Mr. Griffith was granted an equity award value of $4 million, the same LTI equity award value that his predecessor in the position had received, in recognition of the value of his expertise. The Compensation Committee granted Mr. Santos an LTI equity award value of $4 million as his role is well alignedcompared to that of our other Executive Vice President roles (as previously discussed under “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources”). The Compensation Committee concluded that the LTI equity award values granted were appropriate because they recognize and reward strong execution by our executives with stockholder interestscompensation that is substantially “at risk,” performance-based, and pay for performance.focused on the longer-term.
amgen historical outstanding potential dilution (% shares outstanding)
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Compensation Discussion and Analysis
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Value
Performance Award Program 2018-2020 Performance Period Performance Units Earned
At the end of Long-Term Incentive Equity Awards
Grantedthe 2018-2020 performance period, our performance with respect to Named Executive Officersour non-GAAP operating measures was calculated for each year of the performance period, resulting in 2017
2017 Annual Long-Term Incentive Equity Awards
89.4% earned for 2018, 110.6% earned for 2019, and 80.2% earned for 2020. These annual operating measure percentage calculations were then averaged for a total operating measures score of 93.4% for the three-year performance period. Based on our TSR ranking of the 62.8th percentile relative to the TSRs of the companies in the S&P 500, the total operating measures score of 93.4% was increased by +15.4 percentage points, resulting in a reviewpayout of Company108.8% of target performance units granted. For the 2018-2020 performance period, this payout percentage 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 19, 2021. For additional information on the specific targets and executiveactual performance and market data,calculation of amounts earned, see 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 determinationdetailed description of the Market Median, see “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources”2018-2020 performance period previously discussed.discussed on pages 48-49.
| 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
| )
| ||||||
| Named Executive Officer | Performance Units Value Granted (Target) ($) | Number of Performance Units Granted (#) | Number of Shares of our Common (#) | |||||||||
Robert A. Bradway | 6,250,000 | 33,107 | 39,253 | |||||||||
Murdo Gordon(2) | n/a | n/a | n/a | |||||||||
David M. Reese(3) | 450,000 | 2,383 | 2,825 | |||||||||
Peter Griffith(4) | n/a | n/a | n/a | |||||||||
Esteban Santos |
| 1,400,000 |
|
| 7,416 |
|
| 8,792 |
| |||
| (1) |
|
| (2) | Mr. Gordon commenced employment with the Company effective September 3, 2018 after the participants for the 2018-2020 performance period |
| (3) | At the time of the 2018-2020 performance period grant, Dr. Reese served as the Company’s Senior Vice President, Translational Sciences and Oncology. He was promoted to the role of Executive Vice President, Research and Development effective July 26, 2018. |
| (4) | Mr. Griffith commenced employment with the Company in late 2019. For a full description of the new-hire LTI equity awards granted to Mr. Griffith in connection with the commencement of his employment, see the subsection “Non-Direct Compensation and Payouts in Certain Circumstances—Change of Control Benefits and Offer Letter with Limited Severance Benefits—Offer Letter—Mr. Griffith” below. |
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)Earned Under Initial Hire Performance Unit Award to Mr. Gordon
Performance unitsTo induce Mr. Gordon to join us and to provide long-term incentives that are rightsin alignment with stockholder interests, a performance unit award valued at $3.5 million was granted to earn shares ofMr. Gordon on November 2, 2018 (the first eligible grant date, per our Common Stock, based onpre-established performance goals achieved overgrant practices, after Mr. Gordon’s start date) with a performance period of generally three years. The numberNovember 2, 2018 through December 31, 2020. This performance unit award had substantially the same terms and conditions as the existing performance award goal design for the 2018-2020 performance period except modifications intended to address the different grant date.
These modifications consist of performance units earned is determined by our performanceusing the November 2, 2018 grant date as measured against thepre-established performance goals at TSR start date and excluding the 2018 operating measures given Mr. Gordon’s late 2018 start date. At the end of the relatedMr. Gordon’s performance period. Each performance unit earned entitles the participant to one share of our Common Stock. Given the design ofperiod, our performance award program, there is no guaranteefor our non-GAAP operating measures was calculated for 2019 and 2020 and averaged for a total operating measures score of any value realized from grants95.4% for the performance period and decreased by -0.1 percentage points for a TSR ranking of the 49.9th percentile for Mr. Gordon’s performance units.period, resulting in a payout of 95.3% of target performance units granted. This resulted in 18,128 shares of Common Stock being delivered at the payout date of March 19, 2021.
4858 ï 20182021 Proxy Statement
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Compensation Discussion and Analysis
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Performance Award Program—Performance Units Earned for the 2015-2017
2019-2021 Performance Period Goal Design and Award Calculation
Performance units forAll operating measures and goals were established at the 2015-2017
beginning of the three-year performance period which ended January 30, 2018,
The Compensation Committee constructed the 2019-2021 performance period (January 1, 2019 to December 31, 2021) design with two non-GAAP operating measures of EPS growth and ROIC weighted equally in each year (one-half per measure). All operating measures and goals 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 ofestablished at the beginning of the 2019-2021 performance period. The Compensation Committee retained the same general performance award goal design as for the 2018-2020 performance period (January 30, 2015). Our beginning stock price and ending stock price for purposes of(as shown above), including the 2015-2017 performance period are eachrequirement that the average daily closing price of a shareTSR modifier cannot exceed target (100%) regardless of our Common Stock for the beginning and last twenty trading days ofrelative TSR performance if our absolute TSR over the performance period ($154.49is less than zero.
2020 Operating Measures and $186.61, respectively). DuringPerformance for the same period, the Company’s market capitalization also increased by approximately 20%2019-2021 Performance Period
| Non-GAAP(1) Operating Measures | Minimum (30%) | Low (90%) | Target (100%) | High (110%) | Maximum (170%) | 2020 Performance | ||||||||||||||||||||||||||||
| EPS Growth ($) | 122.0% | ||||||||||||||||||||||||||||||||
£$8.00 | $10.00 | $13.07 | $16.00 | ³$19.00 | ||||||||||||||||||||||||||||||
($16.60 actual) | ||||||||||||||||||||||||||||||||||
ROIC (%) | 90.1% | |||||||||||||||||||||||||||||||||
£21% | 27% | 35% | 43% | ³49% | ||||||||||||||||||||||||||||||
(27.1% actual) | ||||||||||||||||||||||||||||||||||
|
106.0%
| |||||||||||||||||||||||||||||||||
2019-2021 Operating Measures Score (Operating Measure Percentages 30 – 170% with linear
| ||||||||
| Operating Measure Percentages are Equally Weighted for Each of the Three Years | ||||||||
| Non-GAAP(1) Operating Measures | 2019(2) | 2020 | 2021 | 2019-2021 Average Operating Measures | ||||
EPS Growth ($) | 108.8% ($14.82) | 122.0% ($16.60) |
Pre-established and to be disclosed(3) |
TBD | ||||
| ROIC (%) | 92.2% (30.8%) | 90.1% (27.1%) |
TBD | |||||
100.5%
|
106.0%
|
TBD
|
TBD
| |||||
2019-2021 S&P 500 Relative TSR(4) Modifier |
| Payout for Performance Relative to S&P 500 TSR Percentage |
Amgen TSR ³ 75th percentile = 30% (Maximum) |
Amgen TSR = 50th percentile |
Amgen TSR £ 25th percentile = -30% (Minimum) |
 | If Amgen’s TSR is less than 0, the relative TSR modifier can be no greater than 0% (target). |
2019-2021 Performance Period Award Calculation 2019-2021 Non-GAAP(1) Operating Measures EPS Growth ROIC 2019-2021 Amgen Relative TSR Performance Final Payout Multiplier (0-200% of target)
2015-2017 Performance Period Program Design
Payout Calculation for the 2015-2017 Performance Period
2015-2017 Performance Period Performance Units Earned
Our actual performance results (the 46.7th percentile, or below the median) for the 2015-2017 performance period that ended January 30, 2018 resulted in the following number of shares of Common Stock being earned under our performance award program for this performance period. Each earned performance unit converted to one share of Common Stock upon the payout date of March 23, 2018.
| Named Executive Officer | | Performance Units Value Granted (Target) ($) |
| | Number of Performance Units Granted (#) |
| | Number of Shares of our Common (#) |
| |||
Robert A. Bradway
|
| 8,160,000
|
|
| 51,179
|
|
| 51,766
|
| |||
Anthony C. Hooper
|
| 2,800,000
|
|
| 17,561
|
|
| 17,762
|
| |||
Sean E. Harper
|
| 2,400,000
|
|
| 15,052
|
|
| 15,224
|
| |||
David W. Meline
|
| 2,400,000
|
|
| 15,052
|
|
| 15,224
|
| |||
Jonathan P. Graham
|
|
| (2)
|
|
| (2)
|
|
| (2)
|
| (1) |
|
| (2) |
|
| (3) | 2021 targets are pre-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 |
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 20182021 Proxy Statement 4959
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Compensation Discussion and Analysis
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Performance Units Granted in 2016 for the 2016–2018
2020-2022 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 approvedconstructed the 2016-20182020-2022 performance period (January 1, 2020 to December 31, 2022) design with the same two non-GAAP operating measures as the 2019-2021 performance award goal design that contained relativeperiod of EPS growth and ROIC weighted equally in each year (one-half per measure) and the same TSR as a modifier performance measures. See the detailed description of the 2020-2022 performance period previously discussed.
2020 Operating Measures and hadPerformance for the following annual operating performance measures to drive operational performance and increase performance hurdles:2020-2022 Performance Period
| Non-GAAP(1) Operating Measures | Minimum (30%) | Low (80%) | Target (100%) | High (120%) | Maximum (170%) | 2020 Performance | ||||||||||||||||||||||||||||
| EPS Growth ($) | 155.7% | ||||||||||||||||||||||||||||||||
£$13.00 | $14.80 | $15.18 | $15.60 | ³$17.00 | ||||||||||||||||||||||||||||||
($16.60 actual) | ||||||||||||||||||||||||||||||||||
ROIC(2) (%) | 85.8% | |||||||||||||||||||||||||||||||||
£18% | 20% | 21.5% | 23% | ³25% | ||||||||||||||||||||||||||||||
(20.4% actual) | ||||||||||||||||||||||||||||||||||
|
120.8%
| |||||||||||||||||||||||||||||||||
2020-2022 Operating Measures Score (Operating Measure Percentages 30 – 170% with linear
| ||||||||
| Operating Measure Percentages are Equally Weighted for Each of the Three Years | ||||||||
| Non-GAAP(1) Operating Measures | 2020 | 2021 | 2022 | 2020-2022 Average Operating Measures | ||||
EPS Growth ($) | 155.7% ($16.60) | Pre-established and to be disclosed(3) |
TBD | |||||
| ROIC(2) (%) | 85.8% (20.4%) |
TBD | ||||||
120.8%
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TBD
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TBD
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TBD
| |||||
2020-2022 S&P 500 Relative TSR(4) Modifier |
| Payout for Performance Relative to S&P 500 TSR Percentage |
Amgen TSR |
Amgen TSR = 50th percentile |
Amgen TSR £ 25th percentile = -30% (Minimum) |
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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
2020-2022 Performance Period Award Calculation 2020-2022 Non-GAAP(1) Operating Measures EPS Growth ROIC 2020-2022 Amgen Relative TSR Performance Final Payout Multiplier (0-200% 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.target)
| (1) |
|
| (2) | For the 2020-2022 performance period ROIC includes cash in invested capital to better align with our strategic priority of “Innovative Medicines” (which contemplates pursuit of innovation both internally and externally) by removing potential disincentives for |
| (3) | 2021 and 2022 targets are pre-established, but are not being disclosed at this time as they are competitively sensitive. |
| (4) | TSR Measurement Points = Average daily closing price of |
5060 ï 20182021 Proxy Statement
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Compensation Discussion and Analysis
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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.
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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 2018 Proxy Statement 51
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Performance Award Goal Design—Performance Units Granted in 2017Design for the 2017–2019 Performance Period
To ensure that the performance award program continues to strongly align with the interests of our stockholders and motivates management to create long-term value, the Compensation Committee regularly reviews and considers whether to update the performance award goal design with input from management and Cook & Co. Based on review and deliberation in December 2016 and March 2017, and having considered the performance award goal designs of our peer group and stockholder feedback, the Compensation Committee approved the 2017-2019 performance period (January 1, 2017 to December 31, 2019). The Compensation Committee constructed the 2017-2019 performance period performance award goal design to leverage the 2016-2018 performance period goal design, retaining all of the elements of the 2016-2018 performance period goal design for 2017 and 2018, but changing one operating measure for the last year of the three-year performance period. For the first and second years of the 2017-2019 performance period, the Compensation Committee retained the three annualnon-GAAP 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 in part in response to stockholder feedback, and is
designed to support our transformation strategic priority to deliver an efficient, disciplined business model beyond 2018 with focused management of our return on deployment of invested capital.
The operating performance measures were chosen to:
Drive operating performance in alignment with our operating performance commitments to stockholders through 2018;
Focus our executives on the transformation of our business and our operating efficiency, productivity, and profitability; and
Address the challenges of a single performance metric for a full three-year period.
The three annual operating measures are weighted equally(one-third per measure) and calculated againstpre-established targets for each year in the 2017-2019 performance period. All operating goals (for each year) are established at the commencement of the three-year performance period. At the end of the performance period, the final average operating measure percentages for each of the three years are averaged, resulting in a total operating measures score that 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.
|
52 ï 2018 Proxy Statement
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2017-2019 Performance Period Performance Award Goal Calculation
All operating goals (for each year) are established at the commencement of the three-year performance period.
|
Non-GAAP(1) Operating Measures (Scoring 50%-150%) EPS 1/3rd Operating Margin 1/3rd Operating Expense Years 1 & 2 ROIC Years 3 1/3rd S&P 500 Relative TSR Modifier (Scoring +/- 50%) Maximum (50%) for 75th percentile and above Target (0%) for median, or 50th percentile Minimum (-50%) for 25th percentile or below Linear interpolation for performance along the payout curve Payout no greater that target (0%) if Amgen’s absolute TSR is less than 0 (scoring 0%-200% of Target) Final Payout Multiplier 2017-2019 Operating Measures Score (Operating Measure Percentages 50%-150% subject to linear interpolation along the payout curve) Operating Measures Percentages are Measured Annually and Equally Weighted for Each of the Three Years of the Performance PeriodNon-GAAP EPS(1) GrowthNon-GAAP Operating Margin(1)Non-GAAP Operating Expense(1) Years 1 & 2Non-GAAP ROIC(1) Year 3 Average Operating Measure Percentages 2017 134% 115% 107% N/A 118% 2018 TBD TBD TBD TBD 2019 TBD TBD N/A TBD TBD 1/3rd 1/3rd 1/3rd Three Year Average Operating Measure 2017 Targets 2017 ActualNon-GAAP EPS(1) ($) Minimum (50%) Less than or equal to $11.80 $12.74 (134%) Target (100%) $12.00 Intermediate (125%) $12.60 Maximum (150%) More than or equal to $13.00Non-GAAP Operating Margin(1) (%) Minimum (50%) Less than or equal to 51% 54.2% (115%) Target (100%) 53% Intermediate (125%) 55% Maximum (150%) More than or equal to 57%Non-GAAP Operating Expense(1) ($B) Minimum (50%) More than or equal to $11.5 $11.0 (107%) Target (100%) $11.1 Maximum (150%) Less than or equal to $10.7
ï 2018 Proxy Statement 53
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Change to Performance Award Goal Design—2018–20202021–2023 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 2018-20202021-2023 performance period (January 1, 20182021 to December 31, 2020)2023) with input from management and FW Cook & Co. at its December 20172020 and March 20182021 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)2020-2022 performance period goal design for the first year of the 2018-20202021-2023 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 are weighted equally in each year(one-third per measure for 2018 andone-half per measure for 2019 and 2020) and are measured against established targets for each year in the 2018-2020 performance period; all such operating goal targets are established at the commencement of the three year performance period. The operating measures percentages are calculated for each year of the 2018-2020 performance period and are averaged at the end of the performance period, resulting in a 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.described previously. The Compensation Committee believesalso 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 alignment of our performance with the experience of our stockholders. Consistent with the design of our 2016-2018 and 2017-2019 performance period performance awards, the total operating measures score and the relative TSR modifier result in a payout range of 0% to 200% of target awards granted and, in the event our absolute TSR iswas less than zero, the TSR modifier shall not add any percentage points notwithstanding our ranking.0.
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 ofGenerally 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 20182021
In March 2018,2021, the Compensation Committee reviewed the LTI equity award grant values proposed to be granted to NEOs in 2018.2021. The Compensation Committee approved an increase in Mr. Bradway’s LTI equity award value from $12$14.4 million to $12.5$15.9 million to reward Mr. Bradway for strong performance andrecognize his successful leadership of the Company in a yearduring the pandemic, as well as of transition forthe accelerated Otezla integration, the successful execution of the BeiGene collaboration, and the advancement of new approaches to the business’ activities that support the long-term growth of the Company. In making its decision, the Compensation Committee noted that the Market Median had declined because of turnover in leadership at a number of our peer group companies while LTI awards for CEOs who had remained in place at peer companies were increased by 10%. The Compensation Committee grantedapproved increased LTI equity award grant values for Mr. HooperGordon (from $4.1 million to $5 million), Dr. Reese (from $4.1 million to $4.8 million), and Mr. Santos (from $4 million to $4.75 million) to recognize their successful leadership of their respective functions during the samepandemic, as well as of the strong execution of the accelerated Otezla integration, the BeiGene collaboration, and activities to enable the Company’s long-term growth. Given that 2020 was Mr. Griffith’s first year in the Chief Financial Officer role, while recognizing the breadth and importance of Mr. Griffith’s contributions to the Company’s performance during a global pandemic, Mr. Griffith’s LTI equity award value that he had received in 2017 as this aligned him with the Market Median.was maintained at $4 million. The Compensation Committee determined to increase Dr. Harper’s and Mr. Meline’sconcluded that the LTI equity award grant value from $3.7 millionvalues granted were appropriate because they recognize and $3.5 million, respectively, in 2017 to $4 million in 2018reward strong execution by our executives with compensation that is substantially “at risk,” performance-based, and Mr. Graham’s LTI equity award value from $2.5 million in 2017 to $2.8 million in 2018 as these increases positioned their respective target total direct compensation closer tofocused on the Market Median for their respective roles.longer-term.
ï 2021 Proxy Statement5461
Compensation Discussion and Analysis |
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 our non-GAAP net income(1). For 2020, 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 the pre-established 2020 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 2020, the Compensation Committee determined for the EIP participants, the definition of non-GAAP net income(1), the maximum award payable for each participant, and 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 2020 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 would remain the same as those of 2019 (150% of base salary for Mr. Bradway and 100% for each of the other NEOs).
The maximum award under the EIP continued to be expressed as the EIP non-GAAP net income(1) definition and, consistent with past years, was 0.125% for our CEO and 0.075% for each of the other NEOs. As discussed previously, both historically and in 2020, the Compensation Committee has paid well below the maximum award permitted under the EIP based on a practice of exercising negative discretion by using the Company performance goals composite final score under our GMIP as applied to the participant’s target annual cash incentive award opportunity to determine actual awards.
2020 Company Performance Goals
While all of the goals measure single-year performance, taken as a whole, they are intended to positively position us for both near- and long-term success, support our strategic priorities, and create stockholder value. The 2020 Company performance goals approved by the Compensation Committee were based on our 2020 budget and forecast at the time of such approval and are discussed on the following page.
For the 2020 Company performance goals, in early March 2020, management recommended, and the Compensation Committee reviewed and concurred with, replacing “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 the integration-related priorities given the Company’s 2019 acquisition of Otezla and the January 2020 commencement of the BeiGene collaboration. The amount earned is based on performance against the original goals, which were not modified to address the effects of the global pandemic.
| (1) | Non-GAAP net income for purposes of the EIP is as reported and reconciled in Appendix B. |
62 ï 20182021 Proxy Statement
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Compensation Discussion and Analysis
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Annual Cash Incentive Awards
Executive Incentive Plan2020 Company Performance Goals and Results
Annual cash incentive awardsThe table below illustrates the goals established, the weighting of each goal, and our actual performance for 2020. Payouts can range from 0% to our NEOs are generally made under our stockholder-approved EIP, which employs a formula that establishes a maximum award possible 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)225% of the Internal Revenue Code as in effect in 2017. This year, and in the past, actual awards under the EIP are determined by the Compensation Committee using their negative discretion under the EIP, 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, the target annual cash incentive award opportunities and, for the EIP, Global Management Incentive Plan, or GMIP, and Global Performance Incentive Plan, or GPIP, the Company performance goals and 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, and in 2017, 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 score as applied to the participant’s target annual cash incentive award for actual awards.
Target Incentive Opportunity
The target annual cash incentive award opportunity for each metric and the final Company Performance Goals Score cannot exceed 225%. For additional discussion regarding our performance, please see “Aligning Pay With Performance, Executing on Our Strategic Priorities, and Delivering During the COVID-19 Pandemic.”
Deliver Results (60% weighting) |
|
| Weighted Score Achieved 100.5% | |||||||||||||||||
($ In Millions)
Equally focused on top- 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% |
|
|
$23,750 |
|
$ |
25,250 |
|
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$26,750 |
|
|
$25,424 109.9% |
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Non-GAAP Net Income(1) | 30% | $8,016 | $8,883 | $9,750 | | $9,795 225.0% | ||||||||||||||
Certain measurements of our NEOs remainedperformance for the samenon-financial metrics are subjective in 2017 as it was for 2016. Mr. Bradway’s targetnature and could result in a very small payout percentage (less than 1% of an 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,award).
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.
2017 Company Performance Goals
The 2017 Company performance goals approved by the Compensation Committee were:
“Deliver Results” goals (60%):
Progress Innovative Pipeline (30% weighting) |
| |||||
“Progress Innovative Pipeline” goals (25%):
|
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), including for product candidates for inflammation (neuropathic pain, atopic dermatitis), oncology (colorectal cancer, and potentially other EGFR-expressing solid tumor indications, NSCLC, pancreatic cancer) and cardiometabolic (obesity, diabetes) therapies.
• We initiated six first-in-human studies, including for product candidates being studied in prostate cancer, metastatic gastric, gastric, and gastroesophageal junction cancer, solid tumors, and obesity.
• We advanced two programs through the early-to-late stage portal:
- AMG 160 (a half-life extended anti-PSMA x anti-CD3 BiTE®) being investigated as a treatment for prostate cancer; and
- AMG 404 (a human anti-PD-1 monoclonal antibody) being investigated as a treatment for solid tumors.
|
|
125.0% |
| |||
Execute Key Clinical Studies and Regulatory Filings | 20% | • We achieved key clinical study milestones for sotorasib, Otezla, Aimovig, and omecamtiv mecarbil.
• We completed key regulatory filings for sotorasib, Otezla, Aimovig, Prolia, BLINCYTO, and RIABNI (biosimilar rituximab (Rituxan®)).
• However, as a consequence of paused or delayed enrollments of certain clinical trials due to COVID-19, our performance against this goal was negatively affected.
| 77.8% | |||||||
Deliver Annual Priorities (10% weighting) | Weighted Score Achieved 14.0% | |||||
Goals | Weighting | Results | Achieved | |||||||
Ensure Successful Integrations and Transitions— Focuses on integrating our acquisition of Otezla and collaboration with BeiGene | 5% | • For Otezla: We acquired Otezla in November 2019 and exceeded our integration milestones set for 2020, including by transitioning and integrating Otezla into our business on an accelerated basis (realizing higher efficiencies and cost savings), and achieving key clinical milestones and regulatory filings. This level of achievement allowed us to better serve patients by providing uninterrupted supply of Otezla and advancing additional therapeutic indications for this medicine.
• For BeiGene, our successful execution on our collaboration allows us to serve patients by making our products widely available in China and for 2020 includes:
- We achieved operational readiness to enable BeiGene to assume commercial responsibility for XGEVA, KYPROLIS, and BLINCYTO. We achieved product approval in 2020 in China for BLINCYTO and XGEVA. Approval of KYPROLIS was submitted and is under review in China. XGEVA was added to the National Drug Reimbursement List in China.
- We achieved our goals set for clinical trial execution system readiness and transitioned commercial and medical responsibilities and materials in China to BeiGene for XGEVA, BLINCYTO, and KYPROLIS and we transferred regulatory responsibility in China for these collaboration products.
| 177.9% | |||||||
Fund Innovation Through Productivity— Focuses on gross operating expense savings | 5% | • We established a target of $300 million of gross operating expense savings and realized approximately $304 million of such savings. These productivity savings helped to free up and focus resources on those opportunities that can generate the most value for patients and for our business (such as additional investment in research and development to advance our pipeline, launching new products and further growing those already on the market, and expanding our geographic presence). These results exclude adjustments that are unrelated to productivity (including operating expense savings related to COVID-19).
| 104.2% | |||||||
“Deliver Annual Priorities” goals (15%):
2020 Company Performance Goals Final Score | Achieved 142.6% |
|
While all of the goals measure single–year performance, taken as a whole, they are intended to positively position us for both near- and longer-term success, delivery on our strategic priorities and create stockholder value. There are no payouts for below-threshold 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 payouts by the Compensation Committee.
| (1) |
|
Non-GAAP net income for purposes of the |
ï 20182021 Proxy Statement 5563
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Compensation Discussion and Analysis
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2017 Company Performance Goals and Results
The table below illustrates the weighting of each goal, the goals established and our actual performance for 2017. No amounts can be earned for below threshold performance for our financial metrics. For a more detailed description of our performance under each of thenon-financial measures, please see the “Executive Summary” section above.
Deliver Results (60% weighting)
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Weighted Score Achieved 68.2%
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Financial Goals (60%) ($ In Millions)
|
|
Threshold
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Target
|
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Maximum
|
|
|
Weighting
|
|
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Achieved
|
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Revenues |
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$21,085 |
|
|
$22,525 |
|
|
$24,325 |
|
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30% |
|
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$22,849 110.6% |
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Non-GAAP Net Income(1) | $8,000 | $8,890 | $9,955 | 30% | | $9,246 116.8% |
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Progress Innovative Pipeline (25% weighting)
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Weighted Score Achieved 34.7%
| |||||||||
Goals
|
Results
|
Weighting
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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% |
|
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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)
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Weighted Score Achieved 12.1%
| |||||||||
Goals
|
Results
|
Weighting
|
Achieved
| |||||||
Execute Critical Launches and Long-Term Commercial Objectives |
• Prolia—increased worldwide net sales. |
|
10% |
|
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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 $400 million in savings as a result of initiatives at both the Company level as well as activities within each function designed to transform approaches with specific savings targets established for each area.
| 5% | 90.4% | |||||||
|
|
|
56 ï 2018 Proxy Statement
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20172020 Annual Cash Incentive Awards
As shown in the table above, our performance against the 20172020 Company performance goals yielded a composite final score of 115%142.6% and the Compensation Committee awarded actual annual cash incentive awards under the EIP to our NEOs based on this composite final score. No further discretion was employed.
| Named Executive Officer |
Target Opportunity | Target 2017 Award($) | Actual 2017 Award($)(1) | |||||||||
Robert A. Bradway
|
| 150
|
|
| 2,333,077
|
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| 2,683,000
|
| |||
Anthony C. Hooper
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| 100
|
|
| 1,049,769
|
|
| 1,207,000
|
| |||
Sean E. Harper
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| 100
|
|
| 970,308
|
|
| 1,116,000
|
| |||
David W. Meline
|
| 100
|
|
| 970,308
|
|
| 1,116,000
|
| |||
Jonathan P. Graham
|
| 80
|
|
| 745,785
|
|
| 858,000
|
| |||
Named Executive Officer | Target Opportunity (% of Base Salary) | Target 2020 Award($) | Actual 2020 Award($)(1) | |||||||||
Robert A. Bradway |
| 150 |
|
| 2,450,769 |
|
| 3,495,000 |
| |||
Murdo Gordon |
| 100 |
|
| 1,046,746 |
|
| 1,493,000 |
| |||
David M. Reese |
| 100 |
|
| 1,006,969 |
|
| 1,436,000 |
| |||
Peter Griffith |
| 100 |
|
| 990,562 |
|
| 1,413,000 |
| |||
Esteban Santos |
| 100 |
|
| 970,308 |
|
| 1,384,000 |
| |||
| (1) | Calculated in accordance with the |
20182021 Company Performance Goals
In March 2018,2021, the Compensation Committee established Company performance goal categoriesgoals for 20182021 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 added new annual priorities of “Environmental, Social and Governance” and “Digital Transformation” as goals that focus the Company on supporting achievement of our 2027 environmental sustainability targets and Company-wide activities that strengthen and improve the Company’s diversity, inclusion, and belonging efforts, and digital transformation activities that enable speed and, in turn, value creation.
In March 2018,2021, 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 available 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 available position and environmentalmarket conditions to determine each NEO’s base salary. No increase in base salary is automatic or guaranteed. For more information regarding the determination of Market Median, the peer group data reviewed, and the Executive Vice President, Operations role, see “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources” previously described.
In early March 2017,2020, the Compensation Committee reviewed the market competitiveness of each NEO’s base salary employed at the time based on available 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, adjustedincreased Messrs. Bradway, Gordon, Griffith and Santos’ respective base salaries by 2.5%. For Dr. Reese, to align with the Market Median for each position. The Compensation Committee approved a 2017 base salary increase of 2% for Mr. Bradway based on recommendations from Cook & Co., to raisebring his base salary nearercloser to the Market Median for his position, while managingthe Compensation Committee increased 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 of 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.by 4%.
64 ï 20182021 Proxy Statement 57
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Compensation Discussion and Analysis
|
|
20172020 Base Salary Market Position
The 20172020 base salaries as in effect at the end of 2020 and the Market Median position as reviewed by the Compensation Committee in March 2020 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) (%) | |||||||||||||||
Robert A. Bradway
|
| 1,530,000
|
|
| 2.0
|
|
| 1,560,000
|
|
| 1,588,000
|
|
| (1.8
| )
| |||||
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
| )
| |||||
David W. Meline
|
| 950,000
|
|
| 2.5
|
|
| 974,000
|
|
| 996,373
|
|
| (2.2
| )
| |||||
Jonathan P. Graham
|
| 917,000
|
|
| 2.0
|
|
| 935,000
|
|
| 876,479
|
|
| 6.7
|
| |||||
Named Executive Officer | 2019 Base Salary ($) | Increase (%) | 2020 Base Salary ($) | 2019 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | |||||||||||||||
Robert A. Bradway |
| 1,600,000 |
|
| 2.5 |
|
| 1,640,000 |
|
| 1,583,000 |
|
| 3.6 |
| |||||
Murdo Gordon |
| 1,025,000 |
|
| 2.5 |
|
| 1,050,700 |
|
| 1,044,665 |
|
| 0.6 |
| |||||
David M. Reese |
| 973,800 |
|
| 4.0 |
|
| 1,013,000 |
|
| 1,106,303 |
|
| (8.4 | ) | |||||
Peter Griffith |
| 970,000 |
|
| 2.5 |
|
| 994,300 |
|
| 1,002,771 |
|
| (0.8 | ) | |||||
Esteban Santos(1) |
| 950,000 |
|
| 2.5 |
|
| 974,000 |
|
| n/a |
|
| n/a |
| |||||
| (1) | As previously discussed under “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources,” no comparable market data is available for Mr. Santos. |
20182021 Base Salary Adjustments
In March 2018,2021, 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 ofalignment with the Company’s decision to provide nobase salary increases made to its executive directors and officers (except in exceptional circumstances) to be consistent with the market for talent as well as with our continuing exercise of financial discipline,staff members generally, the Compensation Committee decided to provide noincreased Messrs. Bradway, Gordon, Griffith, and Santos’ respective base salaries by 2%. The Compensation Committee increased Dr. Reese’s base salary increasesby 5.6% to our NEOs.bring his base salary in-line with the Market Median for his position and to reflect the importance of his contribution to the Company in his role as Executive Vice President, Research and Development.
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 available Market Median for each element of
compensation, provides a useful check in making compensation decisions.
In March 2017,2020, the Compensation Committee reviewed total target total annual cash compensation for each NEO comparing itcompared to the available market data and historical target total annual cash compensation figures. Our prior year target annual cash compensation reviewed byfigures as depicted below. For Mr. Santos, the compensation for his role as Executive Vice President, Operations is compared to that of our other Executive Vice President roles. The Compensation Committee noted such total target annual cash compensation was generally below the Market Median for available positions, with the exception of the CEO, for the reasons previously discussed, and Mr. Graham asBradway. For Mr. Bradway, who was slightly above the Market Median for his position declined overas a result of changes at our peer companies that narrowed the prior year.spread between the median and the 75th percentile, the Compensation Committee found such positioning to be appropriate given Mr. Bradway’s sustained leadership in the CEO role. For more information regarding the determination of Market Median, and the peer group data reviewed, and the Executive Vice President, Operations role, 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 20172020 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 ($) | Difference vs. Market Median Over/(Under) (%) | |||||||||
Robert A. Bradway
|
| 3,825,000
|
|
| 3,750,000
|
|
| 2.0
|
| |||
Anthony C. Hooper
|
| 2,064,000
|
|
| 2,195,771
|
|
| (6.0
| )
| |||
Sean E. Harper
|
| 1,900,000
|
|
| 1,965,625
|
|
| (3.3
| )
| |||
David W. Meline
|
| 1,900,000
|
|
| 1,979,256
|
|
| (4.0
| )
| |||
Jonathan P. Graham
|
| 1,650,600
|
|
| 1,546,353
|
|
| 6.7
|
| |||
Named Executive Officer | 2020 Amgen Target Total Annual Cash ($) | 2019 Market Median ($) | Difference vs. Market Median Over/(Under) (%) | |||||||||
Robert A. Bradway |
| 4,100,000 |
|
| 3,958,000 |
|
| 3.6 |
| |||
Murdo Gordon |
| 2,101,400 |
|
| 2,117,140 |
|
| (0.7 | ) | |||
David M. Reese |
| 2,026,000 |
|
| 2,318,594 |
|
| (12.6 | ) | |||
Peter Griffith |
| 1,988,600 |
|
| 2,029,200 |
|
| (2.0 | ) | |||
Esteban Santos(1) |
| 1,948,000 |
|
| n/a |
|
| n/a |
| |||
| (1) | As previously discussed under “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources,” no comparable market data is available for Mr. Santos. |
58 ï 20182021 Proxy Statement65
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Compensation Discussion and Analysis
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|
Perquisites
Perquisites are limited in both type and monetary value. The Compensation Committee believes, however, that certain perquisites facilitate the efficient operation of our business, allowing our NEOs to better focus their time, attention, and capabilities on our Company, permit them to be accessible to the business as required, alleviate safety and security concerns, and assist us in recruiting and retaining key executives. The perquisites provided to our NEOs generally include an allowance for personal financial planning services, including tax preparation services (not to exceed $15,000 annually in aggregate), annual physical examinations, Company-paid moving and relocation expenses paid on behalf of newly-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
Clawback Policy
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.
Equity Recoupment ProvisionsPolicy. In the course of our engagement activities, we explored with certain stockholders additional recoupment mechanisms. In December 2020, after discussions of recoupment mechanisms, the Compensation Committee adopted an executive officer equity recoupment policy that provides the Compensation Committee with the ability to cause the forfeiture and cancellation of unvested equity awards and any unexercised portion of stock options (granted after December 31, 2020) in the event an executive officer is terminated for engaging in misconduct that caused serious financial or reputational damage to the Company (including, but not limited to, a financial restatement). If an executive officer is subject to an investigation potentially implicating conduct that could result, or may have resulted, in serious financial or reputational damage to the Company, the Company may freeze access to any unvested equity awards regardless of grant date and any vested but unexercised stock options granted after December 31, 2020, during the investigation, and such unvested equity awards and unexercised stock options may ultimately be subject to forfeiture and cancellation.
Cash Incentive Award Recoupment. 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
These provisions and policies do not intended to limit any other action that the Company could take against an employee, including other
disciplinary actions (up to(including 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(net of shares retained by us to satisfy associated tax withholding requirements and exercise price amounts,amounts) until such officer has reached his or her required stock ownership level.
66 ï 20182021 Proxy Statement 59
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Compensation Discussion and Analysis
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Stock Ownership Guidelines Requirements
The stock ownership guidelines for 20172020 were:
Position | Stock Ownership Requirement | Compliance | ||
Chief Executive Officer(1) | 6x base salary | ✓ | ||
Executive Vice President | 3x base salary | ✓
| ||
|
| ✓
| ||
|
| ✓ | ||
|
|
|
| (1) | Mr. Bradway |
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, 2017,16, 2020, 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 was promoted from Senior Vice President to an Executive Vice President role on July 21, 201426, 2018 and, July 13, 2015 and haveas a result, now has until 2021 to comply with the new ownership level associated with the Executive Vice President role. Mr. Griffith commenced employment with our Company on October 23, 2019 and 2020, respectively,has until 2024 to meet theirhis guidelines.
Insider Trading Policy and Practices
All staff members and our Board are prohibited from: (i) buying or selling our Common Stock while aware of any material nonpublic information; (ii) engaging in short sales with respect to our Common Stock; (iii) pledging or purchasing our Common Stock on margin;margin(1); 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 2017.2020.
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.
| (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”). |
60 ï 20182021 Proxy Statement67
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Compensation Discussion and Analysis
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|
Stockholder Outreach—Executive Compensation Website
We maintain a website accessible throughout the year at www.amgen.com/executivecompensation(1), 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 reviews your input and appreciates your time and effort in completing the survey.
Approach to Pricing Our Products
We are committed to pricing our products according to the value they deliver and employ flexible pricing approaches to help promote patient access. We have internal processes and controls in place to help 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 and biosimilars that can deliver volume-driven unit growth. In 2020, the average net price for Amgen medicines declined for a third straight year and our revenues benefited from volume-based growth globally, including across a number of our newer innovative medicines and biosimilars. We continue to disclose in our annual report on Form 10-K and our quarterly reports on Form 10-Q, the pricing trends significant to our business. 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. A full description of risk management by our Compensation Committee and our ESG efforts can be found in the “CORPORATE GOVERNANCE” section, including the subsections “—Compensation Committee Risk Management” and “—Our Approach to Environmental Sustainability, Social Responsibility, and Human Capital Management.”
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 Secretary effective July 13, 2015. HisGlobal Commercial Operations, on September 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 vested at the end of the performance period of November 2, 2018 to December 31, 2020. For more information regarding these performance units, see “Elements of Compensation and Specific Compensation Decisions—Performance Units Earned Under Initial Hire Performance Unit Award to Mr. Gordon” previously described. 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 account 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)(2) 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) | 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. |
| (2) | The Consolidated Omnibus Budget Reconciliation Act of 1985. |
68 ï 2021 Proxy Statement
Compensation Discussion and Analysis |
Offer Letter—Mr. Griffith
Mr. Griffith, who commenced employment as our Executive Vice President, Finance, on October 23, 2019, and became our Executive Vice President and Chief Financial Officer on January 1, 2020, is currently subject to an offer letter that was negotiated in connection with his hiring. The terms of the offer letter were approved by the Compensation Committee. We agreed to provide Mr. Griffith with a base salary of $970,000, and, consistent with each of the other Executive Vice Presidents, a target annual cash incentive award opportunity of 100% of base salary, both of which were targeted at the Market Median(1). We also agreed to provide Mr. Griffith with a $500,000 sign-on bonus to induce Mr. Griffith to accept our offer, however, such sign-on bonus is subject to recoupment if, within 24 months from his hire date, Mr. Griffith resigns his employment with the Company or for any reason his employment is terminated by us for “cause.” We also agreed to provide Mr. Griffith with RSUs valued at $4 million which will vest over three years beginning on the second anniversary of the grant date through the fourth anniversary of the grant date at a rate of 33%, 33%, and 34% each year, respectively, contingent upon Mr. Griffith being actively employed with us through each vesting date. The Compensation Committee concluded that this LTI equity award value was appropriate because it provides compensation that is focused on the longer-term and targeted at the Market Median. Mr. Griffith’s offer letter also provides for cash severance protection for three years following his employment date equal to two year’s annual base salary and target annual cash incentive award, plus up to 18 months of COBRA 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 October 23, 2022, and are payable only if Mr. Griffith is terminated other than for “cause.”
Change of Control Benefits
Change of Control Severance Plan
In the event of a change of control and a qualifying termination, our Change of Control Severance Plan provides severance payments to 1,6131,675 U.S. staff members (as of December 31, 2017)2020), 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 throughending on the quarter end immediately prior to 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.
| (1) | Measured using information available at the time the Compensation Committee reviewed and approved Mr. Griffith’s compensation. |
ï 2021 Proxy Statement69
Compensation Discussion and Analysis |
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 2017July 2020, using a samplecomparator group of 14 companies chosen soby Amgen as
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ï 2018 Proxy Statement 61
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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 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.
TaxesTax 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 this year-end,“once-a-covered-employee, and anyalways-a-covered-
employee” rule, the total number of our three other most highly compensatedcovered employees who serve as executive officers atyear-end, otherin 2020 is higher than our Chief Financial Officer.in 2019.
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 20172020 of the RSUscompensation not being performance-based is approximately $2.3 million assumingdeductible due to the Company’s U.S. combined effective tax rate for 2017.
To attract highly qualified executives to join us and to promote their retention, we may offer other compensation elements that are not performance-based compensation under Section 162(m), such as retention bonuses orsign-on bonuses and moving and relocation, as part of their initial employment offers, and bonuses paid under our GMIP to executives who are hired past the eligibility date of our EIP.
6270 ï 20182021 Proxy Statement
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Compensation Discussion and Analysis
|
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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) thatlimit 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 ofapproximately $6.1 million, assuming the requirements of Section 162(m) will no longer be relevant, and thus will not be taken into consideration when setting future compensation.Company’s U.S. blended tax rate for 2020.
Accounting Standards
Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718 requires us to recognize
an expense for the fair value of equity-based compensation awards. Grants of stock options, RSUs, and performance units under our LTI equity award plansprogram are accounted for under FASB ASC Topic 718. The
Compensation Committee regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our LTI equity award plans and programs. For example, the Compensation Committee modified our Employee Stock Purchase Plan to make itnon-compensatory under the “safe harbor” provisions of the accounting rules and, therefore, we no longer recognize compensation expense under this plan. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.
ï 20182021 Proxy Statement 6371
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Executive Compensation Tables
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Summary Compensation Table
The following table sets forth summary information concerning the compensation awarded to, paid to, or earned by each of our Named Executive Officers, or NEOs.
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| Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||
Performance Units and Restricted Stock Units | Stock Options | EIP | ||||||||||||||||||||||||||||||
Robert A. Bradway Chief Executive Officer and President
|
|
2020 |
|
|
1,647,538 |
|
|
0 0 0 |
|
|
10,079,676 |
|
|
4,319,993 |
|
|
3,495,000 |
|
|
589,201 |
|
|
20,131,408 |
| ||||||||
Murdo Gordon Executive Vice President, Global Commercial Operations(6) |
|
2020 |
|
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1,055,520 |
|
|
0 0 |
|
|
2,869,779 |
|
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1,229,977 |
|
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1,493,000 |
|
|
327,774 |
|
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6,976,050 |
| ||||||||
David M. Reese Executive Vice President, Research and Development |
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2020 |
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1,015,817 |
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0 0 300,000 |
|
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2,869,779 |
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1,229,977 |
|
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1,436,000 |
|
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262,663 |
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6,814,236 |
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Peter H. Griffith Executive Vice President, and Chief Financial Officer(7) |
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2020 |
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998,864 |
|
|
0 |
|
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2,799,625 |
|
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1,199,958 |
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1,413,000 |
|
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154,383 |
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6,565,830 |
| ||||||||
Esteban Santos Executive Vice President, Operations(8)
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2020 |
|
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978,446 |
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|
0 |
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2,799,625 |
|
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1,199,958 |
|
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1,384,000 |
|
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229,624 |
|
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6,591,653 |
| ||||||||
| (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 |
72 ï 2021 Proxy Statement
Executive Compensation Tables |
The number of units to be earned for the performance units granted during |
64 ï 2018 Proxy Statement
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The table below shows the grant date fair values of these performance unit awards: (1) if the maximum is achieved with regard to all of the operating performance measures which would result in an earnout of 150% based on the operating performance measures with the TSR market condition at target, with no increase or decrease based on the market condition, and (2) if the maximum is achieved with regard to all of the operating performance measures and maximum performance occurs under the TSR market condition which results in an additional 50% earnout, for total earned payout of 200% of performance units granted.
| Fair Value of Performance Units for the 2017-2019 Performance Period | ||||||||
| Name | Based on the Maximum Performance Regarding the 2017-2019 Operating Performance Measures | Based on the Maximum Performance Regarding the Operating Performance Measures and Maximum Payout for the TSR Modifier | ||||||
Robert A. Bradway
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$8,999,665
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$11,999,673
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Anthony C. Hooper
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2,999,829
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3,999,891
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Sean E. Harper
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2,774,810
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3,699,747
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David W. Meline
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2,624,738
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3,499,770
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Jonathan P. Graham
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1,874,915
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2,499,887
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Fair Value of Performance Units for the 2020-2022 Performance Period | ||||||||
| Name | Maximum Performance of Operating Metrics and Target TSR Performance ($) | Maximum Performance of Operating Metrics and TSR Metrics ($) | ||||||
Robert A. Bradway |
| 12,239,549 |
|
| 14,399,733 |
| ||
Murdo Gordon |
| 3,484,738 |
|
| 4,099,692 |
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David M. Reese |
| 3,484,738 |
|
| 4,099,692 |
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Peter H. Griffth |
| 3,399,556 |
|
| 3,999,566 |
| ||
Esteban Santos |
| 3,399,556 |
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| 3,999,566 |
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| (3) | For |
| (4) | Reflects amounts that were earned under our Executive Incentive Plan, or EIP, for |
| (5) | See the subsection “All Other Compensation—Perquisites and Other Compensation” immediately following these footnotes. |
| (6) |
|
| (7) | Mr. |
| (8) | 2020 is the first |
All Other Compensation—Perquisites and Other Compensation
Perquisites. The amounts reported reflect the aggregate incremental cost of perquisites and other personal benefits provided to our NEOs and are included in the “All Other Compensation” column of the “Summary Compensation Table.” The following table sets forth the perquisites provided to our NEOs in 2017.2020.
| Personal Use of Company Aircraft(1) | Personal Use of Company Car and Driver(2) | Personal Financial Planning Services | Other(3) | |||||||||||||||||
| Name | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Total($) | |||||||||||||||
Robert A. Bradway
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111,098
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3,866
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15,000
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10,539
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140,503
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Anthony C. Hooper
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805
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1,455
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15,000
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9,330
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26,590
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Sean E. Harper
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0
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0
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15,000
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7,500
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22,500
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David W. Meline
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90
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2,388
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15,000
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6,842
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24,320
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Jonathan P. Graham
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90
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40
|
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15,000
|
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6,842
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21,972
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| Personal Use of Company Aircraft(1) | Personal Use of Company Car and Driver(2) | Personal Financial Planning Services | Other(3) | |||||||||||||||||
| Name | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Aggregate Incremental Cost($) | Total($) | |||||||||||||||
Robert A. Bradway |
| 66,115 |
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| 1,227 |
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| 15,000 |
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| 11,374 |
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| 93,716 |
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Murdo Gordon |
| 54,099 |
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| 0 |
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| 15,000 |
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| 12,200 |
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| 81,299 |
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David M. Reese |
| 0 |
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| 0 |
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| 15,000 |
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| 12,166 |
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| 27,166 |
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Peter H. Griffith |
| 7,942 |
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| 0 |
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| 15,000 |
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| 10,085 |
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| 33,027 |
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Esteban Santos |
| 0 |
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| 0 |
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| 12,993 |
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| 12,200 |
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| 25,193 |
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| (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. |
| (3) | Other expenses include: |
| (a) | Company contributions to non-profit charities designated by the executive in the amount of $10,000 for Messrs. Bradway and Gordon, Dr. Reese, and Messrs. Griffith and Santos. |
| (b) | Executive physicals and expenses related to guests accompanying the NEOs on business travel. |
ï 20182021 Proxy Statement 6573
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Executive Compensation Tables
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Other Compensation. The following table sets forth compensation for our NEOs in 20172020 incurred in connection with our 401(k) Retirement and Savings Plan, or 401(k) Plan, our NDCP, and our Supplemental Retirement Plan, or SRP. These amounts, along with the perquisites and other compensation discussed above, are included in the “All Other Compensation” column of the “Summary Compensation Table.” See “Nonqualified Deferred Compensation” below for a description of these plans.
| Name | Company Contributions to 401(k) Retirement and Savings Plan($) | Company Credits to Supplemental Retirement Plan($) | Total($) | |||||||||
Robert A. Bradway
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27,000
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493,538
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520,538
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Anthony C. Hooper
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27,000
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241,877
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268,877
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Sean E. Harper
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27,000
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220,231
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247,231
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David W. Meline
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27,000
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220,331
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247,331
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Jonathan P. Graham
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27,000
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182,723
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209,723
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| Name | Company Contributions to 401(k) Retirement and Savings Plan($) |
Company Credits to Non-Qualified |
Company Credits to Supplemental Retirement Plan($) | Total($) | ||||||||||||
Robert A. Bradway |
| 28,500 |
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| 0 |
|
| 466,985 |
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| 495,485 |
| ||||
Murdo Gordon |
| 28,500 |
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| 0 |
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| 217,975 |
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| 246,475 |
| ||||
David M. Reese |
| 28,500 |
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| 0 |
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| 206,997 |
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| 235,497 |
| ||||
Peter H. Griffith |
| 28,500 |
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| 0 |
|
| 92,856 |
|
| 121,356 |
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Esteban Santos |
| 28,500 |
|
| 0 |
|
| 175,931 |
|
| 204,431 |
| ||||
Grants of Plan-Based Awards
The following table sets forth summary information regarding all grants of plan-based awards made to our NEOs for the year ended December 31, 2017.2020. All of our equity based awards were granted under the Amgen Inc. 2009 Equity Incentive Plan, as amended.
Estimated Future Payouts |
Estimated Future | All Other Stock Awards: Number of Shares of Stock or Units(#)(4) | All Other Option Awards: Number of Securities Underlying Options (#)(5) | Exercise ($/Sh) | Grant Date Fair Value of Stock and Option Awards($) | |||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Approval Date(1) | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||||||||||||
| EIP | Performance Units | RSUs | Stock Options | |||||||||||||||||||||||||||||||||||||||||||||
Robert A. Bradway | 3/7/17 | 3/7/17 | (2) | (2) | 11,702,500 | |||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | (3) | 33,543 | 67,086 | 5,999,836 | (6) | ||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | 14,760 | 2,399,976 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
|
| 5/1/17
|
|
| 3/7/17
|
|
| 130,718
|
|
| 162.60
|
|
| 3,599,974
| (8)
| ||||||||||||||||||||||||||||||||||
Anthony C. Hooper | 3/7/17 | 3/7/17 | (2) | (2) | 7,021,500 | |||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | (3) | 11,181 | 22,362 | 1,999,945 | (6) | ||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | 4,920 | 799,992 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
|
| 5/1/17
|
|
| 3/7/17
|
|
| 43,572
|
|
| 162.60
|
|
| 1,199,973
| (8)
| ||||||||||||||||||||||||||||||||||
Sean E. Harper | 3/7/17 | 3/7/17 | (2) | (2) | 7,021,500 | |||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | (3) | 10,342 | 20,684 | 1,849,874 | (6) | ||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | 4,551 | 739,993 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
|
| 5/1/17
|
|
| 3/7/17
|
|
| 40,305
|
|
| 162.60
|
|
| 1,110,000
| (8)
| ||||||||||||||||||||||||||||||||||
David W. Meline | 3/7/17 | 3/7/17 | (2) | (2) | 7,021,500 | |||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | (3) | 9,783 | 19,566 | 1,749,885 | (6) | ||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | 4,305 | 699,993 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
|
| 5/1/17
|
|
| 3/7/17
|
|
| 38,126
|
|
| 162.60
|
|
| 1,049,990
| (8)
| ||||||||||||||||||||||||||||||||||
Jonathan P. Graham | 3/7/17 | 3/7/17 | (2) | (2) | 4,681,000 | |||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | (3) | 6,988 | 13,976 | 1,249,944 | (6) | ||||||||||||||||||||||||||||||||||||||||||
| 5/1/17 | 3/7/17 | 3,075 | 499,995 | (7) | ||||||||||||||||||||||||||||||||||||||||||||
|
| 5/1/17
|
|
| 3/7/17
|
|
| 27,233
|
|
| 162.60
|
|
| 749,997
| (8)
| ||||||||||||||||||||||||||||||||||
Estimated Future Payouts |
Estimated Future | All Other | All Other (#)(5) | Exercise ($/Sh) | Grant Date | |||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Approval Date(1) | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||||||||||||||||
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| EIP/GMIP | Performance Units | RSUs | Stock Options |
| |||||||||||||||||||||||||||||||||||||||||||||
Robert A. Bradway | 3/3/2020 | 3/3/2020 | (2) | (2) | 12,243,750 | |||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | (3) | 28,907 | 57,814 | 7,199,866 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | 12,184 | 2,879,810 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/5/2020
|
|
| 3/3/2020
|
|
| 102,031
|
|
| 236.36
|
| 4,319,993 | (8) | |||||||||||||||||||||||||||||||||||||||
Murdo Gordon | 3/3/2020 | 3/3/2020 | (2) | (2) | 7,346,250 | |||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | (3) | 8,230 | 16,460 | 2,049,846 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | 3,469 | 819,933 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/5/2020
|
|
| 3/3/2020
|
|
| 29,050
|
|
| 236.36
|
| 1,229,977 | (8) | |||||||||||||||||||||||||||||||||||||||
David M. Reese | 3/3/2020 | 3/3/2020 | (2) | (2) | 7,346,250 | |||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | (3) | 8,230 | 16,460 | 2,049,846 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | 3,469 | 819,933 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/5/2020
|
|
| 3/3/2020
|
| 29,050 | 236.36 | 1,229,977 | (8) | |||||||||||||||||||||||||||||||||||||||||||
Peter H. Griffith | 3/3/2020 | 3/3/2020 | (2) | (2) | 7,346,250 | |||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | (3) | 8,029 | 16,058 | 1,999,783 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | 3,384 | 799,842 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/5/2020
|
|
| 3/3/2020
|
|
| 28,341
|
|
| 236.36
|
| 1,199,958 | (8) | |||||||||||||||||||||||||||||||||||||||
Esteban Santos | 3/3/2020 | 3/3/2020 | (2) | (2) | 7,346,250 | |||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | (3) | 8,029 | 16,058 | 1,999,783 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||
| 5/5/2020 | 3/3/2020 | 3,384 | 799,842 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
| 5/5/2020
|
|
| 3/3/2020
|
|
| 28,341
|
|
| 236.36
|
| 1,199,958 | (8) | |||||||||||||||||||||||||||||||||||||||
| (1) | Reflects the date on which the grants were approved by the Compensation and Management Development Committee, or Compensation Committee. |
| (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 |
6674 ï 20182021 Proxy Statement
|
Executive Compensation Tables
|
|
|
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards($) | Non-Equity Compensation($) | |||||||||||||
| Name | Threshold | Target | Maximum | Actual | ||||||||||
Robert A. Bradway
|
|
—
|
|
|
2,333,077
|
|
5,249,423
|
2,683,000
| ||||||
Anthony C. Hooper
|
|
—
|
|
|
1,049,769
|
|
2,361,980
|
1,207,000
| ||||||
Sean E. Harper
|
|
—
|
|
|
970,308
|
|
2,183,193
|
1,116,000
| ||||||
David W. Meline
|
|
—
|
|
|
970,308
|
|
2,183,193
|
1,116,000
| ||||||
Jonathan P. Graham
|
|
—
|
|
|
745,785
|
|
1,678,016
|
858,000
| ||||||
|
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards($) |
| Non-Equity Compensation($) | |||||||||||||||
| Name | Threshold | Target | Maximum |
| Actual | |||||||||||||
Robert A. Bradway |
| — |
|
| 2,450,769 |
|
| 5,514,230 |
|
| 3,495,000 |
| ||||||
Murdo Gordon |
| — |
|
| 1,046,746 |
|
| 2,355,179 |
|
| 1,493,000 |
| ||||||
David M. Reese |
| — |
|
| 1,006,969 |
|
| 2,265,680 |
|
| 1,436,000 |
| ||||||
Peter H. Griffith |
| — |
|
| 990,562 |
|
| 2,228,765 |
|
| 1,413,000 |
| ||||||
Esteban Santos |
| — |
|
| 970,308 |
|
| 2,183,193 |
|
| 1,384,000 |
| ||||||
| (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 2020 operating measures with respect to the 2020-2022 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 |
ï 20182021 Proxy Statement 6775
|
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, 20172020 granted to each of our NEOs.
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