UNITED STATES SECURITIES AND EXCHANGE COMMISSION
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SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
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Endo International plc | ||||
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Notice of the
General Meeting of Shareholders and Proxy Statement
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June 11, 201910, 2021 at 8:00 a.m. local, Irish time
Endo International plc
First Floor● Minerva House● Simmonscourt Road● Ballsbridge● Dublin 4● Ireland
endo.com
Endo International plc First Floor Minerva House Simmonscourt Road Ballsbridge Dublin 4, Ireland endo.com |
Dear Fellow Shareholders,
It is our pleasure to announce the Endo International plc (Endo) 2021 Annual General Meeting of Shareholders. The attached Notice of the Annual General Meeting and Proxy Statement serve as your guide to the business to be conducted and provide additional details regarding the meeting.
2020 was a remarkable year for all of us. Despite the challenges associated with the COVID-19 pandemic, 2020 was a year of progress for Endo. We delivered solid financial performance, led by our Sterile Injectables segment and increased VASOSTRICT® utilization, executed a smooth CEO succession and embarked on the next phase of our transformation journey. As an initial step, we introduced a meaningful new vision—to help everyone we serve live their best life. Our vision is simple in words yet highly aspirational in ambition and powerful in meaning. At its core, this vision guides our team to deliver on our new mission of developing and delivering life-enhancing products through focused execution.
In addition to our new vision and mission, we established three strategic priorities to help define our evolution as a company. Our first strategic priority is “Expand & Enhance Our Portfolio,” which reflects our focus on investing to build a more differentiated and durable product portfolio. Our second priority is “Reinvent How We Work,” which represents our commitment to transform our business by accelerating new ways of working to promote innovation and improve productivity. “Be a Force for Good” is our third priority and it expresses our commitment to transform our culture and adopt more sustainable practices to positively impact our stakeholders, including through the promotion of diversity, equity, and inclusion. These three strategic priorities guide our actions as a company and we are proud of what we achieved in 2020.
Expand & Enhance Our Portfolio
As part of our commitment to expanding and enhancing our product portfolio, we are making strategic investments designed to create long-term value. In 2020, we developed and implemented a comprehensive plan aimed at maximizing the long-term value of XIAFLEX® through incremental investment for our on-market indications and potential new indications. We have a strong belief in the ability of XIAFLEX® to satisfy the unmet need that exists for nonsurgical options to treat Peyronie’s disease and Dupuytren’s contracture and we are investing to increase patient awareness, physician education and training. Additionally, we initiated development programs related to potential new XIAFLEX® indications for the treatment of plantar fibromatosis and adhesive capsulitis and funded pre-clinical work on several other potential indications.
In July, we received U.S. Food and Drug Administration (FDA) approval for Qwo® (collagenase clostridium histolyticum-aaes), the first injectable for the treatment of moderate to severe cellulite in the buttocks of adult women. During 2020, we put in place a U.S. Aesthetics commercial team and the capabilities that enabled us to launch QWO® in March 2021. We are excited to have launched QWO® and to have the opportunity to build a new medical aesthetics category with the first and only FDA-approved injectable for the treatment of cellulite. As we enter the medical aesthetics market, we are initially targeting a select set of medical aesthetics practices with our clinician training and onboarding programs. As the launch progresses, we will expand to additional practices. Through our investments to promote QWO® to medical aesthetics clinicians and consumers, we believe that QWO® will be welcomed as an innovative solution.
Given our strong belief in the long-term growth potential for both XIAFLEX® and QWO®, we acquired BioSpecifics Technologies Corp. in December 2020. This acquisition immediately enhanced the profitability of XIAFLEX® and QWO® and gave us additional opportunities for future XIAFLEX® and QWO® indications.
We also progressed the evolution of our sterile injectable product pipeline and capabilities to support the introduction of more complex products, focusing on ready-to-use and other more differentiated opportunities. In 2020, we launched 11 products across our Sterile Injectables and Generic Pharmaceuticals segments and plan to launch approximately 10 products across those segments in 2021.
Reinvent How We Work
In early 2020, guided by our commitments to the safety of our team members and our communities, as well as our commitment to continue reliably supplying critical medicines, Endo implemented a comprehensive response to COVID-19. For the safety of our team members, we implemented alternative working practices, including work from home requirements for appropriate team members and enhanced safety measures at our manufacturing facilities. We also transitioned our sales force to a virtual engagement model to continue supporting healthcare professionals, patient care and access to medicines. With the burden of COVID-19 on hospitals, the continued supply of our critical medicines was essential. To meet the demand for those products, we prioritized certain operations and we are proud that all of our manufacturing sites and related distribution channels remained operational throughout the year.
We believe many of our new ways of working will lead to permanent changes and will result in Endo being a more flexible, efficient and effective company. Despite the challenges presented by COVID-19, we also delivered on our key multi-year invest-
ment initiatives, including the completion of our migration to a single global Enterprise Resource Planning system and continued progress on our manufacturing site in Indore, India.
In early November, we announced a set of business transformation initiatives designed to enhance our organizational effectiveness, increase the efficiency and competitiveness of our Generic Pharmaceuticals segment and generate significant cost savings that will be reinvested into our core areas of growth. This was a necessary but very difficult decision because it impacts many of our Endo team members. We deeply appreciate all that our impacted team members have done for our company and continue to do through this period of transition.
These actions are designed to advance our business in 2021 and beyond.
Be a Force for Good
In order to fulfill our vision and mission, we must adopt more sustainable business practices to address the needs of the many stakeholders counting on us each day, including our customers, patients, team members, shareholders and the broader communities in which we live and work. As we saw racial and other societal issues come to the forefront of our news and collective consciousness, we committed to enhancing our workplace, embracing our team members’ distinct perspectives and working to embed diversity, equity and inclusion (DE&I) into how we run our business.
As part of our commitment to “Be a Force for Good,” we issued Endo’s inaugural Environmental, Social and Governance (ESG) report in 2020. Our ESG report summarized our efforts across four areas: Our Business Practices, Our Team, Our Customers and Our World, using metrics from the Sustainability Accounting Standards Board (SASB). We are pleased with the progress we are making in all areas of our ESG strategy, particularly with respect to embedding DE&I into the way we work. We hired a Global Head of DE&I, established a Leadership Council and improved the diversity of our Board and senior leadership. While we still have a great deal more to accomplish, these initial steps placed us on a path toward a more sustainable business that can deliver on its purpose to help everyone live their best life well into the future. Additionally, in recognition of the growing importance of developing and maintaining a robust ESG strategy, the Board formalized its oversight of the Company’s overall ESG program through the Nominating, Governance & Corporate Responsibility Committee, with the Compliance Committee, the Compensation & Human Capital Committee and the Audit & Finance Committee each having responsibility for individual aspects of ESG.
Lastly, part of being a force for good also means doing our part in times of need by offering what we can in terms of our resources and capabilities. The partnership we established in 2020 with Novavax to help bring their COVID-19 vaccine forward to support the fight against the pandemic exemplifies our commitment to live up to this responsibility.
Board Oversight, Refreshment & Succession
Our Board is committed to having the right mix of perspectives, skills and expertise to address the Company’s current and anticipated opportunities and challenges. Our Board members have drawn on their leadership experiences and areas of expertise to regularly engage with management, providing guidance on corporate strategy and implementation in areas such as product development, capital allocation, operating results, litigation and human capital management. Additionally, given Endo’s ongoing transformation, the Board added two directors since last year’s Annual General Meeting and implemented a board succession process.
We are pleased to welcome M. Christine Smith, Ph.D. and Jennifer Chao to the Board. Dr. Smith, Senior Managing Director at Accenture, has a life sciences industry background as well as significant human capital, strategy development, leadership and data and analytics expertise. Ms. Chao is the founder of CoreStrategies Management, LLC and brings financial expertise and knowledge of the biotech and life sciences industries.
Paul Campanelli, who has served as Chairman of the Board since 2019, and who previously served as President and Chief Executive Officer from 2016 to 2020, has made the decision to retire from the Board upon the expiration of his current term at the 2021 Annual General Meeting. At the Annual General Meeting, Mark Barberio will become Chairman of the Board. Additionally, Roger Kimmel, who has served as Senior Independent Director since 2019 and served as Chairman of the Board from 2014 to 2019, has also made the decision to retire from the Board upon the expiration of his current term. On behalf of the Board, we would like to thank Paul and Roger for their long-term leadership and dedication to Endo.
Final Reflections
While 2020 tested us personally and professionally, Endo persevered, delivered solid financial performance and, importantly, continued to advance on our transformation journey. We want to thank Endo’s more than 3,300 global team members for the dedication they demonstrate every day to our patients and customers, our communities and each other. It is because of their strong and unwavering commitment to serve others that we continue to drive forward and transform Endo.
And finally, we want to express our appreciation for your commitment to, and investment in, Endo. As fellow shareholders, we believe we have significant opportunities to create sustainable value over the long-term, and we are personally excited about the future of Endo. Thank you for putting your trust in us.
Blaise Coleman President and Chief Executive Officer and Director | Mark G. Barberio Chairman of the Board-Elect |
| Endo International plc
First Floor
Minerva House
Simmonscourt Road
Ballsbridge
Dublin 4, Ireland
endo.com |
Dear Fellow Endo International plc Shareholder:
It is my pleasure to invite you to the 2019 Annual General Meeting of Shareholders (the Annual Meeting) of Endo International plc (Endo or the Company), which will be held on June 11, 2019 at 8:00 a.m., local time, at First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland. The attached Notice of Annual Meeting of Shareholders and proxy statement will serve as your guide to the business to be conducted.
Approximately two years ago, we established our Vision to be a highly focused generics and specialty branded pharmaceutical company, delivering quality medicines to patients in need through excellence in development, manufacturing and commercialization. We also outlined our three Strategic Priorities of our multi-year plan: Reshaping our Organization for Success; Building our Portfolio and Capabilities for the Future; and Driving Margin Expansion andDe-levering.
I am pleased with the progress we have made in reshaping our Company and establishing a foundation for Endo to transition to the next phase of our multi-year plan. Endo is a different organization today than it was two years ago. We have simplified our Company through centralization and unification and these actions have also served to drive productivity improvements. We have created a new Endo culture that is customer focused and performance driven, with a relentless commitment to quality, compliance and flawless operational execution. I am extremely proud of the dedication and commitment of our nearly 3,000 employees.
Delivering on Promises
2018 was a successful year for Endo. Our U.S. Branded—Sterile Injectables segment, which is anchored by VASOSTRICT®, and the specialty products portfolio of our U.S. Branded—Specialty & Established Pharmaceuticals segment both delivered double-digit growth. We drove expanded awareness and utilization of XIAFLEX® to treat patients living with Peyronie’s Disease and Dupuytren’s Contracture, launched 10 generic and sterile injectable products, including ertapenem for injection, the authorized generic of Invanz®, and colchicine tablets, the authorized generic of Colcrys®. We also navigated through stabilizing competitive pressures in the generic market. These actions contributed to our solid operating results, which exceeded our 2018 expectations.
We also reported positive Phase 3 results from our collagenase clostridium histolyticum (CCH) for the treatment of cellulite clinical trials. These positive results position us to pursue the exciting, untapped medical aesthetics market with a potential new injectable option to treat cellulite.
Focused Investment in Our Core Growth Areas
Our investments will continue to be in our core growth areas, our U.S. Branded—Sterile Injectables segment, the specialty products portfolio of our U.S. Branded—Specialty & Established Pharmaceuticals segment, the development of CCH in cellulite and a focus on high-barrier, technically challenging generic products. We have taken and will continue to take a long-term approach with respect to how we manage the business, with a laser focus on methodically executing against our strategic priorities.
Atyear-end 2018, our U.S. Generic Pharmaceuticals and U.S. Branded—Sterile Injectables portfolio included approximately 85 Abbreviated New Drug Applications filed with the U.S. Food and Drug Administration (FDA), of which nearly 50% were eitherfirst-to-file orfirst-to-market opportunities, and we had approximately 70 projects in development. In 2018, we expanded our potential sterile injectables product pipeline through a licensing agreement with Nevakar. We are excited about this relationship, which will potentially provide up to five differentiated 505(b)(2) hospital and critical care based products.
During 2019, we will continue to prepare for the successful commercialization of CCH for the treatment of cellulite. We are continuing with our regulatory andpre-commercialization activities and we expect to submit a Biologics License Application to the FDA in the second half of 2019 and, if approved, launch commercially in the second half of 2020.
Committed to our Values and Vision
At Endo, our high-performance organization has fostered an entrepreneurial culture that emphasizes integrity and compliance. We are guided by our Core Values every day—Customer Focus, Results Driven, Leadership, Teamwork and Innovation and Continuous Improvement—as they shape who we are, influence how we work together and define the behaviors that drive our success.
We remain committed to delivering quality medicines to patients in need through excellence in development, manufacturing and commercialization, delivering sustainable operating results and creating value for our shareholders. Thank you for your investment and putting your trust in us.
We encourage you to read more about our Board of Directors, corporate governance practices and performance-driven compensation programs in this Proxy Statement. We hope that you will participate in the Annual Meeting, either by attending and voting in person or by voting through other acceptable means as described in this Proxy Statement as promptly as possible. Your vote is important—so please exercise your right.
Sincerely,
Paul V. Campanelli
President, Chief Executive Officer and Director
Dublin, Ireland
April 29, 2019
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TO BE HELD ON JUNE 11, 201910, 2021
8:00 a.m., Local TimeIrish time
First Floor, Minerva House,
Simmonscourt Road, Ballsbridge, Dublin 4, Ireland
Notice is hereby given that the 20192021 Annual General Meeting of Shareholders (the Annual Meeting) of Endo International plc, an Irish public limited company, will be held on June 11, 201910, 2021 at 8:00 a.m., localIrish time, at First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
Unless otherwise indicated or required by the context, references throughout this Proxy Statement to “Endo,” the “Company,” “we,” “our” or “us” refer to Endo International plc and its subsidiaries.
The purposes of the meeting are:
(1) | To elect, by separate resolutions, |
(2) | To approve, on an advisory basis, the compensation of our named executive officers(say-on-pay); |
(3) |
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To renew the Board’s existing authority to issue shares under Irish law; |
To renew the Board’s existing authority toopt-out of statutorypre-emption rights under Irish law; |
To approve the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, |
To act upon such other matters as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
Proposals 1, through 42, 3 and 65 are ordinary resolutions requiring the approval of a simple majority of the votes cast at the Annual Meeting. Proposal 54 is a special resolution requiring the approval of not less than 75% of the votes cast at the Annual Meeting. All proposals are more fully described in this Proxy Statement.
The Company’s Irish statutory financial statements for the fiscal year ended December 31, 2018,2020, including the reports of the directors and auditors thereon, will be presented and considered at the Annual Meeting. There is no requirement under Irish law that such statements be approved by the shareholders, and no such approval will be sought at the Annual Meeting. The Annual Meeting will also will include a review of the Company’s affairs.
Only shareholders of record at the close of business on April 12, 20192021 (the record date) are entitled to notice of and to vote at the Annual Meeting and any adjournment thereof.
This year, we have elected to continue to furnish proxy materials to our shareholders electronically so that we can both provide our shareholders with the information they need and also reduce our costs ofwhile saving on printing and delivery costs and reducing the environmental impact of our Annual Meeting.annual meetings.
It is important that your shares be represented and voted at the Annual Meeting. Please vote by promptly completing and returning your proxy by internet, by mail or by telephone so that, whether or by attending the Annual Meeting and votingnot you intend to vote in person by ballot so that whether you intend to be present at the Annual Meeting, or not, your shares can be voted. Returning your proxy will not limit your rights to attend or vote at the Annual Meeting.
If you are a shareholder who is entitled to attend the Annual Meeting and vote, then you are entitled to appoint a proxy or proxies to attend and vote on your behalf. A proxy is not required to be a shareholder in the Company. If you wish to appoint as proxy any person other than the individuals specified on the proxy card, please specify the name(s) and address(es) of such person(s) in the proxy card.
Special Precautions Due to COVID-19 Concerns:
In light of public health concerns related to COVID-19, the Company would like to emphasize that we consider the health of our shareholders, employees and other attendees a top priority. We are monitoring guidance issued by the Irish Health Service Executive (HSE), the Irish government, the U.S. Centers for Disease Control and Prevention and the World Health Organization, and we have implemented, and will continue to implement, the measures advised by the HSE to minimize the spread of COVID-19.
Based on the latest available public health guidance, we expect that the Annual Meeting will proceed under very constrained circumstances given current restrictions on public gatherings.
Shareholders’ input at the Annual Meeting is valued. Shareholders are strongly encouraged, however, to vote their shares by proxy as the preferred means of fully and safely exercising their rights. Personal attendance at the Annual Meeting may present a health risk to shareholders and others. Shareholders who are experiencing any COVID-19 symptoms or anyone who has been in contact with any person experiencing any COVID-19 symptoms should not attend the Annual Meeting in person.
The Company may take additional procedures or impose additional restrictions on attending the Annual Meeting in person, including limiting seating, requiring health screenings and other reasonable or required measures in order to enter the building.
In the event that a change of venue becomes necessary due to public health recommendations regarding the containment of COVID-19, which may include the closure of or restrictions on access to the meeting venue, we will promptly communicate this to shareholders by an announcement in a press release posted on the investor relations page of https://investor.endo.com/ and in a filing with the U.S. Securities and Exchange Commission. We advise shareholders to monitor the page regularly, as circumstances may change on short notice. We recommend that shareholders keep up-to-date with the latest public health guidance regarding travel, self-isolation and health and safety precautions.
By Order of the Board of Directors,
Yoon Ah OhMatthew J. Maletta
CorporateExecutive Vice President,
Chief Legal Officer and
Company Secretary
Dublin, Ireland
April 29, 20192021
Endo International plc
Registered Office: First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland
Registered in Ireland: Number—534814
Directors: Roger Hartley Kimmel (USA), Paul Victor Campanelli (USA), Mark Gilbert Barberio (USA), Jennifer M. Chao (USA), Blaise Coleman (USA),
Shane Martin Cooke (Ireland), Nancy June Hutson (USA), Michael Hyatt (USA), Sharad Sunder MansukaniRoger Hartley Kimmel (USA),
William Patrick Montague (USA), Todd Benjamin SisitskyMary Christine Smith (USA).
Proxy Statement for 20192021 Annual General Meeting of Shareholders
Proxy Statement for 20192021 Annual General Meeting of Shareholders
We are providing these proxy materials in connection with the solicitation by the Board of Directors of Endo International plc (the Board), an Irish public limited company, of proxies to be voted at the Annual Meeting to be held on June 11, 2019,10, 2021, beginning at 8:00 a.m., localIrish time. The Annual Meeting will be held at First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
In accordance with the rules of the U.S. Securities and Exchange Commission (SEC), we are furnishing the Proxy Statement for Annual Meeting, 20182020 Annual Report on Form10-K and 20182020 Irish Statutory Financial Statements (collectively, the proxy materials) by providing access to these materials electronically on the internet. As such, we are not mailing a printed copy of our proxy materials to each shareholder of record or beneficial owner, and our shareholders will not receive printed copies of the proxy materials unless they request this form of delivery. PrintedWe will provide printed copies will be provided upon request at no charge.
We are mailing a Notice of Meeting and Internet Availability of Proxy Materials (Notice of Internet Availability) to our shareholders on or about April 29, 2019. This2021 and expect to provide access to the 2020 Irish Statutory Financial Statements on or about May 7, 2021. The Notice of Internet Availability is being mailed in lieu of the printed proxy materials and contains instructions for our shareholders on how they may: (1)(i) access and review our proxy materials on the internet; (2)(ii) submit their proxy; and (3) receive(iii) request printed proxy materials. Shareholders may request to receive printed proxy materials by mail or electronically bye-mail on an ongoing basis by following the instructions in the Notice of Internet Availability. We believe that providing proxy materials electronically enables us to save costs associated withon printing and delivering the materialsdelivery costs and reduces the environmental impact of our annual meetings. A request made to receive proxy materials in printed form by mail or bye-mail, will remain in effect until such time as the shareholder elects to terminate it.
Unless otherwise indicated or required by the context, otherwise requires, references in this proxy statement to “Endo,” the “Company,” “we,” “our” or “us” and “our” refer to Endo International plc and its subsidiaries.
Annual General Meeting Admission
Shareholders must present a form of personal identification in order to be admitted to the Annual Meeting. For directions toinformation about the location of the Annual Meeting, visitwww.endo.com/about-us/locations.
No cameras, recording equipment or electronic devices will be permitted in the Annual Meeting.
In light of public health concerns related to COVID-19 and protocols recommended or required by governmental authorities, the Company may impose additional restrictions on your ability to attend the Annual Meeting in person, including limiting seating, requiring health screenings and other reasonable or required measures in order to enter the building.
Shareholders Entitled to Vote
Holders of ordinary shares at the close of business on April 12, 2019 (the record date)2021 are entitled to receive this notice and to vote their shares at the Annual Meeting. As of that date, there were 226,181,144233,305,326 issued and outstanding ordinary shares of Endo entitled to vote.
Each ordinary share is entitled to one vote on each matter properly brought before the Annual Meeting. Your proxy indicates the number of votes you have.
How to Vote if You Are a Shareholder of Record
Your vote is important. Shareholders of record canmay vote by internet, by mail, by telephone or by attending the Annual Meeting and voting in person by ballot as described below.
The Company encourages shareholders to vote by internet, by mail or by telephone, rather than attend the Annual Meeting in person in light of the public health concerns related to COVID-19. Please refer to “Special Precautions Due to COVID-19 Concerns” in the Notice of Annual General Meeting of Shareholders above for more information.
How to Vote
If you are a shareholder of record, you may vote by internet, by mail, by telephone or by attending the Annual Meeting and voting in person.person by ballot. If you requestreceive a paper copy of the proxy materials, which will include a proxy card, you canmay vote by mail by simply completing your proxy card, dating and signing it and returning it in the postage-paid envelope provided.
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For additional instructions on how shareholders of record canmay vote using any of the methods set forth above, please visitwww.proxyvote.com, enter the control number found on the Notice of Internet Availability (or, if you request to receive a paper copy of the proxy materials, the proxy card) and follow the steps outlined on the secure website.
Deadline for Voting by Internet, by Mail or by Telephone
Internet and telephone votes must be received by 11:59 PM U.S. Eastern Time on June 10, 2019.9, 2021. If you are a shareholder of record and choose to vote by mail, your properly completed proxy card should be received by 8:00 a.m., Irish time on June 9, 2019.8, 2021.
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Additional Information on Voting at the Annual Meeting
Voting by internet, by mail or by telephone will not limit your right to vote at the Annual Meeting if you decide to attend in person. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the Annual Meeting.
All shares that have been properly voted and not revoked will be voted in accordance with your instructions at the Annual Meeting. If you execute your proxy but do not give voting instructions, the ordinary shares represented by that proxy will be voted as described below under the section entitled “General Information on Voting and Required Vote.”
Additional Information for Beneficial Owners of Shares Held Through a Bank or Brokerage Firm
If you are a beneficial owner of shares held through a bank or brokerage firm, please follow the voting instructions provided by your bank or brokerage firm.
Electronic Access to Investor Information
Endo’s Proxy Statement and other investor information are available on the Company’s website atwww.endo.com, under
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General Information on Voting and Required Vote
You are entitled to cast one vote for each ordinary share of Endo you own on the record date. Provided that a quorum is present, a majority of the votes cast at the Annual Meeting will be required in order for:
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the compensation of the named executive officers to be approved, on anon-binding advisory basis; |
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the Board’s existing authority to issue shares to be renewed; and |
the appointment of the Company’s independent registered public accounting firm for the year ending December 31, |
In addition, renewal of the Board’s existing authority toopt-out of statutorypre-emption rights will require the approval of not less than 75% of the votes cast at the Annual Meeting.
The presence of the holders of a majority of the issued and outstanding ordinary shares as of the record date entitled to vote at the Annual Meeting, present in person or represented by proxy, is necessary to constitute a quorum. Shares represented by a proxy marked “abstain” on any matter will be considered present at the Annual Meeting for purposes of determining a quorum. Abstentions will not be considered votes cast at the Annual Meeting. The practical effect of this is that abstentions are not voted in respect of these proposals. Shares represented by a proxy as to which there is a “brokernon-vote” (for example, where a broker does not have the discretionary authority to vote the shares) will be considered present for the Annual Meeting for purposes of determining a quorum and will not have any effect on the outcome of voting on the proposals.
All ordinary shares that have been properly voted and not revoked will be voted at the Annual Meeting in accordance with your instructions. If you execute the proxy but do not give voting instructions, the ordinary shares represented by that proxy will be voted as follows:
(1) | FOR each of the nominees for election as director; |
(2) | FOR the approval, on an advisory basis, of the compensation to be paid to the named executive officers; |
(3) | FOR the |
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FOR the renewal of the Board’s existing authority toopt-out of statutorypre-emption rights; and |
FOR the approval of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, |
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Voting on Other Matters
If other matters are properly presented at the Annual Meeting for consideration, the persons named in the proxy will have the discretion to vote on those matters for you. At the date the Company began printing this Proxy Statement, no other matters had been raised for consideration at the Annual Meeting.
How You Can Revoke or Change Your Vote
You canmay revoke your proxy at any time before it is voted at the Annual Meeting by:
sending written notice of revocation to the |
timely delivering a valid, later-dated proxy; or |
attending the Annual Meeting and voting in person. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the |
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List of Shareholders
TheSubject to any restrictions that the Company may be required to implement as a result of public health concerns related to COVID-19, the names of shareholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting and for ten days prior to the Annual Meeting for any purpose germane to the meeting, between the hours of 8:45 a.m. and 4:30 p.m. local, Irish time, at our registered office at First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
Cost of Proxy Solicitation
The Company will pay forany costs incurred associated with preparing, printing and mailing this Proxy Statement and we will pay for the cost of soliciting proxies. Proxies may be solicited on our behalf by directors, officers or employees in person or by telephone, electronic transmission and facsimile transmission. The Company will reimburse banks, brokers and other custodians, nominees and fiduciaries for their reasonableout-of-pocket costs of sending the proxy materials to our beneficial owners. We have also retained D.F. King & Co., Inc. to assist in soliciting proxies. We will pay D.F. King & Co., Inc. a base fee of approximately $15,000 plus reasonableout-of-pocket expenses for these services.
Presentation of Irish Statutory Financial Statements
The Company’s Irish Statutory Financial Statements for the fiscal year ended December 31, 2018,2020, including the reports of the directors and auditors thereon, will be presented and considered at the Annual Meeting. There is no requirement under Irish law that such financial statements be approved by shareholders, and no such approval will be sought at the Annual Meeting. The Company’s 20182020 Irish Statutory Financial Statements are expected to become available along with the Proxy Statement for Annual Meeting, 2018 Annual Report on Form10-K and other proxy materials,or about May 7, 2021 atwww.proxyvote.com.
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Proposal 1: Election of Directors
The Board of Directors
Under the terms ofAs set forth in the Company’s Memorandum and Articles of Association (the Articles of Association), directors need not be shareholders of the Company or residents of Ireland. However, pursuant to the Common Stock Ownership Guidelines (the Ownership Guidelines) approved by the Board, eachnon-employee director eligible to own Company stock should, but is not required to, have ownership of the Company’s ordinary shares equal in value to at least five times his or her current annual cash retainer to be achieved within five years of joining the Board, as further described in the section below entitled “Common Stock Ownership Guidelines.” Directors are elected for aone-year term and shall retire from office unlessre-elected by ordinary resolution at the next following Annual General Meeting.Non-employee Directors receive compensation for their services as otherwise determined by the Board, as further described in the section entitled “Compensation ofNon-Employee Directors.”
As set forth in the Articles of Association,Company by ordinary resolution, the number of directors of the Company shall be not less than five nor more than twelve, the exact number of which shall be fixed from time to time by resolution of the Board. AThe number of directors on the Board is currently fixed at ten and the number of nominees to be elected at the Annual Meeting is eight. Endo’s current directors are Paul V. Campanelli, Mark G. Barberio, Jennifer M. Chao, Blaise Coleman, Shane M. Cooke, Nancy J. Hutson, Ph.D., Michael Hyatt, Roger H. Kimmel, William P. Montague and M. Christine Smith, Ph.D. Messrs. Campanelli and Kimmel are retiring from the Board and will not stand for re-election at the Annual Meeting. Neither of Messrs. Campanelli nor Kimmel have any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Directors may be elected by shareholders or, in the case of a vacancy on the Board or a newly created directorship resulting from any increase in the authorized number of directors, may be filledappointed by a majority of the directors then in office, even though less than a quorum remains. A director appointedsubject to fill a vacancy remains a directorcertain limitations. Directors generally serve until the next following Annual General Meeting of Shareholders (at which time they shall retire from office unless re-elected by ordinary resolution) or his or her earlieruntil death, resignation or removal.
As of December 31, 2018, the Board consisted of eight members, including Roger H. Kimmel, Paul V. Campanelli, Shane M. Cooke, Nancy J. Hutson, Ph.D., Michael Hyatt, Sharad S. Mansukani, M.D., William P. Montague and Todd B. Sisitsky.removal, if earlier. All of the current members are nominateddirectors were elected at the last Annual General Meeting of Shareholders except for Ms. Chao and Dr. Smith, who were appointed to the Board effective February 17, 2021 and July 29, 2020, respectively.
Non-employee directors generally receive compensation for their services as determined by the Board, for re-election as directorsfurther described in the section entitled “Compensation of Non-Employee Directors.” However, Mr. Campanelli, who is currently a non-management director of the Company, other than Mr. Sisitsky, who willreceived compensation in 2020 pursuant to a Letter Agreement entered into and approved by the Compensation & Human Capital Committee in December 2019, and was not eligible to receive non-employee board compensation and/or fees for services as a board member, or for serving as Chairman of the Board, until after his retirement as an employee of the Company on December 31, 2020.
Under the terms of the Articles of Association, directors need not be standing for re-election. The Board has fixed the number of directors at seven, effective asshareholders of the dateCompany or residents of Ireland. However, pursuant to the Common Stock Ownership Guidelines (the Ownership Guidelines) approved by the Board, each non-employee director eligible to own Company stock should, but is not required to, have ownership of the Annual Meeting.Company’s ordinary shares equal in value to at least three times his or her current annual cash retainer to be generally achieved within five years of joining the Board, as further described in the section below entitled “Common Stock Ownership Guidelines.”
The Board annually determines the independence of directors based on a review by the Board and the Nominating, Governance & GovernanceCorporate Responsibility Committee. No director is considered independent unless the Board has determined that he or she has no material relationship with the Company, either directly or as a partner, shareholder or officer of an organization that has a material relationship with the Company. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others. To evaluate the materiality of any such relationship, the Board has adopted categorical independence standards consistent with the Nasdaq’s listing rules.standards of the Nasdaq Stock Market (Nasdaq). These standards are available on the Company’s website atwww.endo.com, under “Investors/Media—Corporate Governance—Nominating & Governance Committee.Governance.”
MembersAll members of the Audit & Finance, Compensation & Human Capital and Nominating, Governance & GovernanceCorporate Responsibility Committees must meet applicable Nasdaq independence tests of the Nasdaq.requirements.
The Board has affirmatively determined that, except for Messrs. Campanelli and Coleman, all of its current members and all of the nominees except for Mr. Campanelli,listed below are independent under the Nasdaq’sNasdaq listing rules. Mr. Campanelli is not independent due to his former role as Chief Executive Officer and President of the Company and Mr. Coleman is not independent due to his current role as President and Chief Executive Officer of the Company. It was determined that neither Dr. Mansukani’s service as an advisor to nor Mr. Sisitsky’s service as an executive of TPG Capital LP (referred to herein as TPG or TPG Capital), one of Endo’s shareholders, interferes with their independence.
In determining Dr. Mansukani’sdirector independence, the Board also considered his relationshiprelationships between Endo and companies affiliated with Children’s Hospital of Philadelphia (CHOP), to which the Company sells certain sterile injectable products in the ordinary course of their respective businesses. Dr. Mansukani serves as Treasurer and sits on the board of CHOP. In 2018, CHOP made payments to the Company relating to such product sales totaling approximately $0.4 million.directors. In determining Mr. Cooke’s independence, the Board considered his relationship with Alkermes plc (Alkermes), which has a 2002 license agreement with one of the Company’s subsidiaries with respect to Megace ES ES®in the ordinary course of their respective businesses. Mr. Cooke was President of Alkermes until March 2018, when he was appointed to the board of directors of Alkermes. The total amount of royalty and related payments made by the Company to Alkermes in 20182020 was approximately $0.2$0.1 million. The Board also considered Mr. Cooke’s relationship with UDG Healthcare plc (UDG), where he has served on its board of directorsas a director since February 2019. The Company’s subsidiaries and UDG are parties to agreements, entered into in the ordinary course of their respective businesses, whereby UDG provides certain services to the Company relating primarily to the packaging, by UDG’s Sharp division, of certain of the Company’s pharmaceutical products. The total amount of payments made to UDG by the Company in 20182020 was approximately $7.9$9.9 million. The Board has determined that these relationships are not material and do not impair Dr. Mansukani’s or Mr. Cooke’s independence. In determining Mr. Barberio’s independence, the Board considered his role as Chairman of Life Storage, Inc. During 2020, the Company paid approximately $12,547 to Life Storage, Inc. in the ordinary course of business. The Board has determined that this relationship is not material and does not impair Mr. Barberio’s independence.
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On an annual basis and upon the nomination of any new director, the Nominating, Governance & GovernanceCorporate Responsibility Committee and the Board review directors’ responses to a questionnaire asking about their relationships with the Company (and those of their immediate family members) and other potential conflicts of interest. The Nominating, Governance & GovernanceCorporate Responsibility Committee has determined that, except for Messrs. Campanelli and Coleman, all of the sevennon-employee directors currently serving are independent and that the members of the Audit & Finance, Compensation & Human Capital and Nominating, Governance & GovernanceCorporate Responsibility Committees also meet the applicable independence tests of the Nasdaq listing rules. Specifically, the Nominating, Governance & GovernanceCorporate Responsibility Committee and the Board have determined that, during the last three years, none of the currentnon-employee directors, except for Messrs. Campanelli and Coleman, has had any material relationship with the Company that would compromise their independence. The Nominating, Governance & GovernanceCorporate Responsibility Committee recommended this determination to the Board and explained the basis for its decision,recommendation, and this determination was adopted by the full Board.
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As of the date of this Proxy Statement, the Company is not aware of any material legal proceedings to which any director or executive officer of the Company, or any associate thereof, is a party that are adverse to the Company or any of its subsidiaries.
Nominees
There are seveneight nominees for election as directors of the Company to serve until the 20202022 Annual General Meeting of Shareholders or(or until death, resignation or removal, if earlier.earlier). All of the nominees are currently serving as directors of the Company. In addition, allAll of the nominees were elected to the Board at the last Annual General Meeting of Shareholders.Shareholders except for Ms. Chao and Dr. Smith, who were appointed to the Board effective February 17, 2021 and July 29, 2020, respectively.
The members of our Board represent a wide range of experience and perspectives important to enhancing the Board’s effectiveness in fulfilling its oversight role. Below we highlight the composition of our director nominees.
Diversity | Independence | |
Tenure
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The proposed nominees for election as directors have confirmed that they are each willing to serve as directors of the Company. If, as a result of circumstances not now known or foreseen, a nominee shall be unavailable or unwilling to serve as a director, an alternate nominee may be designated by the present Board of Directors to fill the vacancy.
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The Board believes that each of the Company’s directors is highly qualified to serve as a member of the Board and each has contributedcontributes to the mix of skills, core competencies and qualifications of the Board. When evaluating candidates for election to the Board, the Nominating, Governance & GovernanceCorporate Responsibility Committee seeks candidates with certain qualities that it believes are important, including experience, skills, expertise, personal and professional integrity, character, business judgment, time availability injudg-
Set forth below are summaries of the background, business experience and principal occupation of each of the Company’s current director nominees: | ment, time availability in light of other commitments, dedication, independence, those criteria and qualifications described in each director’s biography below and such other relevant factors that the Nominating, Governance & |
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5MARK G. BARBERIO, 58, was appointed to the Board of Directors in February 2020 and is a member of Endo’s Audit & Finance Committee and Nominating, Governance & Corporate Responsibility Committee. At the Annual Meeting, Mr. Barberio will begin serving as independent, non-executive Chairman and will also become a member of the Compensation & Human Capital Committee and the Compliance Committee. Mr. Barberio has been a Principal of Markapital, LLC since 2013. Prior to then, Mr. Barberio held numerous leadership roles at Mark IV, LLC (now Dayco, LLC), most recently having served as a director from 2011 to 2013, Co-Chief Executive Officer from 2009 to 2013 and Chief Financial Officer from 2004 to 2013. Mr. Barberio currently serves as a director of Gibraltar Industries, Inc. since June 2018 and Life Storage, Inc. since January 2015, where he has been Non-Executive Chairman since May 2018. Previously, Mr. Barberio served as a director of Paragon Offshore Limited from July 2017 to April 2018 and Exide Technologies from April 2015 to October 2020. He is also a member of the Rochester Institute of Technology Board of Trustees, 100 Club of Buffalo—serving the needs of first responders, Buffalo Angels LLC, WNY Venture Association and Rochester Angel Network and is a member of the National Association of Corporate Directors. He earned an M.B.A. from State University of New York at Buffalo and a B.S. in Business-Accounting from Rochester Institute of Technology. Mr. Barberio’s qualifications to serve on the Board of Endo include, among others, his significant knowledge in strategy development, finance, operational oversight, real estate, capital markets and investor relations stemming from his extensive executive- and board-level experience as chief executive officer, chief financial officer and chairman of the board.
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JENNIFER M. CHAO, 51, was appointed to the Board of Directors in February 2021 and is a member of Endo’s Audit & Finance Committee and Compliance Committee. Prior to joining Endo, Ms. Chao served as Chairman of the Board of BioSpecifics Technologies Corp. (BioSpecifics) from October 2019 until its acquisition by Endo in December 2020, and also served as Chair of BioSpecifics’ Compensation Committee and as a member of the Audit Committee, Strategy Committee, Intellectual Property Committee and Nominating and Corporate Governance Committee from 2015 to 2020. Ms. Chao is the founder of CoreStrategies Management, LLC, a strategic consulting firm providing transformational corporate and financial strategies to biotech/life science companies for maximizing core valuation. From 2004 to 2008, Ms. Chao was a Managing Director and Senior Lead Biotechnology Securities Analyst at Deutsche Bank, covering large- and small- to mid-cap biotechnology companies. Prior to this, Ms. Chao was a Managing Director and Senior Lead Biotechnology Analyst at RBC Capital Markets and a Senior Analyst in Biotechnology at Leerink Swann & Co. Ms. Chao was a research fellow at Massachusetts General Hospital/Harvard Medical School as a recipient of the BioMedical Research Career Award and received her B.A. in Politics and Greek Classics from New York University. Ms. Chao’s qualifications to serve on the Board of Endo include, among others, her knowledge of the biotech and life sciences industries, significant board-level experience at a publicly traded company and financial expertise and experience. | ||
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BLAISE COLEMAN, 47, was appointed President, Chief Executive Officer and a member of the Board of Directors, effective March 2020. He previously served as Executive Vice President and Chief Financial Officer since December 2016. He joined Endo in January 2015 as Vice President of Corporate Financial Planning & Analysis, and was then promoted to Senior Vice President, Global Finance Operations in November 2015. Prior to joining Endo, Mr. Coleman held a number of finance leadership roles with AstraZeneca, most recently as the Chief Financial Officer of the AstraZeneca/Bristol-Myers Squibb US Diabetes Alliance. Prior to that, he was the Head of Finance for the AstraZeneca Global Medicines Development organization based in Mölndal, Sweden. Mr. Coleman joined AstraZeneca in 2007 as Senior Director Commercial Finance for the US Cardiovascular Business. He joined AstraZeneca from Centocor, a wholly-owned subsidiary of Johnson & Johnson, where he held positions in both the Licenses & Acquisitions and Commercial Finance organizations. Mr. Coleman’s move to Centocor in early 2003 followed 7 years’ experience with the global public accounting firm, PricewaterhouseCoopers LLP. Mr. Coleman is a Certified Public Accountant; he holds a Bachelor of Science degree in accounting from Widener University and an M.B.A. from the Fuqua School of Business at Duke University. Mr. Coleman’s qualifications to serve on the Board of Endo include, among others, his executive leadership experience at pharmaceutical companies, extensive background in finance, business and strategic planning and in-depth knowledge of the Company, its businesses and management. SHANE M. COOKE, 58, has been a member of the Board of Directors since July 2014 and is Chair of Endo’s Audit & Finance Committee and is a member of Endo’s Compliance Committee. In March 2018, Mr. Cooke retired from Alkermes plc (Alkermes), most recently having served as its President since 2011, when Elan Drug Technologies (EDT) merged with Alkermes. Mr. Cooke was appointed to the board of directors of Alkermes in March 2018. From 2007 until 2011, he was head of EDT and Executive Vice President of Elan and concurrently served as Chief Financial Officer of Elan Corporation from 2001 to 2011. Mr. Cooke was appointed director of Elan in 2005. Prior to joining Elan, he was Chief Executive and a founder of Pembroke Capital Limited. Mr. Cooke also previously held a number of senior positions in finance in the banking and aviation industries. He currently serves on the boards of directors of Alkermes, Prothena Corporation plc and is Chairman of UDG Healthcare plc, which operates through its two divisions: Ashfield and Sharp. Mr. Cooke is a chartered accountant and a graduate of University College Dublin, Ireland. Mr. Cooke’s qualifications to serve on the Board of Endo include, among others, his extensive knowledge of the pharmaceutical industry, significant executive- and board-level experience at a publicly traded company and financial expertise and experience, including service as a chief financial officer of a public company. NANCY J. HUTSON, Ph.D., 71, has been a member of the Board of Directors since the Company’s inception in February 2014 and is Chair of Endo’s Compliance Committee and a member of Endo’s Nominating, Governance & Corporate Responsibility Committee. Dr. Hutson retired from Pfizer, Inc. (Pfizer) in 2006 after spending 25 years in various research and leadership positions, most recently serving as Senior Vice President, Pfizer Global Research and Development and Director of Pfizer’s pharmaceutical R&D site, known as Groton/New London Laboratories. At Pfizer, she led 4,500 colleagues (primarily scientists) and managed a budget in excess of $1 billion. She is currently a director of BioCryst Pharmaceuticals, Inc., Clearside Biomedical, Inc. and PhaseBio Pharmaceuticals, Inc. Dr. Huston previously served as Director of Cubist Pharmaceuticals until 2015 and Inspire Pharmaceuticals, Inc. until 2011. From 2009 until February 2014, Dr. Hutson was a director of Endo Health Solutions Inc. Dr. Hutson owns and operates Standing Stones Farm in Ledyard, CT. Dr. Hutson holds a Bachelor of Arts degree from Illinois Wesleyan University and a Ph.D. degree from Vanderbilt University. Dr. Hutson’s qualifications to serve on the Board of Endo include, among others, her in-depth knowledge and understanding of the complex research, drug development and business issues facing pharmaceutical companies. MICHAEL HYATT, 75, has been a member of the Board of Directors since the Company’s inception in February 2014 and is Chair of Endo’s Nominating, Governance & Corporate Responsibility Committee and a member of Endo’s Compensation & Human Capital Committee. Mr. Hyatt is currently a Senior Advisor to Irving Place Capital. Until 2008, Mr. Hyatt was a Senior Managing Director of Bear Stearns & Co., Inc. Mr. Hyatt previously served as a Director of Schiff Nutrition International until 2012. From 2000 until February 2014, Mr. Hyatt was a director of Endo Health Solutions Inc. Mr. Hyatt holds a Bachelor of Arts degree from Syracuse University and a J.D. degree, from Emory University School of Law. Mr. Hyatt’s qualifications to serve on the Board of Endo include, among others, his leadership experience in the banking industries, in-depth knowledge of the Company and experience as a board member of a publicly traded company. 7 WILLIAM P. MONTAGUE, 74, has been a member of the Board of Directors since the Company’s inception in February 2014 and is Chair of Endo’s Compensation & Human Capital Committee and a member of Endo’s Audit & Finance Committee. Mr. Montague served as Chief Executive Officer of Mark IV Industries, Inc. from 2004 until his retirement in 2008 and as Director from 1996 until 2008. He joined Mark IV Industries in 1972 as Treasurer/Controller, serving as Vice President of Finance from 1974 to 1986, then Executive Vice President and Chief Financial Officer from 1986 to 1996 and then as President from 1996 to 2004. Mr. Montague has also served as a director of Gibraltar Industries, Inc. since 1993, and has served as Chairman of Gibraltar’s Board of Directors since June 2015. From 2013 until 2014, Mr. Montague served as a director of Allied Motion Technologies Inc. From 2009 until February 2014, Mr. Montague was a director of Endo Health Solutions Inc. Mr. Montague is a Certified Public Accountant; he holds a Bachelor of Science degree in accounting and an M.B.A. from Wilkes University. Mr. Montague’s qualifications to serve on the Board of Endo include, among others, his significant executive and leadership experience at manufacturing companies, including service as chief executive officer and membership on the board of directors of such companies, and financial expertise and experience, including service as a company’s chief financial officer. M. CHRISTINE SMITH, Ph.D., 56, was appointed to the Board of Directors in July 2020 and is a member of Endo’s Compensation & Human Capital Committee and Nominating, Governance & Corporate Responsibility Committee. Since November 2020, Dr. Smith has served as Senior Managing Director at Accenture. From 2017 to 2020, she served as the Global Vice President for Inclusion and Diversity at Apple. In 2017, prior to joining Apple, Dr. Smith served as interim head of human resources at Grail, a start-up cancer detection company, where she was responsible for creating the human resources function and accelerating talent acquisition and growth. From 2001 to 2017, Dr. Smith held various leadership roles within Deloitte, including Regional Managing Partner and head of the human capital and life sciences practices. Between 2010 and 2017, she was a member of Deloitte’s executive leadership team, responsible for defining and implementing the firm’s strategy and business, operations and international expansion plans for both industry sectors through a period of accelerated growth and expansion within the BRIC countries and the EMEA region. Dr. Smith holds a Bachelor of Arts from Loyola College in Baltimore, a Masters in Social Work from Rutgers University and a Doctorate from New York University. Dr. Smith’s qualifications to serve on the Endo Board of Directors include, among others, her extensive knowledge of the life sciences industry and significant strategy development, leadership, data and analytics, and mergers and acquisitions experience. | ||
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Vote Required
Each nominee for director receiving a majority of the votes cast at the Annual Meeting will be elected.
The Board of Directors recommends a vote FOR the election of each of these nominees for election as director.
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Corporate Governance
Corporate Governance Highlights | ||
Director Nominees | ▪ Seven of eight director nominees are independent, including the Chairman elect. ▪ All committee members, including the Chair of each committee, are independent. ▪ Nominees are diverse in gender, ethnicity, experience and skills. | |
Board Refreshment | ▪ Mr. Barberio was appointed to the Board in February 2020. ▪ Mr. Coleman was appointed to the Board in March 2020. ▪ Dr. Smith was appointed to the Board in July 2020. ▪ Ms. Chao was appointed to the Board in February 2021. | |
Board Leadership Structure | ▪ Separate Chairman and Chief Executive Officer roles. ▪ New non-executive Chairman will be appointed at the Annual Meeting. | |
Corporate Responsibility | ▪ ESG is embedded into the Company’s corporate strategy. ▪ Commitment to diversity, equity and inclusion. ▪ Robust enterprise risk management program. ▪ Board oversight of Corporate Responsibility through its committees. | |
Compensation | ▪ Pay-for-performance philosophy designed to provide incentives that advance the interests of shareholders. ▪ Clawback provision for both cash awards and equity awards. | |
Shareholder Engagement | ▪ Direct engagement with shareholders, including targeted outreach initiatives. ▪ Members of management and certain directors participate in shareholder outreach. ▪ Input solicited on ESG strategy, executive compensation and other topics of importance to shareholders. | |
Shareholder Rights | ▪ Directors must stand for re-election on an annual basis. ▪ Directors elected by majority voting with a director resignation policy. ▪ Shareholders have the ability to call special meetings (10% ownership threshold). |
Board Leadership Structure
We have a board leadership structure under which Mr. Kimmel serves asnon-executive independent Chairman of theThe Board and Dr. Mansukani serves as Senior Independent Director of the Board. In April 2018, the Board appointed Dr. Mansukani to the newly created position of Senior Independent Director upon the recommendation of the Nominating & Governance Committee, as part of the Board’s succession planning process, to support the Chairman and to provide management and shareholders with additional means of access to the Board. This position was created to align the Company’s board leadership structure with those of other Irish-domiciled companies. All of our directors are independent, with the exception of our President and Chief Executive Officer, Mr. Campanelli. During 2018, our Board had four standing committees. Each committee has a committee chair and each committee consists solely of independent directors. In addition, the Board appoints other committees as the Board considers appropriate or necessary from time to time.
The Boardgenerally believes that the role of Chairman and the role of President and Chief Executive Officer should be separate and that the Chairman should not be an employeepart of the Company. Further, the Board believes this separation serves the Company’s shareholders best for setting our strategic priorities and executing our business strategy. We believe that our Board consists of directors with significant leadership, organizational and strategic skills, as discussed above. All of our independent directors have served as chair, vice chair, chief executive officer, chief financial officer and/or senior executive of other significant companies. Accordingly, we believe that our independent directors have demonstrated leadership in large enterprises, many with relevant industry experience, and are well-versed in board processes and corporate governance. We believe that having directors with such significant leadership skills benefits our company and our shareholders.
management. In addition to the general duties and responsibilities of a director, in accordance with the Articles of Association and our corporate governance guidelines, the Chairman is responsible for setting Board meeting agendas, dates and locations, presiding over all Board and shareholder meetings, presiding over all executive sessions of the Board (if independent), meeting regularly with the Chief Executive Officer between Board meetings and facilitating full and candid communication among directors and between the Board and the Chief Executive Officer. Mr. Campanelli, who currently serves as Chairman, will be retiring at the Annual Meeting. Mr. Barberio will begin serving as independent, non-executive Chairman at the Annual Meeting. Mr. Coleman serves as President and Chief Executive Officer and is also a director.
The Board recognizes that under certain circumstances, it may be in the best interest of the Company if the roles of the Chairman and Chief Executive Officer are held by the same person or someone who otherwise may not be deemed “independent.” When the Chairman is not “independent,” the Board will appoint a Senior Independent Director. The position of Senior Independent Director was created by the Board in April 2018 following the recommendation of the Nominating, Governance & Corporate Responsibility Committee to support the Chairman, to provide management and shareholders with additional means of access to the Board and to align the Company’s board leadership structure with those of other Irish-domiciled companies. In addition to the general duties and responsibilities of a director, in accordance with our corporate governance guidelines, the Senior Independent Director is responsible for fulfilling the Chairman’s duties, as described above, in the event that the Chairman is unavailable or unable to fulfill the Chairman’s duties, including presiding over executive sessions of the Board, together with assisting the Chairman and the chair of the Nominating, Governance & GovernanceCorporate Responsibility Committee with board evaluation, acting as a liaison with specified industry groups designated by the Board or the Chief Executive Officer at their direction, supporting the Chairman and providing management and shareholders with additional means of access to the Board and acting as an intermediary for other directors, if necessary or appropriate. Mr. Kimmel currently serves as Senior Independent Director. Upon Mr. Kimmel’s retirement at the Annual Meeting, there will be no Senior Independent Director because Mr. Barberio will be an independent Chairman.
Our Board currently has four standing committees. Each committee has an independent committee chair and each committee consists solely of independent directors. The Board establishes other committees from time to time as it deems necessary or appropriate.
Our Board consists of directors with significant leadership, organizational and strategic skills. All of our directors have served as chair, vice chair, chief executive officer, chief financial officer and/or senior executive of significant companies. Our directors have demonstrated leadership in large enterprises, many with relevant industry experience, and are well-versed in board
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processes and corporate governance. We believe that having directors with such significant leadership skills benefits our company and our shareholders.
Each director also may suggest items for inclusion on the agenda and may, at any Board meeting, raise subjects that are not on the agenda for that meeting. As required by our corporate governance guidelines, our independent directors meet separately, without management present, at each meeting of the Board. In addition, our Board committees regularly meet without members of management present.
As part of itsan annual self-evaluation process, the Board evaluates the Company’s governanceBoard’s leadership structure. We believeThe Board believes that having a President and Chief Executive Officer with oversight of company operations, coupleda non-executive Chairman with a seasoned Board comprisedthe option of an experienced independent Board Chairman,having a Senior Independent Director other independent directors and separate independent committee chairs and committee members is thean appropriate leadership structure for Endo.
7Board Refreshment and Director Succession Process
The Board has implemented a director succession process focused primarily on the composition of the Board and its committees, upcoming director retirements, succession planning for committee chairs, increasing Board diversity and recruiting strategies for adding new directors. This process has resulted in the addition of three new independent directors since the start of 2020. Mr. Barberio was appointed to the Board in February 2020; Dr. Smith was appointed to the Board in July 2020; and Ms. Chao was appointed to the Board in February 2021. Their appointments were informed by the Board’s annual evaluation process which helps determine an appropriate balance of skills, diversity, experience and tenure. To support effective Board refreshment and in keeping with the Company’s continued transformation, the Nominating, Governance & Corporate Responsibility Committee and the full Board consider a diverse pool of qualified director candidates on an ongoing basis.
Upon joining the Board, each independent director undergoes a comprehensive orientation process to help the new director quickly begin to contribute to board deliberations. The orientation process includes meeting with the Company’s senior leadership to learn about the Company’s overall strategy, key business issues, risks and opportunities. In addition to new director orientation, our directors participate in continuing education to maintain the skills necessary to perform their duties and responsibilities and to keep abreast of industry trends, regulatory developments and corporate governance practices. These include periodic presentations from outside advisors and consultants at board meetings, regular discussions with members of management, membership in the National Association of Corporate Directors (NACD) and the opportunity to attend external board education programs.
Board Responsibilities
The Board is responsible for overseeing and advising management with respect to the long-term interests of the Company and its shareholders. The Board’s responsibilities include, among others, the following:
▪ | overseeing management’s conduct of our business; |
▪ | reviewing and overseeing the Company’s risk management efforts; |
▪ | determining the compensation of our President and Chief Executive Officer and other senior executives, including our named executive officers (NEOs); |
▪ | planning for CEO succession; |
▪ | reviewing the Company’s human capital management efforts, including broad oversight of compensation programs, DE&I initiatives, succession planning and leadership development; |
▪ | reviewing the Company’s Corporate Responsibility program, including environmental, social and governance initiatives; |
▪ | reviewing and approving our major financial objectives, strategic priorities and operating plans; |
▪ | reviewing and evaluating the Company’s financial reporting processes; and |
▪ | reviewing regulatory, compliance, quality and legal matters and management’s implementation of the Company’s compliance program. |
To address these responsibilities, the Board and its committees meet on at least quarterly basis with members of management, including at regularly scheduled Board and committee meetings, and participate in recurring informational calls and other ad hoc discussions with management that generally occur at least quarterly. Additional information is included throughout the remainder of this section and under the heading “Board Meetings, Attendance and Committees of the Board of Directors” below.
Risk Oversight and Key Policies
On a regular basis, the Company’s officersmembers of management responsible for monitoring and managing risks across the Company’s various functions and business segments make reports to the Audit & Finance Committee. The Audit & Finance Committee, in turn, reports to the full Board of Directors. While the Audit & Finance Committee has primary responsibility for overseeing risk management, our entirethe full Board is actively involved in overseeing risk management for the Company by engaging in periodic discussions with Endo officersmanagement as the Board may deem appropriate. In addition, each of our Board committees considers the risks within its respective areas of responsibility.
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The Board believes that one of its most important responsibilities is to oversee how the Company’s Senior Executive Leadership Team, which includes our current named executive officers (NEOs)NEOs and other senior leaders, manages the various risks the Company faces and has delegated primary responsibility for overseeing the Company’s Enterprise Risk Management (ERM) program to the Audit & Finance Committee. It is management’s responsibility to manage risk and bring the most material risks the Company faces to the attention of the Audit & Finance Committee and the Board. The Company’s head of internal audit, who reports functionally to the Audit & Finance Committee, facilitates the ERM program under the sponsorship of our Senior Executive Leadership Team. Enterprise risks are identified and prioritized by management, and each material risk is assigneddiscussed with and overseen by the Board to a Board committee or the full Board for oversight based on the nature of the risk area and the committee’s charter. The committee or full Board agendas include discussions of individual risk areas throughout the year. Additionally, the Audit & Finance Committee agendas include periodic updates on the ERM program.
The Audit & Finance Committee regularly reviews, in consultation with third party advisors as appropriate, risks and risk management activities relating to liquidity, debt, financial, accounting, legal, tax, compliance, information technology security and other matters. The Compensation & Human Capital Committee considers risks related to succession planning and the attraction and retention of talent as well as risks relating to the design of compensation programs and arrangements.arrangements, succession planning and leadership development. The Compensation & Human Capital Committee also reviews compensation and benefit plans affecting Endo’s executive officers and other employees. The Compliance Committee considers risks related to regulatory, compliance, quality and legal matters and reviews management’s implementation of the Company’s compliance program. The full Board considers strategic risks and opportunities and regularly receives detailed reports from its committees regarding risk oversight in their respective areas of responsibility.
Information Security
As part of its role in in risk oversight, the Audit & Finance Committee reviews the Company’s program for managing information security risks, including data privacy and data protection. The Audit & Finance Committee is briefed by the Company’s senior leadership multiple times a year on information security matters. The Company is aligned with the National Institute of Standards and Technology (NIST) Cybersecurity Framework to manage information security risks and assess the maturity of the information security program. As part of the Company’s information security training program, employees participate in various cyber awareness activities including formal training exercises, simulated phishing events, town hall discussions and annual cybersecurity awareness month events. The Company maintains an updated information security policy and incident response plan. Tabletop exercises are performed to simulate ransomware and other disruptive events. The Company maintains insurance coverage for information security risk.
Corporate Responsibility
The Company’s Corporate Responsibility initiatives, including environmental, social and governance (ESG) matters, are incorporated into the Company’s corporate strategy. The Company issued its inaugural ESG report in 2020 summarizing the Company’s efforts using metrics from the Sustainability Accounting Standards Board (SASB). The Board has oversight over Endo’s Corporate Responsibility initiatives and management provides regular updates to the Board regarding the Company’s progress. The Nominating, Governance & Corporate Responsibility Committee has oversight of the Company’s overall Corporate Responsibility program while other committees have oversight of certain individual aspects of the program. For example, the Compensation & Human Capital Committee reviews progress on the Company’s commitment to diversity, equity and inclusion. The Compliance Committee has oversight of ethics and compliance related matters. The Audit & Finance Committee, as explained above, has oversight of enterprise risk management.
Code of Conduct
The Board has adoptedmaintains a Code of Conduct that applies to the Company’s directors, executive officers (including its President and Chief Executive Officer and Executive Vice President and Chief Financial Officer) and other employees (Endo Code). The Board has also adoptedmaintains a Code of Conduct for the Board of Directors (Director Code). These Codes are posted on the Company’s website atwww.endo.com. The Endo Code is available under “Our Responsibility—Corporate Compliance—Code of Conduct,Compliance,” and the Director Code is available under “Investors/Media—Corporate Governance—Code of Conduct.Governance.” Any waiver of either code for a director or executive officer of the Company, as applicable, may be made only by the Board or a committee of the Board. Such waivers and any amendments to either code will be disclosed on the Company’s website if required by law or stock exchange rules. The Board reviews the Endo Code and the Director Code on an annual basis.
Recovery of Compensation
The Compensation & Human Capital Committee maintains a compensation recovery (clawback) policy relating to recoupment of cash and equity-based incentive awards (collectively, Covered Awards) granted to NEOs and other senior management employees at the vice president level and above (collectively, Covered Employees). Under the policy, if the Company issues a material restatement of its reported financial results caused by the Covered Employee’s fraud or intentional misconduct, as determined by the Compensation & Human Capital Committee, then the Compensation & Human Capital Committee will direct the Company to use reasonable efforts to seek recovery of all Covered Awards that were paid or granted for performance during the restated fiscal year or years. In addition, the Compensation & Human Capital Committee has the ability to recoup certain Covered Awards granted to Covered Employees for material misconduct or gross negligence resulting in a material violation of the Company’s policies or applicable laws, as determined by a court of competent jurisdiction in a final, non-appealable judgment, which causes material financial harm to the Company. In the event that the Compensation & Human
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Capital Committee invokes this policy to recover any Covered Awards, the Company will disclose such recoupment as required by law or regulation or if the applicable misconduct has otherwise become public knowledge.
Insider Trading Policy
The Board has adoptedmaintains an Insider Trading Policy, which applies to all personnel, includingnon-employee directors and officers, arising from our legal and ethical responsibilities as a public company. Among other restrictions, the Insider Trading Policy contains hedging restrictions prohibitingnon-employee directors, the Company’s executive officers and all other employees from purchasing any financial instrument that is designed to hedge or offset any decrease in the market value of the Company’s shares, including but not limited to, puts, calls or other derivative transactions.Non-employee directors, the Company’s executive officers and all other employees are also restricted from engaging in short sales related to the Company’s ordinary shares and pledging the Company’s shares as collateral for a loan, including holding shares in a margin account.
Company Policy on Parachute Payments
The Board has adoptedmaintains a policy that provides that the Company will not enter into any future employment agreements that include “golden parachute” excise taxgross-ups with respect to payments contingent upon a change in control. Accordingly, the employment agreements for Messrs. Campanelli, Coleman, Coughlin, Maletta and Pera do not include excise taxgross-ups with respect to payments contingent upon a change in control. An excess parachute payment is generally a change in control
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payment in excess of one times the average of the officer’s taxableW-2 income for the five years prior to the change in control (base amount), and generally only results if the change in control payment exceeds 2.99 times the base amount. Excess parachute payments, including any excise taxgross-up payments, arenon-deductible to the Company under Section 280G of the Internal Revenue Code (the Code). TheAccordingly, the Company does not have any employment agreements with change in control excise tax gross up provisions.
Common Stock Ownership Guidelines
The Board has adopted themaintains Ownership Guidelines both fornon-employee directors and for executive officers and senior management of the Company. The Board believes thatnon-employee directors and senior management should have a significant equity position in the Company and that the Ownership Guidelines serve to further the Board’s interest in encouraging a longer-term focus in managing the Company. The Board also believes that the Ownership Guidelines align the interests of itsthe Company’s directors and senior management with the interests of shareholders and further promote Endo’s commitment to sound corporate governance. The Ownership Guidelines are posted on the Company’s website atwww.endo.com, under “Investors/Media—Corporate Governance—Nominating & Governance Committee.Governance.” The current Ownership Guidelines provide that eachnon-employee director eligible to own Company stock should, but is not required to, have ownership of the Company’s ordinary shares equal in value to at least fivethree times his or her current annual cash retainer to be generally achieved within five years of joining the Board. All non-employee directors executive officers and members of senior managementNEOs subject to the Ownership Guidelines are in compliance with the recommended guidelines.
The applicability of the Ownership Guidelines has been waived with respect to anynon-employee director who is a representative or employee of a significant shareholder of the Company or an investment firm if suchnon-employee director is prohibited from personally owning Company shares of common stock by the internal policies of such significant shareholder or investment firm. This waiver applies to Todd B. Sisitsky, who serves as a representative of TPG Capital, a significant shareholder of the Company. TPG Capital’s policies prohibit personal ownership of Company stock by its representatives and, accordingly, Mr. Sisitsky waived all rights to receive any annual cash retainer fees, meeting fees, share-based awards or other compensation of any kind (other than certain rights to indemnification, directors and officers insurance and expense reimbursement) in connection with his service as a director of the Company.
Review and Approval of Transactions with Related Persons
The Board has adoptedmaintains written policies and procedures for review, approval and monitoring of transactions involving the Company and “related persons” (directors and executive officers or their immediate family members, or beneficial owners of greater than five percent of the Company’s outstanding ordinary shares). The policy covers any related person transaction that meets the minimum threshold for disclosure in the Proxy Statement under relevant SEC rules (generally, transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect material interest). Such transactions are subject to review and approval by the Audit & Finance Committee.
Robert Campanelli is the Executive Director,Vice President, Strategic OperationsProjects at Par Pharmaceutical, Inc., aan indirect subsidiary of the Company. Mr. Campanelli joined Par Pharmaceutical Inc. in 2003 as a senior product manager and has worked in ascending areas of responsibility since that time. He is the brother of Paul Campanelli, President, Chief Executive Officer and Directorthe current Chairman of Endo.Endo’s Board. Robert Campanelli’s 20182020 compensation, calculated in accordance with the rules applicable to the Summary Compensation Table, totaled $387,177,$434,150, of which $215,748$262,423 was salary $88,670and $171,727 was annual and other bonuses and $82,759 was compensation under the Company’s long-term incentive equity plan.bonuses. In addition, Robert Campanelli is also eligible to participate in the retirement plans, insurance programs, health benefits and other similar employee welfare benefit arrangements available to other employees of comparable level and on substantially similar terms and conditions.
Shareholder Interaction
Shareholder Communications with Directors
The Board has established a process to receive communications from shareholders. Shareholders may contact any member or all members of the Board, including the Chairman, any Board committee or anythe chair of any such committee by mail. To communicate with the Board, any individual director or any group or committee of directors, correspondence should be addressed to the Board of Directors or any such individual director or group or committee of directors by either name or title. All such correspondence should be sent “c/o CorporateCompany Secretary” to Endo International plc, First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
All communications received as set forth in the preceding paragraph will be opened by the office of our CorporateCompany Secretary for the sole purpose of determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or service or patently offensive material will be forwarded promptly to the addressee(s). In the case of communications to the Board or any group or committee of directors, the CorporateCompany Secretary’s office will make sufficient copies of the contents to send to each director who is a member of the group or committee to which the communication is addressed.
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Shareholder Engagement
Endo’s Board believes it is important to directly engage with shareholders, including through targeted outreach initiatives, as a means of soliciting theirshareholder views on matters, including governance, environmental, social, corporate governance, executive compensation and other important
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topics in order to assist our Board with items requiring a broader shareholder perspective. Over the past several years, certainnon-employeeCertain directors and members of our management team have engaged with our shareholders, as well as with ISS and Glass Lewisthird party advisory firms, to discuss key issues on a variety of topics. In additionAs an example, the Company has reached out to shareholders with combined ownership levels of more than 70% of Endo’s ordinary shares outstanding in each of the past three years. Together with the shareholder advisory vote on executive compensation (thesay-on-pay vote), these conversations have been beneficial, and will continue to provideprovided the Compensation CommitteeBoard with insights into evolving shareholder views, while serving as an effective communication channel for matters of critical importance to Endo’s short- and long-term priorities.
Throughout 2018, members Members of Endo’s Board, and management team undertookincluding independent directors, plan to continue efforts to engage with and maintain an open dialogue with shareholders.
After implementing key changes in response to shareholder feedback received in 2018, the Company’s 2019 shareholder engagement process resulted in the following feedback:
▪ | A high degree of support for the Company’s responsiveness to shareholder concerns raised in 2018 and agreement with the resulting changes implemented by the Compensation & Human Capital Committee; |
▪ | Continued support for the Company’s strategy, performance and management, as well as Endo’s executive compensation policies, plan designs and metrics used; |
▪ | Significant shareholder focus on Endo motivating top talent with an emphasis on encouraging management continuity during a period of significant external headwinds facing Endo and other specialty pharmaceutical companies; and |
▪ | Support for the Company’s proactive management of share utilization, and emphasis on minimizing shareholder dilution levels. |
The feedback received from shareholders relating to encouraging management continuity as well as the Company’s share utilization limitations are material concerns shared by the Board. For Endo employees, including the Company’s NEOs, significant realized value opportunities have been lost over the past several years due to a number of external factors outside of the employees’ control, including unfavorable media coverage, political scrutiny and litigation relating to prescription opioid medication abuse. The negative impact these factors have on Endo’s share price creates significant continuity risk and share usage concerns for the Company that have required immediate attention. To illustrate this point, the chart below summarizes the estimated lost value opportunities for NEO LTI awards issued from 2016 to 2020, based on a November 4, 2020 share price of $4.83, which accountedis the date the 2020 continuity compensation arrangements were approved:
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The actions implemented by the Compensation & Human Capital Committee as a result of this feedback were intended to directly address these concerns. First, continuity compensation arrangements were authorized by the Compensation & Human Capital Committee in 2019 and 2020 to increase realizable earnings for approximately 90%Endo’s most critical talent in an effort to help bridge the significant gap between current pay and competitive norms. As discussed with our shareholders, NEO target levels for Total Direct Compensation (TDC), including base salary, cash incentive compensation (IC) and long-term incentive compensation (LTI), were less than the 25th percentile of Endo’s Pay Comparator Companies (as defined below in the CD&A). While the inclusion of continuity compensation increased target TDC levels, current NEO target TDC levels, inclusive of 2020 continuity compensation, remained below the 25th percentile of Endo’s Pay Comparator Companies. To illustrate this point, the chart below depicts the relative positioning of Mr. Coleman’s 2020 target TDC levels, with and without the inclusion of the continuity compensation arrangement extended in 2020 and vesting in 2021, versus median target CEO TDC levels reported by Endo’s Pay Comparator Companies in 2020:
Note: Base salary represents the annual rate of base salary. Since Mr. Coleman’s LTI is determined at the sole discretion of the Compensation & Human Capital Committee, “Expected Target” amounts of LTI reflect actual expected values of LTI issued in 2020. Except for amounts reported for Mr. Coleman, amounts reflect median overall pay levels for these companies, and totals may not equal the sum of the individual Base Salary, IC and LTI components.
In addition, the use of cash-based long-term incentives in 2020 was also authorized to address shareholder concerns regarding share usage and dilution resulting from Endo’s reduced share price, but also to serve as a separate mechanism to allow for predictable realizable value opportunities for all LTI-eligible employees. Both actions were required to maintain management continuity and increase the level of motivation for Endo employees, which in turn are key to driving the success of the business on an ongoing basis.
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Following the implementation of these changes, the Company’s 2020 shareholder engagement process, which involved reaching out to holders with combined ownership levels of more than 70% of Endo’s ordinary shares outstanding and held direct discussionsas well as third party advisory firms, resulted in feedback that was highly consistent with ISS and Glass Lewis. These conversations have been beneficial, resultingthe feedback received in changes implemented2019. The following summarizes the shareholder feedback received in 2020, as well as the actions taken by the Compensation Committee, including:& Human Capital Committee:
2020 Shareholder Feedback |
Prior Approach | Implemented Changes | ||
Understood the purpose and supported the use of continuity compensation in 2019 and 2020 in response to earlier shareholder feedback Prefer Endo return to a conventional executive compensation program design that better aligns NEO pay levels with competitive market levels | Reliance on standard executive compensation structure which significantly lagged competitive market levels for all current NEOs (current NEO target TDC levels below the 25th percentile of Endo’s Pay Comparator Companies) Augmented pay with continuity compensation arrangements scheduled to vest in 2021 (current NEO target TDC levels, inclusive of 2020 continuity compensation, remained below the 25th percentile of Endo’s Pay Comparator Companies) | Initial compensation adjustments applied in 2021, with a second phase of adjustments to be applied in 2022, to return to a conventional executive compensation structure that is aligned with competitive pay levels No further continuity compensation arrangements authorized by the Compensation & Human Capital Committee for NEOs (after receiving shareholder feedback following the issuance of 2020 continuity compensation arrangements scheduled to vest in 2021) | ||
Support for the Company’s proactive management of share utilization, and emphasis on | For the 2020 annual grant, equity | For the 2021 annual grant, the Company’s Senior Executive Team received LTI in the form of 50% |
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The actions taken by the Compensation |
As summarized above, while shareholders understood the purpose and supported Endo’s use of continuity compensation to address immediate shareholder concerns during this critical transitional period, many indicated they would prefer Endo return to a conventional executive compensation program design that better aligns NEO pay levels with competitive market levels. In an effort to implement a sustainable approach, the Compensation & Human Capital Committee, in agreement with the feedback received from shareholders following the issuance of the 2020 continuity compensation arrangements, has commenced the phase out of continuity compensation arrangements and has applied initial adjustments to current NEO pay levels in 2021. A second phase of adjustments will be applied in 2022, ending continuity payments and reverting to conventional compensation arrangements to better align Endo executive pay with median pay levels exhibited by Endo’s Pay Comparator Companies. Please reference the “Individual Compensation Determination” section for approved salary actions.
Based on the actions taken in 2021, and in prior years as noted in the CD&A, the Compensation & Human Capital Committee believes the changes implemented have consistently addressed the feedback received through the course of our shareholder engagement discussions and serve to strengthen our ability to motivate top talent and encourage management continuity of our NEOs who are critical to the planning and execution of Endo’s strategy and the creation of long-term shareholder value. These shareholder discussions have provided the Board with insights into evolving shareholder views, while serving as an effective communication channel for matters of critical importance to Endo’s short- and long-term priorities. The Compensation & Human Capital Committee will continue to consider shareholder feedback and the results of future say-on-pay votes when making executive compensation decisions and policies. Such votes are conducted annually at least until the Company solicits the next shareholder advisory vote on the frequency of such votes, which is scheduled to occur no later than June 2023.
The shareholder engagement process and resulting changes implemented changesas a result of the feedback received in 2019 and 2020 are discussed in further detail inunder the “Compensation Discussionheading “Say-on-Pay and Analysis” (CD&A) section of this Proxy Statement.Shareholder Engagement Feedback” within the CD&A section.
Board Meetings, Attendance and Committees of the Board of Directors
Between January 1, 20182020 and December 31, 2018,2020, the Board as a whole met foursix times and acted by written consent on one occasion.three occasions. All members of the Board attended 75% or more than 75% of the aggregate number of meetings of the Board and of the committees of the Board on which they served in 20182020 (that were held during the respective periods in which they served on the Board and related committees). The Board’s committees also routinely engage with members of management outside of these scheduled meetings, including theirthrough participation in recurring informational calls that generally occur at least quarterly and other ad hoc discussions. The Company does not have a policy on director attendance at Annual Meetings. Messrs. Kimmel andMr. Cooke attended the 20182020 Annual General Meeting of Shareholders (the 20182020 Annual Meeting).
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Board Committees
The Board has afour standing Audit Committee, Compensation Committee, Nominating & Governance Committee and Compliance Committee. The Board has determined that each committee’s chair and members, both current and expected, are “independent” in accordance with the criteria established by the SEC and Nasdaq.committees. Each of these committeescommittee operates pursuant to a written charter adopted by the Board describing the nature and scope of responsibilities of each committee. This year, through a special committee review process, we revised the charters and names of our committees to formalize their oversight of certain areas of focus:
▪ | The Audit Committee has been renamed the Audit & Finance Committee and the committee charter has been updated to reflect the committee’s oversight of the Company’s financing practices and capital structure. |
▪ | The Compensation Committee has been renamed the Compensation & Human Capital Committee and the committee charter has been updated to reflect the committee’s oversight of the Company’s human capital initiatives including diversity, equity and inclusion. |
▪ | The Nominating and Governance Committee has been renamed the Nominating, Governance & Corporate Responsibility Committee and the committee charter has been updated to reflect the committee’s oversight of the Company’s overall ESG initiatives. |
▪ | The Compliance Committee’s charter has been updated to align the charter with the Company’s standard operating procedure for investigations and to reflect the committee’s oversight of interactions with healthcare professionals. |
The Board has determined that the chair and all members of each committee are “independent” in accordance with the criteria established by the SEC and Nasdaq.
Audit & Finance Committee
The Audit & Finance Committee is responsible for overseeing the Company’s financial reporting process on behalf of the Board. In addition, the Audit & Finance Committee reviews, acts on and reports to the Board with respect to various auditing and accounting matters, including the selection of the Company’s independent registered public accounting firm, the scope of the annual audits, fees to be paid to the independent registered public accounting firm, the performance of the Company’s independent registered public accounting firm, the accounting practices of the Company and the Company’s internal controls and legal compliance functions. As explained above, the Audit & Finance Committee also has oversight of the Company’s ERM program and its information security program. The Audit & Finance Committee’s charter is available on the Company’s website atwww.endo.com, under “Investors/Media—Corporate Governance—Audit Committee.Governance.”
Management of the Company has the primary responsibility for the Company’s financial reporting process, principles and internal controls as well as preparation of its financial statements. The Company’s independent registered public accounting firm is responsible for performing an independent audit of, and expressing an opinion on, the conformity of the Company’s financial statements with accounting principles generally accepted in the United States and the effectiveness of the Company’s internal controls over financial reporting.
Between January 1, 20182020 and December 31, 2018,2020, the Audit & Finance Committee met four times in each case includingand held periodic meetings held separately with management, the Company’s internal auditors and the independent registered public accounting firm. The Audit & Finance Committee also routinely engaged with members of management outside of these scheduled meetings, including through participation in recurring informational calls and other ad hoc discussions.
Compensation & Human Capital Committee
The Compensation & Human Capital Committee of the Board determines the salary and incentive compensation of our President and Chief Executive Officer, reviews and approves the compensation levels of certain other senior executives of the Company, including the NEOs, and provides broad guidance regarding the remuneration and incentive compensation of the other employees of the Company. The Compensation & Human Capital Committee also reviews all the recommendations of the Company’s management for awards granted under the Endo International plc Amended and Restated 2015 Stock Incentive Plan and acts on such recommendations, as appropriate, in the Committee’scommittee’s judgment. The Compensation & Human Capital Committee’s charter is available on the Company’s website atwww.endo.com, under “Investors/Media—Corporate Governance—Compensation Committee.Governance.”
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The primary function of the Compensation & Human Capital Committee is to conduct reviews ofset and review the Company’s general executive compensation policies and strategies and oversee and evaluate the Company’s overall compensation structure and programs. The Compensation & Human Capital Committee confirms that total compensation paid to the NEOs, including the President and Chief Executive Officer, Executive Vice President and Chief Financial Officer and those other individuals included in the Summary Compensation Table, is competitive and performance-based. Responsibilities of the Compensation & Human Capital Committee include, but are not limited to:
setting and reviewing, at least annually, the goals and objectives of the Company’s executive compensation plans; |
annually evaluating the performances of the Company’s NEOs (and certain other employees) in light of those goals and objectives and determining and/or approving their compensation levels based on such evaluations; |
establishing or reviewing performance-based and |
interpreting, implementing, administering, reviewing and approving all other aspects of remuneration to the Company’s NEOs (and certain other employees), including their employment agreements, severance arrangements and change in control agreements or provisions; |
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developing, approving, administering and recommending to the Board and the Company’s shareholders for their approval (to the extent such approval is required by any applicable law, regulation or Nasdaq rule) all stock option and other |
approving individual recommendations and granting any shares, stock options, cash-based awards or other equity-based awards under all |
reviewing and approving the Company’s management succession plan for senior management; and |
reviewing and approving compensation policies for the Company’snon-employee directors. |
Endo management is required to provideprovides reviews and recommendations for the Compensation Committee’s consideration, and to manageof the Company’s executive compensation programs, policies and governance.governance for the Compensation & Human Capital Committee’s consideration and review. Management responsibilities in this regard include, but are not limited to:
providing an ongoing review of the effectiveness of the compensation programs for all employees, including competitiveness, and alignment with the Company’s objectives; |
recommending changes, if necessary, to achieve all program objectives; and |
recommending pay levels, payout and/or awards for NEOs and certain other employees other than the President and Chief Executive Officer. |
The Compensation & Human Capital Committee can exercise its discretion in modifying any recommended adjustments or awards to the NEOs, taking into considerationNEOs.
As explained above, the requirements related to performance-based compensation under Section 162(m)Compensation & Human Capital Committee also has oversight of the Code.Company’s human capital initiatives, including the Company’s commitment to diversity, equity and inclusion.
Between January 1, 20182020 and December 31, 2018,2020, the Compensation & Human Capital Committee met four times. The Compensation & Human Capital Committee also routinely engaged with members of management outside of these scheduled meetings, including through participation in recurring informational calls and other ad hoc discussions.
Use of Compensation Consultants.The Compensation & Human Capital Committee retains Korn Ferry Hay Group, a division of Korn Ferry International, as its consultant to provide objective, independent analysis, advice and recommendations with regard to executive and employee compensation including, but not limited to, competitive market data, compensation analysis and recommendations related to our President and Chief Executive Officer, Board and our other senior executives. Korn Ferry Hay Group served as the independent executive compensation consultant to the Compensation & Human Capital Committee for the Company’s entire 20182020 fiscal year. The consultant reports to the Chair of the Compensation & Human Capital Committee and has direct access to the other members of the Compensation & Human Capital Committee. The Compensation & Human Capital Committee also authorizes the consultant to interact with management in certain respects in order to prepare for meetings with, and respond to requests from, the Compensation & Human Capital Committee. The Compensation & Human Capital Committee may retain other consultants and advisors from time to time.
A representative of Korn Ferry Hay Group attends meetings of the Compensation & Human Capital Committee, is available to participate in executive sessions and communicates directly with the Compensation & Human Capital Committee.
In determining the independence and lack of any conflict of interest regarding Korn Ferry Hay Group and Korn Ferry Hay Group’sFerry’s lead advisor to the Compensation & Human Capital Committee, the Compensation & Human Capital Committee considered, among other things, the following factors:
the amount of Korn |
Korn |
that there are no conflicts of interest resulting from other business or personal relationships between Korn |
the lead Korn Ferry |
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|
any other factors relevant to the independence of Korn |
In addition, Korn Ferry Hay Group’sFerry’s Policy on Avoiding Conflicts of Interest confirms that Korn Ferry Hay Group’sFerry’s compensation consultants will continue to provide clients with independent, unbiased advice. Endo’s Board determined that the policy sufficiently allows Korn Ferry Hay Group Compensation Committee consultants to maintain independence.
In 2018,2020, Korn Ferry Hay Group assisted the Compensation & Human Capital Committee with, among other things, (i) performing a review of the Company’s executive and Board compensation programs, including competitive market analyses, assessment of potentialpoten-
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tial risks associated with compensation arrangements, policies and plans and considerations related to Endo’s President and Chief Executive Officer and other senior executives, (ii) determining the appropriate allocation among short-term and long-term compensation, cash andnon-cash compensation and the different forms ofnon-cash compensation, (iii) identifying appropriate Pay Comparator Companies (as defined below in CD&A) for purposes of benchmarking the Company’s executive compensation in the industry sectors in which Endo competes for talent and (iv) providing competitive market information and an overview of critical issues and trends affecting the executive compensation landscape.
Compensation Committee Interlocks and Insider Participation.As of the date of this Proxy Statement and during 2018,2020, (i) none of the members of the Compensation & Human Capital Committee were or have been officers or employees of the Company or had or have had any relationship requiring disclosure under Item 404(a) of RegulationS-K and (ii) none of the executive officers of the Company served or have served on the compensation committee or board of any company that employed any member of the Company’s Compensation & Human Capital Committee or Board.
Nominating, Governance & GovernanceCorporate Responsibility Committee
The Nominating, Governance & GovernanceCorporate Responsibility Committee of the Board, which consists of independent directors, identifies and recommends to the Board individuals qualified to serve as directors of the Company, recommends to the Board directors to serve on committees of the Board and advises the Board with respect to matters of Board composition and procedures. The Nominating, Governance & GovernanceCorporate Responsibility Committee also oversees the Company’s corporate governance.Corporate Responsibility program, including its ESG initiatives, as well as the Company’s drug pricing policy. The Nominating, Governance & GovernanceCorporate Responsibility Committee’s charter is available on the Company’s website atwww.endo.com, under “Investors/Media—Corporate Governance—Nominating & Governance Committee.Governance.”
WhileThe Nominating, Governance & Corporate Responsibility Committee believes that diversity is an important factor in determining the Board does not have a formal policy with respect to diversity,composition of the Board, and the Nominating & Governance Committee advocate diversityconsiders it in the broadest sense. We believe that it is important that nominees for the Board represent diverse viewpoints and backgrounds.making nominee recommendations. The Nominating, Governance & GovernanceCorporate Responsibility Committee considers a broad array of qualifications and attributes including: experience, skills, expertise, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, independence and such other relevant factors that the Nominating, Governance & GovernanceCorporate Responsibility Committee considers appropriate in the context of the needs of the Board. Although not specified inBased on its charter,belief that it is important for nominees for the Board to represent diverse viewpoints and backgrounds, the Nominating, Governance & GovernanceCorporate Responsibility Committee also considers diversity such as race, ethnicity and gender when selecting candidates so that additional diversity may be represented on the Board.candidates.
The Nominating, Governance & GovernanceCorporate Responsibility Committee will consider director candidates recommended by shareholders. In considering candidates submitted by shareholders, the Nominating, Governance & GovernanceCorporate Responsibility Committee will take into consideration the needs of the Board and the qualifications of the candidate. The Nominating, Governance & GovernanceCorporate Responsibility Committee may also take into consideration the number of shares held by the recommending shareholder and the length of time that such shares have been held. To have a candidate considered by the Nominating, Governance & GovernanceCorporate Responsibility Committee, a shareholder must submit the recommendation in writing and must include the following information:
Shareholder Information: name of the shareholder and evidence of share ownership in the Company, including the quantity owned and the length of time of ownership. |
Candidate Information: name of the candidate, his or her resume or a listing of qualifications to be a director of the Company and his or her consent to be named as a director if selected by the Nominating, Governance & |
The shareholder recommendation and information described above must be sent to the CorporateCompany Secretary at Endo International plc, First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
The Nominating, Governance & GovernanceCorporate Responsibility Committee will also, from time to time, engage national search firms that specialize in identifying and evaluating director candidates.
Once a person has been identified by the Nominating, Governance & GovernanceCorporate Responsibility Committee as a potential candidate, the Nominating, Governance & GovernanceCorporate Responsibility Committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the Nominating, Governance & GovernanceCorporate Responsibility Committee determines that the candidate warrants further consideration, the Chair or a member of the Nominating, Governance & GovernanceCorporate Responsibility Committee utilizes a recognized search firm to review the candidate’s qualifications and background. Generally, if the person expresses a willingness to be considered and to serve on the Board, the Nominating, Governance & GovernanceCorporate Responsibility Committee requests information from the candidate, reviews the person’s
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accomplishments and qualifications, including in light of any other candidates that the Nominating, Governance & GovernanceCorporate Responsibility Committee might be considering, and conducts one or more interviews with the candidate. Generally, Nominating, Governance & GovernanceCorporate Responsibility Committee members may conduct additional due diligence on the candidate. The Nominating, Governance & GovernanceCorporate Responsibility Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder, although the number of shares held by the recommending shareholder and the length of time that such shares have been held may be taken into consideration.
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The Nominating, Governance & GovernanceCorporate Responsibility Committee has established procedures under which any director who is not elected shall tender his or her resignation to the Board.
Between January 1, 20182020 and December 31, 2018,2020, the Nominating, Governance & GovernanceCorporate Responsibility Committee met four times. The Nominating, Governance & Corporate Responsibility Committee also routinely engaged with members of management outside of these scheduled meetings, including through participation in recurring informational calls and other ad hoc discussions.
Compliance Committee
The Compliance Committee focuses on assisting the Board by providing oversight of regulatory, compliance, quality and legal matters.matters and reviewing management’s implementation of the Company’s compliance program. The Compliance Committee’s areas of oversight include product safety and quality, anti-bribery and corruption and interactions with healthcare professionals and government officials. The Compliance Committee’s charter is available on the Company’s website atwww.endo.com, under “Investors/Media—Corporate Governance—Compliance Committee.Governance.”
Between January 1, 20182020 and December 31, 2018,2020, the Compliance Committee met fivefour times. The Compliance Committee also routinely engaged with members of management outside of these scheduled meetings, including through participation in recurring informational calls and other ad hoc discussions.
Composition of Committees of the Board of Directors
The following table shows the directors who currently serve on and/or chair each of the current committees.
Name | Audit & Finance Committee | Compensation & Human Capital Committee | Nominating, Governance & Responsibility Committee | Compliance Committee | ||||||||||||
| — | — | — | — | ||||||||||||
Mark G. Barberio |
| Member |
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| — |
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| Member |
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| — | |||||
Jennifer M. Chao | Member | — | — | Member |
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| — |
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| — |
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Subject to the re-election of each of the director nominees at the Annual Meeting, there are no expected changes to the committees, other than Mr. Sisitsky, who will not be standing for re-election at the Annual Meeting.
With respect to the Audit & Finance Committee, the Board has determined that: (i)that Messrs. Barberio, Cooke and Montague and Ms. Chao are “audit committee financial experts,”experts” as defined by the SEC regulations, and each has the related financial management expertise within the meaning of the Nasdaq listing rules and (ii) the current and expected chair and members are financially literate in accordance with the criteria established by the SEC and the Nasdaq.regulations.
1319
Security Ownership of Certain Beneficial Owners and Management
The following table, together with the corresponding footnotes, sets forth, as of April 12, 2019,2021, the name, address and holdings of each person, including any “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the Exchange Act), known by Endo to be the “beneficial owner” of more than 5% of the Company’s outstanding ordinary shares. The table also sets forth, as of April 12, 2019,2021, the number of ordinary shares beneficially owned by each of the Company’s current directors and current NEOs, and by all current directors and NEOsexecutive officers of the Company as a group. Footnote (1) below provides a brief explanation of what is meant by the term “beneficial ownership.”
Name of Beneficial Owner | Number of Ordinary Shares Beneficially Owned (#)(1) | Percentage of Class (%)(a) | ||||||
Directors and Named Executive Officers: | ||||||||
Roger H. Kimmel(2) | 273,371 | * | ||||||
Shane M. Cooke(3) | 56,244 | * | ||||||
Nancy J. Hutson, Ph.D.(3) | 58,064 | * | ||||||
Michael Hyatt(4) | 297,484 | * | ||||||
Sharad S. Mansukani, M.D.(5) | 43,540 | * | ||||||
William P. Montague(3) | 72,982 | * | ||||||
Todd B. Sisitsky(6) | — | * | ||||||
Paul V. Campanelli(3) | 1,489,319 | * | ||||||
Blaise Coleman(3) | 237,651 | * | ||||||
Terrance J. Coughlin(3) | 402,238 | * | ||||||
Matthew J. Maletta(3) | 248,683 | * | ||||||
Tony Pera(3) | 137,692 | * | ||||||
All current directors and named executive officers of the Company as a group (12 persons) | 3,317,268 | 1.5% | ||||||
Other Shareholders: | ||||||||
BlackRock, Inc.(7) | 34,645,917 | 15.3% | ||||||
The Vanguard Group, Inc.(8) | 25,644,375 | 11.3% | ||||||
TPG Group Holdings (SBS) Advisors, Inc.(9) | 22,152,136 | 9.8% | ||||||
Renaissance Technologies LLC(10) | 11,704,171 | 5.2% |
Name of Beneficial Owner | Number of Ordinary Shares Beneficially Owned (#)(1) | Percentage of Class (%)(1) | ||||||
Directors and Named Executive Officers: | ||||||||
Paul V. Campanelli (2) | 3,615,784 | 1.5% | ||||||
Mark G. Barberio (2) | 13,266 | * | ||||||
Jennifer M. Chao (2) | — | * | ||||||
Blaise Coleman (2) | 653,601 | * | ||||||
Shane M. Cooke (2) | 77,030 | * | ||||||
Nancy J. Hutson, Ph.D. (2) | 91,219 | * | ||||||
Michael Hyatt (3) | 330,639 | * | ||||||
Roger H. Kimmel (4) | 216,575 | * | ||||||
William P. Montague (2) | 97,104 | * | ||||||
M. Christine Smith, Ph.D. (2) | 5,655 | * | ||||||
Mark Bradley (2) | 147,790 | * | ||||||
Matthew J. Maletta (2) | 670,534 | * | ||||||
Patrick Barry (2) | 250,199 | * | ||||||
George Apostol, M.D. (2) | 15,271 | * | ||||||
All current directors and executive officers of the Company as a group (14 persons) | 6,184,667 | 2.7% | ||||||
Other Shareholders: | ||||||||
BlackRock, Inc. (5) | 36,714,699 | 15.7% | ||||||
The Vanguard Group, Inc. (6) | 25,337,239 | 10.9% | ||||||
Renaissance Technologies LLC (7) | 19,599,225 | 8.4% | ||||||
Paulson & Co., Inc. (8) | 18,327,012 | 7.9% |
* | The percentage represents less than 1%. |
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(1) | “Beneficial ownership” is a term broadly defined by the SEC in Rule13d-3 under the Exchange |
Name | Ordinary Shares(a) | RSUs That Will Be Vested within the Next 60 Days | Options to Purchase Ordinary Shares That Will Be Exercisable within the Next 60 Days | Ordinary Shares (a) | Restricted Stock Units That Will Be Vested within 60 Days | Options to Purchase Ordinary Shares That Will Be Exercisable within 60 Days | ||||||||||||||||||
Roger H. Kimmel | 265,277 | — | 8,094 | |||||||||||||||||||||
Paul V. Campanelli | 1,607,550 | — | 2,008,234 | |||||||||||||||||||||
Mark G. Barberio | 13,266 | — | — | |||||||||||||||||||||
Jennifer M. Chao | — | — | — | |||||||||||||||||||||
Blaise Coleman | 293,472 | — | 360,129 | |||||||||||||||||||||
Shane M. Cooke | 56,244 | — | — | 77,030 | — | — | ||||||||||||||||||
Nancy J. Hutson, Ph.D. | 49,970 | — | 8,094 | 91,219 | — | — | ||||||||||||||||||
Michael Hyatt | 289,390 | — | 8,094 | 330,639 | — | — | ||||||||||||||||||
Sharad S. Mansukani, M.D. | 43,540 | — | — | |||||||||||||||||||||
Roger H. Kimmel | 216,575 | — | — | |||||||||||||||||||||
William P. Montague | 64,888 | — | 8,094 | 97,104 | — | — | ||||||||||||||||||
Paul V. Campanelli | 551,326 | — | 937,993 | |||||||||||||||||||||
Blaise Coleman | 86,919 | 2,680 | 148,052 | |||||||||||||||||||||
Terrance J. Coughlin | 226,703 | — | 175,535 | |||||||||||||||||||||
M. Christine Smith, Ph.D. | 5,655 | — | — | |||||||||||||||||||||
Mark Bradley | 71,204 | — | 76,586 | |||||||||||||||||||||
Matthew J. Maletta | 84,031 | 902 | 163,750 | 287,903 | — | 382,631 | ||||||||||||||||||
Tony Pera | 65,648 | — | 72,044 | |||||||||||||||||||||
Patrick Barry | 132,660 | — | 117,539 | |||||||||||||||||||||
George Apostol, M.D. | — | 15,271 | — |
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(a) | The ordinary share amounts for Mr. Kimmel include |
(2) |
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The business address for this person is c/o Endo International plc, First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland. |
The business address for Mr. Hyatt is c/o Irving Place Capital, 745 Fifth Avenue, 7th Floor, New York, New York 10151. |
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The business address for Mr. |
The business address for this entity is 55 East 52nd Street, New York, New York 10055. BlackRock, Inc. has sole power to (i) vote |
The business address for this entity is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. The Vanguard Group, Inc. has sole power to (i) vote |
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The business address for this entity is 800 Third Avenue, New York, New York 10022. Renaissance Technologies LLC has sole power to (i) vote |
(8) | The business address for this entity is 1133 Avenue of the Americas, New York, NY 10036. Paulson & Co, Inc. has sole power to (i) vote 18,327,012 ordinary shares and |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers, directors andgreater-than-ten-percent shareholders (collectively, Reporting Persons) to file an initial report of ownership (Form 3) and reports of changes of ownership (Forms 4 and 5) of Endo securities with the SEC and the Nasdaq. These persons are also required to furnish the Company with copies of all Section 16(a) reports that they file with respect to Endo securities. Based solely upon a review of Section 16(a) reports furnished to the Company for the year ended December 31, 2018 and written representations from certain Reporting Persons that no other reports were required, the Company believes that all Reporting Persons complied with the applicable filing requirements for the year ended December 31, 2018, except that Carrie Ann Nichol’s timely-filed Form 3 was amended to add an additional holding that was inadvertently omitted from the initial filing.
Compensation ofNon-Employee Directors
The Compensation & Human Capital Committee annually reviews compensation for eachnon-employee director who was not affiliated with the Company against pay levels observed among Endo’s Pay Comparator Companies and makes adjustments, as appropriate. In addition to offeringThe Company offers a competitively positioned compensation package our objectivethat is intended to align with competitive pay levels exhibited by Endo’s Pay Comparator Companies. This compensation package is designed to award a meaningful portion of compensation in the form of equity to further align the interests ofnon-employee directors with the interests of Endo shareholders.shareholders while managing shareholder dilution levels. Except as described below under the heading “Non-Employee Director Compensation Table,” directors who are employees of the Company generally receive no additional compensation for their services as directors or as members of Board committees. Details on the compensation arrangements for Endo’s non-employee directors are summarized below under the headings “Annual Cash Retainer” and “Annual Equity Retainer.”
Over the past two consecutive years,21
In February 2021, the Compensation & Human Capital Committee has taken actionapproved changes to reduce overall pay for the compensation of non-employee directors to better align the program with competitive market practices observed amongmedian pay levels exhibited by Endo’s Pay Comparator Companies. TheseThe changes allow Endo to appropriately alignnon-employee director pay levels with the median pay levels of Pay Comparator Companies, while balancing the mix between equity- and cash-based compensation in a manner that strengthens alignment betweennon-employee director and shareholder interests and increasing the level of consistency with the median mix reported by our Pay Comparator Companies.
In February 2018, additional reductions were approved by the Compensation & Human Capital Committee including:for the 2021 compensation cycle are summarized below:
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Because Mr. Sisitsky serves as a representative of TPG Capital, whose policies prohibit personal ownership of Company stock by its representatives, Mr. Sisitsky has waived all rights to receive any annual cash retainer fees, meeting fees, share-based awards or other compensation of any kind (other than certain rights to indemnification, directors and officers insurance and expense reimbursement) in connection with his service as a director of the Company.
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The compensation cycle fornon-employee directors runs from January 1st through December 31st of each year, with the annual payment date scheduled for the first trading day following the Annual General Meeting of Shareholders. The current compensation package fornon-employee directors, which reflectsincluding the most recent changes implemented in 2018,2021, is further described below.
Annual Cash Retainer
Non-employee directors are entitled to receive an annual cash retainer based on their service on the Board, as well as for their roles on certain committees of the Board. The amounts thatnon-employee directors were entitled to receive in June 20182020 and will be entitled to receive in June 2019,2021, which reflect the reducedchanges to the director pay program noted above, are set forth in the following schedule:
Purpose | Amount | |||
For membership on the Board of Directors | $ | 60,000 | ||
For serving as the Chair of the Board of Directors | $ | 150,000 | ||
For serving as Senior Independent Director(1) | $ | 60,000 | ||
For serving as Chair of the Audit Committee | $ | 25,000 | ||
For serving as Chair of the Compensation Committee | $ | 20,000 | ||
For serving as Chair of the Compliance Committee | $ | 20,000 | ||
For serving as Chair of the Nominating & Governance Committee | $ | 15,000 |
For membership on the Board of Directors For serving as the Chairman of the Board of Directors For serving as Senior Independent Director For serving as Chair of the Audit & Finance Committee For serving as Chair of the Compensation & Human Capital Committee For serving as Chair of the Compliance Committee For serving as Chair of the Nominating, Governance & Corporate Responsibility Committee For membership on any of the Board’s committees (on a committee-by-committee basis) Paul V. Campanelli, who is a non-management director of the Company, received compensation in 2020 pursuant to a Letter Agreement entered into and approved by the Compensation & Human Capital Committee in December 2019, and was not eligible to receive non-employee board compensation and/or fees for services as a board member, or for serving as Chairman of the Board, until after his retirement as an employee of the Company on December 31, 2020. |
Meeting Fees
Non-employee directors are entitled to receive a fee of $5,000 cash per trip to Ireland on Company business, other than for attending regularly scheduled meetings in Ireland.
Annual Equity Retainer
Effective with the 20182021 compensation cycle, eachnon-employee director is entitled to receive an annual award of fully-vested ordinary shares having a grant date value equal to $240,000.$300,000, which is increased from the grant date value of annual awards granted during the 2020 compensation cycle of $175,000. The number of ordinary shares actually awarded to eachnon-employee director is calculated using a determined grant date fair market value (as determined in the sole discretion of the Compensation & Human Capital Committee, but in no event shall the determined grant date fair market value be less than the closing price as of the date of the grant). Establishing the closing price as of the date of the annual grant as a base metric limits additional shares being issued beyond the number of shares that would have been issued based on the closing price on the date of grant. ThisIn acknowledgment of the Company’s share utilization priorities and applicable plan limits, all or a portion of the annual equity retainer may be issued in the form of cash, subject to the Compensation & Human Capital Committee’s discretion. Consistent with past practices, the annual stock award will be grantedgrant date for non-employee directors is on the first trading day after the Company’s Annual General Meeting of Shareholders, with the annual stock award for the 2021 compensation cycle scheduled for grant on June 12, 2019.11, 2021. Pursuant to the Directors Stock Election Plan (described below),non-employee directors may also elect to receive their cash retainer fees in the form of Endo ordinary shares.
Directors Stock Election Plan
Under the Directors Stock Election Plan,non-employee directors may elect to have some or all of their cash retainer fees delivered in the form of Endo ordinary shares. The amount of shares will be determined by dividing the portion of cash fees elected to be received as shares by the closing price of the sharesgrant date fair market value (as described above) on the day the payment would have otherwise been paid in cash.
Additional Arrangements
The Company provides Irish tax return preparation services for certainnon-employee directors and pays for or provides (or reimburses directors forout-of-pocket costs incurred for) transportation, hotel, food and other incidental expenses related to
22
attending Board and committee meetings or participating in director education programs and other director orientation or educational meetings.
Insurance and Indemnification
The Company has retained directors and officers indemnification insurance coverage. This insurance coversnon-employee directors and officers individually.
16
Non-EmployeeDirector Compensation Table
The following table provides information concerning the compensation of the Company’snon-employee directors paid during 20182020 and includes any individual who servedreceived compensation as anon-employee director of the Company at any time during 2018. Directors2020. Other than as described below, directors who arewere compensated as employees of the Company receiveat any time during 2020 received no additional compensation for their servicesservice as directors or as members of Board committees. During the 2020 compensation cycle, Mr. Campanelli received certain compensation and benefits in respect of his combined service as Chairman of the Board and as an employee through December 31, 2020 supporting an orderly succession plan and transitional process, the amounts of which are reported in the Summary Compensation Table. For a complete understanding of the following table, please read the footnotes and the narrative disclosures that follow the table.
Name | Length of Service | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | All Other Compensation ($) | Total ($) | Director Since | Fees Earned or Paid in Cash ($)(1)(2) | Stock Awards ($)(2)(3)(4) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||||||||
Roger H. Kimmel | 5 Years | $ | 210,000 | $ | 240,000 | $ | — | $ | 450,000 | |||||||||||||||||||||||||||||||
Mark G. Barberio | February 2020 | $ | 292,500 | $ | 87,500 | $ | — | $ | 380,000 | |||||||||||||||||||||||||||||||
Shane M. Cooke | 4 Years 6 Months | $ | 85,000 | $ | 240,000 | $ | — | $ | 325,000 | July 2014 | $ | 317,500 | $ | 87,500 | $ | — | $ | 405,000 | ||||||||||||||||||||||
Nancy J. Hutson, Ph.D. | 5 Years | $ | 80,000 | $ | 240,000 | $ | — | $ | 320,000 | February 2014 | $ | 312,500 | $ | 87,500 | $ | — | $ | 400,000 | ||||||||||||||||||||||
Michael Hyatt | 5 Years | $ | 75,000 | $ | 240,000 | $ | — | $ | 315,000 | February 2014 | $ | 312,500 | $ | 87,500 | $ | — | $ | 400,000 | ||||||||||||||||||||||
Sharad S. Mansukani, M.D. | 1 Year | $ | 120,000 | $ | 240,000 | $ | — | $ | 360,000 | |||||||||||||||||||||||||||||||
Roger H. Kimmel | February 2014 | $ | 375,000 | $ | 87,500 | $ | — | $ | 462,500 | |||||||||||||||||||||||||||||||
William P. Montague | 5 Years | $ | 80,000 | $ | 240,000 | $ | — | $ | 320,000 | February 2014 | $ | 317,500 | $ | 87,500 | $ | — | $ | 405,000 | ||||||||||||||||||||||
Todd B. Sisitsky | 3 Years | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
Jill D. Smith | 4 Years | $ | 129,863 | $ | — | $ | — | $ | 129,863 | |||||||||||||||||||||||||||||||
M. Christine Smith, Ph.D. | July 2020 | $ | 124,672 | $ | 37,295 | $ | — | $ | 161,967 |
(1) | The amounts in this column |
(2) | As noted above, all or a portion of the annual equity retainer is permitted to be issued in the form of cash, subject to the Compensation & Human Capital Committee’s discretion. In acknowledgment of the Company’s share utilization priorities, based on Compensation & Human Capital Committee discretion, 2020 annual equity retainer amounts of $74,590 for Dr. Smith and $175,000 for each of the other non-employee directors included in the table above were issued in the form of 50% cash and 50% fully-vested ordinary shares. The amounts |
(3) | The amounts in this column represent the grant date fair |
Name | Grant Date | Fair Value on Grant Date of Stock Awards ($) | Grant Date | Fair Value on Grant Date of Stock Awards ($) | ||||||||||||
Roger H. Kimmel | June 8, 2018 | $ | 240,000 | |||||||||||||
Mark G. Barberio | June 12, 2020 | $ | 87,500 | |||||||||||||
Shane M. Cooke | June 8, 2018 | $ | 240,000 | June 12, 2020 | $ | 87,500 | ||||||||||
Nancy J. Hutson, Ph.D. | June 8, 2018 | $ | 240,000 | June 12, 2020 | $ | 87,500 | ||||||||||
Michael Hyatt | June 8, 2018 | $ | 240,000 | June 12, 2020 | $ | 87,500 | ||||||||||
Sharad S. Mansukani, M.D. | June 8, 2018 | $ | 240,000 | |||||||||||||
Roger H. Kimmel | June 12, 2020 | $ | 87,500 | |||||||||||||
William P. Montague | June 8, 2018 | $ | 240,000 | June 12, 2020 | $ | 87,500 | ||||||||||
Todd B. Sisitsky | n/a | $ | — | |||||||||||||
M. Christine Smith, Ph.D. | July 29, 2020 | $ | 37,295 |
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The following table summarizes the aggregate number of stock |
Name | Options Outstanding at Fiscal Year End (#) | Options Exercisable at Fiscal Year End (#) | Restricted Stock Units Outstanding at Fiscal Year End (#) | Value at Fiscal Year End ($)(a) | Restricted Stock Units Outstanding at Fiscal Year End (#) | Value at Fiscal Year End ($)(a) | ||||||||||||||||||
Nancy J. Hutson, Ph.D. | 6,515 | $ | 46,778 | |||||||||||||||||||||
Roger H. Kimmel | 8,094 | 8,094 | 15,074 | $ | 110,040 | 15,074 | $ | 108,231 | ||||||||||||||||
Shane M. Cooke | — | — | — | $ | — | |||||||||||||||||||
Nancy J. Hutson, Ph.D. | 13,185 | 13,185 | 6,515 | $ | 47,560 | |||||||||||||||||||
Michael Hyatt | 18,478 | 18,478 | — | $ | — | |||||||||||||||||||
Sharad S. Mansukani, M.D. | — | — | — | $ | — | |||||||||||||||||||
William P. Montague | 18,478 | 18,478 | 23,108 | $ | 168,688 | 23,108 | $ | 165,915 | ||||||||||||||||
Todd B. Sisitsky | — | — | — | $ | — |
(a) | Based upon the closing price on December 31, |
1724
Proposal 2: Advisory Vote on the Compensation of Our Named Executive Officers(Say-on-Pay)
We are seeking an advisory vote to approve our executive compensation for 2018.2020. At our 2017 Annual General Meeting of Shareholders, a majority of shareholders voted to have asay-on-pay vote each year. As a result, on August 1, 2017, the Compensation & Human Capital Committee resolved that Endo will conduct an advisory vote on executive compensation annually at least until the next shareholder advisory vote on the frequency of such votes, which is scheduled to occur no later than June 2023.
Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires that we regularly seek anon-binding advisory vote from our shareholders to approve the compensation of our NEOs as disclosed in the CD&A and in the other tabular and narrative executive compensation disclosures in this Proxy Statement. Since the required vote is advisory, the result of the vote is not binding upon the Board.
Although thesay-on-pay vote is advisory and is not binding on our Board, our Compensation & Human Capital Committee will take into consideration the outcome of the vote when making future executive compensation decisions. At the 20182020 Annual Meeting, approximately 65.7%66.2% of the votes cast favored oursay-on-pay proposal. The Compensation Committee considered this result disappointing and solicited input from investors during our
After implementing key changes in response to shareholder feedback received in 2018, the Company’s 2019 shareholder engagement process.process resulted in the following feedback:
▪ | A high degree of support for the Company’s responsiveness to shareholder concerns raised in 2018 and agreement with the resulting changes implemented by the Compensation & Human Capital Committee; |
▪ | Continued support for the Company’s strategy, performance and management, as well as Endo’s executive compensation policies, plan designs and metrics used; |
▪ | Significant shareholder focus on Endo motivating top talent with an emphasis on encouraging management continuity during a period of significant external headwinds facing Endo and other specialty pharmaceutical companies; and |
▪ | Support for the Company’s proactive management of share utilization, and emphasis on minimizing shareholder dilution levels. |
The feedback received from shareholders relating to encouraging management continuity as well as the Company’s share utilization limitations are material concerns shared by the Board. For Endo employees, including the Company’s NEOs, significant realized value opportunities have been lost over the past several years due to a number of external factors outside of the employees’ control, including unfavorable media coverage, political scrutiny and litigation relating to prescription opioid medication abuse. The negative impact these factors have on Endo’s share price creates significant continuity risk and share usage concerns for the Company that have required immediate attention. To illustrate this point, the chart below summarizes the estimated lost value opportunities for NEO LTI awards issued from 2016 to 2020, based on a November 4, 2020 share price of $4.83, which is the date the 2020 continuity compensation arrangements were approved:
25
Throughout 2018, members
The actions implemented by the Compensation & Human Capital Committee as a result of this feedback were intended to directly address these concerns. First, continuity compensation arrangements were authorized by the Compensation & Human Capital Committee in 2019 and 2020 to increase realizable earnings for Endo’s most critical talent in an effort to help bridge the significant gap between current pay and competitive norms. As discussed with our shareholders, NEO target levels for TDC, including base salary, IC and LTI, were less than the 25th percentile of Endo’s BoardPay Comparator Companies. While the inclusion of continuity compensation increased target TDC levels, current NEO target TDC levels, inclusive of 2020 continuity compensation, remained below the 25th percentile of Endo’s Pay Comparator Companies. To illustrate this point, the chart below depicts the relative positioning of Mr. Coleman’s 2020 target TDC levels, with and without the inclusion of the continuity compensation arrangement extended in 2020 and vesting in 2021, versus median target CEO TDC levels reported by Endo’s Pay Comparator Companies in 2020:
Note: Base salary represents the annual rate of base salary. Since Mr. Coleman’s LTI is determined at the sole discretion of the Compensation & Human Capital Committee, “Expected Target” amounts of LTI reflect actual expected values of LTI issued in 2020. Except for amounts reported for Mr. Coleman, amounts reflect median overall pay levels for these companies, and totals may not equal the sum of the individual Base Salary, IC and LTI components.
In addition, the use of cash-based long-term incentives in 2020 was also authorized to address shareholder concerns regarding share usage and dilution resulting from Endo’s reduced share price, but also to serve as a separate mechanism to allow for predictable realizable value opportunities for all LTI-eligible employees. Both actions were required to maintain management team undertook effortscontinuity and increase the level of motivation for Endo employees, which in turn are key to engagedriving the success of the business on an ongoing basis.
Following the implementation of these changes, the Company’s 2020 shareholder engagement process, which involved reaching out to holders with shareholders, which accounted for approximately 90%combined ownership levels of more than 70% of Endo’s ordinary shares outstanding and held direct discussionsas well as third party advisory firms, resulted in feedback that was highly consistent with ISS and Glass Lewis. These conversations have been beneficial, resultingthe feedback received in changes implemented2019. The following summarizes the shareholder feedback received in 2020, as well as the actions taken by the Compensation Committee, including:& Human Capital Committee:
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2020 Shareholder Feedback | Implemented Changes | |||
Understood the purpose and supported the use of continuity compensation in 2019 and 2020 in response to earlier shareholder feedback Prefer Endo return to a conventional executive compensation program design that better aligns NEO pay levels with competitive market levels |
Augmented pay with continuity compensation arrangements scheduled to vest in 2021 (current NEO target TDC levels, inclusive of 2020 continuity compensation, remained below the 25th percentile of Endo’s Pay Comparator Companies) | Initial compensation adjustments applied in 2021, with a second phase of adjustments to be applied in 2022, to return to a conventional executive compensation structure that is aligned with competitive pay levels No further continuity compensation arrangements authorized by the Compensation & Human Capital Committee for NEOs (after receiving shareholder feedback following the issuance of 2020 continuity compensation arrangements scheduled to vest in 2021) | ||
Support for the Company’s proactive management of share utilization, and emphasis on | For the 2020 annual grant, equity | For the 2021 annual grant, the Company’s Senior Executive Team received LTI in the form of 50% PSUs, 25% RSUs and The actions taken by the Compensation & Human Capital Committee allowed the Company to |
As summarized above, while shareholders understood the purpose and supported Endo’s use of continuity compensation to address immediate shareholder concerns during this critical transitional period, many indicated they would prefer Endo return to a conventional executive compensation program design that better aligns NEO pay levels with competitive market levels. In an effort to implement a sustainable approach, the Compensation & Human Capital Committee, in agreement with the feedback received from shareholders following the issuance of the 2020 continuity compensation arrangements, has commenced the phase out of continuity compensation arrangements and has applied initial adjustments to current NEO pay levels in 2021. A second phase of adjustments will be applied in 2022, ending continuity payments and reverting to conventional compensation arrangements to better align Endo executive pay with median pay levels exhibited by Endo’s Pay Comparator Companies. Please reference the “Individual Compensation Determination” section for approved salary actions. Based on the actions taken in 2021, and in prior years as noted in the CD&A, the Compensation & Human Capital Committee believes the changes implemented have consistently addressed the feedback received through the course of our shareholder engagement discussions and serve to strengthen our ability to motivate top talent and encourage management continuity of our NEOs who are critical to the planning and execution of Endo’s strategy and the creation of long-term shareholder value. These shareholder discussions have provided the Board with insights into evolving shareholder views, while serving as an effective communication channel for matters of critical importance to Endo’s short- and long-term priorities. The Compensation & Human Capital Committee will continue to consider shareholder feedback and the results of future say-on-pay votes when making executive compensation decisions and policies. Such votes are conducted annually at least until the Company solicits the next shareholder advisory vote on the frequency of such votes, which is scheduled to occur no later than June 2023. |
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The shareholder engagement process and specificresulting changes to our compensation programsimplemented as a result of the feedback received in 2019 and 2020 are outlined in greater detaildiscussed further under the sectionheading “Say-on-Pay and Shareholder Engagement Feedback” within the CD&A section.
Vote Required
A majority of the votes cast at the Annual Meeting will be required to approve, on an advisory basis, the compensation of Endo’s named executive officers.
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The Compensation & Human Capital Committee and the Board of Directors recommend a vote FOR the approval, on an advisory basis, of the compensation of Endo’s named executive officers as described in CD&A and in the other tabular and narrative executive compensation disclosures in this Proxy Statement.
Compensation & Human Capital Committee Report
The Compensation & Human Capital Committee reviewed and discussed with the Company’s management the section of this Proxy Statement entitled “Compensation Discussion and Analysis.” In reliance on this review and discussion, the Compensation & Human Capital Committee recommended to the Board of Directors that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement and incorporated by reference into the Endo International plc Annual Report on Form10-K for the year ended December 31, 2018.2020.
Submitted by the Compensation & Human Capital Committee of the Company’s Board of Directors.
Members of the Compensation & Human Capital Committee:
William P. Montague (Chair)
Michael Hyatt (Member)
Sharad S. Mansukani (Member)
Todd B. SisitskyRoger H. Kimmel (Member)
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Compensation Discussion and Analysis
Executive Summary
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| A Message from Endo’s
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Dear Shareholders:
This year’s proxy statement highlights decisions made by the Compensation & Human Capital Committee in the context of Endo’s
Throughout Despite the challenges faced in 2020, the Company made ▪ receiving FDA approval of QWO®, ▪ advancing the Company’s ▪ completing the ▪ implementing the COVID-19 response plan, ▪ designing and initiating the previously announced transformational strategic actions to improve operational
▪ advancing Endo’s multi-year environmental, social and ▪ designing and implementing Endo’s diversity, equity and inclusion strategy, and ▪ successfully executing the Company’s 2020 debt refinancing activities.
Endo’s progress in
The Compensation & Human Capital Committee continued to assess and evaluate the Company’s executive compensation program in Our shareholders, in addition to
The Board is pleased with the Company’s financial and operating performance in
Sincerely, | ||||||||||
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| Chair of the Compensation & Human Capital Committee | |||||||||||
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Executive Summary (continued)
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Vision | ||||||||||||||||
Helping everyone we serve live their best life. | ||||||||||||||||
Mission | ||||||||||||||||
We develop and deliver life-enhancing products through focused execution. | ||||||||||||||||
| 2020 Strategic • Received FDA approval of QWO® (the first and • Advanced key development programs, including the Company’s adhesive capsulitis and plantar fibromatosis programs • Completed the BioSpecifics acquisition, enhancing profitability of XIAFLEX® and QWO®, and providing additional opportunities for future indications • Executed Endo’s COVID-19 response plan • Initiated the previously announced transformational strategic actions, with a focus on simplifying the organization and improving operational efficiency • Executed a fill-finish manufacturing services agreement with Novavax on its COVID-19 vaccine candidate • Advanced Endo’s multi-year ESG initiatives • Designed and implemented Endo’s DE&I strategy • Successfully executed the Company’s 2020 debt refinancing activities |
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(as a Percent of
Note: Refer to the section below entitled “2020 Consolidated Financial Results” for discussion of Adjusted Revenue, Adjusted EBITDA Margin and Adjusted Diluted EPS from Continuing Operations.
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Executive Summary (continued) | ||||||
CEO Performance & Compensation Determination Summary
President and Chief Executive Officer
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Performance.The Compensation & Human Capital Committee’s (referred to in this “Compensation Discussion and Analysis” section as the Committee) assessment of Mr. | ||||||
▪Reinvent How We Work: embracing the future by accelerating new ways of working to better serve our customers, promote innovation and improve productivity, and ▪Be a Force For Good: remaining committed to the adoption of more sustainable practices that positively impact our stakeholders, including the promotion of diversity and inclusion. Despite significant external headwinds facing Endo and other specialty pharmaceutical companies, Endo’s 2020 TSR was up 53.1%, representing the net appreciation in Endo’s share price in 2020, ranking Endo above the third quartile relative to the organizations included in Endo’s Pay Comparator Companies peer group (85th percentile), the Company’s
Compensation Determination Summary.Consistent with Endo’spay-for-performance philosophy, the Committee’s |
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Executive Summary (continued) |
| Please see the below chart, which compares the expected target value of Mr. Note: Base salary represents the annual rate of base salary. Since Mr. Coleman’s LTI is determined at the sole discretion of the Compensation & Human Capital Committee, “Expected Target” amounts of LTI reflect actual expected values of LTI issued in 2020. Except for amounts reported for Mr. Coleman, amounts reflect median overall pay levels for these companies, and totals may not equal the sum of the individual Base Salary, IC and LTI components. Compared to the peer group data above, which is based on the most recent proxy filings available at the time of Korn Ferry’s annual executive compensation review in October 2020, Mr. Coleman’s expected target TDC level, inclusive of 2020 continuity compensation not included in the chart above, is positioned below the 25th percentile of each of the comparator groups. Please see the below chart, which compares the actual value authorized
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The Summary Compensation Table’s
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Executive Summary (continued) |
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Executive Compensation Program
Compensation Philosophy
Pay-for-performance underlies Endo’sOur executive compensation philosophy.program’s focus emphasizes the importance of attracting, motivating and encouraging continuity of experienced and well-qualified executive officers through policies, programs and strategies that advance our critical business and human capital development objectives and promote the creation of shareholder value over the long-term. The Committee believes that the most effective executive compensation program is one that is based on a pay-for-performance philosophy and designed to provide incentives that advance the interests of shareholders and deliver levels of compensation that are commensurate with performance. Endo’s compensation philosophy is designed to support our business strategy by attracting and retaining highly-talented individuals and motivating them to perform at the highest professional level, while embracing the Company’s values, behaviors and Code of Conduct, key values and behaviors.Conduct.
Pay-for-performance, alignment with shareholder interests and offering competitive pay are fundamental to Endo’s compensation philosophy.
A significant portion of executive compensation is linked directly with Endo’s short- and long-term strategic, operating and compliance performance, without encouraging excessive risk; |
Endo’s executive pay programs incorporate significant amounts of variable incentive-based compensation that directly aligns with Endo’s financial, strategic, operating, compliance and share price performance objectives; and |
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Endo’s executive compensation package supports this philosophy by offering annual and long-term incentive compensation opportunities that are performance-based. Incentive-based cash compensation awarded is subject to the Company achieving its annual performance objectives and realizing value in long-term equity is largely dependent upon Endo’s financial performance and the delivery of shareholder value.
The three principal components of the Company’s executive compensation package include base salary, annual cash incentive compensation and equity-based LTI compensation. In allocating compensation among these elements,Notwithstanding the Committee’s decision to use long-term cash awards in lieu of equity to manage shareholder dilution levels in 2020, we believe that the majority of the compensation of our senior-most levels of management—the levels of management having the greatest ability to influence the Company’s performance—should be variable and dependent upon performance.
In making decisions with respect to any element of an NEO’s compensation, the Committee considers the total compensation that may be awarded to the officer, including salary, annual incentive compensation cash bonus and long-term incentive compensation. In addition, in reviewing and approving employment agreements for NEOs, the Committee considers the other benefits to which the officer is entitled by the agreement, including compensation payable upon termination of employment under a variety of circumstances. The Committee’s goal is to award compensation that is competitive to attract and retain highly-qualified leaders and motivate high business performance. The Committee believes that its compensation programs align executive and shareholder interests by effectively calibrating compensation payout levels with individual and Company performance.
Considerations
Competitive Considerations.In making compensation decisions with respect to each element of compensation, the Committee considers the competitive market for executives and compensation levels provided by comparable companies. The Committee reviews the compensation practices at companies with which the Company competes for talent, including businesses engaged in activities similar to those of the Company. While we do not believe that it is appropriate to establish compensation levels based primarily on benchmarking, we believe that information regarding pay practices at other companies is nevertheless useful as a tool to assess the reasonableness and competitiveness of our compensation practices.
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The Committee generally aligns target executive compensation at the median of compensation packages for executives in similar positions and with similar responsibilities and experience at similar companies of comparable size, with the opportunity for top quartile actual compensation based upon individual and Company performance. We recognize, however, that positions with similar titles are not always comparable in terms of responsibility to such positions at the Company. The Committee’s
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choice of this target percentile reflects the Company’s consideration for our shareholders’ interests in paying what is competitive to achieve our corporate goals.
We believe that, given our compensation philosophy and objectives, compensation targeted at the median of similarly-situated companies with the opportunity for top quartile total compensation based upon performance is generally sufficient to retain our current executive officers and to hire new executive officers when and as required. In setting compensation for the NEOs, the Committee considers comparative market data requested by the Committee from Korn Ferry, Hay Group, its compensation consultant. In gathering relevant competitive market compensation data, the Committee approved the use of a sample of companies with similar operations to Endo, which we refer to collectively as the “Pay Comparator Companies.”
The Committee believes that Endo competes with the Pay Comparator Companies for talent and for shareholder investment. In assessing the relevance of the Pay Comparator Companies, Korn Ferry Hay Group evaluates the appropriateness based on several key criteria in an effort to identify comparator companies with the most appropriate business fit. These factors include company size (in terms of both revenue and market cap), industry/business sector, operating complexity, location, talent market, customer base and other relevant factors, recognizing that not all peer companies will match all criteria and not all criteria are of equal importance.
The Pay Comparator Companies typically have similar executive officer positions; however, the Committee does not attempt to set each compensation element for each executive within a particular range as it relates to the Pay Comparator Companies. Instead, the Committee uses Pay Comparator Companies market comparisons as one factor in making compensation decisions. Other factors considered when making individual executive compensation decisions include individual contribution and performance, reporting structure, complexity and importance of role and responsibilities, leadership, growth potential and secondary executive compensation survey sources specific to the pharmaceutical industry, among others.
Korn Ferry Hay Group makes periodic recommendations to the Committee regarding the recalibration of the Pay Comparator Companies referenced. As a result of this annual review, Endo recalibrated the Pay Comparator Companies to include organizations that were relevant to Endo’s size and business composition. The consolidation of viable peer companies and loss of manysimilarly-sized competitor companies during the past few years has forced Endo to consider comparator companies that fall outside of the normal size parameters in order to include organizations relevant to Endo’s business. This includes companies both larger and smaller in size, in an effort to include a balanced and fair assessment of the range of competitive pay levels. Ultimately, Endo believes it is imperative that the comparator companies align with Endo’s customer base and market for key talent in order to establish a reasonable assessment of competitive pay levels for our NEOs.
The Committee-approved Pay Comparator Companies for 20182020 are listed in the table below:
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Alexion Pharmaceuticals Inc. | Incyte Corporation | |
Alkermes plc | Jazz Pharmaceuticals plc | |
Amneal Pharmaceuticals Inc. | Mallinckrodt plc | |
Bausch Health Companies Inc. |
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| Perrigo Co. plc | |
| Regeneron Pharmaceuticals | |
| United Therapeutics Corporation | |
Horizon Pharma plc | Vertex Pharmaceuticals Inc. |
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Pay Risk and Governance.The Committee regularly reviews industry compensation practices to align the Company’s compensation philosophy with the Company’s business strategy, while focusing on the enhancement of long-term shareholder value and management of risk. The summary below reflects the leading governance practices implemented and maintained by the Committee:
What We Do | ||
Maintain a Compensation & Human Capital Committee composed entirely of independent directors | ||
Engage with shareholders | ||
Retain an independent executive compensation consultant to the Committee | ||
Conduct annual assessments of NEO pay positioning against Pay Comparator Companies | ||
Complete independent annual reviews of risks associated with compensation arrangements, policies and practices | ||
Implement an executive pay program that is highly concentrated on variable short- and long-term incentive compensation tied to individual and Company performance | ||
Grant LTI awards that are generally subject to three-year vesting conditions | ||
Grant NEO LTI awards comprised of a minimum of 50% PSUs, tied to FCF and relative TSR | ||
Maintain ownership guidelines for executive management andnon-employee | ||
Maintain a compensation recovery (clawback) policy that applies to both cash- and equity-based incentives in situations involving material misconduct or gross negligence resulting in material financial harm to the Company |
What We Don’t Do | ||
Reward executives for excessive, inappropriate, or unnecessary risk-taking | ||
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Allowre-pricing of equity awards without shareholder approval | ||
Allow cash buyouts of underwater options | ||
Allow hedging and pledging of Company shares | ||
Grant single-trigger vesting of | ||
Enter into employment agreements with automatic renewal provisions (except as required by local law) | ||
Allow change in controlgross-up payments |
AtOn at least on an annual basis, the Company conducts an assessment of the potential risks associated with the Company’s compensation arrangements, policies and practices. The assessment is conducted by Korn Ferry Hay Group and then reviewed by the Committee. A key objective is to determine whether the Company’s compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. This risk assessment process includes:
A comprehensive review of compensation programs with the highest potential for material adverse effect; |
Identification of key Company positions and business areas that could potentially carry a significant portion of the Company’s risk profile; |
Identification of compensation programs for the key Company positions and business areas; and |
An analysis of employee compensation plans with the highest potential for risk, pursuant to which we: |
Identify the features within the plans that could potentially encourage excessive or imprudent risk-taking; |
Identify business risks that these features could potentially encourage; |
Identify controls and plan features that mitigate the risks identified; |
Determine residual risk remaining after having identified mitigating controls and features; and |
Assess whether residual risk is reasonably likely to have a material adverse effect on the Company as a whole. |
The Committee also reviews the Company’s compensation programs that allow for variable payouts. A key consideration is the establishment of an appropriate mix of performance metrics. The Committee also oversees the plans so that they reward both annual goal achievement and the long-term sustainable success of the Company. In addition, the reviews focus on plans where an employee might be able to influence payout factors and programs that involve our executives, with a focus on analyzing whether any of the performance targets encourage excessive risk-taking. During the assessment, several control and design features of the Company’s compensation program that are intended to mitigate the risk of excessive risk-taking are evaluated. Risk profiles are also evaluated on an ongoing basis by the Company’s management team as new program designs are considered.
Based on the process described above, it was concluded that the potential risks associated with the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on Endo. The Committee will continue to review the Company’s compensation programs at least annually to identify and address potential risks that may have a material adverse effect on the Company.
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Say-on-Pay and Shareholder Engagement Feedback.In establishing 20192021 compensation, the Committee considered the results of the most recentsay-on-pay vote at the Company’s Annual Meeting held in June 2018,2020, where only 65.7%approximately 66.2% of the
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votes cast on thesay-on-pay proposal were voted in favor of the proposal. In addition to addressingThe Committee also considered the immediate concerns raised by shareholders relating toresults of its recent shareholder engagement efforts that were undertaken based on the 2018say-on-pay vote, the Committee believes it is important to directly engageBoard’s belief that regularly engaging with shareholders as a means of soliciting their views on matters includingsuch as corporate governance, environmental and social initiatives, executive compensation and other important topics, is important in order to assistassisting the CommitteeBoard with items requiring a broader shareholder perspective. Throughout 2018, and consistent
Consistent with prior year practices,years, Mr. Montague, who serves as our Chair of the Compensation Committee, Mr. Montague, and certainnon-employee directors and members of our management team have engagedundertook efforts in 2020 to engage with our shareholders ISS and Glass Lewis to discuss key issues and specific shareholder concerns that led to the June 2018say-on-pay proposal outcome and changes implemented as a resultwith combined ownership levels of these discussions.
This initiative, which was led by Mr. Montague and assisted bymore than 70% of Endo’s proxy solicitors, extended into 2019 and resulted in the following:
The general feedback received from shareholders included a high degree of support for the Company’s strategy, performance and management, along with general agreement with the Company’s executive compensation policies, plan designs and use of metrics. While the general consensus also noted an understanding of the rationale for the August 10, 2017 special equity award and high use of time-based equity, the shareholder feedback we received indicated that Endo should consider a greater allocation of PSUs (generally 50%), with performance periods of at least3-years on a going-forward basis. Another common suggestion revolved around Endo exclusively granting equity through the annual grant cycle, rather than special oroff-cycle awards. The feedback received from shareholders was highly consistent with the feedback provided by ISS and Glass Lewis, in both their 2018 annual research reportsordinary shares outstanding as well as our directthird party advisory firms. These conversations with these firms.shareholders demonstrate the Committee’s commitment to consider shareholder feedback, as evidenced by the key actions implemented by the Committee in recent years as noted below.
In response to theActions implemented based on shareholder feedback received from our engagement efforts with shareholders, ISS and Glass Lewis, as well as other internal discussions,in 2018 include the Committee implemented the following changes to align Endo’s executive compensation program with best practices and the Company’s strategy:following:
Prior Approach | Implemented Changes | |||
Placing more emphasis on per share metrics in the annual incentive program | Adjusted Diluted EPS = 30% of | Adjusted Diluted EPS = 35% of | ||
Placing more emphasis on performance-based equity for NEOs | 25% PSUs and 75% RSUs in 2018 | 50% PSUs and 50% RSUs | ||
Increasing the length of equity performance periods |
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Eliminating special oroff-cycle LTI awards for NEOs | Special award of 50% Options and 50% RSUs approved by the Committee in 2017 | No special oroff-cycle LTI awards authorized by the Committee for |
Actions implemented based on shareholder feedback received in 2019 include the following:
2019 Shareholder Feedback | Prior Approach | Implemented Changes | ||
Significant focus on motivating top talent with an emphasis on encouraging management continuity during a period of significant external headwinds | Reliance on standard executive compensation structure which significantly lagged competitive market levels (NEO target TDC levels below the 25th percentile of Endo’s Pay Comparator Companies) | Implementation of continuity compensation arrangements in 2019 and 2020 to augment below market pay levels for Endo’s NEOs (excluding Mr. Campanelli) | ||
Support for the Company’s proactive management of share utilization, and emphasis on minimizing shareholder dilution levels | Company-wide reductions for all LTI awards in 2018 and 2019, negatively impacting the competitiveness of LTI compensation | For the 2020 annual grant, no company-wide reductions were applied; however, equity limited to the Company’s Senior Executive Team (in the form of PSUs), with LTC awards granted to all employees participating in the LTI Program |
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Actions implemented based on shareholder feedback received in 2020 include the following:
2020 Shareholder Feedback | Prior Approach | Implemented Changes | ||
Understood the purpose and supported the use of continuity compensation in 2019 and 2020 in response to earlier shareholder feedback Prefer Endo return to a conventional executive compensation program design that better aligns NEO pay levels with competitive market levels | Reliance on standard executive compensation structure which significantly lagged competitive market levels for all current NEOs (current NEO target TDC levels below the 25th percentile of Endo’s Pay Comparator Companies) Augmented pay with continuity compensation arrangements scheduled to vest in 2021 (current NEO target TDC levels, inclusive of 2020 continuity compensation, remained below the 25th percentile of Endo’s Pay Comparator Companies) | Initial compensation adjustments applied in 2021, with a second phase of adjustments to be applied in 2022, to return to a conventional executive compensation structure that is aligned with competitive pay levels No further continuity compensation arrangements authorized by the Compensation & Human Capital Committee for NEOs (after receiving shareholder feedback following the issuance of 2020 continuity compensation arrangements scheduled to vest in 2021) | ||
Support for the Company’s proactive management of share utilization, and emphasis on minimizing shareholder dilution levels | For the 2020 annual grant, equity limited to the Company’s Senior Executive Team (in the form of PSUs), with LTC awards granted to employees participating in the LTI Program | For the 2021 annual grant, the Company’s Senior Executive Team received LTI in the form of 50% PSUs, 25% RSUs and 25% LTC awards, with all other employees participating in the LTI Program receiving 25% RSUs and 75% LTC awards The actions taken by the Compensation & Human Capital Committee allowed the Company to defer a request for additional shares until 2022, in an effort to further reduce current overhang levels |
As noted above, the Committee took immediate action in late 2019 and 2020 based on initial shareholder feedback received in 2019 to implement continuity compensation arrangements to address concerns regarding the Company’s ability to motivate top talent and encourage management continuity due to the significant gap between NEO target compensation and competitive norms, and during a period of significant external headwinds facing Endo and other specialty pharmaceutical companies. In an effort to implement a sustainable approach, the Committee, in agreement with the feedback received from shareholders following the issuance of the 2020 continuity compensation arrangements, has commenced the phase out of continuity compensation arrangements and has applied initial adjustments to current NEO pay levels in 2021. A second phase of adjustments will be applied in 2022, ending continuity payments and reverting to conventional compensation arrangements to better align Endo executive pay with median pay levels exhibited by Endo’s Pay Comparator Companies. Please reference the “Individual Compensation Determination” section for approved salary actions.
Based on the actions taken in 2021, and in prior years as noted above, the Committee believes the actionschanges implemented directly addresshave consistently addressed the feedback received through the course of our shareholder engagement discussions and serve to strengthen our ability to motivate top talent and encourage management continuity of our NEOs who are critical to the executive compensation program’s long-term performance-based orientationplanning and reflectexecution of Endo’s strategy and the creation and preservation of long-term shareholder value.
Shareholder conversations These shareholder discussions have been beneficial and are continuing into 2019 to provideprovided the CommitteeBoard with insights into evolving shareholder views, while serving as an effective communication channel for matters of critical importance to Endo’s short- and long-term priorities and other shareholder interests.priorities. The Committee will also continue to consider shareholder feedback and the results of futuresay-on-pay votes when making executive compensation decisions and policies. Such votes are expected be conducted annually at least until the Company solicits the next shareholder advisory vote on the frequency of such votes, which is scheduled to occur no later than June 2023.
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Base Salary
Purpose. The objective of base salary is to reflect job responsibilities, value to the Company and individual performance while taking into consideration market competitiveness. We seek to provide our executive officers with competitive annual base salaries in order to attract and retain them. While the base salary component of our executive officer compensation program is primarily designed to provide the baseline level of compensation to executive officers, individual performance is also a key consideration when establishing appropriate base salary levels, further supporting the Company’spay-for-performance philosophy.
Considerations. Salaries for the NEOs are initially determined initially by each individual’stheir employment agreementagreements, which are described under “Employment and Change in Control Agreements; Severance Agreements” below. These salaries and the amount of any increases over these salaries are determined by the Committee based on a variety of factors, including:
the nature and responsibility of the position and, to the extent available, salary norms for persons in comparable positions at the Pay Comparator Companies and secondary executive compensation survey sources specific to the pharmaceutical industry; |
the expertise and competencies of the individual executive; |
the competitiveness of the market for the executive’s services; |
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internal review of the executive’s compensation, both individually and relative to other NEOs; |
the recommendations of the President and Chief Executive Officer (except in the case of the President and Chief Executive Officer’s own compensation); and |
individual performance of the NEO, which includes: |
achievement of individual annual goals and objectives, the risks and challenges involved and the impact of the results; |
performance ofday-to-day responsibilities; |
increases in competencies and skill development; |
value of the NEO’s contribution to function and Company goal achievement; and |
behaviors aligned with Endo key values. |
Base salaries are generally reviewed annually. In reviewing salaries, the Committee adjusts salaries from time to time to realign salaries with market levels, individual performance and incumbent experience. The Committee also considers salaries relative to those of others within the Company and may, on occasion, make adjustments to salaries or other elements of total compensation, such as annual incentive compensation and long-term incentive targets, where such an adjustment would correct a compensation imbalance, as the Committee deems appropriate.
20182020 Decisions Regarding Base Salary. In November 2018,October 2020, as part of the Committee’s annual review of compensation, Korn Ferry Hay Group provided the Committee with a market assessment of the competitive compensation for the Company’s executive officers. This assessment included reviewing the Pay Comparator Companies and secondary executive compensation survey sources specific to the pharmaceutical industry and:
establishing a benchmark match for each of the positions; |
gathering and analyzing competitive compensation from relevant labor markets; and |
developing competitive market medians of compensation for the positions. |
Based on the competitive market data referred to above, the Committee developed, with the assistance of Korn Ferry, Hay Group, market medians of compensation for each of Endo’s compensation elements (base salary, target annual incentive compensation and expected target value of long-term incentive compensation) and then compared each NEO’s current compensation to the market median for each data sample. The market data and the performance of each of Endo’s NEOs are reviewed each year, but there is no assurance that any of their individual compensation packages will be aligned with the market. Please reference the “Individual Compensation Determination” section for approved salary actions.
Performance-Based Annual Cash Incentive Compensation
Purpose. The compensation program provides for an annual cash incentive that directly reinforces the Company’spay-for-performance approach. This incentive compensation program is a short-term performance-based incentive plan that rewards the achievement of annual goals and objectives, as well as longer-range strategic goals. Both the Company and individual performance goals, and the resulting payments, arepre-established and formulaic. The objective of the program is to compensate individuals based on the achievement of specific goals that are intended to correlate closely with shareholder value.
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The Committee annually assesses each NEO’s achievement against the Company’s annualpre-established and formulaic objectives, which allow for a maximum bonus equal to 225% of the target bonus amount. The Committee then determines the level of realized performance based on quantifiable Company scorecard and individual performance objectives. The following illustrates the mechanics underlying the annual cash incentive calculation:
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The respective annual cash incentive compensation target for each Current NEO, as defined in the “Compensation of Executive Officers” section below, related to 2018,2020, paid in early 2019,2021, is expressed in the graphchart below.
Annual incentive compensation targets for 2020, to be paid in early 2021, for our Former NEOs, as defined in the “Compensation of Executive Officers” section below, were 150%, 70% and 50% for Messrs. Campanelli, Coughlin and Ciarico, respectively, with their annual incentive compensation opportunities governed by the terms of: (i) in the case of Mr. Campanelli, the Letter Agreement that governs the terms and conditions of his compensation during the succession planning and transition period until his retirement as an employee on December 31, 2020 and (ii) in the case of the other Former NEOs, their respective separation agreements. Please reference the “Individual Compensation Determination” section for additional information.
Considerations. The annual cash incentive compensation program includes relative incentive levels based on each NEO’s specific position accountabilities and impact on overall Company strategic, operating and compliance performance, with target awards established as a percentage of base salary. Each NEO’s target annual incentive compensation bonus is initially established pursuant to his employment agreement, which is determined based on all factors that the Committee deems relevant, including (but not limited to) a review of Pay Comparator Company compensation. The annual incentive compensation metrics are aligned with the Company’s business strategy and the use of the Company scorecard objectives including Adjusted Revenue, Adjusted EBITDA Margin, Adjusted Diluted EPS from Continuing Operations andnon-financial metrics, and are supported by practices observed among our Pay Comparator Companies. The Committee establishes annual incentive plan targets based upon the Company’s strategic and business plans and then aligns the compensation plan with the Company’s financial guidance for the year. Achieving the high end of the bonus payout threshold is contingent upon achieving significantly higher financial performance than the top end of the guidance range.
Discretion. Under the annual incentive compensation program, the Committee has discretion, in appropriate circumstances and subject to certain limitations, to pay annual incentive compensation at less than or in excess of target levels. For example, in determining the extent to which thepre-set performance goals are met for a given period, the Committee exercises its judgment in determining whether to reflect or exclude the impact of changes in accounting principles and unusual or infrequently occurring events reported in the Company’s public filings, but no more than the maximum individual amount of $5,000,000 for the President and Chief Executive Officer and three other highest-paid executive officers (not including the Company’s Executive Vice President & Chief Financial Officer in accordance with Section 162(m) of the Code, as in effect for the 2018 tax year), which is the amount previously approved by shareholders in accordance with Section 162(m) of the Code under Endo’s Amended and Restated 2015 Stock Incentive Plan.filings. Further, pursuant to each of our NEO’s employment agreements, target annual incentive compensation as a percentage of annual base salary may subsequently be increased at the discretion of the Committee. Please reference the “Individual Compensation Determination” section for approved target annual incentive compensation changes.
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20182020Decisions Regarding Incentive Compensation. As a result of COVID-19, the Committee approved updated scorecard objectives in July 2020 to reflect the impact, planning and response to COVID-19 and to better align with the Company’s new priorities. While the scorecard objectives were updated, the Committee applied negative discretion and approved lower annual cash incentive compensation payout levels based on performance against the Company’s original 2020 scorecard. This decision reduced the overall Company payout factor from approximately 133.5%, as calculated under the updated 2020 scorecard, to 127.2% based on the original scorecard approved by the Committee in February 2020. The Committee recognized that the Company’s performance against the updated 2020 scorecard objectives was unexpectedly strong, and believed that the original goals were still appropriate. This decision demonstrated the Committee’s use of negative discretion under the appropriate circumstances and commitment to the Company’s pay-for-performance philosophy.
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The following information summarizes the components of the Company’s annual incentive compensation program, andbased on the original scorecard approved by the Committee, which served as the basis for the actual award granted by the Committee for 2018.2020. With respect to 2018,2020, the annual award for each NEO was based on the achievement of corporate scorecard objectives and NEO individual performance. The corporate scorecard and individual NEO performance objectives are aligned with the Company’s neworiginal priorities established as part of the 20182020 strategic assessment process.process in February 2020. The performance goals associated with the corporate scorecard were weighted as follows (specific targets are discussed in the following section entitled “2018“2020 Consolidated Financial Results”):
The above “scorecard” is structured so that objectives allow for a payout opportunity ranging from 0% to 225% of the target bonus opportunity (commensurate with performance). The Committee also has the discretion to withhold annual cash incentives that otherwise would be made to any employees, including the NEOs, if it determines that overall performance is below performance thresholds. Moreover, the scorecard achievements are assessed based on whether the Company achieved the scorecard results considering (i) current healthcare compliance as reflected by a robust internal compliance program and as determined by outcomes of regulatory review and inspections, such as those of the Food and Drug Administration, and (ii) progress on health and safety outcomes as determined by other regulatory and environmental matters.
20182020Consolidated Financial Results. In 2018, the Company continued to make significant progressOur 2020 Adjusted Revenue was in shaping Endoline with 2019 as a highly focused generics and specialty branded pharmaceutical company with a strong set of assets acrosssolid performance from our various segments, evidenced by double-digityear-on-year revenue increases in our core growth areas of the U.S. Branded—Sterile Injectables segment was offset by declines in our Branded Pharmaceuticals, Generic Pharmaceuticals and International Pharmaceuticals segments. Our 2020 Adjusted Revenue was significantly impacted by COVID-19, which resulted in increased sales volumes for certain critical care products, such as VASOSTRICT®, and decreased sales volumes for other products, including certain physician administered products such as XIAFLEX®. As expected and anticipated in our 2020 financial guidance, 2020 Adjusted Revenue also reflected declines due to competitive pressures in our Generic Pharmaceuticals and International Pharmaceuticals segments and the specialty productsEstablished Products portfolio of our U.S. Branded—Specialty & EstablishedBranded Pharmaceuticals segment. The Companyincreases in Adjusted EBITDA Margin and Adjusted Diluted EPS from Continuing Operations in 2020 as compared to 2019 were primarily driven by improved margins related to favorable changes in product mix. See also succeeded in organically growing core products, progressing key pipeline assetsfootnote (4) to the chart below for a discussion of factors impacting the comparability of 2020 and successfully defending2019 amounts for Adjusted EBITDA Margin and progressing key product patents.Adjusted Diluted EPS from Continuing Operations.
As expected and contemplated in our 2018 financial guidance, 2018 also sawYear-on-year reductions to Adjusted Revenue, Adjusted EBITDA Margin and Adjusted Diluted EPS declines due to a variety of factors including the 2017 loss of marketing exclusivity for certain key generic products such as ezetimibe tablets and quetiapine ER tablets, continued competitive pressure on a variety of products, the ceasing of shipments of OPANA® ER to customers by September 2017 and, consistentfrom Continuing Operations were considered along with our stated strategic initiatives, the discontinuation of various non-core products and the divestitures of our Litha and Somar businesses. The Company considered these and other factors in determining the 2018our 2020 financial guidance and the associated annual cash incentive compensation program’s performance objectives approved by the Committee, includingCommittee. Although lower than theyear-on-year reductions 2019 results, the annual incentive compensation program’s performance objectives were intended to be challenging, yet aligned with the Adjusted Revenue and Adjusted Diluted EPS from Continuing Operations targets.Company’s 2020 goals, taking into consideration the factors explained above.
41
Despite the significant challenges presented by COVID-19 in 2020, Endo outperformed its annual cash incentive compensation financial targets and objectives. On an adjusted basis, the Companywe achieved the following financial objective results in 20182020 compared to prior year financial performance:
Achieved |
Achieved |
Achieved |
30
Fully adjusted amounts are summarized in the |
(1) | Adjusted Revenue, Adjusted EBITDA Margin and Adjusted Diluted EPS from Continuing Operations are not prepared in accordance with GAAP. In calculating these amounts, each amount is adjusted from GAAP in order to keep participants from being advantaged or disadvantaged as a result of certain unplanned and unbudgeted events or changes throughout the performance period. These include adjustments: for unbudgeted acquisitions during the performance period to include deal model base case revenue and EPS commitments in the Company’s performance targets; for unbudgeted dispositions during the performance period; for unplanned material changes in share count during the performance period; and to neutralize foreign exchange impact versus budget during the performance period. |
(2) | EBITDA represents net income (loss) before interest expense, net; income |
(3) | To arrive at Adjusted Diluted EPS from Continuing Operations, GAAP diluted |
(4) | Effective January 1, 2020, the Company revised its definition of its adjusted financial metrics to exclude certain legal costs. The Company believes that such costs are not indicative of business performance and that excluding them more accurately reflects the Company’s results. As a result of this change, the Company’s 2019 Adjusted EBITDA Margin and Adjusted Diluted EPS from Continuing Operations amounts presented above include opioid-related legal expenses, while such costs are excluded from the 2020 amounts presented above. Had the 2019 amounts been prepared on a consistent basis with the 2020 amounts, the Company’s 2019 Adjusted EBITDA Margin would have been higher by approximately 220 basis points and the Company’s 2019 Adjusted Diluted EPS from Continuing Operations would have been higher by approximately $0.28. |
42
(5) | These amounts reflect the lower annual cash incentive compensation payout levels approved by the Committee, which are based on performance against the Company’s original 2020 scorecard. The Committee’s application of negative discretion reduced the overall Company payout factor from approximately 133.5%, as calculated under the updated 2020 scorecard, to 127.2% based on the original scorecard approved by the Committee in February 2020, which is further |
Overall Company Performance Against Objectives. In addition to the financial results above, other performance goals are established in alignment with the Company’s strategic, operating and compliance priorities. Further, the goals are developed to incentivize strong annual operating performance results, while positioning the Company for longer-term success and enhanced shareholder value. Performance goals are set to be challenging, while reasonably attainable given a concerted effort on the part of the Company’s NEOs and employees in consideration of conditions and trends. NEO compensation is closely aligned with the achievement of the 20182020 financial objectives, as well as the Company’s strategic, operating and compliance priorities.
In addition to the financial challenges created by COVID-19 in 2020, the pandemic also significantly impacted the Company’s strategic, operating and compliance priorities. Over half of the operating and compliance priorities detailed in this section of the CD&A were negatively affected by the COVID-19 pandemic. The following objectives related to building our portfolio and capabilities for the future were the most significantly impacted by COVID-19:
▪ | The achievement of our XIAFLEX® volume growth target objective was negatively affected by a high number of physician office closures and a decline in patient visits to doctors’ offices. |
▪ | The achievement of our generics and sterile injectables new product launch objectives was, in part, negatively impacted by delays experienced at the FDA related to the approval of new products. |
▪ | The achievement of our key R&D related objectives were negatively impacted by delays experienced in recruiting and enrolling subjects for certain clinical trials. In addition, certain company resources and manufacturing capacity dedicated to supporting FDA filings had to be reallocated to support the significant increase in production for certain critical medicines due to the surge in COVID-19 related hospitalizations during the year. |
▪ | Our 2020 QWO® manufacturing objectives were, in part, negatively impacted as a result of temporary delays experienced in the construction and qualification of new QWO® manufacturing capacity. |
Throughout 2020, the Senior Executive Team focused their efforts on addressing these challenges and also executed multiple strategically significant activities in 2020. These initiatives, which were not part of the original annual scorecard, included the following:
▪ | Implemented a comprehensive COVID-19 response plan with alternative working practices across every part of our organization, which we believe will continue to evolve and will lead to permanent changes in how we work, |
▪ | Completed the acquisition of BioSpecifics, which immediately enhanced the profitability of XIAFLEX® and QWO® and provides additional optionality for future XIAFLEX® and QWO® indications, |
▪ | Designed and launched a set of business transformation initiatives to enhance our organizational effectiveness, increase the competitiveness of our generics segment and generate significant cost savings that will be reinvested into our core growth areas, |
▪ | Executed a fill-finish manufacturing services agreement with Novavax for its COVID-19 vaccine candidate, |
▪ | Designed and implemented Endo’s DE&I strategy, and |
▪ | Completed the refinancing of nearly $3.0 billion of debt, which resulted in a meaningful extension of our debt maturities. |
The Committee reviewed the Company’s achievement of the scorecard objectives set forth above for 2018,2020, and made the following performance determination, which applies to each NEO (certain amounts may not recalculate due to rounding):
Plan Weightings
|
Payout Percent
|
Final Company
| Plan Weightings
|
Payout Percent
|
Final Company
| |||||||||||||||||||
Adjusted Revenue |
| 24.5% |
|
| 150.0% |
|
| 36.8% |
|
| 24.5% |
|
| 132.6% |
|
| 32.5% |
| ||||||
Adjusted EBITDA Margin |
| 24.5% |
|
| 111.4% |
|
| 27.3% |
|
| 21.0% |
|
| 150.0% |
|
| 31.5% |
| ||||||
Adjusted Diluted EPS from Continuing Operations |
| 21.0% |
|
| 150.0% |
|
| 31.5% |
|
| 24.5% |
|
| 150.0% |
|
| 36.8% |
| ||||||
Strategic/Operating/Compliance Priorities |
| 30.0% |
|
| 116.7% |
|
| 35.0% |
|
| 30.0% |
|
| 88.3% |
|
| 26.5% |
| ||||||
Total |
| 100.0% |
|
| 130.5% |
|
| 100.0% |
|
| 127.2% |
| ||||||||||||
3143
Details behind the Company performance objectives, relative weighting and actual results are summarized below from the 20182020 Company performance scorecard are summarized in the table below (certain amounts may not recalculate due to rounding and select results have been generalized due to competitive considerations):. Within this table, the objectives and results that were impacted by COVID-19 are highlighted in orange font.
Objective
| 2018 Results
| Weighting
| Achievement
|
Contribution
| ||||||||||||
FINANCIAL OBJECTIVES |
|
70.0% |
|
|
136.5% |
|
|
95.5% |
| |||||||
Adjusted Revenue Goal(1)
|
Meet or Exceed Adjusted Revenue of $2.75 billion
|
Adjusted Revenue at 107.4% of target |
|
24.5% |
|
|
150.0% |
|
|
36.8% |
| |||||
Adjusted EBITDA Margin Goal(1)
|
Meet or Exceed Adjusted EBITDA Margin of 45.8%
|
Adjusted EBITDA Margin at 100.5% of target
|
|
24.5% |
|
|
111.4% |
|
|
27.3% |
| |||||
Adjusted Diluted EPS from Continuing Operations
|
Meet or Exceed Adjusted Diluted EPS from Continuing Operations of $2.39
|
Adjusted Diluted EPS from Continuing Operations at 121.3% of target
|
|
21.0% |
|
|
150.0% |
|
|
31.5% |
| |||||
STRATEGIC, OPERATING AND COMPLIANCE PRIORITIES |
|
30.0% |
|
|
116.7% |
|
|
35.0% |
| |||||||
Drive revenue achievement through core businesses
|
Achieve XIAFLEX® net sales and volume growth target objectives
|
Significantly exceeded net sales and volume objectives, achieving double-digit growth
|
|
2.0% |
|
|
150.0% |
|
|
3.0% |
| |||||
Execute core branded specialty product portfolio net sales growth objectives
|
Significantly exceeded net sales objectives, resulting in double-digit revenue growth
|
|
2.0% |
|
|
150.0% |
|
|
3.0% |
| ||||||
Meet generics revenue targets from 2018 launch products
|
Significantly exceeded generics revenue target objectives from 2018 launch products
|
|
2.0% |
|
|
150.0% |
|
|
3.0% |
| ||||||
Deliver on net sales growth targets for U.S. sterile injectables
|
Significantly exceeded U.S. sterile injectables net sales growth target objectives, achieving double-digit growth
|
|
2.0% |
|
|
150.0% |
|
|
3.0% |
| ||||||
Achieve international budgeted sales and Adjusted EBITDA objectives
|
Significantly exceeded international budgeted revenue and Adjusted EBITDA objectives
|
|
2.0% |
|
|
150.0% |
|
|
3.0% |
| ||||||
Advance key R&D pipeline products
|
Execute cellulite treatment development program for CCH, achieving critical study stage gates
|
Successfully completed CCH Phase 3 studies for the treatment of cellulite in the buttocks, realizing positive results by hitting all primary endpoints in both studies, while achieving 8 out of 8 key secondary endpoints inRelease-1 and 7 out of 8 inRelease-2
|
|
3.0% |
|
|
130.0% |
|
|
3.9% |
| |||||
Achieve generics regulatory submission and new product launch objectives
|
Launched a number of significant generic product entries, while progressing generics regulatory filings based on commercial viability determinations
|
|
3.0% |
|
|
100.0% |
|
|
3.0% |
| ||||||
Enhance focus
|
Meet FDA and DEA requirements, including no warning letters received and no quality system failures that result in market action
|
Met all objectives, including no warning letters received and continued reductions in filed alerts and recalls (none due to internal systems quality failures)
|
|
2.0% |
|
|
100.0% |
|
|
2.0% |
| |||||
Meet CIA compliance requirements and OIG deliverables
|
Fulfilled CIA requirements for the 4th reporting year, including all relevant OIG monitoring, training and reporting objectives, and on target to complete all requirements for the 5th and final reporting year
|
|
2.0% |
|
|
100.0% |
|
|
2.0% |
| ||||||
Develop and implement integrated S&OP management process to meet backorder reduction and inventorywrite-off objectives
|
Successfully implemented formal S&OP process leading to significantly exceeding inventorywrite-off reduction objective and the identification of backorder reduction opportunities with third party manufacturers
|
|
2.0% |
|
|
50.0% |
|
|
1.0% |
| ||||||
Execute engagement and reward/recognition initiatives that contribute to the retention of high-performing talent
|
Delivered on all engagement and reward/recognition initiatives, exceeding high-performing retention objectives
|
|
2.0% |
|
|
110.0% |
|
|
2.2% |
| ||||||
Achieve key financial metrics
|
Achieve total adjusted operating expense objective
|
Achieved lower total adjusted operating expense as a percent of revenue compared to budgeted target
|
|
2.0% |
|
|
75.0% |
|
|
1.5% |
| |||||
Deliver onyear-end 2018 Net Debt Leverage Ratio guidance
|
Exceededyear-end Net Debt Leverage Ratio objective
|
|
2.0% |
|
|
120.0% |
|
|
2.4% |
| ||||||
Execute capital expenditures plan, achieving all key investment milestones and delivering below or to budget
|
Optimized annual capital expenditure budget, appropriately investing in growth drivers
|
|
2.0% |
|
|
100.0% |
|
|
2.0% |
|
Objective
| 2020 Results
| Weighting
| Achievement
| Contribution
| ||||||||||
FINANCIAL OBJECTIVES | 70.0% | 143.9% | 100.7% | |||||||||||
Meet or Exceed Adjusted Revenue (1) goal of $2.814 billion | Adjusted Revenue at 103.3% of annual IC target | 24.5% | 132.6% | 32.5% | ||||||||||
Meet or Exceed Adjusted EBITDA Margin (1) goal of 45.0% | Adjusted EBITDA Margin at 106.6% of annual IC target | 21.0% | 150.0% | 31.5% | ||||||||||
Meet or Exceed Adjusted Diluted EPS from Continuing Operations (1) goal of $2.18 | Adjusted Diluted EPS from Continuing Operations at 129.8% of annual IC target | 24.5% | 150.0% | 36.8% | ||||||||||
STRATEGIC, OPERATING AND COMPLIANCE PRIORITIES | 30.0% | 88.3% | 26.5% | |||||||||||
Meet FDA and DEA requirements, including no warning letters received and no quality system failures that result in regulatory action, while improving other key metrics | Met all FDA & DEA objectives and improved other key metrics including decreased Field Alerts | 2.0% | 105.0% | 2.1% | ||||||||||
Execute Pathway to One SAP initiative, achieving critical project stage gates | Exceeded 2020 objectives | 2.0% | 150.0% | 3.0% | ||||||||||
Advance employee engagement initiatives with a continued focus on retaining high performing and high potential employees | Delivered on an extended number of engagement initiatives, and exceeded high-performing retention objectives | 2.0% | 125.0% | 2.5% | ||||||||||
Successfully meet 2020 Environmental, Social & Governance milestones on multi-year plan | All 2020 objectives achieved | 2.0% | 100.0% | 2.0% | ||||||||||
Achieve XIAFLEX® volume growth target objective | Partially achieved volume growth objective due to physician office closures and a decline in patient visits to doctors’ offices | 4.0% | 79.0% | 3.2% | ||||||||||
Achieve generics and sterile injectables new product launch objectives | Partially achieved launch objectives due to delays experienced at the FDA related to approval of new products | 2.0% | 45.8% | 0.9% | ||||||||||
Achieve key R&D program launch and FDA filing objectives | Successfully launched key R&D developmental programs achieving critical study milestones, and partially achieved FDA filing objectives due to delays experienced in recruiting and enrolling subjects for certain clinical trials and reallocation of resources / capacity in support of the production of certain critical medicines due to the surge in COVID-19 related hospitalizations during the year | 2.0% | 40.0% | 0.8% | ||||||||||
Achieve 2020 QWO® commercial and manufacturing objectives | Achieved 2020 QWO® commercial deliverables, with manufacturing objectives not met due to temporary delays in the construction and qualification of new QWO® manufacturing capacity due to COVID-19 | 4.0% | 50.0% | 2.0% | ||||||||||
Advance manufacturing priorities, and Business Continuity objectives | All 2020 objectives achieved | 2.0% | 100.0% | 2.0% | ||||||||||
Achieve inventory write-off objective | Write-off objective not met | 2.0% | —% | —% | ||||||||||
Develop an enhanced enterprise inventory management process | Achieved 2020 objectives, designed to optimize working capital, while minimizing back orders | 2.0% | 100.0% | 2.0% | ||||||||||
Achieve total adjusted operating expense objective | Exceeded total adjusted operating expense objective | 2.0% | 150.0% | 3.0% | ||||||||||
Deliver on year-end 2020 Net Debt Leverage Ratio objectives | Exceeded year-end Net Debt Leverage Ratio objective | 2.0% | 150.0% | 3.0% |
(1) | Refer to the section above entitled |
32
The Committee also considered each NEO’s individual performance and awarded the NEOs the 20182020 annual cash IC bonus amounts set forth in the “Individual Compensation Determination” section. See also below under the heading “Employment and Change in Control Agreements; Severance Agreements” regarding how each NEO with an employment agreement is entitled to annual cash incentive compensation as a percentage of salary under certain circumstances.
Equity-Based Long-term44
Long-Term Incentive Compensation
Purpose. TheNotwithstanding the Committee’s decision to use long-term cash awards in lieu of equity to manage shareholder dilution levels in 2020 and 2021, the Company believes that the most effective means to encourage long-term performance by our NEOs is to create an ownership culture. This philosophy is implemented through the granting of the equity-based awards described below. The LTI Program described below is designed so that Company leaders hold a competitive stake in the Company’s financial future. The LTI Program provides a future reward structure so that employees who have an impact on the Company’s performance share in the results of that impact.
The Company generally establishesnon-NEO eligibility criteria to align Company and industry practices, with participation in the LTI Program based on individual performance. LTI awards remain an important component of the Company’s compensation philosophy and are allocated most heavily to:
Reward consistently high performing individuals who make significant contributions to the success of the Company; |
Reward individuals at various levels who have high impact relative to the expectations and objectives of their role; and |
Retain eligible individuals who have skills critical to the long-term success of the Company. |
The LTI compensation program provides an annual grant that is directly aligned with Endo’s financial, strategic, operating, compliance and share price performance objectives. The objective of the program is to align compensation for NEOs over a multi-year period directly with the interests of shareholders of the Company by motivating and rewarding creation and preservation of long-term shareholder value. The level of LTI compensation is determined based on an evaluation of competitive factors in conjunction with total compensation provided to NEOs and the goals of the compensation program. Currently,Typically, LTI awards for NEOs are equity-based providing for the opportunity to award a combination of PSUs, RSUs and/or stock options.
The Company believes that targeted combinations of PSUs, RSUs and/or stock options closely equates the value of the benefit received by the recipient to the accounting expense of the benefit to the Company. The Company also believes that the resulting blend of PSUs, RSUs and/or stock options is supported by the pattern of equity-based awards that prevails in the Pay Comparator Companies and in the external market generally.
In 2018,2020, select actions were taken by the Committee in support of the Company’s 2018 priorities. In an effort2020 priorities, and in direct response to minimizeshareholder feedback. As part of the Committee’s continued efforts to manage share pool utilization and underlying dilution levels, the Committee implemented special initiatives, includinglimited the use of an alternate equity mix,for the 2020 annual grant, reductions and broaderexclusively granting equity to members of the Company’s Senior Executive Team in the form of PSUs. In connection with this decision, the Committee also authorized the use of Long-Term Cash Incentive (LTCI)cash-based LTC awards fornon-executive positions. all LTI recipients, including the Company’s NEOs. LTC awards are fixed cash-based long-term incentive awards that are scheduled to vest over a three-year period for NEOs. This decision allowed the Company to offer LTI recipients target long-term award values that are aligned with competitive practices, while also addressing shareholder feedback relating to encouraging management continuity during a period of significant external headwinds facing Endo and other specialty pharmaceutical companies. In addition2021, our efforts to managingmanage share pool availability,utilization and underlying dilution levels continued by issuing PSUs exclusively to the Company’s Senior Executive Team, and granting a combination of RSUs and LTC awards to LTI participants. These combined efforts allowed the Company to offer competitive LTI levels to all eligible participants, while remaining aligned with long-term shareholder interests. Annual LTI awards for all NEOs accounted for approximately 29.5% of the total expected target value issued to all eligible employees as part of the 2021 annual grant.
The annual LTI mix for 2018 involved the expanded use of RSUs for vice president positions and above in an effort to increase the direct ownership equity stake for key executives, while contributing to business continuity and strategic growth priorities. Each NEO,Company’s Senior Executive Team, including Mr. Campanelli, received a 25% allocation of PSUs and a 75% allocation of RSUs during the 2018 annual grant cycle. The Committee also approved a management-recommended company-wide 10% LTI reduction factor, which allowed Endo to continue to support its share utilization priorities during the 2018 annual grant cycle. Since Mr. Campanelli’s LTI compensation is determined at the sole discretion of the Committee, this decision to apply a company-wide reduction in LTI was taken into account (in addition to Mr. Campanelli’s performance and competitive pay positioning) when considering Mr. Campanelli’s 2018 LTI award.
For the 2019 annual grant, based on feedback received during the 2018 shareholder engagement process and ongoing internal discussions, the Committee determined to change the LTI mix for each NEO to 50% PSUs and 50% RSUs, with the PSU performance metrics tied to relative TSR and free cash flow performance metrics (each measured over a three-year performance period). The Committee believes these changes to the LTI mix strengthen the LTI Program’s long-term orientation and reflect the creation and preservation of long-term shareholder value. Please reference the “Performance Share Units” section for details concerning the change to the free cash flow three-year performance period.
The annual equity mix for senior management, including Mr. CampanelliColeman, is reflected in the graphchart below.
33
In addition to the continued use of PSUs and RSUs, the Committee’s decision to approve a management-recommended company-wide 20% LTI reduction factor allowed Endo to continue to support the Company’s share utilization priorities. These priorities are focused on optimizing the use of equity-based LTI compensation, while responsibly managing share pool usage and dilution. Since Mr. Campanelli’s LTI compensation is determined at the sole discretion of the Committee, this decision to apply a company-wide reduction in LTI was taken into account (in addition to Mr. Campanelli’s performance and competitive pay positioning) when considering Mr. Campanelli’s 2019 LTI award. Similar to Endo’s Committee-approved grant practices in 2018, Endo has not authorized (in 2019) and will not authorize special oroff-cycle LTI awards to NEOs.
Considerations.In determining the annual LTI grants for the NEOs, the Committee considered market data on total compensation packages, the value of long-term incentive grants at the Pay Comparator Companies, TSR, share usage and shareholder dilution and, except in the case of the award to the President and Chief Executive Officer, the recommendations of the President and Chief Executive Officer. Further, performance is considered based on a collective group of factors focused on financial, strategic, operating and compliance, which drives the Company’s future success as a highly focused generics and specialty branded pharmaceutical company deliveringcommitted to helping everyone we serve live their best life through the delivery of quality, medicines to patients in need through excellence in development, manufacturing and commercialization.life-enhancing therapies. At the end of the performance year, each NEO’s performance is assessed and then factored into the awarding of equity-basedLTI compensation. Grant
45
levels are determined based on overall performance relative, but not limited to, the following factors adopted by the Committee for all applicable NEO LTI assessments:
Factors
| ||||||
Development of a long-term vision for the Company and the successful execution of the overall business strategy
|
Strengthening the balance sheet by effectively managing capital and cash flow conversion
| |||||
Focus on operational execution and the achievement of operating objectives and overall financial performance
| Progress in the development and expansion of the Company’s product portfolio and pipeline
| |||||
Success in forging the Company for long-term sustainable revenue and profitability growth
| Advancement of the Company’s performance-oriented culture and efficient operating model
| |||||
Achievement of quality and compliance objectives |
Relative shareholder value creation and preservation |
Based upon the achievement of Company goals and individual objectives, the Company’s President and Chief Executive Officer recommends an adjustment to each NEO’s annual equity-based LTI compensation target based upon performance related to key job accountabilities and annual performance objectives. The recommendation is then reviewed by the Committee, which has discretion to modify the final award. Regarding the award for the Company’s President and Chief Executive Officer, the Committee follows a similar process and has the ultimate discretion for determining the annual equity award.
The equity-based LTI compensation target for each NEOCurrent NEOs excluding Mr. CampanelliColeman related to 20182020 performance, to be granted in early 2019,2021, is reflected in the graphchart below. Mr. Campanelli’sColeman’s LTI compensation is determined at the discretion of the Committee.
Pursuant to the Letter Agreement governing the terms and conditions of Mr. Campanelli’s compensation during the succession planning and transition period until his retirement as an employee on December 31, 2020, Mr. Campanelli will be compensated as a non-employee director in 2021 and was not eligible for an LTI award in his capacity as a Former NEO.
Discretion.Mr. Campanelli’sColeman’s employment agreement does not prescribe a specific LTI target but instead provides that his LTI compensation would be determined at the sole discretion of the Committee if the Company and executive achieve certain performance targets set by the Committee with respect to each year ending during Mr. Campanelli’sColeman’s employment term. All other NEOs are eligible to receive LTI compensation in an amount equal to a fixed percentage of their annual base salary for such year (or such lesser (including zero) or greater percent of the base salary for such year as is recommended to the Committee by the President and Chief Executive Officer and approved by the Committee). The Committee may use negative discretion to take into account factors outside of thepre-established performance objectives to reflect extraordinary business circumstances. Further, pursuant to each of our NEO’s employment agreements, target LTI as a percentage of annual base salary may subsequently be increased at the discretion of the Committee. Please reference the “Individual Compensation Determination” section for approved target LTI changes.
34
Performance Share Units.PSU awards are granted annually with each award coveringto the Company’s NEOs, based on a plan design that utilizes two discrete measures: FCF and relative TSR performance, both measured over cumulative three-year performance period. Through this program, executives are eligibleperiods. This design takes into account earlier feedback received through the shareholder engagement process, and is designed to earn a specified targetstrengthen the program’s long-term performance-based orientation and reflect the creation and preservation of long-term shareholder value. The number of Company shares at the endPSUs awarded to each executive continues to be based on a targeted percentage of the three-year performance period. Theexecutive’s base salary, with the actual share award isnumber of shares released at the end of the three-year period depending on how well the Company performed against the FCF and relative TSR targets set at the beginning of the performance period.
The PSUs granted in 2018 to eligible vice president and above positions, includingUnder the Company’s NEOs, were based on a plancurrent design, that utilized two discrete measures: relative TSR performance measured over a three-year performance period and Adjusted Free Cash Flow, also measured over a three-year period, but comprised of threeone-year annual Adjusted Free Cash Flow targets.
The Adjusted Free Cash Flow performance metric, which accounted forthe 50% of the PSU award at grant, demonstrates its importance to the success and sustainability of the Company. Each of the threeone-year annual Adjusted Free Cash Flow targets are established near the beginning of each year of the performance period, with earned awards banked each year and released at the end of the three-year vesting period. Under this design, the portion of the PSU award that isPSUs tied to Adjusted Free Cash FlowFCF performance will not vest unless the 2018 results reachCompany’s cumulative three-year FCF performance reaches the minimum 95%90% of target threshold, at which an attainment multiple of 0.5x will apply, while the maximum attainment multiple of 2x can only be achieved if the Company’s 2018cumulative three-year FCF performance is at or above 110% of target. Award levels will be interpolated between the 0.5x and 2x payout multiples. The performance period for the 20182020 awards measured against Adjusted Free Cash FlowFCF performance began on January 1, 20182020 and endedends on December 31, 2018.2022.
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The remaining 50% portion of the PSU award wasPSUs tied exclusively to relative TSR performance and will be measured against the three-year TSR of thea custom index of companies. The custom index utilized for the 20182020 grant was initially comprised of a statistically meaningful group offorty-one 38 pharmaceutical companies, which include companies in the New York Stock Exchange ARCA Pharmaceutical Index, Endo’s Pay Comparator Companies and other specialty pharmaceutical companies. For purposes of determining the final relative TSR performance measurement, each company in the custom index will be included only if they are publicly-traded at both the beginning and end of the performance period. Under this design, the portion of the PSU award that is tied to relative TSR performance will not vest unless the three-year TSR results reach the 40th percentile minimum threshold, at which an attainment multiple of 0.5x will apply, while the maximum attainment multiple of 2x can only be achieved if the Company’s percentile rankings is at or above the 90th percentile over the performance period. Further, a maximum of 1x of the award will vest if the Company’s TSR for the performance period is negative, with no payout made if results are below the 40th percentile. Award levels based on positive TSR results will be interpolated between the 1x and 2x payout multiples. The performance period for the 20182020 awards measured against relative TSR performance began on April 2, 2018March 6, 2020 and ends on April 2, 2021March 6, 2023 and will be assessed at the end of the performance cycle.
The number of PSUs awardedFor the 2021 PSU grant, the awards followed the same program design with no changes to each executive continuesthe FCF and relative TSR performance schedules. However, the performance periods changed to be based on a targeted percentagecoincide with the timing of the executive’s base salary, with2021 grants such that performance for the actual number of shares awarded adjusted based onawards tied to FCF and relative TSR performance will be measured from January 1, 2021 through December 31, 2023 and Adjusted Free Cash Flow performance. As offrom March 5, 2021 through March 5, 2024, respectively. In addition, the record date,custom index used to measure relative TSR performance associated with the 2018 PSUs is tracking above the 84th percentile, based on a beginning Per Share Price of $6.63. Adjusted Free Cash Flow for the 2018 performance year achieved 163.7%2020 grant was updated to reflect the current list of target, based on a target amount of $456 million and actual attainment levels of $746 million, consisting of $267 million of cash flow from operations determined in accordance with GAAP, adjusted as described below, resulting in a payout of 200% (with this earned portion banked and to be released at the end of the three-year vesting period).36 pharmaceutical companies. The performance schedules for the 20182020 and 2021 PSUs are shown in the charts below:
“Per Share Price” means the average of the closing prices of the Company’scompany’s ordinary shares for the applicable company during the thirty consecutive trading days ending on the day prior to the applicable measurement date.
35“Adjusted Free Cash Flow” or “FCF” means Adjusted EBITDA (see additional discussion of Adjusted EBITDA above under “2020 Consolidated Financial Results”), adjusted for changes in net working capital and reduced by cash payments for capital expenditures. FCF and Adjusted EBITDA are not prepared in accordance with GAAP.
“Total Shareholder Return” or“TSR” means the appreciation of the Per Share Price during the performance period, plus any dividends paid on the applicable Company’scompany’s ordinary shares during the performance period. The determination of the TSR attainment levels will be made by the Committee following an independent third-party confirmation of the results.
“Free Cash Flow” means Adjusted Cash Flow from Operations less Capital Expenditures. Adjusted Free Cash Flow is not prepared in accordance with GAAP. To arrive at Adjusted Free Cash Flow, the amount of GAAP cash flow from operations is reduced by cash payments for capital expenditures and further adjusted to exclude certain upfront and milestone payments to partners; cost reduction and integration-related initiatives such as separation benefits, retention payments, other exit costs and certain costs associated with integrating an acquired company’s operations; litigation-related and other contingent matters; and certain other items.
In February 2019, the Committee implemented a change to the PSU plan design in response to feedback received during the 2018 shareholder engagement process and ongoing internal discussions. To further strengthen the program’s long-term performance-based orientation and reflect the creation and preservation of long-term shareholder value, the Adjusted Free Cash Flow performance metric was changed from threeone-year annual Adjusted Free Cash Flow targets, to a single three-year Adjusted Free Cash Flow target.
Under this new design, the portion of the PSUs tied to Adjusted Free Cash Flow performance will not vest unless the 2019-2021 results reach the minimum 90% of target threshold, at which an attainment multiple of 0.5x will apply, while the maximum attainment multiple of 2x can only be achieved if the Company’s free cash flow performance is at or above 110% of target. Award levels will be interpolated between the 0.5x and 2x payout multiples. No changes were made to the relative TSR performance schedule. The free cash flow performance schedule for the new 2019 PSUs is shown in the chart below:
Restricted Stock Units.In addition to the PSUs described above, our NEOs are also aretypically granted time-based RSUs, which are the second element of our equity-based LTI compensation package. RSUs are valued based on the closing price of our ordinary shares on the Nasdaq on the date of grant, and each RSU represents the right to receive one ordinary share of the Company as of the date of vesting. RSUs granted to the NEOs vest ratably over three years.
Stock Options.Stock options represent the third element of our equity-based LTI compensation package, and are designed to reward NEOs only if our share price increases. When offered, the LTI Program calls for stock options to be granted with exercise prices of not less than the closing price of our shares as quoted on the Nasdaq on the date of grant and generally to vest ratably over four years. The Committee will not reduce the exercise price of stock options (except in connection with adjustments to reflect recapitalizations, share or extraordinary dividends, share splits, mergers, spin-offs and similar events permitted by the relevant plan) without shareholder approval. Stock option grants to NEOs have been awarded with a term of ten years, but were not issued as part of the 20182020 or 20192021 annual grant cycles.
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Long-Term Cash. As described earlier, LTC awards are fixed cash-based long-term incentive awards offered in 2020 and 2021 as a means of managing share utilization and maintaining acceptable shareholder dilution levels, while offering LTI recipients target long-term award values that are aligned with competitive practices. LTC awards can only be settled in cash, and vest every six months over a three-year period for NEOs.
Vesting Due to Retirement Age.On the first day of the year in which an NEO reaches the minimum retirement age and service requirements, which is considered age 60 with five years of service or age 55 with ten years of service, PSUs, RSUs, and stock options and LTC awards become eligible for continued vesting, following certain termination events, in accordance with the original vesting schedule. However, awards eligible for continued vesting as a result of reaching retirement age are not settled until after the end of the applicable performance or vesting period, if applicable.
Timing of Grants.Prior to 2018, annual grants of PSUs, RSUs and/or stock options to our NEOs have been made at a regularly scheduled meeting of the Committee held during the first quarter of each year. While the Committee will continue to approve
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the annual equity award values during the regularly scheduled meeting held during the first quarter of each year, effectiveEffective with the 20192020 annual grant, the timing of the annual LTI award for employees has moved to a new common grant date, which occurs onapproximately one week after the last business day in March.filing of the 10-K to better align the timing of the grant with the annual compensation planning and performance management processes. The number of PSUs, RSUs and/or stock options awarded will be based on Endo’sa determined grant date fair market value (as determined in the sole discretion of the Committee, but in no event shall the determined grant date fair market value be less than the closing share price atas of the timedate of grant. Supported by best practices, thisthe grant). This is intended to grant the annual equity awards after the annual earnings release, while allowing for a sufficient amount of time between the filing of the Company’s10-K and the date of Endo’s annual grant. The Company may also make new hire grants throughoutConsistent with the year to new NEOs of the Company, in addition toCompany’s customary practice, new hire and promotionalpromotion grants may also be awarded to eligiblenon-NEO positions. employees.
20182020 Decisions Regarding Equity-Based LTI Compensation. In 2018,2020, the Committee awarded LTI compensation for NEOs pursuant to the program described above resulting in the awards identified in the Summary Compensation Table and the 20182020 Grants of Plan-Based Awards Table. Included in these tables are grant details associated with Mr. Campanelli’s 2018 annual LTI award, as well as the following, which were reported in the aforementioned tables in 2018 in accordance with SEC rules: (i) the remaining portion of the August 10, 2017 special grant, which was approved by shareholders during the 2018 Annual Meeting and (ii) the year two Adjusted Free Cash Flow performance tranche of the 2017 PSU award tied to 2018 Adjusted Free Cash Flow performance. Please reference the “CEO Equity Compensation” section for additional details associated with Mr. Campanelli’s 2018 reported performance. For grants awarded in 20192021 based on 20182020 performance, the Committee reviewed the Company’s achievements as well as each NEO’s contributions and awarded the NEOs the LTI amounts set forth in the “Individual Compensation Determination” section.
Additional Compensation Components
The Company’s current practice is to limit use of perquisites. In 2018,2020, other than as described below, the only perquisites offered to the NEOs were certain financial planningand legal services, housing allowances, relocation planning and related services,executive physicals, term life and long-term disability insurance and, executive physicals.in the case of Mr. Campanelli who retired in 2020, retirement gifts. The Company currently offers two executive retirement programs including the 401(k) Restoration Plan and the Executive Deferred Compensation Plan, each of which is described below. Both plans were effective January 1, 2008, with the 401(k) Restoration Plan and the Executive Deferred Compensation Plan amended and restated in 2014 and 2018, respectively.
401(k) Restoration Plan. The purpose of the 401(k) Restoration Plan is to provide eligible employees with the opportunity to defer a portion of their compensation on atax-favored basis in parity with the tax benefit provided under the qualified 401(k) plan. The 401(k) Restoration Plan allows eligible employees whose compensation exceeds the Section 401(a)(17) amount in the Code (or other criteria set by the Committee), including NEOs, to defer eligible pay after such individual’s contribution to the Company’s existing qualified 401(k) plan has exceeded the maximum. The Company does not fund employer matching contributions in the 401(k) Restoration Plan.
The amount in any individual’s 401(k) Restoration Plan account will be paid to such individual at termination of employment or following the elected specified payment date. Actual 401(k) Restoration Plan participation will begin when an executive’s total cash compensation exceeds the Code earnings limit for the qualified 401(k) ($280,000290,000 for 2019)2021). Individuals who elect to defer their eligible pay under the 401(k) Restoration Plan will defer federal and state (to the extent allowed by state law) taxes until the account is paid to the individual.
Executive Deferred Compensation Plan.The Executive Deferred Compensation Plan permits executives to elect to defer up to 100% of the following year’s LTI compensation that is granted in RSUs that settle in shares of our stock.
Deferral of the RSUs delays the imposition of federal and state (as allowed under state laws) taxes, which normally applies when the RSUs vest. The taxable event is delayed until the deferred RSUs are settled in shares. The RSUs may be deferred to a specified payment date on which the elected disbursement(s) under the participant’s account will commence. The value of the compensation an executive receives upon the share delivery is based on the value of the Company’s shares on the date the deferral is delivered to the executive, and the executive will be responsible for the federal and state taxes at that time.
The Executive Deferred Compensation Plan also allows an executive to defer up to 50% of his or her annual incentive compensation award. When an executive makes his or her irrevocable election to defer cash incentive compensation, he or she also elects a specified payment date in which the elected disbursement(s) under the participant’s account will commence.
Employment and Change in Control Agreements; Severance Agreements
The Company generally enters into a written employment agreement with each of the NEOs. The purpose of these agreements and the compensation and benefits provided for therein is to aid recruitment and retention and to reinforce an ongoing commitment to shareholder value creation and preservation.
On February 13, 2018, the Company entered into a new executive employment agreement with Matthew J. Maletta, which was effective February 13, 2018 and has a term of three years, to replace his prior agreement, dated April 28, 2015, that expired pursuant to its terms.
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On April 24, 2019, the Company entered into a newan executive employment agreement with Paul V.Mr. Campanelli, which was effective April 24, 2019 and hashad a term through September 23, 2022, to replace his prior agreement dated September 23, 2016, which had a three-year term.
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Each NEOOn August 2, 2019, the Company entered into a new executive employment agreement sets forthwith Mr. Ciarico in connection with his appointment to Executive Vice President and Chief Commercial Officer Sterile & Generics, which was effective August 2, 2019 and had a three-year term.
On December 9, 2019, the Company entered into an executive employment agreement with Mr. Coughlin, which was effective December 9, 2019 and had a term of three years, to replace his prior agreement, dated December 9, 2016, that expired pursuant to its terms.
On December 12, 2019, the Committee approved a Letter Agreement in connection with Mr. Campanelli’s announced retirement as Chief Executive Officer and President. The Letter Agreement governed the terms and conditions of Mr. Campanelli’s compensation during the succession planning period until a successor Chief Executive Officer was appointed, and subsequently as Chairman of the Board and strategic advisor to the Company supporting the transition period until Mr. Campanelli’s retirement as an employee on December 31, 2020.
On February 19, 2020, the Company entered into an executive employment agreement with Mr. Coleman in connection with his appointment to President and Chief Executive Officer, which was effective March 6, 2020 and has a term of three years, to replace his prior agreement, dated December 19, 2019.
On February 19, 2020, the Company entered into an executive employment agreement with Mr. Bradley in connection with his appointment to Executive Vice President and Chief Financial Officer, which was effective March 6, 2020 and has a term of three years, to replace his prior agreement, dated November 6, 2018.
On April 28, 2020, the Company entered into an executive employment agreement with Mr. Barry, which was effective April 26, 2020 and has a term of three years, to replace his prior agreement, dated April 26, 2017, that expired pursuant to its terms.
On November 4, 2020, the Company entered into an executive employment agreement with Mr. Maletta, which was effective February 13, 2021 and has a term of three years, to replace his prior agreement, dated February 13, 2018, that expired pursuant to its terms.
On November 4, 2020, the Committee approved Continuity Compensation arrangements for critical leadership positions in the Company, including the following named executive officers: Messrs. Coleman, Bradley, Maletta and Barry and Dr. Apostol. The arrangements are the result of actions taken by the Committee based on initial shareholder feedback received in 2019 to implement continuity compensation arrangements to address concerns regarding the Company’s ability to motivate top talent and encourage management continuity due to the significant gap between NEO target compensation and competitive norms, and during a period of significant external headwinds facing Endo and other specialty pharmaceutical companies. The Continuity Compensation arrangements approved by the Committee in 2020 were equal to 1x the value of each NEO’s base salary level at the time of approval (a significant reduction in value from the arrangements implemented in 2019), and are scheduled to vest in 2021. As noted above, the Committee has commenced the phase out of continuity compensation arrangements and has applied initial adjustments to current NEO pay levels in 2021. A second phase of adjustments will be applied in 2022, ending continuity payments and reverting to conventional compensation arrangements to better align Endo executive pay with median pay levels exhibited by Endo’s Pay Comparator Companies.
On April 29, 2021, the Company entered into an executive employment agreement with Dr. Apostol, which was effective April 29, 2021, to replace his prior agreement, dated April 6, 2020, as amended May 6, 2020 and November 4, 2020, each of which are of no further force or effect.
The payments and benefits to be received by each Current NEO upon certain terminations of employment are governed by each of the respective NEOs.their various employment agreements and Continuity Compensation arrangements. These payments and benefits and the triggering events are further described in the “Compensation of Executive Officers” section below under the heading “Potential Payments Upon Termination or Change in Control.” Each Current NEO’s employment agreement contains post-termination restrictive covenants.
The Company also generally enters into a written separation agreement with each of the NEOs upon termination of employment. The purpose of these agreements is to provide the Company with certainty regarding its post-termination protections and obligations. With regard to
On November 19, 2020, the Company entered into a separation agreement with Mr. Coughlin in connection with his termination of employment eachon March 1, 2021.
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On November 19, 2020, the Company entered into a separation agreement replaces thewith Mr. Ciarico in connection with his termination of employment agreement and thus constitutes the entire agreement between the NEO and the Company regarding post-termination benefits.on December 1, 2020.
Individual Compensation Decisions and Rationale
Key Considerations
Under our compensation structure, the mix of base salary, annual cash incentive compensation and equity-based LTI compensation varies depending on each NEO’s level. Annual compensation determinations by the Committee are based on factors including the Company’s performance, individual performance and the competitiveness of each NEO’s pay as reported by the Committee’s consultant, Korn Ferry Hay Group.Ferry. Details associated with the Committee’s decisions are set forth in the “Individual Compensation Determination” section.
Other key factors considered by the Committee include NEO ownership levels against the Company’s Ownership Guidelines, as well as share utilization priorities and tax deductibility of compensation. These factors are discussed in further detail below.
Stock Ownership Guidelines for Executive and Senior Management.The current Ownership Guidelines for executive and senior management are as follows:
Executive and senior management are expected to achieve the Ownership Guidelines within five years of joining the Company. Executive and senior management are also expected to continuously own sufficient shares to meet the Ownership Guidelines once attained. Members of executive and senior management who subsequently get promoted to a higher level will have five years from the date of promotion to achieve their new ownership target. All members of executive and senior managementNEOs subject to the Ownership Guidelines are in compliance with the recommended guidelines.
guidelines, with Mr. Campanelli has a sizable personal investment in the success of Endo. Per the terms of Mr. Campanelli’s original employment agreement following the acquisition of Par, Mr. Campanelli was required to purchase or retain shares of Endo stock equal in value to at least fifteen percent (15%) of theafter-tax proceeds that he received in connection with the merger. Further, Mr. Campanelli is required to retain shares with a purchase price of $5,000,000 for three years and retain the balance of the shares for one year following his date of employment with Endo. Mr. Campanelli chose to retain substantially more than the aforementioned requirement, and has since made additional open market purchases of Endo stock (allowing him to exceed the Company’s Ownership Guidelines with aColeman’s current ownership level of 26.3x3.7x base salary based on eligible share ownership levels of 2,257,731663,130 shares as of April 12, 2019)2021), strengthening the alignment between management and shareholder interests. Because Mr. Coleman was promoted to the position of President and Chief Executive Officer on March 6, 2020, he will have until March 6, 2025 to achieve his new ownership target.
Share Utilization Priorities.The LTI pool is established annually based on the Company’s achievement of goals and objectives, and can vary significantly from year to year. The share pool is also managed in a manner that focuses on optimizing share utilization, while remaining aligned with competitive eligibility and grant practices. Our efforts to proactively manage share utilization and dilution levels in 2018 and 20192020 are demonstrated by limiting the applicationuse of management-recommended 10%equity in 2020 and 20% company-wide LTI reduction factorsexclusively granting equity to members of the Company’s Senior Executive Team in 2018 and 2019, respectively.the form of PSUs. In addition, only full valueconnection with this decision, the Committee also authorized the use of cash-based LTC awards were awarded in 2018 and 2019 tofor all LTI recipients, including the Company’s NEOs. This allowedNEOs, allowing the CommitteeCompany to offer LTI target values that are in line with competitive practices. In 2021, our efforts to manage share pool availability,utilization and underlying dilution levels continued by issuing PSUs exclusively to the Company’s Senior Executive Team, and granting a combination of RSUs and LTC awards to LTI participants. These combined efforts allowed the Company to offer competitive LTI levels to all eligible participants, while increasingremaining aligned with long-term shareholder interests. Annual LTI awards for all NEOs accounted for approximately 29.5% of the direct ownership equity stake for key executives and contributingtotal expected target value issued to business continuity and strategic growth priorities.all eligible employees as part of the 2021 annual grant.
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Key dilution metrics such as adjusted burn rate and overhang are regularly evaluated against external benchmarks, but also considered in the context of the Company’s current business environment.
Tax Deductibility of Compensation.Prior to the enactment of the Tax Cuts and Jobs Act of 2017 (the Tax Act) in December 2017, Section 162(m) of the Code precluded a public corporation from taking a tax deduction for certain compensation in excess of $1.0 million in any one year paid to its chief executive officer or any of its three other highest-paid executive officers (not including a company’s chief financial officer), unless certain specific and detailed criteria are satisfied. However, certain qualifying “performance-based” compensation (that is, compensation paid under a plan administered by a committee of outside directors, based on achieving objective performance goals, the material terms of which were approved by shareholders, such as our Amended and Restated 2015 Stock Incentive Plan) was not subject to the $1.0 million deduction limit.
With the passage of the Tax Act, only qualifying performance-based compensation paid pursuant to a binding written contract in effect on November 2, 2017 (and not modified in any material respect on or after November 2, 2017) as set forth under the Tax Act will be eligible for the deduction exception. The Tax Act also expanded the executive officers covered by Section 162(m) to include the chief financial officer position as well as any person who ever was a covered executive for any prior taxable year, beginning after December 31, 2016. As a result of these changes, starting in 2018, most compensation payable by us to any person who was an NEO of the Company since fiscal year 2016 isnon-deductible, regardless of whether the compensation is performance-based.
Individual Compensation Determination
The following summarizes the compensation targets applicable in 20182020 and the actual compensation awarded in 20192021 by the Committee for the Current NEOs based on 20182020 performance:
Name
| Base Salary as of
| 2018 Annual
| 2018 Annual
| 2018 Long-Term
|
2018 Long-Term
| Base Salary as of
| 2020 Annual
| 2020 Annual
| 2020 Long-Term
|
2020 Long-Term
| ||||||||||||||||||||||||||||||
Paul V. Campanelli | $ | 950,000 |
| $ | 1,140,000 |
| $ | 2,231,550 |
|
| Committee Discretion |
| $ | 7,200,000 |
| |||||||||||||||||||||||||
Blaise Coleman | $ | 600,000 |
| $ | 390,000 |
| $ | 806,188 |
| $ | 1,800,000 |
| $ | 1,440,000 |
| $ | 850,000 | $ | 850,000 | $ | 1,621,800 |
| Committee Discretion |
| $ | 9,500,000 | ||||||||||||||
Terrance J. Coughlin | $ | 625,000 |
| $ | 437,500 |
| $ | 868,672 |
| $ | 2,187,500 |
| $ | 1,750,000 |
| |||||||||||||||||||||||||
Mark Bradley | $ | 575,000 | $ | 316,250 | $ | 583,292 | $ | 1,437,500 | $ | 2,012,500 | ||||||||||||||||||||||||||||||
Matthew J. Maletta | $ | 575,000 |
| $ | 345,000 |
| $ | 707,781 |
| $ | 1,725,000 |
| $ | 1,380,000 |
| $ | 650,000 | $ | 390,000 | $ | 620,100 | $ | 1,950,000 | $ | 2,340,000 | |||||||||||||||
Tony Pera | $ | 471,500 |
| $ | 259,325 |
| $ | 453,419 |
| $ | 943,000 |
| $ | 754,400 |
| |||||||||||||||||||||||||
Patrick Barry | $ | 550,000 | $ | 330,000 | $ | 587,664 | $ | 1,375,000 | $ | 1,925,000 | ||||||||||||||||||||||||||||||
George Apostol, M.D.(2) | $ | 556,485 | $ | 278,242 | $ | 424,709 | $ | 834,727 | $ | 1,001,672 |
(1) | Award levels established at the time of grant |
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closing share price at the time of grant for PSUs and RSUs (see Summary Compensation Table’s footnote |
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(2) | Dr. Apostol’s compensation is paid in euros and has been converted into U.S. dollars using the same conversion rate used for 2020 compensation in the Summary Compensation Table as further described below. |
Each Current NEO’s target percentage and actual number of PSUs and RSUs granted in 2019,2021, based on 20182020 performance, were as follows:
Name
|
LTI Target % of
|
PSUs Actually
|
RSUs Actually
|
LTI Target % of
|
PSUs Actually
|
RSUs Actually
| ||||||||||||||||||
Paul V. Campanelli |
| Committee Discretion |
|
| 448,318 |
|
| 448,318 |
| |||||||||||||||
Blaise Coleman |
| 300% |
|
| 89,663 |
|
| 89,663 |
| Committee Discretion | 679,542 | 339,771 | ||||||||||||
Terrance J. Coughlin |
| 350% |
|
| 108,966 |
|
| 108,966 |
| |||||||||||||||
Mark Bradley | 250% | 143,955 | 71,977 | |||||||||||||||||||||
Matthew J. Maletta |
| 300% |
|
| 85,927 |
|
| 85,927 |
| 300% | 167,381 | 83,690 | ||||||||||||
Tony Pera |
| 200% |
|
| 46,973 |
|
| 46,973 |
| |||||||||||||||
Patrick Barry | 250% | 137,696 | 68,848 | |||||||||||||||||||||
George Apostol, M.D. | 150% | 74,904 | 37,452 |
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|
President and Chief Executive Officer | |||
The information used to determine the compensation recommendation for the President and Chief Executive Officer is developed by Korn
The Committee’s assessment of Mr.
• Reinvent How We Work: embracing the future by accelerating new ways of • Be a Force For Good: remaining committed to the The Committee
The following illustrates the mechanics underlying the annual cash incentive calculation for Mr.
| ||||
When Mr.
|
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Blaise Coleman President and Chief Executive Officer | ||||
Mr. |
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| ||||||
Ferry’s analysis of competitive LTI levels, and in consideration of Mr.
Consistent with Endo’s other NEOs, Mr. Please see the below chart, which compares the expected target value of Mr. Coleman’s compensation package for 2020 against the median target CEO TDC levels of Endo’s Pay Comparator Companies, the ISS Peer Group and the Glass Lewis Peer Group. Note: Base salary represents the annual rate of base salary. Since Mr. Coleman’s LTI is determined at the sole discretion of the Compensation & Human Capital Committee, “Expected Target” amounts of LTI reflect actual expected values of LTI issued in 2020. Except for amounts reported for Mr. Coleman, amounts reflect median overall pay levels for these companies, and totals may not equal the sum of the individual Base Salary, IC and LTI components. Compared to the peer group data above, which is based on the most recent proxy filings available at the time of Korn Ferry’s annual executive compensation review in October 2020, Mr. Coleman’s expected target TDC level, inclusive of 2020 continuity compensation not included in the chart above, is positioned below the 25th percentile of each of the comparator groups.
|
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Blaise Coleman President and Chief Executive Officer (continued) | ||||
Please see the below chart, which compares the actual value authorized of Mr. Coleman’s compensation package for 2020 against the median actual CEO TDC levels of Endo’s Pay Comparator Companies, the ISS Peer Group and the Glass Lewis Peer Group. Note: Base salary represents the annual rate of base salary. Except for amounts reported for Mr. Coleman, amounts reflect median overall pay levels for these companies, and totals may not equal the sum of the individual Base Salary, IC and LTI components. Compared to the peer group data above, which is based on the most recent proxy filings available at the time of Korn Ferry’s annual executive compensation review in October 2020, Mr. Coleman’s actual TDC level, inclusive of 2020 continuity compensation not included in the chart above, is positioned as follows: below the 25th percentile of Endo’s Pay Comparator Companies, slightly above the median of the ISS Peer Group and below the median for the Glass Lewis Peer Group. The Summary Compensation Table’s footnote (3) provides details regarding adjustments to LTI valuations under ASC 718 for accounting and proxy reporting purposes. Mr. Notwithstanding the Committee’s decision to issue LTC awards to NEOs in 2021 in response to shareholder feedback to minimize share utilization and dilution levels during periods when Endo shares are trading at a significantly reduced share price, the changes to the 2021 CEO pay structure
|
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| Blaise Coleman
| |||
Please see the below chart, which compares the expected target value of Mr. Coleman’s compensation package for 2021 against the median target CEO TDC levels of Endo’s Pay Comparator Companies, the ISS Peer Group and the Glass Lewis Peer Group. Note: Base salary represents the annual rate of base salary. Since Mr. Coleman’s LTI is determined at the sole discretion of the Compensation & Human Capital Committee, “Expected Target” amounts of LTI reflect actual expected values of LTI issued in 2021. |
Executive Vice President and Chief Financial Officer | ||||||
Effective in March 2020, Mr. |
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| ||||
levels in 2021. To further align Mr.
|
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Matthew J. Maletta Executive Vice President, Chief Legal Officer and Company Secretary | ||||||
Mr. Maletta has served as the Company’s Executive Vice President, Chief Legal Officer since May 4,
|
Executive Vice President | ||||||
Effective in April 2020, Mr. |
George Apostol, M.D. Executive Vice President, Global Research and Development | ||||||
Dr. Apostol has served as Endo’s Executive Vice President, Global Research and Development since November 2020, after joining Endo as the Global Head of Research and Development in May 2020. In this role, Dr. Apostol has responsibility for all R&D work for current and future products in the Company’s branded, generic, sterile injectables and aesthetics divisions. Prior to joining Endo, Dr. Apostol was the Vice President of Global Development at Takeda (formerly Shire), and previously held multiple clinical development roles at Novartis, Abbott, Pfizer and Eli Lilly and Company. Under Dr. Apostol’s leadership, the organization achieved 11 new product launches, progressed high-value generic regulatory filings based on commercial viability determinations and achieved critical study stage gates associated with the Company’s adhesive capsulitis and plantar fibromatosis development programs. Based on individual performance and Company performance against 2020 scorecard objectives, Dr. Apostol was awarded an annual performance-based bonus equal to approximately 153% of his
|
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Compensation of Executive Officers
Summary Compensation Table
The following table sets forth the cash andnon-cash compensation paid to or earned by our NEOs. Our NEOs consist of: (i) our current President and Chief Executive Officer, our current Executive Vice President and Chief Financial Officer and the three other three most highly compensated executive officers of the Companyindividuals who were serving as executive officers at the end of the last completed fiscal yearDecember 31, 2020 (collectively, the Current NEOs) and (ii) our former Chief Executive Officer and President and two other former executive officers that would have qualified as Current NEOs but for the fact that they ceased serving as executive officers in November 2020 (collectively, the Former NEOs). Information for each NEO is included for each of the years ending December 31, 2018, 20172020, 2019 and 20162018 in which that individual met the definition of an NEO. For a complete understanding of the table, please read the footnotes and narrative disclosures that follow the table. Included in the CD&A section above on page 22, under the heading “CEO Equity Compensation,” is additional information on how the expected targeted value of Mr. Campanelli’s 2018 LTI award compares to the amounts in the table below.
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Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Share Awards ($)(3) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||
Current Named Executive Officers: | ||||||||||||||||||||||||||||||||
Blaise Coleman President and Chief Executive | | 2020 2019 2018 | | $ $ $ | 829,365 612,115 569,231 | $ $ $ | 1,133,333 625,000 — | $ $ $ | 3,574,366 1,672,726 1,256,858 | $ $ $ | — — — |
| $ $ $ | 1,621,800 640,106 806,188 | $ $ $ | 10,839 21,701 3,385 | $ $ $ | 7,169,703 3,571,648 2,635,662 | ||||||||||||||
Mark Bradley Executive Vice President and Chief Financial Officer | 2020 | $ | 552,411 | $ | 624,448 | $ | 536,882 | $ | — | $ | 583,292 | $ | 11,589 | $ | 2,308,622 | |||||||||||||||||
Matthew J. Maletta Executive Vice President, | | 2020 2019 2018 | | $ $ $ | 665,385 595,192 549,038 | $ $ $ | 816,667 625,000 — | $ $ $ | 1,383,178 1,606,932 1,255,826 | | $ $ $ | — — — |
| $ $ $ | 620,100 568,360 707,781 |
| $ $ $ | 28,048 33,152 38,482 | $ $ $ | 3,513,378 3,428,636 2,551,127 | ||||||||||||
Patrick Barry Executive Vice President and President, Global Commercial Operations | | 2020 2019 | | $ $ | 540,577 433,885 | | $ $ | 739,333 625,000 | $ $ | 815,981 785,269 | | $ $ | — — | | $ $ | 587,664 397,005 | $ $ | 7,592 16,646 | | $ $ | 2,691,147 2,257,805 | |||||||||||
George Apostol, M.D.(6) Executive Vice President, | 2020 | $ | 352,301 | $ | 29,917 | $ | 174,998 | $ | — | $ | 424,709 | $ | 25,086 | $ | 1,007,011 | |||||||||||||||||
Former Named Executive Officers: | ||||||||||||||||||||||||||||||||
Paul V. Campanelli(7) Former Chief Executive | | 2020 2019 2018 | | $ $ $ | 986,538 950,000 913,462 | | $ $ $ | 6,500,000 1,500,000 — | $ $ $ | 5,603,699 8,631,243 12,928,700 | | $ $ $ | — — 3,857,212 |
| $ $ $ | 1,812,600 2,010,960 2,231,550 | $ $ $ | 16,366 26,078 39,779 | $ $ $ | 14,919,203 13,118,281 19,970,703 |
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Terrance J. Coughlin(7) Former Executive Vice | | 2020 2019 2018 | | $ $ $ | 679,615 637,923 597,115 | $ $ $ | 853,625 625,000 — |
| $ $ $ | 1,656,515 2,064,064 1,659,967 | $ $ $ | — — — |
| $ $ $ | 585,438 682,671 868,672 | $ $ $ | 4,956 8,647 3,692 | | $ $ $ | 3,780,149 4,018,305 3,129,446 | ||||||||||||
Domenico Ciarico(7) Former Executive Vice | 2020 | $ | 407,115 | $ | 345,833 | $ | 547,794 | $ | — | $ | 247,757 | $ | 1,500,666 | $ | 3,049,165 |
(1) |
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(2) | The amounts shown in this column for 2020 include (i) $2,000,000 for Mr. Campanelli pursuant to his CEO transition compensation arrangement, (ii) $625,000, $550,000, $625,000, $625,000, $625,000 and $187,500 for Messrs. Coleman, Bradley, Maletta, Barry, Coughlin and Ciarico, respectively, related to certain continuity compensation arrangements and (iii) $508,333, $74,448, $191,667, $114,333, $29,917, $4,500,000, $228,625 and $158,333 for Mr. Coleman, Mr. Bradley, Mr. Maletta, Mr. Barry, Dr. Apostol, Mr. Campanelli, Mr. Coughlin and Mr. Ciarico, respectively, related to previously issued LTC awards. Because Mr. Campanelli is considered retirement eligible under the Amended and Restated 2015 Stock Incentive Plan, which allows LTC awards to continue to vest following a termination of service in accordance with the original vesting schedules, and because Mr. Campanelli retired as an employee effective December 31, 2020, his entire LTC award issued in 2020 was considered earned in 2020 and is reflected as 2020 compensation in the table above. For each of the other NEOs, only one-sixth of their 2020 LTC awards, representing the portions vested, were considered earned and are reflected as 2020 compensation in the table above. |
58
(3) | The amounts shown in these columns represent the grant date fair value of the awards granted in |
Date PSU Award Issued |
Performance Period(s) UnderlyingFCF-Based PSU | Grant Dates with Respect to the Performance Periods Ending December 31, | Performance Period(s) Underlying FCF-Based PSU Award | Grant Dates with Respect to the Performance Periods Ending December 31, | ||||||||||||||||||||||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||||||||||||||||||||||||
21-Feb 17 |
Calendar years 2017-2019 (separateone-year periods) |
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21-Feb 17 |
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01-Mar 18 |
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08-Mar 19 |
| Calendar years 2017-2019 (separate one-year periods) |
| 01-Mar 18 |
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| 08-Mar 19 |
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02-Apr 18 |
Calendar years 2018-2020 (separateone-year periods) |
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02-Apr 18 |
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08-Mar 19 |
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TBD in 2020 |
| Calendar years 2018-2020 (separate one-year periods) |
| 02-Apr 18 |
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| 08-Mar 19 |
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| 19-Feb 20 |
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31-Jul 18 |
Calendar years 2018-2020 (separateone-year periods) |
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31-Jul 18 |
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08-Mar 19 |
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TBD in 2020 |
| Calendar years 2018-2020 (separate one-year periods) |
| 31-Jul 18 |
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| 08-Mar 19 |
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| 19-Feb 20 |
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29-Mar 19
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Calendar years 2019-2021 (one three-year period) |
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29-Mar 19 |
| Calendar years 2019-2021 (one three-year period) |
| 29-Mar 19 |
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31-Mar 19 | Calendar years 2019-2021 (one three-year period)
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31-Mar 19 |
| Calendar years 2019-2021 (one three-year period) |
| 31-Mar 19 |
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06-Mar 20 | Calendar years 2020-2022 (one three-year period) |
| 06-Mar 20 |
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05-Mar 21 | Calendar years 2021-2023 (one three-year period) |
| 05-Mar 21 |
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44
For additional information on the current year amounts included in the Summary Compensation Table, refer to the “2018“2020 Grants of Plan-Based Awards” table below.
The amounts shown in this column represent cash amounts earned pursuant to the Company’s annual incentive compensation program with respect to |
The amounts shown in this column for |
Name
| Perquisites &
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Registrant
| Life Insurance
| Other(d)
| Total
| Perquisites & Other Personal Benefits (a) |
Registrant | Life Insurance Premiums (c) | Other (d) | Total | ||||||||||||||||||||||||||||||
Current Named Executive Officers: | Current Named Executive Officers: | |||||||||||||||||||||||||||||||||||||||
Blaise Coleman | $ | 6,072 |
| $ | 4,767 |
| $ | — |
| $ | — |
| $ | 10,839 |
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Mark Bradley | $ | 3,950 |
| $ | 7,639 |
| $ | — |
| $ | — |
| $ | 11,589 |
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Matthew J. Maletta | $ | 17,571 |
| $ | 10,477 |
| $ | — |
| $ | — |
| $ | 28,048 |
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Patrick Barry | $ | — |
| $ | 7,592 |
| $ | — |
| $ | — |
| $ | 7,592 |
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George Apostol, M.D. | $ | — |
| $ | 25,086 |
| $ | — |
| $ | — |
| $ | 25,086 |
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Former Named Executive Officers: | Former Named Executive Officers: | |||||||||||||||||||||||||||||||||||||||
Paul V. Campanelli | $ | 29,490 |
| $ | 5,846 |
| $ | 2,860 |
| $ | 1,583 |
| $ | 39,779 |
| $ | 4,615 |
| $ | 7,308 |
| $ | 2,860 |
| $ | 1,583 |
| $ | 16,366 |
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Blaise Coleman | $ | — |
| $ | 3,385 |
| $ | — |
| $ | — |
| $ | 3,385 |
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Terrance J. Coughlin | $ | — |
| $ | 3,692 |
| $ | — |
| $ | — |
| $ | 3,692 |
| $ | — |
| $ | 4,956 |
| $ | — |
| $ | — |
| $ | 4,956 |
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Matthew J. Maletta | $ | 27,482 |
| $ | 11,000 |
| $ | — |
| $ | — |
| $ | 38,482 |
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Tony Pera | $ | 36,010 |
| $ | 3,538 |
| $ | — |
| $ | — |
| $ | 39,548 |
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Domenico Ciarico | $ | 14,507 |
| $ | 3,731 |
| $ | — |
| $ | 1,482,428 |
| $ | 1,500,666 |
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(a) |
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59
(b) | Represents the employer’s |
(c) | Represents annual premiums paid by the Company for executive term life insurance policies. |
(d) |
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(7) | Mr. Campanelli served as Chief Executive Officer and President |
The employment agreements, short-term and long-term incentive compensation program and awards, explanation of amount of salary and bonus in proportion to total compensation and other elements of the Summary Compensation Table are discussed at length in the CD&A section above.
45
20182020 Grants of Plan-Based Awards
The following table summarizes grants of plan-based awards made to the NEOs, including grants made under the Amended and Restated 2015 Stock Incentive Plan, during the year ended December 31, 2018.2020.
Estimated Future Payouts UnderNon-Equity Incentive Plan Awards(2) |
Estimated Future Payouts Plan Awards(3) | All Other
| All Other
| Exercise
| Grant Date
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| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) |
| Estimated Future Payouts Plan Awards(3) | All Other Stock Awards (number of shares of stock or units) (#)(4) | All Other Option Awards (number of securities underlying options) (#)(4) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock & Option Awards ($)(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Grant
| Action
| Threshold
| Target
| Maximum
| Threshold
| Target
| Maximum
| Grant Date(1) | Action Date(1) | Threshold ($) | Target ($) | Maximum ($) |
| Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul V. Campanelli(6) |
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— |
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— |
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$ |
— |
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1,140,000 |
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2,565,000 |
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— |
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— |
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— |
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— |
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— |
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$ |
— |
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$ |
— |
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| 01-Mar 18 |
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| 21-Feb 17 |
| $ | — |
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| — |
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| — |
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| — |
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| 37,907 |
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| 75,814 |
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| — |
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| — |
| $ | — |
| $ | 247,533 |
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| 02-Apr 18 |
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| 13-Feb 18 |
| $ | — |
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| — |
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| — |
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| — |
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| 200,000 |
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| 400,000 |
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| — |
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| — |
| $ | — |
| $ | 1,609,000 |
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Current Named Executive Officers: | Current Named Executive Officers: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02-Apr 18 |
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| 13-Feb 18 |
| $ | — |
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| — |
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| — |
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| — |
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| — |
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| — |
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| 900,000 |
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| — |
| $ | — |
| $ | 5,103,000 |
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| 07-Jun 18 |
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| 10-Aug 17 |
| $ | — |
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| — |
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| — |
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| — |
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| — |
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| — |
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| — |
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| 971,590 |
| $ | 7.55 |
| $ | 3,857,212 |
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| 07-Jun 18 |
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| 10-Aug 17 |
| $ | — |
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| — |
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| — |
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| — |
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| — |
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| — |
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| 120,039 |
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| — |
| $ | — |
| $ | 937,505 |
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| 31-Jul 18 |
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| 31-Jul 18 |
| $ | — |
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| — |
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| — |
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| — |
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| 64,549 |
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| 129,098 |
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| — |
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| — |
| $ | — |
| $ | 1,418,141 |
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| 31-Jul 18
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| 31-Jul 18
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| $
| —
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| —
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| —
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| —
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| —
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| —
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| 290,476
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| —
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| $
| —
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| $
| 3,613,521
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Blaise Coleman | — | — | $ | — | $ | 850,000 | $ | 1,912,500 |
| — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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— |
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— |
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$ |
— |
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390,000 |
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877,500 |
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— |
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— |
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— |
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— |
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— |
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$ |
— |
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$ |
— |
| 19-Feb 20 | 13-Feb 18 | $ | — | $ | — | $ | — |
| — | 9,094 | 18,188 | — | — | $ | — | $ | 56,928 | |||||||||||||||||||||||||||||||||||||||||||||||
| 01-Mar 18 |
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| 21-Feb 17 |
| $ | — |
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| — |
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| — |
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| — |
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| 5,528 |
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| 11,056 |
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| — |
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| — |
| $ | — |
| $ | 36,098 |
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| 02-Apr 18 |
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| 13-Feb 18 |
| $ | — |
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| — |
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| — |
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| — |
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| 36,375 |
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| 72,750 |
|
| — |
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| — |
| $ | — |
| $ | 292,638 |
| 06-Mar 20 | 19-Feb 20 | $ | — | $ | — | $ | — |
| — | 663,042 | 1,326,084 | — | — | $ | — | $ | 3,517,438 | |||||||||||||||||||||||||||||||||||||||||||||||
| 02-Apr 18
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| 13-Feb 18
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| $
| —
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| —
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| —
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| —
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| —
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| —
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| 163,690
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| —
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| $
| —
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| $
| 928,122
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Mark Bradley | — | — | $ | — | $ | 316,250 | $ | 711,563 |
| — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19-Feb 20 | 13-Feb 18 | $ | — | $ | — | $ | — |
| — | 3,473 | 6,946 | — | — | $ | — | $ | 21,741 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
06-Mar 20 | 19-Feb 20 | $ | — | $ | — | $ | — |
| — | 97,105 | 194,210 | — | — | $ | — | $ | 515,141 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Matthew J. Maletta | — | — | $ | — | $ | 390,000 | $ | 877,500 |
| — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19-Feb 20 | 13-Feb 18 | $ | — | $ | — | $ | — |
| — | 9,094 | 18,188 | — | — | $ | — | $ | 56,928 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
06-Mar 20 | 19-Feb 20 | $ | — | $ | — | $ | — |
| — | 250,000 | 500,000 | — | — | $ | — | $ | 1,326,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patrick Barry | — | — | $ | — | $ | 330,000 | $ | 742,500 |
| — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19-Feb 20 | 13-Feb 18 | $ | — | $ | — | $ | — |
| — | 3,969 | 7,938 | — | — | $ | — | $ | 24,846 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
06-Mar 20 | 19-Feb 20 | $ | — | $ | — | $ | — |
| — | 149,130 | 298,260 | — | — | $ | — | $ | 791,135 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
George Apostol, M.D. | — | — | $ | — | $ | 278,242 | $ | 626,045 |
| — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
01-Jun 20 | 01-Jun 20 | $ | — | $ | — | $ | — |
| — | — | — | 45,811 | — | $ | — | $ | 174,998 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former Named Executive Officers: | Former Named Executive Officers: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul V. Campanelli | — | — | $ | — | $ | 1,425,000 | $ | 3,206,250 |
| — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19-Feb 20 | 13-Feb 18 | $ | — | $ | — | $ | — |
| — | 50,000 | 100,000 | — | — | $ | — | $ | 313,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19-Feb 20 | 31-Jul 18 | $ | — | $ | — | $ | — |
| — | 16,139 | 32,278 | — | — | $ | — | $ | 101,030 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
06-Mar 20 | 19-Feb 20 | $ | — | $ | — | $ | — |
| — | 978,260 | 1,956,520 | — | — | $ | — | $ | 5,189,669 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Terrance J. Coughlin | — | — | $ | — | $ | 460,250 | $ | 1,035,563 |
| — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
— |
|
|
— |
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$ |
— |
|
|
437,500 |
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|
984,375 |
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|
— |
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|
— |
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|
— |
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|
— |
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|
— |
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$ |
— |
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$ |
— |
| 19-Feb 20 | 13-Feb 18 | $ | — | $ | — | $ | — |
| — | 11,906 | 23,812 | — | — | $ | — | $ | 74,532 | |||||||||||||||||||||||||||||||||||||||||||||||
| 01-Mar 18 |
|
| 21-Feb 17 |
| $ | — |
|
| — |
|
| — |
|
| — |
|
| 9,477 |
|
| 18,954 |
|
| — |
|
| — |
| $ | — |
| $ | 61,885 |
| 06-Mar 20 | 19-Feb 20 | $ | — | $ | — | $ | — |
| — | 298,206 | 596,412 | — | — | $ | — | $ | 1,581,983 | |||||||||||||||||||||||||||||||||||||||||||||||
| 02-Apr 18 |
|
| 13-Feb 18 |
| $ | — |
|
| — |
|
| — |
|
| — |
|
| 47,618 |
|
| 95,236 |
|
| — |
|
| — |
| $ | — |
| $ | 383,086 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02-Apr 18
|
|
| 13-Feb 18
|
| $
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 214,285
|
|
| —
|
| $
| —
|
| $
| 1,214,996
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Matthew J. Maletta |
|
— |
|
|
— |
|
$ |
— |
|
|
345,000 |
|
|
776,250 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
— |
|
$ |
— |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 01-Mar 18 |
|
| 21-Feb 17 |
| $ | — |
|
| — |
|
| — |
|
| — |
|
| 5,370 |
|
| 10,740 |
|
| — |
|
| — |
| $ | — |
| $ | 35,066 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02-Apr 18 |
|
| 13-Feb 18 |
| $ | — |
|
| — |
|
| — |
|
| — |
|
| 36,375 |
|
| 72,750 |
|
| — |
|
| — |
| $ | — |
| $ | 292,638 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02-Apr 18
|
|
| 13-Feb 18
|
| $
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 163,690
|
|
| —
|
| $
| —
|
| $
| 928,122
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tony Pera |
|
— |
|
|
— |
|
$ |
— |
|
|
259,325 |
|
|
583,481 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
— |
|
$ |
— |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 01-Mar 18 |
|
| 21-Feb 17 |
| $ | — |
|
| — |
|
| — |
|
| — |
|
| 3,875 |
|
| 7,750 |
|
| — |
|
| — |
| $ | — |
| $ | 25,304 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02-Apr 18 |
|
| 13-Feb 18 |
| $ | — |
|
| — |
|
| — |
|
| — |
|
| 24,337 |
|
| 48,674 |
|
| — |
|
| — |
| $ | — |
| $ | 195,791 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02-Apr 18
|
|
| 13-Feb 18
|
| $
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 109,523
|
|
| —
|
| $
| —
|
| $
| 620,995
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domenico Ciarico | — | — | $ | — | $ | 194,778 | $ | 438,251 |
| — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
06-Mar 20 | 19-Feb 20 | $ | — | $ | — | $ | — |
| — | 103,260 | 206,520 | — | — | $ | — | $ | 547,794 |
(1) | The grant date is determined in accordance with ASC 718. The action date is the date on which the Board took action to issue such awards. |
(2) | The amounts shown in these columns represent the target and maximum annual incentive compensation program payouts approved by the Compensation & Human Capital Committee for |
60
(3) | The quantities shown in these columns represent the target and maximum quantity of shares that may be released at the end of the vesting period of PSUs deemed to have been granted in accordance with ASC 718 during |
46
(4) | The |
(5) | The amounts shown in this column represent the grant date fair values of the stock awards determined in accordance with ASC 718. Refer to footnote |
Details of the equity-based portions of the Company’s 2020 LTI compensation grants, which were approved by the Compensation & Human Capital Committee in February 2021 based on 2020 performance, are set forth for each of the eligible NEOs in the following table.
Name |
Annual
|
Grant Date Fair Value of
| ||||||
Blaise Coleman |
| 1,019,313 | $ | 8,062,766 | ||||
Mark Bradley |
| 215,932 | $ | 1,708,021 | ||||
Matthew J. Maletta |
| 251,071 | $ | 1,985,971 | ||||
Patrick Barry |
| 206,544 | $ | 1,633,763 | ||||
George Apostol, M.D. |
| 112,356 | $ | 888,736 |
(1) | These amounts consist of PSUs and RSUs approved by the Compensation |
Name |
2018 Annual
|
Grant Date Fair Value of 2018
| ||||||
Paul V. Campanelli |
| 896,636 |
| $ | 7,731,244 |
| ||
Blaise Coleman |
| 179,326 |
| $ | 1,546,237 |
| ||
Terrance J. Coughlin |
| 217,932 |
| $ | 1,879,119 |
| ||
Matthew J. Maletta |
| 171,854 |
| $ | 1,481,810 |
| ||
Tony Pera |
| 93,946 |
| $ | 810,048 |
|
|
|
The amounts shown in this column represent the grant date fair values of the awards determined in accordance with ASC 718. Refer to footnote |
|
See the CD&A section above regarding the material terms, determining amounts payable, vesting scheduleschedules and other material conditions of these grants, including pages 35 to 36 summarizingthe summarized performance conditions associated with Endo’s PSU awards.awards, included under Executive Compensation Program—Long-Term Incentive Compensation—Performance Share Units.
4761
Outstanding Equity Awards at December 31, 20182020
The following table summarizes the number of securities underlying outstanding plan awards for the NEOs at December 31, 2018.2020. Amounts in this table and the related footnotes do not include options and awards for which a grant date has not yet occurred in accordance with ASC 718.
Option Awards
|
Stock Awards
|
Option Awards
|
Stock Awards
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Number of
| Number of
|
Equity
| Option
| Option
| Number of
| Market Value of
|
Equity
| Equity Incentive
| Number of
| Number of
|
Equity
| Option
| Option
| Number of
| Market Value of
|
Equity
| Equity Incentive
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul V. Campanelli |
|
323,864 |
|
|
647,726 |
|
|
— |
|
$ |
7.55 |
|
|
10-Aug 27 |
|
|
— |
|
$ |
— |
|
|
— |
|
$ |
— |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 127,551 |
|
| 382,653 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 286,430 |
|
| 143,215 |
|
| — |
| $ | 21.99 |
|
| 26-Sep 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 19,938 |
|
| 19,937 |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 42,690 |
|
| 14,230 |
|
| — |
| $ | 61.82 |
|
| 28-Sep 25 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 1,636,857 |
| $ | 11,949,056 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| 477,730
|
| $
| 4,461,686
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Named Executive Officers: | Current Named Executive Officers: |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Blaise Coleman |
|
86,806 |
|
|
173,610 |
|
|
— |
|
$ |
7.55 |
|
|
10-Aug 27 |
|
|
— |
|
$ |
— |
|
|
— |
|
$ |
— |
|
| 260,416 |
|
| — |
|
| — |
| $ | 7.55 |
|
| 10-Aug 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||
| 18,601 |
|
| 55,803 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
|
| 55,803 |
|
| 18,601 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||
Blaise Coleman |
| 20,246 |
|
| — |
|
| — |
| $ | 14.30 |
|
| 16-May 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,063 |
|
| — |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 114,338 |
| $ | 820,947 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| — |
| $ | — |
|
| 807,268 |
| $ | 5,983,319 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 33,143 |
|
| — |
|
| — |
| $ | 7.55 |
|
| 10-Aug 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,818 |
|
| 4,606 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mark Bradley |
| 9,536 |
|
| — |
|
| — |
| $ | 14.30 |
|
| 16-May 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,872 |
|
| — |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,976 |
|
| — |
|
| — |
| $ | 85.25 |
|
| 24-Feb 22 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,635 |
|
| — |
|
| — |
| $ | 34.70 |
|
| 22-Feb 22 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,432 |
|
| — |
|
| — |
| $ | 79.33 |
|
| 26-Feb 21 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,360 |
|
| — |
|
| — |
| $ | 33.98 |
|
| 23-Feb 21 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 38,703 |
| $ | 277,888 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| — |
| $ | — |
|
| 144,743 |
| $ | 1,110,708 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 260,416 |
|
| — |
|
| — |
| $ | 7.55 |
|
| 10-Aug 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 54,209 |
|
| 18,069 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Matthew J. Maletta |
| 19,140 |
|
| — |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 17,394 |
|
| — |
|
| — |
| $ | 61.22 |
|
| 31-Dec 25 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,403 |
|
| — |
|
| — |
| $ | 86.54 |
|
| 29-Apr 25 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 111,847 |
| $ | 803,061 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| — |
| $ | — |
|
| 390,490 |
| $ | 2,990,853 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 85,227 |
|
| — |
|
| — |
| $ | 7.55 |
|
| 10-Aug 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 24,234 |
|
| 8,078 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patrick Barry |
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 52,036 |
| $ | 373,618 |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| — |
| $ | — |
|
| 215,280 |
| $ | 1,627,371 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 45,811 |
| $ | 328,923 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,498 |
|
| 6,748 |
|
| — |
| $ | 14.30 |
|
| 16-May 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,532 |
|
| 2,531 |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 265,620 |
| $ | 1,939,026 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| 65,516
|
| $
| 616,322
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former Named Executive Officers: | Former Named Executive Officers: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul V. Campanelli (5) |
| 971,590 |
|
| — |
|
| — |
| $ | 7.55 |
|
| 10-Aug 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 382,653 |
|
| 127,551 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 429,645 |
|
| — |
|
| — |
| $ | 21.99 |
|
| 26-Sep 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 39,875 |
|
| — |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 56,920 |
|
| — |
|
| — |
| $ | 61.82 |
|
| 28-Sep 25 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| — |
| $ | — |
|
| 1,823,403 |
| $ | 14,453,007 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Terrance J. Coughlin |
|
85,227 |
|
|
170,454 |
|
|
— |
|
$ |
7.55 |
|
|
10-Aug 27 |
|
|
— |
|
$ |
— |
|
|
— |
|
$ |
— |
|
| 255,681 |
|
| — |
|
| — |
| $ | 7.55 |
|
| 10-Aug 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||
| 31,888 |
|
| 95,663 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
|
| 95,664 |
|
| 31,887 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||
| 8,701 |
|
| 8,700 |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,481 |
|
| 4,493 |
|
| — |
| $ | 61.82 |
|
| 28-Sep 25 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 330,984 |
| $ | 2,416,183 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| 105,320
|
| $
| 978,603
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Matthew J. Maletta |
|
86,806 |
|
|
173,610 |
|
|
— |
|
$ |
7.55 |
|
|
10-Aug 27 |
|
|
— |
|
$ |
— |
|
|
— |
|
$ |
— |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 18,070 |
|
| 54,208 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,570 |
|
| 9,570 |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,046 |
|
| 4,348 |
|
| — |
| $ | 61.22 |
|
| 31-Dec 25 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10,053 |
|
| 3,350 |
|
| — |
| $ | 86.54 |
|
| 29-Apr 25 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 266,499 |
| $ | 1,945,443 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| 74,575
|
| $
| 680,405
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tony Pera |
|
36,301 |
|
|
72,600 |
|
|
— |
|
$ |
7.55 |
|
|
10-Aug 27 |
|
|
— |
|
$ |
— |
|
|
— |
| $ | — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,039 |
|
| 39,115 |
|
| — |
| $ | 13.19 |
|
| 21-Feb 27 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,862 |
|
| 3,861 |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,872 |
|
| 1,290 |
|
| — |
| $ | 70.02 |
|
| 01-Oct 25 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 158,467 |
| $ | 1,156,809 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| —
|
|
| —
|
| $
| —
|
|
| 48,290
|
| $
| 447,169
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Terrance J. Coughlin |
| 17,401 |
|
| — |
|
| — |
| $ | 50.22 |
|
| 23-Feb 26 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 17,974 |
|
| — |
|
| — |
| $ | 61.82 |
|
| 28-Sep 25 |
|
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| 144,072 |
| $ | 1,034,437 |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
| $ | — |
|
| — |
|
| — |
| $ | — |
|
| 478,600 |
| $ | 3,681,321 |
|
(1) | The options expiring on February 21, 2027 were granted on February 21, 2017 with one-fourthvesting |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
4862
(2) | These amounts consist of the following PSUs and RSUs: |
Name
| Grant Date
|
Performance Share Units |
Restricted Stock Units | Grant Date
|
Performance Share Units |
Restricted Stock Units | ||||||||||||||||||||||||||||||||||||||
Number of
| Vest Date
|
Number of Shares or
| Vest Dates (Percentages Refer to Quantity
|
Number of
| Vest Dates
|
Number of Shares or
| Vest Dates (Percentages Refer to Quantity
| |||||||||||||||||||||||||||||||||||||
Current Named Executive Officers: | Current Named Executive Officers: |
| ||||||||||||||||||||||||||||||||||||||||||
Blaise Coleman |
| 02-Apr 18 |
|
| 36,375 |
|
| 02-Apr 21 |
|
| 54,563 |
| 33-1/3% on each of 02-Apr 2019, 20 and 21 | |||||||||||||||||||||||||||||||
| 08-Mar 19 |
|
| 9,094 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 29-Mar 19 |
|
| 89,663 |
|
| 29-Mar 22 |
|
| 59,775 |
| 33-1/3% on each of 29-Mar 2020, 21 and 22 | ||||||||||||||||||||||||||||||||
| 19-Feb 20 |
|
| 9,094 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 06-Mar 20 |
|
| 663,042 |
|
| 06-Mar 23 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
Mark Bradley |
| 02-Apr 18 |
|
| 13,888 |
|
| 02-Apr 21 |
|
| 20,833 |
| 33-1/3% on each of 02-Apr 2019, 20 and 21 | |||||||||||||||||||||||||||||||
| 08-Mar 19 |
|
| 3,472 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 29-Mar 19 |
|
| 26,805 |
|
| 29-Mar 22 |
|
| 17,870 |
| 33-1/3% on each of 29-Mar 2020, 21 and 22 | ||||||||||||||||||||||||||||||||
| 19-Feb 20 |
|
| 3,473 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 06-Mar 20 |
|
| 97,105 |
|
| 06-Mar 23 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
Matthew J. Maletta |
| 02-Apr 18 |
|
| 36,375 |
|
| 02-Apr 21 |
|
| 54,563 |
| 33-1/3% on each of 02-Apr 2019, 20 and 21 | |||||||||||||||||||||||||||||||
| 08-Mar 19 |
|
| 9,094 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 29-Mar 19 |
|
| 85,927 |
|
| 29-Mar 22 |
|
| 57,284 |
| 33-1/3% on each of 29-Mar 2020, 21 and 22 | ||||||||||||||||||||||||||||||||
| 19-Feb 20 |
|
| 9,094 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 06-Mar 20 |
|
| 250,000 |
|
| 06-Mar 23 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
Patrick Barry |
| 02-Apr 18 |
|
| 15,872 |
|
| 02-Apr 21 |
|
| 23,809 |
| 33-1/3% on each of 02-Apr 2019, 20 and 21 | |||||||||||||||||||||||||||||||
| 08-Mar 19 |
|
| 3,968 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 29-Mar 19 |
|
| 42,341 |
|
| 29-Mar 22 |
|
| 28,227 |
| 33-1/3% on each of 29-Mar 2020, 21 and 22 | ||||||||||||||||||||||||||||||||
| 19-Feb 20 |
|
| 3,969 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 06-Mar 20 |
|
| 149,130 |
|
| 06-Mar 23 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
George Apostol, M.D. |
| 01-Jun 20 |
|
| — |
|
| — |
|
| 45,811 |
| 33-1/3% on each of 01-Jun 2021, 22 and 23 | |||||||||||||||||||||||||||||||
Former Named Executive Officers: | Former Named Executive Officers: |
| ||||||||||||||||||||||||||||||||||||||||||
Paul V. Campanelli |
|
28-Sep 15 |
|
|
— |
|
|
— |
|
|
3,841 |
|
25% on each of28-Sep 2016, 17, 18 and 19 |
| 02-Apr 18 |
|
| 200,000 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||
| 23-Feb 16 |
|
| 23,645 |
|
| 23-Feb 19 |
|
| 5,910 |
| 25% on each of23-Feb 2017, 18, 19 and 20 |
| 31-Jul 18 |
|
| 64,549 |
|
| 10-Aug 21 |
|
| — |
| — | |||||||||||||||||||
| 21-Feb 17 |
|
| 151,629 |
|
| 21-Feb 20 |
|
| 151,630 |
| 33-1/3% on each of21-Feb 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 10-Aug 17 |
|
| — |
|
| — |
|
| 204,974 |
| 33-1/3% on each of10-Aug 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 01-Mar 18 |
|
| 37,907 |
|
| 21-Feb 20 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 02-Apr 18 |
|
| 200,000 |
|
| 02-Apr 21 |
|
| 900,000 |
| 33-1/3% on each of02-Apr 2019, 20 and 21 | ||||||||||||||||||||||||||||||||
| 07-Jun 18 |
|
| — |
|
| — |
|
| 80,026 |
| 33-1/3% on each of10-Aug 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 31-Jul 18
|
|
| 64,549
|
|
| 10 Aug 21
|
|
| 290,476
|
| 33-1/3% on each of10-Aug 2019, 20 and 21
| ||||||||||||||||||||||||||||||||
Blaise Coleman |
|
23-Feb 16 |
|
|
1,501 |
|
|
23-Feb 19 |
|
|
750 |
|
25% on each of23-Feb 2017, 18, 19 and 20 | |||||||||||||||||||||||||||||||
| 16-May 16 |
|
| — |
|
| — |
|
| 2,680 |
| 25% on each of16-May 2017, 18, 19 and 20 | ||||||||||||||||||||||||||||||||
| 21-Feb 17 |
|
| 22,112 |
|
| 21-Feb 20 |
|
| 22,112 |
| 33-1/3% on each of21-Feb 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 10-Aug 17 |
|
| — |
|
| — |
|
| 76,388 |
| 33-1/3% on each of10-Aug 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 01-Mar 18 |
|
| 5,528 |
|
| 21-Feb 20 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 02-Apr 18
|
|
| 36,375
|
|
| 02-Apr 21
|
|
| 163,690
|
| 33-1/3% on each of02-Apr 2019, 20 and 21
| ||||||||||||||||||||||||||||||||
Paul V. Campanelli |
| 08-Mar 19 |
|
| 50,000 |
|
| 02-Apr 21 |
|
| — |
| — | |||||||||||||||||||||||||||||||
| 08-Mar 19 |
|
| 16,137 |
|
| 10-Aug 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 31-Mar 19 |
|
| 448,318 |
|
| 29-Mar 22 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 19-Feb 20 |
|
| 50,000 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 19-Feb 20 |
|
| 16,139 |
|
| 10-Aug 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 06-Mar 20 |
|
| 978,260 |
|
| 06-Mar 23 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
|
28-Sep 15 |
|
|
— |
|
|
— |
|
|
1,213 |
|
25% on each of28-Sep 2016, 17, 18 and 19 |
| 02-Apr 18 |
|
| 47,618 |
|
| 02-Apr 21 |
|
| 71,428 |
| 33-1/3% on each of 02-Apr 2019, 20 and 21 | |||||||||||||||||||
| 23-Feb 16 |
|
| 10,318 |
|
| 23-Feb 19 |
|
| 2,579 |
| 25% on each of23-Feb 2017, 18, 19 and 20 |
| 08-Mar 19 |
|
| 11,904 |
|
| 02-Apr 21 |
|
| — |
| — | |||||||||||||||||||
| 21-Feb 17 |
|
| 37,907 |
|
| 21-Feb 20 |
|
| 37,907 |
| 33-1/3% on each of21-Feb 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 10-Aug 17 |
|
| — |
|
| — |
|
| 75,000 |
| 33-1/3% on each of10-Aug 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 01-Mar 18 |
|
| 9,477 |
|
| 21-Feb 20 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 02-Apr 18
|
|
| 47,618
|
|
| 02-Apr 21
|
|
| 214,285
|
| 33-1/3% on each of02-Apr 2019, 20 and 21
| ||||||||||||||||||||||||||||||||
Matthew J. Maletta |
|
29-Apr 15 |
|
|
— |
|
|
— |
|
|
902 |
|
25% on each of29-Apr 2016, 17, 18 and 19 | |||||||||||||||||||||||||||||||
| 31-Dec 15 |
|
| — |
|
| — |
|
| 1,202 |
| 25% on each of31-Dec 2016, 17, 18 and 19 | ||||||||||||||||||||||||||||||||
| 23-Feb 16 |
|
| 11,350 |
|
| 23-Feb 19 |
|
| 2,837 |
| 25% on each of23-Feb 2017, 18, 19 and 20 | ||||||||||||||||||||||||||||||||
| 21-Feb 17 |
|
| 21,480 |
|
| 21-Feb 20 |
|
| 21,480 |
| 33-1/3% on each of21-Feb 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 10-Aug 17 |
|
| — |
|
| — |
|
| 76,388 |
| 33-1/3% on each of10-Aug 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 01-Mar 18 |
|
| 5,370 |
|
| 21-Feb 20 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 02-Apr 18
|
|
| 36,375
|
|
| 02-Apr 21
|
|
| 163,690
|
| 33-1/3% on each of02-Apr 2019, 20 and 21
| ||||||||||||||||||||||||||||||||
Tony Pera |
|
01-Oct 15 |
|
|
— |
|
|
— |
|
|
357 |
|
25% on each of01-Oct 2016, 17, 18 and 19 | |||||||||||||||||||||||||||||||
| 23-Feb 16 |
|
| 4,579 |
|
| 23-Feb 19 |
|
| 1,144 |
| 25% on each of23-Feb 2017, 18, 19 and 20 | ||||||||||||||||||||||||||||||||
| 21-Feb 17 |
|
| 15,499 |
|
| 21-Feb 20 |
|
| 15,499 |
| 33-1/3% on each of21-Feb 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 10-Aug 17 |
|
| — |
|
| — |
|
| 31,944 |
| 33-1/3% on each of10-Aug 2018, 19 and 20 | ||||||||||||||||||||||||||||||||
| 01-Mar 18 |
|
| 3,875 |
|
| 21-Feb 20 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 02-Apr 18
|
|
| 24,337
|
|
| 02-Apr 21
|
|
| 109,523
|
| 33-1/3% on each of02-Apr 2019, 20 and 21
| ||||||||||||||||||||||||||||||||
Terrance J. Coughlin |
| 29-Mar 19 |
|
| 108,966 |
|
| 29-Mar 22 |
|
| 72,644 |
| 33-1/3% on each of 29-Mar 2020, 21 and 22 | |||||||||||||||||||||||||||||||
| 19-Feb 20 |
|
| 11,906 |
|
| 02-Apr 21 |
|
| — |
| — | ||||||||||||||||||||||||||||||||
| 06-Mar 20 |
|
| 298,206 |
|
| 06-Mar 23 |
|
| — |
| — |
(3) | These values were calculated by multiplying the number of unvested RSUs by the closing price of |
(4) | ForFCF-based PSUs, this value was calculated by multiplying the number of unvested units for which a grant date has occurred as of December 31, 2020 by the product of the closing price of $7.18 per share on December 31, 2020 and either: (i) the target payout multiple for incomplete performance periods or (ii) the expected final payout multiple associated with completed performance periods. For TSR-based PSUs, these values represent the number of shares that would be earned at target performance levels and were calculated by multiplying the number of unvested units by the closing price of |
(5) | Because Mr. Campanelli is considered retirement eligible under the Amended and Restated 2015 Stock Incentive Plan, which allows RSUs to continue to vest following a termination of service in accordance with the original vesting schedules, and because Mr. Campanelli retired as an employee effective December 31, 2020, his unvested RSUs outstanding |
4963
immediately prior to his December 31, 2020 retirement were considered to be earned on December 31, 2020 and therefore excluded from the table above. |
Option Exercises and Stock Vested in 20182020
The following table summarizes the stock option exercises by the NEOs and share vestings during the year ended December 31, 2018.2020.
Option Awards
|
Stock Awards
|
Option Awards
|
Stock Awards
| |||||||||||||||||||||||||||||||||||||
Name
|
Number of Shares
| Value Realized
|
Number of Shares
| Value Realized on
|
Number of Shares
|
Value Realized
|
Number of Shares
|
Value Realized on
| ||||||||||||||||||||||||||||||||
Paul V. Campanelli |
| — |
| $ | — |
|
| 225,113 |
| $ | 2,822,266 |
| ||||||||||||||||||||||||||||
Current Named Executive Officers: | Current Named Executive Officers: | |||||||||||||||||||||||||||||||||||||||
Blaise Coleman |
| — |
| $ | — |
|
| 52,307 |
| $ | 691,046 |
|
| — |
| $ | — |
|
| 164,471 | $ | 653,381 |
| |||||||||||||||||
Mark Bradley |
| — |
| $ | — |
|
| 45,327 | $ | 176,502 |
| |||||||||||||||||||||||||||||
Matthew J. Maletta |
| — |
| $ | — |
|
| 163,085 | $ | 648,205 |
| |||||||||||||||||||||||||||||
Patrick Barry |
| — |
| $ | — |
|
| 68,423 | $ | 273,430 |
| |||||||||||||||||||||||||||||
George Apostol, M.D. |
| — |
| $ | — |
|
| — |
| $ | — |
| ||||||||||||||||||||||||||||
Former Named Executive Officers: | Former Named Executive Officers: | |||||||||||||||||||||||||||||||||||||||
Paul V. Campanelli (3) |
| — |
| $ | — |
|
| 1,671,668 | $ | 8,980,961 |
| |||||||||||||||||||||||||||||
Terrance J. Coughlin |
| — |
| $ | — |
|
| 60,957 |
| $ | 776,601 |
|
| — |
| $ | — |
|
| 217,599 | $ | 910,783 |
| |||||||||||||||||
Matthew J. Maletta |
| — |
| $ | — |
|
| 52,461 |
| $ | 693,543 |
| ||||||||||||||||||||||||||||
Tony Pera |
| — |
| $ | — |
|
| 24,651 |
| $ | 311,774 |
| ||||||||||||||||||||||||||||
Domenico Ciarico |
| — |
| $ | — |
|
| 88,586 | $ | 305,452 |
|
(1) |
|
(2) | Amounts in this column were calculated by multiplying the number of shares issued in respect of awards vested by the market price of the underlying securities at vesting. |
(3) | Because Mr. Campanelli is considered retirement eligible under the Amended and Restated 2015 Stock Incentive Plan, which allows RSUs to continue to vest following a termination of service in accordance with the original vesting schedules, and because Mr. Campanelli retired as an employee effective December 31, 2020, his 695,703 unvested RSUs outstanding immediately prior to his December 31, 2020 retirement were considered to be earned on December 31, 2020 and are therefore included in the Number of Shares Acquired on Vesting and Value Realized on Vesting columns of the table above. The amount for RSUs was calculated by multiplying 695,703 outstanding RSUs as of December 31, 2020 by the closing price of our ordinary shares on December 31, 2020 of $7.18. Portions of these RSUs are not eligible to be converted into ordinary shares and/or paid until after the respective original vesting dates in 2021, 2022 and 2023 (determined without regard to retirement eligibility). |
2020 Nonqualified Deferred Compensation
Because Mr. Campanelli is considered retirement eligible under the Amended and Restated 2015 Stock Incentive Plan, which allows both RSUs and LTC awards to continue to vest following a termination of service in accordance with the original vesting schedules, and because Mr. Campanelli retired as an employee effective December 31, 2020, his unvested RSUs and LTC awards outstanding immediately prior to his December 31, 2020 retirement were considered to be earned on December 31, 2020 and are reflected as 2020 compensation in the Summary Compensation Table above. However, portions of these award are not eligible to be converted into ordinary shares and/or paid until after the respective original vesting dates in 2021, 2022 and 2023 (determined without regard to retirement eligibility). Amounts that have otherwise been earned but will not be converted into ordinary shares and/or paid under the plan until after the original vesting dates are considered nonqualified deferred compensation beginning on the December 31, 2020 retirement date and are reported in the table below solely because of the awards’ delayed settlement dates.
Name
|
Executive
|
Registrant
|
Aggregate
|
Aggregate
|
Aggregate Balance
| |||||||||||||||
Former Named Executive Officers: | ||||||||||||||||||||
Paul V. Campanelli | $ | — | $ | 8,745,148 | $ | — | $ | — | $ | 8,745,148 |
(1) | Represents amounts related to outstanding RSUs and LTC awards that were considered to be earned by Mr. Campanelli upon his December 31, 2020 retirement date that were not yet eligible to be converted into ordinary shares and/or paid as of December 31, 2020. The amount for RSUs was calculated by multiplying 695,703 outstanding RSUs as of December 31, 2020 by the closing price of our ordinary shares on December 31, 2020 of $7.18. |
(2) | Includes the remaining unpaid balance relating to RSUs and LTC awards issued and reported as compensation in the Summary Compensation Table. Of this amount: (i) $4,995,148, representing the balance related to RSUs, relates to amounts that were reported as compensation in the Summary Compensation table in years prior to 2020 and (ii) $3,750,000, representing the balance related to LTC awards, was reported as compensation in the Summary Compensation Table in 2020. |
5064
Potential Payments Upon Termination or Change in Control
The following tables showtable shows the potential payments to the NEOs upon termination or change of control (COC) as if such event(s) took place on December 31, 2018.2020. The amounts reflected in this table were determined using each NEO’s then-existing employment agreement, individual award agreements, and the respective equity plan(s) to which each award relates.relates and/or other compensatory arrangements. Dr. Apostol’s compensation is paid in euros and has been converted into U.S. dollars using the same conversion rate used for 2020 compensation in the Summary Compensation Table, as further described above. The equity award acceleration amounts in the table that follows were calculated using the closing price of our ordinary shares on December 31, 20182020 of $7.30.$7.18.
Name
| Cash Separation
| Health and Welfare
| Disability Insurance
|
Acceleration of
| Value of Term Life
|
Cash Separation
| Health and Welfare
| Disability Insurance
|
Acceleration of
| Value of Term Life
| ||||||||||||||||||||||||||||||
Termination for Cause, Resignation or Retirement | Termination for Cause, Resignation or Retirement |
| Termination for Cause, Resignation or Retirement | |||||||||||||||||||||||||||||||||||||
Paul V. Campanelli | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Blaise Coleman | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| ||||||||||
Terrance J. Coughlin | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Mark Bradley | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Matthew J. Maletta | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| ||||||||||
Tony Pera (6) | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Patrick Barry | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
George Apostol, M.D. | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Death | Death |
| Death | |||||||||||||||||||||||||||||||||||||
Paul V. Campanelli | $ | 2,231,550 |
| $ | 28,080 |
| $ | — |
| $ | 17,653,936 |
| $ | 2,000,000 |
| |||||||||||||||||||||||||
Blaise Coleman | $ | 806,188 |
| $ | 32,366 |
| $ | — |
| $ | 2,728,608 |
| $ | 1,000,000 |
| $ | 1,621,800 |
| $ | 29,108 |
| $ | — |
| $ | 6,225,369 |
| $ | 1,000,000 |
| ||||||||||
Terrance J. Coughlin | $ | 868,672 |
| $ | 32,366 |
| $ | — |
| $ | 3,637,993 |
| $ | 1,000,000 |
| |||||||||||||||||||||||||
Mark Bradley | $ | 583,292 |
| $ | 29,108 |
| $ | — |
| $ | 1,167,561 |
| $ | 756,000 |
| |||||||||||||||||||||||||
Matthew J. Maletta | $ | 707,781 |
| $ | 24,630 |
| $ | — |
| $ | 2,797,946 |
| $ | 1,000,000 |
| $ | 620,100 |
| $ | 25,398 |
| $ | — |
| $ | 3,215,017 |
| $ | 1,000,000 |
| ||||||||||
Tony Pera | $ | 453,419 |
| $ | 24,750 |
| $ | — |
| $ | 1,721,196 |
| $ | 920,000 |
| |||||||||||||||||||||||||
Patrick Barry | $ | 587,664 |
| $ | 29,108 |
| $ | — |
| $ | 1,748,380 |
| $ | 872,000 |
| |||||||||||||||||||||||||
George Apostol, M.D. | $ | 424,709 |
| $ | — |
| $ | — |
| $ | 328,923 |
| $ | 2,054,630 |
| |||||||||||||||||||||||||
Disability | Disability |
| Disability | |||||||||||||||||||||||||||||||||||||
Paul V. Campanelli | $ | 2,231,550 |
| $ | 49,286 |
| $ | 1,540,000 |
| $ | 28,039 |
| $ | — |
| |||||||||||||||||||||||||
Blaise Coleman | $ | 806,188 |
| $ | 49,935 |
| $ | 840,000 |
| $ | — |
| $ | — |
| $ | 1,621,800 |
| $ | 47,437 |
| $ | 1,340,000 |
| $ | — |
| $ | — |
| ||||||||||
Terrance J. Coughlin | $ | 868,672 |
| $ | 49,935 |
| $ | 830,000 |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Mark Bradley | $ | 583,292 |
| $ | 46,887 |
| $ | 790,000 |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Matthew J. Maletta | $ | 707,781 |
| $ | 38,439 |
| $ | 790,000 |
| $ | 6,585 |
| $ | — |
| $ | 620,100 |
| $ | 40,003 |
| $ | 940,000 |
| $ | — |
| $ | — |
| ||||||||||
Tony Pera | $ | 453,419 |
| $ | 38,523 |
| $ | 523,000 |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Patrick Barry | $ | 587,664 |
| $ | 47,148 |
| $ | 680,000 |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
George Apostol, M.D. | $ | 424,709 |
| $ | 35,004 |
| $ | 656,394 |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Change of Control | Change of Control |
| Change of Control | |||||||||||||||||||||||||||||||||||||
Paul V. Campanelli | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Blaise Coleman | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| ||||||||||
Terrance J. Coughlin | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Mark Bradley | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Matthew J. Maletta | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| ||||||||||
Tony Pera | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Patrick Barry | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
George Apostol, M.D. | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Termination Without Cause or Quit for Good Reason | Termination Without Cause or Quit for Good Reason |
| Termination Without Cause or Quit for Good Reason | |||||||||||||||||||||||||||||||||||||
Paul V. Campanelli | $ | 6,411,550 |
| $ | 49,286 |
| $ | — |
| $ | 3,071,844 |
| $ | — |
| |||||||||||||||||||||||||
Blaise Coleman | $ | 2,786,188 |
| $ | 49,935 |
| $ | — |
| $ | 419,400 |
| $ | — |
| $ | 8,413,467 |
| $ | 47,437 |
| $ | — |
| $ | 4,002,112 |
| $ | — |
| ||||||||||
Terrance J. Coughlin | $ | 2,993,672 |
| $ | 49,935 |
| $ | — |
| $ | 698,392 |
| $ | — |
| |||||||||||||||||||||||||
Mark Bradley | $ | 3,313,031 |
| $ | 46,887 |
| $ | — |
| $ | 323,642 |
| $ | — |
| |||||||||||||||||||||||||
Matthew J. Maletta | $ | 2,547,781 |
| $ | 38,439 |
| $ | — |
| $ | 487,410 |
| $ | — |
| $ | 4,308,433 |
| $ | 40,003 |
| $ | — |
| $ | 909,139 |
| $ | — |
| ||||||||||
Tony Pera | $ | 1,915,069 |
| $ | 38,523 |
| $ | — |
| $ | 312,472 |
| $ | — |
| |||||||||||||||||||||||||
Patrick Barry | $ | 3,469,331 |
| $ | 47,148 |
| $ | — |
| $ | 502,309 |
| $ | — |
| |||||||||||||||||||||||||
George Apostol, M.D. | $ | 2,796,482 |
| $ | 35,004 |
| $ | — |
| $ | — |
| $ | — |
| |||||||||||||||||||||||||
Termination Without Cause or Quit for Good Reason Within 24 Months After Change of Control | Termination Without Cause or Quit for Good Reason Within 24 Months After Change of Control |
| Termination Without Cause or Quit for Good Reason Within 24 Months After Change of Control | |||||||||||||||||||||||||||||||||||||
Paul V. Campanelli | $ | 8,501,550 |
| $ | 73,929 |
| $ | — |
| $ | 17,653,936 |
| $ | — |
| |||||||||||||||||||||||||
Blaise Coleman | $ | 2,786,188 |
| $ | 49,935 |
| $ | — |
| $ | 2,728,608 |
| $ | — |
| $ | 10,113,467 |
| $ | 71,156 |
| $ | — |
| $ | 6,225,369 |
| $ | — |
| ||||||||||
Terrance J. Coughlin | $ | 2,993,672 |
| $ | 49,935 |
| $ | — |
| $ | 3,637,993 |
| $ | — |
| |||||||||||||||||||||||||
Mark Bradley | $ | 3,313,031 |
| $ | 46,887 |
| $ | — |
| $ | 1,167,561 |
| $ | — |
| |||||||||||||||||||||||||
Matthew J. Maletta | $ | 2,547,781 |
| $ | 38,439 |
| $ | — |
| $ | 2,797,946 |
| $ | — |
| $ | 4,308,433 |
| $ | 40,003 |
| $ | — |
| $ | 3,215,017 |
| $ | — |
| ||||||||||
Tony Pera | $ | 1,915,069 |
| $ | 38,523 |
| $ | — |
| $ | 1,721,196 |
| $ | — |
| |||||||||||||||||||||||||
Patrick Barry | $ | 3,469,331 |
| $ | 47,148 |
| $ | — |
| $ | 1,748,380 |
| $ | — |
| |||||||||||||||||||||||||
George Apostol, M.D. | $ | 2,796,482 |
| $ | 35,004 |
| $ | — |
| $ | 328,923 |
| $ | — |
|
(1) |
|
65
agreement), subject to the respective NEO executing and not revoking a release of claims, the Cash Separation Payment includes an amount equal to two times the sum of the NEO’s current base salary |
51
(2) |
|
|
(3) | Upon Disability of any of the NEOs, disability insurance benefits would be paid to the NEO equal to the excess of 24 months’ base salary over his respective disability benefits. As of December 31, |
(4) | The provisions governing acceleration of equity awards are discussed separately for each scenario below, as follows: |
(a) | Upon Termination for Cause or Voluntary Resignation—all unvested equity held by our NEOs is forfeited and no amounts have been included under this scenario. |
(b) | Upon Retirement— |
(c) | Upon Death—each of the NEO’s outstanding and unvested RSUs and stock options |
(d) | Upon Disability—for each NEO, |
(e) | Upon a COC—for each NEO, outstanding and unvested PSUs, RSUs and stock options |
(f) | Upon a Termination Without Cause or a Quit for Good Reason— |
(g) | Upon a Termination Without Cause or a Quit for Good Reason Within 24 Months After COC— |
52
(5) | Each of our NEOs is covered by term life insurance policies, the premiums for which are reimbursed by the Company. |
Mr. Campanelli transitioned from the role of Chief Executive Officer and President in March 2020 and remained employed by the Company until December 31, 2020. During this succession planning and transition period, the terms and conditions of his compensation were governed by a Letter Agreement with Mr. Campanelli. Because Mr. Campanelli is considered retirement eligible under the Amended and Restated 2015 Stock Incentive Plan, his LTI awards will continue to vest following his retire- 66 ment in accordance with the original vesting schedules. Under his original employment agreement, Mr. Campanelli is also entitled to continued health and welfare benefits, including medical, dental and vision, as well as life insurance benefits for himself and his dependents from the date of his retirement until he reaches age 70. The estimated cost of continued coverage is $235,856. Mr. Coughlin entered into a separation agreement in November 2020. Upon the termination of his employment effective March 1, 2021, Mr. Coughlin was entitled to payments and benefits as defined in the separation agreement. In addition to the payment of any accrued but unpaid base salary and accrued but unused paid time off as of the termination date, Mr. Coughlin received $2,235,500 in cash severance upon his departure. In addition, he received his 2020 annual cash incentive compensation payment as disclosed in the Summary Compensation table under the Non-Equity Incentive Plan Compensation column. Mr. Coughlin is also entitled to the pro-rata portion of his 2021 annual cash incentive compensation payment, based on actual performance, and payable in a lump sum on or prior to March 15, 2022. The separation agreement also provides for vesting of 107,750 RSUs and $228,625 in long-term cash awards, as well as the payout of 220,308 shares associated with outstanding PSUs, representing pro-rated vestings based on actual performance. Based on the $7.51 closing price of Endo’s shares on March 1, 2021 (the date of Mr. Coughlin’s termination) the shares issued with respect to these RSUs and PSUs had a combined value of approximately $2,463,716. The separation agreement also provides for 24 months of benefits continuation for the former executive and his dependents valued at $47,437. The separation agreement also provides for 12 months of outplacement services valued at up to $9,000. Mr. Coughlin continues to be subject to the post-termination restrictive covenants, including with respect to non-competition and non-solicitation, provided for in his employment agreement with the Company. Mr. Ciarico entered into a separation agreement in November 2020. Upon the termination of his employment effective December 1, 2020, Mr. Ciarico was entitled to payments and benefits as defined in the separation agreement. In addition to the payment of any accrued but unpaid base salary and accrued but unused paid time off as of the termination date, Mr. Ciarico received $1,275,000 in cash severance upon his departure. In addition, he received the pro-rata portion of his 2020 annual cash incentive compensation payment as disclosed in the Summary Compensation table under the Non-Equity Incentive Plan Compensation column. Mr. Ciarico also received a cash payment of $187,500, representing the final installment of his 2019 cash continuity compensation arrangement. The separation agreement also provides for vesting of 4,047 RSUs and $79,167 in long-term cash awards, as well as vesting and settlement of 15,775 shares associated with outstanding PSUs, representing pro-rated vesting based on actual performance in accordance with the underlying award agreement. Based on the $5.12 closing price of Endo’s shares on December 1, 2020 (the date of Mr. Ciarico’s termination) the shares issued with respect to these RSUs and PSUs had a combined value of approximately $101,489. The separation agreement also provides for 24 months of benefits continuation for the former executive and his dependents valued at $45,741. The separation agreement also provides for cash payments of $9,000 in lieu of 12 months of outplacement services, as well as for financial planning and tax preparation services up to a maximum cost of $15,000. Mr. Ciarico continues to be subject to the post-termination restrictive covenants, including with respect to non-competition and non-solicitation, provided for in his employment agreement with the Company. |
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, the following information is being provided, summarizing the relationship of the annual total compensation of Endo employees and the annual total compensation of our President and Chief Executive Officer, Mr. Campanelli,Coleman, for 2018:2020:
the annual total compensation of the employee identified as the median employee of our Company (other than our President and Chief Executive Officer) was |
the annual total compensation of the President and Chief Executive Officer as reported in the Summary Compensation Table was |
Based on this information, the CEO Pay Ratio of the annual total compensation of Mr. Campanelli to the annual total compensation of the employee identified as the median employee is approximately 243105 to 1 for 2018. Please reference the section entitled “CEO Equity Compensation” on page 22 of the CD&A’s Executive Summary for a detailed explanation of the factors impacting Mr. Campanelli’s LTI and total compensation, as reported in the Summary Compensation Table for 2018.2020.
For the purpose of identifying Endo’s median employee annual total compensation, as permitted by SEC rules and regulations, we considered the Company’s U.S., India and Canada employee populations, consisting of 2,7983,255 total employees as of December 31, 2018 (1,919, 7812020 (1,903, 1,259 and 98 employees,93, respectively, in each jurisdiction including full- and part-time, seasonal and temporary employees, including employees on a leave of absence as of December 31, 2018)2020). We excluded from this calculation 5875 employees in the aggregate employed by us in the followingnon-U.S. jurisdictions: IrelandIreland/UK (total of 5773 employees) and Luxembourg (total of one employee)two employees). The de minimis number of excludednon-U.S. employees, in the aggregate, represents less than 5% of our total employee population.
The compensation measure consistently applied to this population of employees included the sum of base salary, overtime, paid time off, annual bonus, other bonuses and long-term incentive compensation, as applicable for the period from January 1, 20182020 through December 31, 2018.2020. We converted the aggregate value of each Indian- or Canadian-basedIndia- and Canada-based employee’s compensation to U.S. dollars using the conversion rates in effect as of December 31, 2018.2020.
This information is being provided for compliance purposes. Neither the Compensation & Human Capital Committee nor management of the Company used the pay ratio measure in making compensation decisions.
5367
Proposal 3: Approval of the Endo International plc Amended and Restated 2015 Stock Incentive Plan
Summary
On June 7, 2018, shareholders approved an amendment and restatement of the Endo International plc 2015 Stock Incentive Plan (the Plan) that increased the authorized number of shares of Company stock that may be issued with respect to awards under the Plan, provided that those shares may be used for any type of award issuable under the Plan and updated certain provisions in connection with the Tax Act. On April 24, 2019, our Board of Directors approved, subject to shareholder approval at the Annual Meeting, an amendment and restatement of the Plan that further increases the authorized number of shares of Company stock that may be issued with respect to awards under the Plan by seven million (7,000,000) shares. The Plan, as proposed, restates the terms and conditions of the current Plan. A summary of the material provisions of the Plan is set forth below.
Long-term equity awards are a key element of our compensation programs and accomplish the following objectives:
|
|
|
|
In the context of a challenging and competitive external environment, it is critical that we maintain the ability to attract and motivate key individuals who are essential to the long-term success of the Company. This proposal will allow the Plan to maintain a sufficient number of shares to help achieve our goals and enable us to continue making long-term equity awards to employees to incentivize them to support the Company’s strategic objectives. If the shareholders do not approve the Plan, as amended and restated in 2019, then the terms, conditions and current share reserve of the current Plan will continue in effect, but we will not have a sufficient number of shares available for future grants.
In determining the number of shares of Company stock to reserve under the Plan, our management and the Compensation Committee, in consultation with our compensation consultant, evaluated the dilution, historic share usage, burn rate and the existing terms of outstanding equity awards. We believe the increased dilution resulting from the approval of the Plan, as amended and restated in 2019, remains consistent with shareholder interests. For additional information on our dilution, historic share usage and burn rate, see the section entitled “Dilution and Historical Share Usage” below.
Vote Required
A majority of the votes cast at the Annual Meeting will be required to approve the Plan.
The Compensation Committee and the Board of Directors recommend a vote FOR the approval of the Endo International plc Amended and Restated 2015 Stock Incentive Plan (as amended through April 24, 2019).
Dilution and Historical Share Usage
Dilution
Subject to shareholder approval of the Plan, as amended and restated in 2019, an estimated 7,446,846 shares of Company stock will be reserved for issuance under the Plan (comprised of 7,000,000 new shares available for awards under the Plan and 446,846 shares available for future awards under the Plan as of April 12, 2019, all of which may be used for any type of award issuable under the Plan), which represents approximately 3.3% of our issued and outstanding shares. The Board believes that this number of shares constitutes reasonable potential equity dilution and provides a significant incentive for employees to increase the value of the Company for all shareholders. The closing trading price of each share of Company stock as of the record date was $7.54.
As of April 12, 2019, Endo had:
|
|
|
|
|
54
The new shares available under the Plan, as amended and restated in 2019, would represent an additional potential equity dilution of approximately 3.1%. Including the shares under the Plan, as amended and restated in 2019, the potential equity dilution from all equity incentive awards outstanding and available for grant under all of our equity plans would result in a maximum potential equity dilution of approximately 12.9%. The following summarizes current and proposed share reserves and resulting dilution levels as of April 12, 2019:
# Shares
|
Dilution
| |||||||||
A. | Shares Available for Grant Under the Current Plan |
| 446,846 |
|
| 0.2% |
| |||
B. | New Shares Available for Grant Under the Proposed Plan |
| 7,000,000 |
|
| 3.1% |
| |||
C. | Total Shares Available for Grant Under the Proposed Plan (A+B) |
| 7,446,846 |
|
| 3.3% |
| |||
D. | Current Shares Outstanding |
| 21,757,042 |
|
| 9.6% |
| |||
E. | Total Shares Authorized Under the Proposed Plan (C+D) |
| 29,203,888 |
|
| 12.9% |
|
The shares reserved for issuance under the Plan may be authorized but unissued Company stock or authorized and issued Company stock held in the Company’s treasury. If any shares subject to an award are forfeited, cancelled, exchanged or surrendered, or if an award terminates or expires without a distribution of shares to the participant, the shares of Company stock with respect to such award will, to the extent of any such forfeiture, cancellation, exchange, surrender, withholding, termination or expiration, again be available for awards under the Plan, except that any shares of Company stock surrendered or withheld as payment of either the exercise price of an award and/or withholding taxes in respect of an award will not again be available for awards under the Plan.
The quantity of shares available for issuance under the Plan is required to provide the Company with the ability to support ourpay-for-performance compensation philosophy by offering the appropriate level of incentives and equity ownership stake to effectively attract, motivate and retain highly-talented individuals, while supporting our strategic growth objectives focused on the creation of shareholder value. As demonstrated by the Company’s responsible use of equity over the past several years and good corporate governance practices associated with equity and executive compensation practices in general, the stock reserved under the Plan will allow the Company to remain focused on business continuity and strategic growth priorities, while managing program costs and share utilization levels within acceptable industry standards.
Share Usage
In determining the number of shares to reserve under the Plan, we evaluated the dilution and historic share usage (as described above), adjusted burn rate and the existing terms of outstanding awards under our equity plans. The annual share usage under our equity plans for the last three fiscal years was as follows:
2018 Fiscal
| 2017 Fiscal
| 2016 Fiscal
| Average
| |||||||||||||||
A. | Total Shares Granted During Fiscal Year(1) |
| 13,870,879 |
|
| 11,541,391 |
|
| 4,951,749 |
|
| 10,121,340 |
| |||||
B. | Basic Weighted Average Common stock Outstanding |
| 223,960,000 |
|
| 223,198,000 |
|
| 222,651,000 |
|
| 223,269,667 |
| |||||
C. | Adjusted Burn Rate (A/B) |
| 6.19% |
|
| 5.17% |
|
| 2.22% |
|
| 4.53% |
|
|
Description of Material Features of the Plan
Terms and Provisions
The material terms and provisions of the Plan, assuming this proposal is approved, are summarized below. This description is not intended to be complete and is qualified in its entirety by reference to the Plan, a copy of which is attached as Annex 1 to this Proxy Statement.
Administration
The Plan is administered by the Compensation Committee, which was appointed by our Board of Directors. The Compensation Committee has the authority, in its sole discretion, subject to and not inconsistent with the express terms and provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or as necessary or advisable. The Compensation Committee may delegate all or any part of its authority under the Plan to an employee, employees or committee of employees. All decisions, determinations and interpretations of the Compensation Committee are final and binding, and no member of the Compensation Committee will be liable for any action taken or determination made in good faith with respect to the Plan or any award.
Eligibility
Awards pursuant to the Plan may be granted to the following classes of persons: (i) employees of the Company, including officers and directors who are employees,(ii) non-employee directors and (iii) consultants of the Company. Incentive stock
55
options (ISOs) may only be granted to Company employees (including officers and directors who are also employees). As of April 12, 2019, we had sevennon-employee directors, six of whom are currently eligible to participate in the Plan. As of April 12, 2019, we had approximately 2,970 employees (which includes all of the full-time and part-time employees of the Company and its subsidiaries and approximately six officers of the Company and its subsidiaries), all of whom are eligible to participate in the Plan, although awards will typically be limited to approximately 540 employees of the Company. While consultants are eligible to participate in the Plan, historically, the Company has infrequently granted awards under the Plan to these individuals.
Shares Available
The number of shares of Company stock reserved for issuance under the Plan, as amended and restated in 2019, will be 7,000,000 plus the number of shares reserved but unissued under the Plan as of the date the Plan, as amended and restated in 2019, is approved by shareholders, or that become available for reuse in accordance with the terms of the Plan following the date the Plan, as amended and restated in 2019, is approved by shareholders, subject to adjustment for a change in capitalization. The shares may be authorized but unissued Company stock or authorized and issued Company stock held in the Company’s treasury. If any shares subject to an award are forfeited, cancelled, exchanged or surrendered or if an award terminates or expires without a distribution of shares to the participant, the shares of stock with respect to such award will, to the extent of any such forfeiture, cancellation, exchange, surrender, withholding, termination or expiration, again be available for awards under the Plan except that any shares of Company stock surrendered or withheld as payment of either the exercise price of an award and/or withholding taxes in respect of an award will not again be available for awards under the Plan. The shares available under the Plan, as amended and restated in 2019, may be used to grant any type of award issuable under the Plan.
Section 162(m) Limitations
The Plan contains individual award limitations and performance goals in order to allow certain “Grandfathered Awards” granted under the Plan to qualify as “performance-based compensation” under Section 162(m) of the Code. “Grandfathered Awards” means remuneration which the Company intended to qualify as “performance-based compensation” under Section 162(m) of the Code and which is provided pursuant to a written binding contract that was in effect on November 2, 2017, and that was not modified in any material respect on or after such date, within the meaning of Section 13601(e)(2) of P.L.115-97 (the Tax Cuts and Jobs Act) as may be amended from time to time (including any regulations or further guidance). The Plan contains the following limitations for Grandfathered Awards. The total number of shares of Company stock subject to stock-based awards intended to qualify as Grandfathered Awards granted to any one participant during any tax year of the Company may not exceed one million five hundred thousand (1,500,000) shares (based on highest levels of performance resulting in maximum payout), subject to adjustment for certain transactions. With respect to cash-based awards intended to qualify as Grandfathered Awards, (i) the maximum value of the aggregate payment that any participant may receive with respect to any such cash-based award that is an annual incentive award is $5,000,000, (ii) the maximum value of the aggregate payment that any participant may receive with respect to any such award that is a LTCI award is the amount set forth in clause (i) above multiplied by a fraction, the numerator of which is the number of months in the performance period and the denominator of which is twelve, (iii) the achievement of the awards will be based on the business criteria listed under “Performance Awards” below, and (iv) the additional rules described below will apply.
Director Compensation Limitation
The maximum fair market value of shares of Company stock subject to awards that may be granted to eachnon-employee director participant in any consecutive twelve-month period is limited to $750,000.
Description of Awards
The Plan provides for the grant of stock options, stock appreciation rights, shares of restricted stock, stock bonus, performance awards or other share-based or cash-based awards. Subject to earlier vesting on certain events, as described below, no award (or portion of an award) granted under the Plan provides for vesting prior to the first anniversary of its date of grant. However, awards that result in the issuance of an aggregate of up to 5% of the shares of Company stock available under the Plan may be granted under the Plan without regard to such minimum vesting provisions. In addition, as described below, awards that are subject to time-based vesting conditions are generally required under the Plan to vest over a three-year period.
Stock Options
Options granted under the Plan may be ISOs meeting the definition of an incentive stock option under Section 422 of the Code or options which do not qualify as ISOs (referred to as nonqualified options). An award will be evidenced by an award agreement that specifies the option price, duration of the option, the number of shares to which the option pertains, termination and transferability rights and other provisions as the Compensation Committee may determine to be appropriate. The option price for each grant will be at least equal to the fair market value of the shares subject to the option on the grant date of the option. The date on which the Compensation Committee adopts a resolution granting an option will be considered the grant date of the option, unless such resolution specifies a later date. No option may be exercised later than the tenth anniversary date of its grant. Notwithstanding the foregoing, if the vesting condition for any option (other than options excluded from the minimum vesting requirement) relates exclusively to the passage of time and continued employment, such time period will not be less than 36 months, with no more than 33 1/3% of the award vesting every 12 months from the date of the award (subject to earlier vesting on certain events described below). If the vesting condition for any award relates to the attainment of specified
56
performance goals, such award will vest over a performance period of not less than one year (subject to earlier vesting on certain events described below).
Stock Appreciation Rights (SARs)
The Compensation Committee may grant SARs under the Plan, either in tandem with stock options or freestanding and unrelated to options. Tandem SARs may be exercised only when the related option is exercisable. Freestanding SARs may be exercised upon such terms and conditions established by the Compensation Committee. Each SAR will be evidenced by an award agreement that will specify the grant price, the term of the SAR and other provisions as the Compensation Committee or board may determine to be appropriate. In no event will the appreciation base of the ordinary shares subject to the SAR be less than the fair market value of the shares on the date of grant. The term of the SAR may not exceed ten (10) years. Notwithstanding the foregoing, if the vesting condition for any SAR (other than SARs excluded from the minimum vesting requirement) relates exclusively to the passage of time and continued employment, such time period will not be less than 36 months, with no more than 33 1/3% of the award vesting every 12 months from the date of the award (subject to earlier vesting on certain events described below). If the vesting condition for any award relates to the attainment of specified performance goals, such award will vest over a performance period of not less than one year (subject to earlier vesting on certain events described below). Upon exercise of a SAR, a participant will be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the fair market value of a share on the exercise date and the appreciation base of the SAR, by (ii) the number of shares with respect to which the SAR is exercised.
Restricted Stock and Bonus Stock
The Compensation Committee may grant restricted stock awards, alone or in tandem with other awards under the Plan, subject to such restrictions, terms and conditions as the Compensation Committee may determine in its sole discretion and as may be evidenced by the applicable agreements. The vesting of a restricted stock award granted under the Plan may be conditioned upon the completion of a specified period of employment or service with the Company or any subsidiary, upon the attainment of specified performance goals and/or upon such other criteria as the Compensation Committee may determine in its sole discretion. Notwithstanding the foregoing, if the vesting condition for any award that is settled in Company stock, such as restricted stock awards (full value awards) (other than full value awards excluded from the minimum vesting requirement) relates exclusively to the passage of time and continued employment, such time period will not be less than 36 months, with no more than 33 1/3% of the award vesting every 12 months from the date of the award (subject to earlier vesting on certain events described below). If the vesting condition for any full value award (including award of restricted stock) relates to the attainment of specified performance goals, such full value award will vest over a performance period of not less than one year (subject to earlier vesting on certain events described below). Each agreement with respect to a restricted stock award will set forth the amount (if any) to be paid by the participant with respect to the award and when and under what circumstances such payment is required to be made. The Compensation Committee may grant stock bonus awards, alone or in tandem with other awards under the Plan, subject to such terms and conditions as the Compensation Committee may determine in its sole discretion and as may be evidenced by the applicable agreement.
Performance Awards
The Compensation Committee may grant performance awards, alone or in tandem with other awards under the Plan, to acquire shares of Company stock in such amounts and subject to such terms and conditions as the Compensation Committee may, from time to time in its sole discretion, determine, subject to the terms of the Plan. To the extent necessary to satisfy the short-term deferral exception to Section 409A of the Code, unless the Compensation Committee will determine otherwise, the Performance Awards will provide that payment will be made within 2 1/2 months after the end of the year in which the Participant has a legally binding vested right to such award. No dividends or dividend equivalents will be paid in respect of unvested performance awards. In the event that the Compensation Committee grants a performance award or other award (other than a nonqualified option or incentive stock option) that is intended to constitute a Grandfathered Award, payments under the award will be made solely on account of the attainment of one or more objective performance goals and the performance goals must be established in writing by the Compensation Committee not later than 90 days after the commencement of the period of service to which the award relates (but in no event after 25 percent of the period of service has elapsed). The performance goal(s) to which the Grandfathered Award relates may be based on one or more of the business criteria set forth in the Plan, which include: stock appreciation; net revenues; return on total shareholders’ equity; earnings per ordinary share; net income; return on assets, return on investment, return on capital or return on equity; earnings from continuing operations; levels of expense, cost or liability; earnings before all or any interest, taxes, depreciation and/or amortization; inventory goals; market share; cost reduction goals; business development goals; customer satisfaction goals; employee satisfaction or employee engagement goals; identification or consummation of investment opportunities or completion of specified projects; entry into new markets; meeting specified market penetration or value added goals; development of new technologies; or cash flow.
Other Stock- or Cash-Based Awards
The Compensation Committee is authorized to grant other stock-based awards or other cash-based awards, as deemed by the Compensation Committee to be consistent with the purposes of the Plan. To the extent necessary to satisfy the short-term deferral exception to Section 409A of the Code, unless the Compensation Committee will determine otherwise, the awards will provide that payment will be made within 2 1/2 months after the end of the year in which the participant has a legally binding vested right to such award. The Compensation Committee may establish such rules applicable to the other stock- or cash-based awards to the extent not inconsistent with Section 162(m) of the Code with respect to Grandfathered Awards.
57
Termination of Service
Unless the applicable award agreement provides otherwise or the Compensation Committee in its sole discretion determines otherwise, the Plan generally provides for the treatment of outstanding awards in the event of a termination of a participant’s service with or without cause (as such term is defined in the Plan), for good reason (or any like term as defined under a participant’s employment agreement), or as a result of voluntary retirement, death or disability.
Effect of Change in Control
Unless the applicable award agreement provides otherwise, in the event of a Change in Control (as such term is defined in the Plan), and in accordance with the requirements of Section 409A of the Code:
|
|
|
|
Amendment or Termination of the Plan
Subject to certain limitations, the Board or the Compensation Committee may, at any time, suspend or terminate the Plan or revise or amend it in any respect whatsoever; provided, however, neither the Board, the Compensation Committee nor their respective delegates will have the authority to(a) re-price (or cancel andre-grant) any option or, if applicable, either award at a lower exercise, base or purchase price, or (b) cancel underwater options or stock appreciation rights in exchange for cash (at any time when the fair market value as defined in the Plan of the Company stock is less than the exercise price of the option or stock appreciation right) without first obtaining the approval of the Company’s shareholders.
Federal Income Tax Consequences of the Endo International plc Amended and Restated 2015 Stock Incentive Plan
The following discussion of certain relevant federal income tax effects applicable to stock options and other stock-based awards granted under the Plan is a summary only, and reference is made to the Code for a complete statement of all relevant federal tax provisions.
Options
With respect to nonqualified options (NSO), the participant will recognize no income upon grant of the option, and, upon exercise, will recognize ordinary income to the extent of the excess of the fair market value of the shares on the date of option exercise over the amount paid by the participant for the shares. Upon a subsequent disposition of the shares received under the option, the participant generally will recognize capital gain or loss to the extent of the difference between the fair market value of the shares at the time of exercise and the amount realized on the disposition.
In general, no taxable income is realized by a participant upon the grant of an ISO. If ordinary shares are issued to a participant (option shares) pursuant to the exercise of an ISO granted under the Plan and the participant does not dispose of the option shares within thetwo-year period after the date of grant or within one year after the receipt of such option shares by the participant (a disqualifying disposition), then, generally (i) the participant will not realize ordinary income upon exercise and (ii) upon sale of such option shares, any amount realized in excess of the exercise price paid for the option shares will be taxed to such participant as capital gain (or loss). The amount by which the fair market value of ordinary shares on the exercise date of an ISO exceeds the purchase price generally will constitute an item which increases the participant’s “alternative minimum taxable income.”
If option shares acquired upon the exercise of an ISO are disposed of in a disqualifying disposition, the participant generally would include in ordinary income in the year of disposition an amount equal to the excess of the fair market value of the option shares at the time of exercise (or, if less, the amount realized on the disposition of the option shares), over the exercise price paid for the option shares. Subject to certain exceptions, an option generally will not be treated as an ISO if it is exercised more than three months following termination of employment. If an ISO is exercised at a time when it no longer qualifies as an ISO, such option will be treated as an NSO as discussed above.
58
In general, we will receive an income tax deduction at the same time and in the same amount as the employee recognizes ordinary income.
Payment of Option Price in Shares
If an option is exercised through the use of Company stock previously owned by the participant (subject to applicable law), such exercise generally will not be considered a taxable disposition of the previously owned shares and, thus, no gain or loss will be recognized with respect to such previously owned shares upon such exercise. The amount of anybuilt-in gain on the previously owned shares generally will not be recognized until the new shares acquired on the option exercise are disposed of in a sale or other taxable transaction. However, if the previously owned shares were acquired on the exercise of an incentive stock option and the holding period requirement for those shares was not satisfied at the time they were used to exercise a stock option, such use would constitute a disqualifying disposition of such previously owned shares resulting in the recognition of ordinary income in the amount described above.
SARs
The recipient of a grant of SARs will not realize taxable income and we will not be entitled to a deduction with respect to such grant on the date of such grant. Upon the exercise of an SAR, the recipient will realize ordinary income equal to the amount of cash (including the amount of any taxes withheld) and the fair market value of any shares received at the time of exercise. In general, we will be entitled to a corresponding deduction, equal to the amount of income realized.
Restricted Stock
A participant who receives a grant of restricted stock will not recognize any taxable income at the time of the award, provided the shares are subject to restrictions (that is, they are nontransferable and subject to a substantial risk of forfeiture). A participant’s rights in restricted stock awarded under the Plan are subject to a substantial risk of forfeiture if the rights to full enjoyment of the shares are conditioned, directly or indirectly, upon the future performance of substantial services by the participant. However, the participant may elect under Section 83(b) of the Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the shares on the date of the award, determined without regard to the restrictions. If the participant does not make a Section 83(b) election within 30 days of receipt of the restricted shares, the fair market value of the shares on the date the restrictions lapse, less any amount paid by the participant for such shares, will be treated as compensation income to the participant and will be taxable in the year the restrictions lapse. We generally will be entitled to a compensation deduction for the amount of compensation income the participant recognizes.
Other Types of Awards
With respect to other awards under the Plan, generally when the participant receives payment with respect to an award, the amount of cash and fair market value of any other property received will be ordinary income to the participant, and the Company generally will be entitled to a tax deduction in the same amount.
New Plan Benefits
Future grants under the Plan will be made at the discretion of the Compensation Committee and, accordingly, are not yet determinable.
Existing Plan Benefits
Pursuant to SEC rules, the following table sets forth the number of shares subject to options granted through April 12, 2019 that count against the maximum share authorization of the current Plan.
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|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
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| |||
|
59
Equity Compensation Plan Information
The following information relates to plans in effect as of December 31, 2018 under which equity securities of Endo may be issued to employees and directors.
Column A
| Column B
| Column C
| ||||||||||
Plan Category
| Number of securities
| Weighted-average
|
Number of securities
| |||||||||
Equity compensation plans approved by security holders |
| 19,820,511 |
| $ | 20.62 |
|
| 5,487,854 |
| |||
Equity compensation plans not approved by security holders |
| — |
|
| — |
|
| — |
| |||
Total |
| 19,820,511 |
| $ | 20.62 |
|
| 5,487,854 |
|
|
|
Registration with the SEC
We intend to file with the SEC a registration statement on FormS-8 covering the Company stock reserved for issuance under the Plan.
60
Proposal 4: Renewal of the Board’s Existing Authority to Issue Shares under Irish Law
Summary
Under Irish law, directors of an Irish public limited company must have authority from its shareholders to issue any shares, including shares which are part of the company’s authorized but unissued share capital. The Company’s current authorization, approved by shareholders at our 20182020 Annual Meeting, is to issue up to 33% of the aggregate nominal value of the issued ordinary share capital of the Company as of April 19, 2018,13, 2020, which authority will expire on December 7, 2019.11, 2021, unless previously renewed, varied or revoked. We are presenting this proposal to renew the Board’s existing authority to issue authorized but unissued shares on the terms set forth below, which are in line with customary practice in Ireland. If this proposal is not approved, the Company will have a limited ability to issue new ordinary shares after December 7, 2019.11, 2021.
It is customary practice in Ireland to seek shareholder authority to issue an aggregate number of shares up to 33% of the company’s issued share capital and for such authority to be limited to a period of 12 to 18 months. Therefore, in accordance with that customary practice in Ireland, we are seeking approval to issue up to a maximum of 33% of our issued ordinary capital as of April 12, 20192021 (the latest practicable date before this proxy statement), for a period expiring on the date which is 18 months from the Annual Meeting, unless otherwise varied, revoked or renewed. The Board expects to propose a renewal of this authorization on a regular basis at our annual general meetings in future years.
Granting the Board this authority is a routine matter for public companies incorporated in Ireland and is consistent with Irish market practice. This authority is fundamental to our business and enables us to issue shares, including, if applicable, in connection with funding acquisitions and raising capital. We are not asking you to approve an increase in our authorized share capital or to approve a specific issuance of shares. Instead, approval of this proposal will only grant the Board the authority to issue shares that are already authorized under the Articles of Association pursuant to the terms set forth below. In addition, because we are a Nasdaq-listed company, our shareholders continue to benefit from the protections afforded to them under the rules and regulations of Nasdaq and the SEC, including those rules that limit our ability to issue shares in specified circumstances without obtaining shareholder approval. This authorization is required as a matter of Irish law and is not otherwise required for other companies listed on Nasdaq. Accordingly, approval of this resolution would merely place us on equal footing with other Nasdaq-listed companies.
The text of the resolution in respect of Proposal 43 (which is proposed as an ordinary resolution) is as follows:
RESOLVED, that the directors be and they are, with effect from the passing of this resolution, hereby generally and unconditionally authorized pursuant to section 1021 of the Companies Act 2014 to exercise all the powers of the Company to allot relevant securities (within the meaning of the said section 1021 of the Companies Act 2014) up to an aggregate nominal amount of approximately $7,464 (74,639,777 ordinary shares)$7,699 (being equivalent to approximately 33% of the aggregate nominal value of the issued ordinary share capital of the Company as of April 12, 20192021 (the latest practicable date before this Proxy Statement)). The authority conferred by this resolution shall expire 18 months from the passing of this resolution, unless previously renewed, varied or revoked by the Company; provided that the Company may before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferred by this resolution had not expired.
Vote Required
A majority of the votes cast at the Annual Meeting will be required to renew the authorization of the Board to issue shares.
The Board of Directors recommends a vote FOR the renewal of its existing authority to issue shares under Irish law.
6168
Proposal 5:4: Renewal of the Board’s Existing Authority toOpt-Out of StatutoryPre-Emption Rights under Irish Law
Summary
Under Irish law, unless otherwise authorized, when an Irish public limited company issues shares for cash to new shareholders, it is required first to offer those shares on the same or more favorable terms to existing shareholders of the company on apro-rata basis (commonly referred to as thepre-emption right). At the 20182020 Annual Meeting, our shareholders granted the Board authority to opt out ofpre-emption rights with such authority to expire on December 7, 2019.11, 2021, unless previously renewed, varied or revoked. We are therefore proposing to renew the Board’s authority toopt-out of thepre-emption right on the terms set forth below.
It is customary practice in Ireland to seek shareholder authority toopt-out of thepre-emption rights provision in the event of the issuance of shares for cash if the issuance is limited to up to 10% of a company’s issued ordinary share capital and provided that the authority granted in respect of 5% of such issued share capital is used only for the purposes of an acquisition or a specified capital investment. It is also customary practice for such authority to be limited to a period of 12 to 18 months.
Therefore, in accordance with customary practice in Ireland, we are seeking this authority, pursuant to a special resolution, to authorize the directors to issue shares for cash without applying statutorypre-emption rights, up to a maximum of approximately 10% of the Company’s issued share capital as of April 12, 20192021 (the latest practicable date before this proxy statement),provided that the authority granted in respect of 5% of such issued share capital is used for the purposes of an acquisition or a specified capital investment. The proposed authority is for a period expiring on the date which is 18 months from our Annual Meeting, unless otherwise varied, renewed or revoked. The Board expects to propose a renewal of this authorization on a regular basis at our annual general meetings in future years.
Granting the Board this authority is a routine matter for public companies incorporated in Ireland and is consistent with Irish market practice. Similar to the authorization sought for Proposal 4,3, this authority is fundamental to our business and, if applicable, will facilitate our ability to fund acquisitions and otherwise raise capital. We are not asking you to approve an increase in our authorized share capital. Instead, approval of this proposal will only grant the Board the authority to issue shares in the mannerthat are already permittedauthorized under the Articles of Association upon the terms below. Without this authorization, in each case where we issue shares for cash after December 7, 2019,11, 2021, we would first have to offer those shares on the same or more favorable terms to all of our existing shareholders, which could cause delays in the completion of acquisitions and the raising of capital for our business. This authorization is required as a matter of Irish law and is not otherwise required for other companies listed on Nasdaq. Accordingly, approval of this resolution would merely place us on equal footing with other Nasdaq-listed companies.
The text of the resolution in respect of Proposal 54 (which is proposed as a special resolution, as required under Irish law) is as follows:
RESOLVED, that, subject to and conditional on the passing of the resolution in respect of Proposal 43 as set out above and with effect from the passing of this resolution, the directors be and they are hereby empowered pursuant to section 1023 of the Companies Act 2014 to allot equity securities (within the meaning of section 1023 of the Companies Act 2014) for cash, pursuant to the authority conferred by Proposal 43 as if section 1022 of that Act did not apply to any such allotment, provided that this power shall be limited to:
(a) the allotment of equity securities in connection with a rights issue in favor of the holders of ordinary shares (including rights to subscribe for, or convert into, ordinary shares) where the equity securities respectively attributable to the interests of such holders are proportional (as nearly as may be) to the respective numbers of ordinary shares held by them (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient to deal with fractional entitlements that would otherwise arise, or with legal or practical problems under the laws of, or the requirements of any recognized regulatory body or any stock exchange in, any territory, or otherwise); and
(b) the allotment (otherwise than pursuant tosub-paragraph (a) above) of equity securities up to an aggregate nominal value of approximately $2,262 (22,618,114 shares)$2,333 (being equivalent to approximately 10% of the aggregate nominal value of the issued ordinary share capital of the Company as of April 12, 20192021 (the latest practicable date before this Proxy Statement)) provided that, with respect to 11,309,057equity securities up to an aggregate nominal value of such shares$1,167 (being equivalent to approximately 5% of the issued ordinary share capital as of April 12, 2019)2021), such allotment is to be used for the purposes of an acquisition or a specified capital investment;
and, in each case, the authority conferred by this resolution shall expire 18 months from the passing of this resolution, unless previously renewed, varied or revoked; provided that the Company may make an offer or agreement before the expiry of this authority, which would or might require any such securities to be allotted after this authority has expired, and in that case, the directors may allot equity securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired.
62
Vote Required
75% of the votes cast at the Annual Meeting will be required to renew the authorization of the Board toopt-out of statutorypre-emption rights. In addition, this proposal is conditioned upon the approval of Proposal 4,3, as required by Irish law.
The Board of Directors recommends a vote FOR the renewal of the Board’s existing authority toopt-out of statutorypre-emption rights under Irish law.
6369
Proposal 6:5: Approval of Appointment of Independent Registered Public Accounting Firm and Authorization to Determine the Firm’s Remuneration
The Audit & Finance Committee has selected PricewaterhouseCoopers LLP (PwC), an independent registered public accounting firm, to audit the books, financial records and internal controls of the Company for the year ending December 31, 2019,2021, based on the Audit & Finance Committee’s belief that such selection is in the best interest of the Company and its shareholders.
In accordance with SEC rules and PwC policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to a company. For lead and concurring review audit partners, the maximum number of consecutive years of service in that capacity is five years. The Audit & Finance Committee is involved in the selection of the lead audit partner under this rotation policy.
The Company is asking its shareholders to approve the appointment of PwC as the Company’sCompany���s independent registered public accounting firm for 20192021 and to authorize the Board, acting through the Audit & Finance Committee, to determine the independent registered public accounting firm’s remuneration.
A representative of PwC is expected to be present atavailable during the Annual Meeting and available to respond to appropriate questions, and will have the opportunity to make a statement if he or she desires to do so.
Fees Paid to the Independent Registered Public Accounting Firm
PwC has served as the Company’s independent registered public accounting firm since 2014. The table that follows summarizes the aggregate fees for services PwC provided during 20182020 and 2017:2019:
2018
| 2017
| 2020 | 2019 | |||||||||||||
Audit Fees(a) | $ | 7,780,404 |
| $ | 9,128,378 |
| $ | 6,832,578 |
| $ | 6,637,457 |
| ||||
Audit-Related Fees(b) |
| 625,711 |
|
| 632,032 |
|
| 350,300 |
|
| 537,800 |
| ||||
Tax Fees(c) |
| 3,617,259 |
|
| 1,292,134 |
|
| 1,575,243 |
|
| 1,308,196 |
| ||||
All Other Fees(d) |
| 237,393 |
|
| 6,840 |
|
| 85,490 |
|
| 105,940 |
| ||||
Total | $ | 12,260,767 |
| $ | 11,059,384 |
| $ | 8,843,611 |
| $ | 8,589,393 |
| ||||
a | Audit fees in |
Audit of the Company’s annual financial statements; |
Evaluation and reporting on the effectiveness of the Company’s internal controls over financial reporting; |
Reviews of the Company’s quarterly financial statements; |
Statutory audits for the Company and certain of its subsidiaries; and |
Comfort letters, consents and other services related to debt issuances and other SEC matters. |
b | Audit-related fees in |
Attestation services requested by management; |
Due diligence services; |
Pre- or post- implementation reviews of processes or |
▪ | Other services related to accounting and financial reporting. |
c | Tax fees in |
Tax compliance; |
Statutory tax return preparation and review; and |
Tax planning and advice, including advice related to the impact of changes in tax laws. |
d | All other fees in |
In considering the nature of the services provided by PwC, the Audit & Finance Committee determined that such services are compatible with the provision of independent audit services. The Audit & Finance Committee discussed these services with PwC and Endo management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as the standards adopted by the Public Company Accounting Oversight Board (PCAOB).
Pre-Approval Policy
Consistent with SEC policies regarding auditor independence, the Audit & Finance Committee has responsibility for appointing, setting compensation for and overseeing the work of the independent registered public accounting firm. In recognition of this responsibility, the Audit & Finance Committee has established a policy topre-approve all audit and permissiblenon-audit services provided by the independent registered public accounting firm.
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Prior to the engagement of the independent registered public accounting firm for the next year’s audit, management will submit to the Audit & Finance Committee for approval a list of services and related fees expected to be rendered during that year within each of the following four categories of services:
1. | Audit services include audit work performed on the financial statements and related to the evaluation and reporting on the effectiveness of the Company’s internal control over financial reporting. |
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generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters, consents and other services related to SEC |
2. | Audit-related services are for assurance and related matters that are traditionally performed by the independent registered public accounting firm, including due diligence related to mergers and acquisitions,carve-out audits and employee benefit plan audits. This category also includes other services and discussion related to the proper application of financial accounting and/or reporting standards. |
3. | Tax services include all services, except those services specifically related to the audit of the financial statements, performed by the independent registered public accounting firm’s tax personnel, including tax analysis; assisting with the coordination of execution oftax-related activities, primarily in the area of mergers and acquisitions; supporting othertax-related regulatory requirements; and tax compliance and reporting. |
4. | Other fees are those associated with services not captured in the other categories. |
Prior to engagement, the Audit & Finance Committeepre-approves the independent registered public accounting firm’s services within each category. The fees are budgeted and the Audit & Finance Committee requires the independent registered public accounting firm to report actual fees versus budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the originalpre-approval categories. In those instances, the Audit & Finance Committee requires specificpre-approval before engaging the independent registered public accounting firm.
The Audit & Finance Committee may delegatepre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, anypre-approval decisions to the Audit & Finance Committee at its next scheduled meeting.
Vote Required
A majority of the votes cast at the Annual Meeting will be required to approve the appointment of the Company’s independent registered public accounting firm and the authorization of the Board, acting through the Audit & Finance Committee, to determine the independent registered public accounting firm’s remuneration.
The Audit & Finance Committee and the Board of Directors recommend a vote FOR the approval of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 20192021 and the authorization of the Board, acting through the Audit & Finance Committee, to determine the independent registered public accounting firm’s remuneration.
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Audit & Finance Committee Report
The Audit & Finance Committee has reviewed and discussed the Company’s audited consolidated financial statements as of and for the year ended December 31, 20182020 with the management of the Company and PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm. Further, the Audit & Finance Committee has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the PCAOB’s Auditing Standard No. 1301, Communications with Audit Committees, other standardsapplicable requirements of the PCAOB (United States), rules ofand the SEC and other applicable regulations, relating to the firm’s judgment about the quality, not just the acceptability, of the Company’s accounting principles, the reasonableness of significant judgments and estimates and the clarity of disclosures in the audited consolidated financial statements as of and for the year ended December 31, 2018.2020.
The Audit & Finance Committee also has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, which relate to PricewaterhouseCoopers LLP’s independence from the Company, and has discussed with PricewaterhouseCoopers LLP theirits independence from the Company. The Audit & Finance Committee has also considered whether the independent registered public accounting firm’s provision ofnon-audit services to the Company is compatible with maintaining the firm’s independence. The Audit & Finance Committee has concluded that the independent registered public accounting firm is independent from the Company and its management. The Audit & Finance Committee has also discussed with management of the Company and PricewaterhouseCoopers LLP such other matters and received such assurances from them as it has deemed appropriate.
The Audit & Finance Committee also reviewed management’s report on its assessment of the effectiveness of the Company’s internal control over financial reporting and the independent registered public accounting firm’s report on the effectiveness of the Company’s internal control over financial reporting. In addition, the Audit & Finance Committee reviewed key initiatives and programs aimed at strengthening the effectiveness of the Company’s internal and disclosure control structure. As part of this process, the Audit & Finance Committee continued to monitor the scope and adequacy of the Company’s internal auditing program.
Based on the reviews, reports and discussions referred to above, the Audit & Finance Committee recommended to the Board of Directors, and the Board approved, that the Company’s audited consolidated financial statements for the year ended December 31, 20182020 and management’s assessment of the effectiveness of Endo International plc’s internal control over financial reporting be included in the Company’s Annual Report on Form10-K for the year ended December 31, 2018,2020, for filing with the SEC. The Audit & Finance Committee has selected, and the Board of Directors has approved, subject to shareholder approval, the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019.2021.
Submitted by the Audit & Finance Committee of the Company’s Board of Directors.
Members of the Audit & Finance Committee:
Shane M. Cooke (Chair)
Roger H. KimmelMark G. Barberio (Member)
Jennifer M. Chao (Member)
William P. Montague (Member)
The above Audit & Finance Committee Report does not constitute soliciting material, and shall not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act, of 1934, as amended, except to the extent that the Company specifically incorporates the Audit & Finance Committee Report by reference therein.
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Other Information Regarding the Company
No Dissenters’ Rights
The corporate action described in this Proxy Statement will not afford shareholders the opportunity to dissent from the actions described herein or to receive an agreed or judicially appraised value for their shares.
Other Matters
As of the date of this Proxy Statement, the Board knows of no other matters to be presented for shareholder action at the Annual Meeting. However, other matters may properly come before the Annual Meeting or any adjournment or postponement thereof. If any other matter is properly brought before the Annual Meeting for action by the shareholders, proxies in the enclosed form returned to the Company will be voted in accordance with the recommendation of the Board.
Annual Report/Form10-K
The Company will provide, without charge, to each person solicited by this Proxy Statement, at the written request of any such person, a copy of the 20182020 Annual Report on Form10-K as filed with the SEC and any amendments thereto. Such written request should be directed to Endo International plc, First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
Shareholder Proposals for the 20202022 Annual General Meeting
The Articles of Association require that, for business to be properly brought by a shareholder before an annual general meeting, such shareholder must have given timely notice thereof (in accordance with article 88.2 of the Articles of Association, which section is summarized below), along with other specified material, in proper written form to the CorporateCompany Secretary. Any shareholder who wishes to make a proposal should obtain a copy of the relevant section of the Articles of Association from the CorporateCompany Secretary. Any notice for proposed items of business (other than a proposal pursuant to Rule14a-8) that is not received within the timeframe provided in the following paragraph will be considered untimely under Rule14a-4(c) under the Exchange Act and will not be presented at the annual general meeting.
In addition, the Articles of Association require that any shareholder who wishes to submit a nomination for director at an annual general meeting under article 147.1(b) must have given timely notice thereof pursuant to article 88.2, which notice must also compliescomply with the information requirements specified in article 147.3 of the Articles of Association relating to shareholder nominations. To be timely in the case of the 20202022 Annual General Meeting, a shareholder’s notice to the CorporateCompany Secretary must be received at the registered office of the Company no earlier than March 13, 202012, 2022 and no later than April 12, 2020.11, 2022. Any shareholder who wishes to make a nomination should obtain a copy of the relevant section of the Articles of Association from the CorporateCompany Secretary.
Proposals of shareholders intended to be included in the Company’s Proxy Statement pursuant to Rule14a-8 under the Exchange Act at the 20202022 Annual General Meeting must be received by us at our registered office addressed to the CorporateCompany Secretary no later than December 31, 2019.30, 2021.
All proposals should be addressed to the CorporateCompany Secretary, Endo International plc, First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
6773
Endo International plc
First Floor
Minerva House
Simmonscourt Road
Ballsbridge
Dublin 4, Ireland
endo.com |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER ANNUAL GENERAL MEETING TO BE HELD ON JUNE 11, 201910, 2021
The Proxy Statement for the Annual Meeting and 20182020 Annual Report on Form10-K are available atwww.endo.com/investors/financial-reportshttps://investor.endo.com/.
By Order of the Board of Directors,
Yoon Ah OhMatthew J. Maletta
CorporateExecutive Vice President,
Chief Legal Officer and
Company Secretary
Dublin, Ireland
April 29, 20192021
Endo International plc,
Registered Office: First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland
Registered in Ireland: Number—534814
Directors: Roger Hartley Kimmel (USA), Paul Victor Campanelli (USA), Mark Gilbert Barberio (USA), Jennifer M. Chao (USA), Blaise Coleman (USA), Shane Martin Cooke (Ireland), Nancy June Hutson (USA), Michael Hyatt (USA), Sharad Sunder MansukaniRoger Hartley Kimmel (USA), William Patrick Montague (USA), Todd Benjamin SisitskyMary Christine Smith (USA).
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ENDO INTERNATIONAL PLC
AMENDED AND RESTATED 2015 STOCK INCENTIVE PLAN
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The purpose of the Endo International plc Amended and Restated 2015 Stock Incentive Plan, as amended and restated [•], 2019 (the “Plan”), is to promote the interests of the Company and the shareholders of the Company by providing directors, officers, employees and consultants of the Company with appropriate incentives and rewards to encourage them to enter into and continue in the employ or service of the Company, to acquire a proprietary interest in the long-term success of the Company and to reward the performance of individuals in fulfilling long-term corporate objectives. Section references are to sections of the Plan unless otherwise stated.
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Notwithstanding the foregoing, to the extent necessary to avoid the imposition of taxes or penalties under Section 409A of the Code with respect to any Award that constitutes deferred compensation under Section 409A of the Code, a “Change in Control” will have occurred only if, in addition to the requirements set forth above, the event constitutes a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of guidance issued by the Secretary of the Treasury under Section 409A of the Code.
For the avoidance of doubt, any one or more of the above events may be effected pursuant to (A) a compromise or arrangement sanctioned by the court under Chapter 1 of Part 9 of the Companies Act 2014 of the Republic of Ireland or (B) otherwise under Part 9 of the Companies Act 2014 of the Republic of Ireland.
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The maximum number of shares of Company Stock reserved for issuance under the Plan (all of which may be granted as Incentive Stock Options or in any other type of Award selected by the Committee) shall be the sum of (in each case, subject to adjustment as provided herein) (i) 7,000,000 shares, (ii) the number of shares reserved but unissued under the Plan as of the date the Plan, as amended and restated, is approved by shareholders, and (iii) the number of shares becoming available for reuse in accordance with Section 4(e) of the Plan following the date the Plan, as amended and restated, is approved by shareholders. Shares reserved under the Plan may be authorized but unissued Company Stock or authorized and issued Company Stock held in the Company’s treasury. The Committee may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares pursuant to the Plan.
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To the extent required by Section 162(m) of the Code with respect to Grandfathered Awards, the total number of shares of Company Stock subject to such Awards granted to any one Participant during any tax year of the Company shall not exceed one million five hundred thousand (1,500,000) shares (based on highest levels of performance resulting in maximum payout), subject to adjustment as provided herein.
A-4
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Subject to adjustment as provided by Section 4(d), the maximum Fair Market Value, as of the grant date, of shares of Company Stock subject to Awards granted to a Nonemployee Director in any consecutive twelve month period will be $750,000.
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In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Company Stock, or other property), or any other alteration to the capital structure of the Company whether by way of recapitalization, Company Stock split, reverse Company Stock split, reorganization, merger, consolidation,spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, makes an adjustment appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the Committee shall make such equitable changes or adjustments as it deems necessary or appropriate to any or all of (i) the number and kind of shares of Company Stock which may thereafter be issued in connection with Awards, (ii) the number and kind of shares of Company Stock, securities or other property (including cash) issued or issuable in respect of outstanding Awards, (iii) the exercise price, grant price or purchase price relating to any Award, and (iv) the maximum number of shares subject to Awards which may be awarded to any employee during any tax year of the Company; provided that, with respect to Incentive Stock Options, any such adjustment shall be made in accordance with Section 424 of the Code; and provided further that no such adjustment shall cause any Award hereunder which is or could be subject to Section 409A of the Code to fail to comply with the requirements of such section; and provided further that in no event shall the per share exercise price of an Option or subscription price per share of an Award be reduced to an amount that is lower than the par value of a share.
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Except as set forth below, if any shares subject to an Award are forfeited, cancelled, exchanged or surrendered, or if an Award terminates or expires without a distribution of shares to the Participant, the shares of Company Stock with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, withholding, termination or expiration, again be available for Awards under the Plan. Notwithstanding the foregoing, upon the exercise of any Award granted in tandem with any other Awards, such related Awards shall be cancelled to the extent of the number of shares of Company Stock as to which the Award is exercised and such number of shares shall no longer be available for Awards under the Plan, and upon the exercise of a Stock Appreciation Right, the number of shares of Company Stock reserved and available for issuance under the Plan shall be reduced by the full number of shares of Company Stock with respect to which such award is being exercised. In addition, notwithstanding the foregoing, the shares of Company Stock surrendered or withheld as payment of either the exercise price of an Option (including shares of Company Stock otherwise underlying an Award of a Stock Appreciation Right that are retained by the Company to account for the appreciation base of such Stock Appreciation Right) and/or withholding taxes in respect of an Award shall no longer be available for Awards under the Plan.
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The persons who shall be eligible to receive Awards pursuant to the Plan shall be the individuals the Committee shall select from time to time, who are employees (including officers of the Company and its Subsidiaries, whether or not they are directors of the Company or its Subsidiaries), Nonemployee Directors, and consultants of the Company and its Subsidiaries; provided that Incentive Stock Options may be granted only to employees (including officers and directors who are also employees) of the Company or its Subsidiaries.
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The Committee may grant Awards in such amounts and with such terms and conditions as the Committee shall determine in its sole discretion, subject to the terms and provisions of the Plan. Each Award granted under the Plan (except an unconditional Stock Bonus) shall be evidenced by an Agreement as the Committee may in its sole discretion deem necessary or desirable and unless the Committee determines otherwise, such Agreement must be signed, acknowledged and returned by the Participant to the Company. Unless the Committee determines otherwise, any failure by the Participant to sign and return the Agreement within such period of time following the granting of the Award as the Committee shall prescribe shall cause such Award to the Participant to be null and void. By accepting an Award or other benefits under the Plan (including participation in the Plan), each Participant shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, all provisions of the Plan and the Agreement.
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The Committee is authorized to grant Awards to Participants in the form of Other Stock-Based Awards or Other Cash-Based Awards, as deemed by the Committee to be consistent with the purposes of the Plan. To the extent necessary to satisfy the short-term deferral exception to Section 409A of the Code, unless the Committee shall determine otherwise, the awards shall provide that payment shall be made within 2 1/2 months after the end of the year in which the Participant has a legally binding vested right to such award. With respect to Other Cash-Based Awards intended to qualify as Grandfathered Awards, (i) the maximum value of the aggregate payment that any Participant may receive with respect to any such Other Cash-Based Award that is an Annual Incentive Award is $5,000,000, (ii) the maximum value of the aggregate payment that any Participant may receive with respect to any such Other Cash-Based Award that is a Long Term Incentive Award is the amount set forth in clause (i) above multiplied by a fraction, the numerator of which is the number of months in the performance period and the denominator of which is twelve, and (iii) such additional rules set forth in Section 6(f) applicable to such Awards shall apply. The Committee may establish such other rules applicable to the Other Stock- or Cash-Based Awards as it deems appropriate, to the extent not inconsistent with the Plan and, with respect to Grandfathered Awards, Section 162(m) of the Code.
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Subject to Sections 2, 7 and 8, no Award or portion thereof shall provide for vesting prior to the first anniversary of its date of grant; provided, however, that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to 5% of the shares of Company Stock available pursuant to Section 4(a) may be granted under the Plan without regard to such minimum vesting provision.
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Unless otherwise determined in an Award Agreement, in the event of a Change in Control:
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By accepting Awards and as a condition to the exercise of Awards and the enjoyment of any benefits of the Plan, including participation therein, each Participant agrees to be bound by and subject tonon-competition, confidentiality and invention ownership agreements acceptable to the Committee or any officer or director to whom the Committee elects to delegate such authority.
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If any Participant shall, in connection with the acquisition of shares of Company Stock under the Plan, make the election permitted under Section 83(b) of the Code, such Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service.
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The Board of Directors or the Committee may, at any time, suspend or terminate the Plan or revise or amend it in any respect whatsoever; provided, however, that the requisite shareholder approval shall be required if and to the extent the Board of Directors or Committee determines that such approval is appropriate or necessary for purposes of satisfying Sections 162(m) (with respect to Awards intended to qualify as Grandfathered Awards) or 422 of the Code or Rule16b-3 or other applicable law. Awards may be granted under the Plan prior to the receipt of such shareholder approval of the Plan but each such grant shall be subject in its entirety to such approval and no Award may be exercised, vested or otherwise satisfied prior to the receipt of such approval. No amendment or termination of the Plan may, without the consent of a Participant, adversely affect the Participant’s rights under any outstanding Award.
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The Plan, as amended and restated, shall become effective on the Effective Date, but the Plan, as amended and restated, shall be subject to the requisite approval of the shareholders of the Company. In the absence of such approval, such Awards shall be null and void. Unless earlier terminated by the Board of Directors, the right to grant Awards under the Plan shall terminate on the tenth anniversary of the Effective Date. Awards outstanding at Plan termination shall remain in effect according to their terms and the provisions of the Plan.
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Except to the extent preempted by any applicable federal law, the Plan shall be construed and administered in accordance with the laws of the State of Delaware, without reference to its principles of conflicts of law.
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The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Agreement shall give any such Participant any rights that are greater than those of a general creditor of the Company.
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No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
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The Plan is designed and intended to comply with Section 162(m) of the Code with respect to Awards intended to qualify as Grandfathered Awards, and to provide for grants and other transactions which are exempt under Rule16b-3, and all provisions hereof shall be construed in a manner to so comply. Awards under the Plan are intended to comply with Code Section 409A to the extent subject thereto and the Plan and all Awards shall be interpreted in accordance with Code Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of the Plan. Notwithstanding any provision in the Plan to the contrary, no payment or distribution under the Plan that constitutes an item of deferred compensation under Code Section 409A and becomes payable by reason of a Participant’s termination of employment or service with the Company will be made to such Participant until such Participant’s termination of employment or service constitutes a “separation from service” (as defined in Code Section 409A). For purposes of the Plan, each amount to be paid or benefit to be provided shall be construed as a separate identified payment for purposes of Code Section 409A. If a participant is a “specified employee” (as defined in Code Section 409A), then to the extent necessary to avoid the imposition of taxes under Code Section 409A, such Participant shall not be entitled to any payments upon a termination of his or her employment or service until the earlier of: (i) the expiration of the six (6)-month period measured from the date of such Participant’s “separation from service” or (ii) the date of such Participant’s death. Upon the expiration of the applicable waiting period set forth in the preceding sentence, all payments and benefits deferred pursuant to this Section 22 (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such deferral) shall be paid to such Participant in a lump sum as soon as practicable, but in no event later than sixty (60) calendar days, following such expired period, and any remaining payments due under the Plan will be paid in accordance with the normal payment dates specified for them herein.
A-13
ENDO INTERNATIONAL PLC
FIRST FLOOR, MINERVA HOUSE
SIMMONSCOURT ROAD, BALLSBRIDGE
DUBLIN 4, IRELAND
ATTN: YOON AH OH
VOTE BY INTERNET -INTERNET—www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and ENDO INTERNATIONAL PLC follow the instructions to obtain your records and to create an electronic voting FIRST FLOOR, MINERVA HOUSE instruction form.
SIMMONSCOURT ROAD, BALLSBRIDGE DUBLIN 4, IRELAND ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
ATTN: MATTHEW J. MALETTA If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards, Form 10-K, shareholder letters, annual reports and Irish statutory accounts electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Endo International plc, First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E72758-P18702 D41329-P49443 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY ENDO INTERNATIONAL PLC The Board of Directors recommends you vote “FOR” the election of all of the following Directors to serve until the next Annual General Meeting of Shareholders or until their successors are duly elected and qualified: 1. Election of Directors to serve until the next Annual General Meeting of the Shareholders The Board of Directors recommends you vote “FOR” the following For Against Abstain Nominees: For Against Abstain proposals: 1a. Mark G. Barberio 2. To approve, by advisory vote, named executive officer compensation. 1b. Jennifer M. Chao 3. To renew the Board’s existing authority to issue shares under Irish law. 1c. Blaise Coleman 4. To renew the Board’s existing authority to opt-out of statutory pre-emption rights under Irish law. 1d. Shane M. Cooke 5. To approve the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021 and to authorize the Board of Directors, acting 1e. Nancy J. Hutson, Ph.D. through the Audit & Finance Committee, to determine the independent registered public accounting firm’s remuneration. 1f. Michael Hyatt 1g. William P. Montague 1h. M. Christine Smith, Ph.D. This proxy is solicited on behalf of the Board of Directors. This proxy, when properly executed, will be voted in accordance with the instructions given hereon. If no instructions are given, this proxy will be voted “FOR” election of all the Directors, “FOR” Proposals 2, 3, 4 and 5 and as said proxies deem advisable on such other matters as may properly come before the Annual General Meeting and any adjournment(s) or postponement(s) thereof. Name: [PLEASE PRINT NAME] ___________________________ Address: ______________________________________ Note: Please sign exactly as your name or names appear(s) on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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2019
2021 ANNUAL GENERAL MEETING ADMISSION TICKET
ENDO INTERNATIONAL PLC
2019 2021 ANNUAL GENERAL MEETING OF SHAREHOLDERS
Tuesday, Thursday, June 11, 2019
10, 2021 8:00 a.m. (Local Time)
ENDO INTERNATIONAL PLC
First Floor
Minerva House
Simmonscourt Road
Ballsbridge
Dublin 4, Ireland
Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting:
The Notice and Proxy Statement, Endo International plc 20182020 Annual Report on Form 10-K and
Irish Statutory Accounts are or will become available at www.proxyvote.com.
E72759-P18702
D41330-P49443 ENDO INTERNATIONAL PLC
2019 2021 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TUESDAY, THURSDAY, JUNE 11, 201910, 2021 8:00 A.M. (LOCAL TIME)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned ordinary shareholder of Endo International plc, an Irish registered company, hereby (1) acknowledges receipt of the Notice of Annual General Meeting of Shareholders and accompanying Proxy Statement and (2) appoints, as proxies, Paul V. CampanelliBlaise Coleman and Blaise Coleman,Mark T. Bradley, each of c/o Endo International plc, First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland (or either of them)or,, if the below table is completed by the undersigned ordinary shareholder, the person(s) named in the first column of the following table with an address as set out in the second column of the following table:
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(If Name of Proxy Address of Proxy (If you choose to appoint alternative proxies, please complete the above table with the name and address of such proxies. In default of such completion Paul V. CampanelliBlaise Coleman and Blaise ColemanMark T. Bradley or either of them shall be your proxies.)
each with full power of substitution, to attend, speak and vote on behalf of the undersigned as designated on the reverse side, all the ordinary shares of Endo International plc held of record by the undersigned at the close of business on April 12, 2019,2021, at the Annual General Meeting of Shareholders to be held at First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland, on June 11, 2019,10, 2021, and at any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors'Directors’ recommendations.
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued (Continued and to be signed on the reverse side)