Board Committees

        The Board has servedestablished three standing committees: an Audit Committee; a Compensation Committee; and a Nominating and Corporate Governance Committee. Charters for the Company's Audit, Compensation, and Nominating and Corporate Governance Committees are posted on the Company's website athttp://www.depomed.com.

        Audit Committee.    The Company's Audit Committee consists of Mr. McKee (Chairman), Ms. Dawes and Messrs. Lavigne and Staple. The Board has determined and identified each of Messrs. McKee and Lavigne as a directorthe Company's Audit Committee financial experts under applicable SEC rules. The Board has determined that the composition of the Audit Committee meets the requirements for independence under the applicable requirements of the Nasdaq and SEC rules and regulations.

        The Audit Committee has sole responsibility for appointing and terminating the Company's independent registered public accounting firm. In addition, the Audit Committee assists the Board in its oversight responsibilities to shareholders, specifically with respect to:

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the qualifications and independence of our independent registered public accounting firm and internal auditing function;



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financial statements and related disclosure matters;



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internal audit, internal controls and corporate risk management;



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investment policies, and tax planning and strategies;



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finance organization and operations;



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compliance and related party transactions; and



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other related matters.

        Compensation Committee.    The Company's Compensation Committee consists of Mr. Lavigne (Chairman), Messrs. Staple and Tyree. The Board has determined that the composition of the Compensation Committee meets the requirements for independence under applicable requirements of Nasdaq and SEC rules and regulations. The Compensation Committee assists the Board in its oversight responsibilities to shareholders, specifically with respect to:

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evaluating the performance of the Company since December 2007. From 2005 until he joinedagainst corporate goals and objectives relevant to executive management compensation approved by the Board;



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in consultation with the Chairman of the Board, evaluating the CEO's performance in light of corporate goals and objectives and any individual goals and objectives;



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evaluating the performance of members of executive management (other than the CEO) in light of the CEO's evaluation of their performance and the corporate and individual goals and objectives;



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recommending to the Board for approval CEO compensation based on the Compensation Committee's evaluation;



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reviewing and approving the compensation of executive management, other than the CEO, based on the Compensation Committee's evaluation;



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executive compensation disclosure (including by reviewing and discussing the Compensation Discussion and Analysis (CD&A) with Company management and, based on such review and discussion, making a recommendation to the Board regarding whether to include the CD&A in the Company's proxy statement and/or Annual Report on Form 10-K;

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overseeing, reviewing and approving inclusion of a compensation committee report in the Company's proxy statement and/or Annual Report on Form 10-K pursuant to applicable securities rules and regulations); compensation and benefit plans;



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non-employee director compensation (including by reviewing periodically, and recommending to the Board for approval, the form and amount of compensation of non-employee directors of the Board for their service); and



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risk oversight associated with the foregoing.

        Nominating and Corporate Governance Committee.    The Company's Nominating and Corporate Governance Committee consists of Mr. Tyree (Chairman) and Ms. Dawes and Mr. McKee. The Board has determined that the composition of the Nominating and Corporate Governance Committee meets the requirements for independence under the applicable requirements of Nasdaq. The primary responsibilities of the Nominating and Governance Committee are:

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identifying individuals qualified to become Board members, consistent with criteria approved by the Board, and selecting, or recommending that the Board select, the director nominees for the next annual meeting of shareholders, or in the case of a vacancy on the Board, recommending an individual to fill such vacancy;



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reviewing and recommending to the Board the appropriate organizational and board leadership structure;



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reviewing the adequacy of our corporate governance principles on a regular basis;



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developing and recommending to the Board a set of corporate governance guidelines applicable to the Company;



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overseeing the Board's self-evaluation process, and providing the Board advice regarding Board succession;



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recommending to the Board membership for each Board committee and any changes to the Board's committee structure as it deems advisable; and



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providing oversight of the risks associated with matters overseen by the Nominating and Corporate Governance Committee, including corporate governance, director succession planning, political and charitable contributions, insider trading, and reputational risk to the extent such risk arises from these topics.

DIRECTOR NOMINATIONS

        The information below describes the criteria and process that the Nominating and Corporate Governance Committee uses to evaluate candidates to the Board.

Criteria for Nomination to the Board of Directors; Process for Identifying and Evaluating Nominees. Our Nominating and Governance Committee has adopted a Director Nomination Protocol (the Protocol) that, together with the Company's Bylaws, describes in detail the process we use to fill vacancies and add new members to the Board. The Protocol is available atwww.depomed.com under Investors—Corporate Governance, as Appendix A to the Nominating and Governance Committee charter. Under the Protocol, in general, while there are no specific minimum qualifications for nominees, any candidate for service on the Board should possess the highest personal and professional ethics and be committed to representing the long-term interests of the Company's shareholders. Director candidates should be committed to the Company's core values (common purpose, integrity, teamwork, agility and accountability), and must strongly support the Company's core purpose, which is to enhance the lives of the patients, families, physicians, payors and providers it serves. They must also bring to the Board a deep and wide range of experience in the business world, and diverse problem-

solving talents. Typically, they will be people who have demonstrated high achievement in business or another field, enabling them to provide strategic support and guidance for the Company. Particular areas of expertise sought include: corporate strategy and development; commercial sales and marketing; commercial operations and execution; corporate finance; financial and/or accounting expertise; organizational leadership, development and management; public company management and disclosure; and corporate risk assessment and management. Directors must also have an inquisitive and objective perspective, practical wisdom and mature judgment. The Company endeavors to have a Board representing diverse experience at policy-making levels in areas that are relevant to the Company's activities. The Company does not have a policy with respect to diversity in identifying or selecting nominees for the Board. However, in evaluating nominees, the Nominating and Corporate Governance Committee and the full Board assess the background of each candidate in a number of different ways, including how the individual's qualifications complement, strengthen and enhance those of existing Board members as well as the anticipated future needs of the Board. The Board also performs an annual self-evaluation, through which the members of the Board assess the Board's performance and ways in which such performance can be improved. Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time. The Company also will consider the candidate's independence under applicable Nasdaq listing standards and the Company's Corporate Governance Guidelines.

        The Nominating and Governance Committee will identify potential candidates to recommend to the full Board and a search firm may be engaged to identify additional candidates and assist with initial screening. The Nominating and Governance Committee and the Chairman of the Board will perform the initial screening and review the credentials of all candidates to identify candidates that they feel are best qualified to serve. The Chairman of the Nominating and Governance Committee, working with the Chairman of the Board, will obtain background and reference information, as appropriate, for the candidates under consideration. The Nominating and Governance Committee will review all available information concerning the candidates' qualifications and, in conjunction with the Chairman of the Board, will identify the candidate(s) they feel are best qualified to serve on the Company's Board. The members of the Nominating and Governance Committee, the CEO, and the Chairman of the Board (or the Chairman of the Board's delegate from the Board) will meet with the leading candidates to further assess their qualifications and fitness, and to determine their interest in joining the Board. Following the meeting, the Board member participants and the Chairman of the Board will make a recommendation concerning the candidate to the Nominating and Governance Committee, which will consider whether to recommend the candidate to the full Board for election.

        Director Candidates Recommended by Shareholders.    The Nominating and Governance Committee will consider candidates recommended by shareholders. The procedures that shareholders should use to nominate directors are provided in our Bylaws. For details, see "—SHAREHOLDER PROPOSALS" below. Shareholders should also provide such additional information as will allow the Nominating and Governance Committee to evaluate the candidate in light of the key principles listed above, including but not limited to information concerning the candidate's commitment to the Company's core values, personal and professional ethics, business experience and independence. The Nominating and Governance Committee may ask the candidate or the shareholder nominating the candidate to provide additional information at any time, and may conduct its own investigation of a candidate's background, as the Nominating and Governance Committee deems appropriate under the circumstances. There are no differences in the manner of evaluation if the nominee is recommended by a shareholder.

        Nominees to the Board of Directors for the Annual Meeting.    The nominees for the Annual Meeting were recommended for selection by the Nominating and Corporate Governance Committee and were selected by the Board. Each of the nominees listed in this Proxy Statement is a current director standing for re-election.

COMMUNICATIONS WITH DIRECTORS

        The Company believes that communication between the Board, shareholders and other interested stakeholders is an important part of the Company's corporate governance process. To this end, the Board has adopted Shareholder Communication Procedures that are available athttp://www.depomed.com under Investors—Corporate Governance and that provide a process for shareholders to send communications to the Board, any individual director or the non-management directors as a group, through the Chairman. Communications may be sent in writing or by email to: James P. Fogarty, Chairman, Depomed, Inc., c/o Matthew M. Gosling, Corporate Secretary, 7999 Gateway Blvd., Suite 300, Newark, California 94560, email:corpgov@depomed.com.

        The Corporate Secretary will act as agent for the independent Chairman in facilitating direct communications to the Board. The Corporate Secretary will review, sort and summarize the communications. The Corporate Secretary will not, however, "filter out" any direct communications from being presented to the independent Chairman without instruction from the independent Chairman, and in such event, any communication that has been filtered out will be made available to any non-employee director who asks to review it. The Corporate Secretary will not make independent decisions with regard to what communications are forwarded to the independent Chairman. The Corporate Secretary will send a reply to the sender of each communication acknowledging receipt of the communication.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        Ms. Dawes and Messrs. Fogarty, Lavigne, McKee, Molinelli, Savage, Staple and Tyree served as members of the Company's Compensation Committee during 2017. None of the members of the Compensation Committee who served on the Compensation Committee during 2017 is, or has ever been, an officer or employee of the Company Mr. Schoeneck was Chief Executive Officeror any of BrainCells Inc., a privately-held biopharmaceutical company. Prior to joining BrainCells, he served as Chief Executive Officerits subsidiaries. None of ActivX BioSciences, Inc., a development stage biotechnology company. Mr. Schoeneck's pharmaceutical experience also includes three years as Presidentthese directors had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K (Certain Relationships and Chief Executive Officer of Prometheus Laboratories Inc. Prior to joining Prometheus, Mr. Schoeneck spent three years at Centocor, Inc., where he ledRelated Transactions). No interlocking relationship exists, or in the development of Centocor's commercial capabilities. His group launched Remicade®, whichpast fiscal year has become oneexisted, between any member of the world's largest pharmaceutical products. Earlier in his career, he spent 13 years at Rhone-Poulenc Rorer, Inc. (now Sanofi) serving in various salesCompensation Committee who served on the Compensation Committee during 2017 and marketing positionsany member of increasing responsibility.any other company's board of directors or compensation committee.

CODE OF ETHICS

        The Board considered Mr. Schoeneck's experiencehas adopted a Code of Business Conduct and expertiseEthics that applies to all of the Company's employees, officers and directors, including its principal executive officer and its principal financial officer or persons performing similar functions. A copy of the code is available on the Company's website athttp://www.depomed.com and any amendments to or waivers of the code will posted to such website. We intend to disclose future amendments to certain provisions of the code, and any waivers of the code granted to executive officers and directors, on the website within four business days following the date of the amendment or waiver.

EXECUTIVE COMPENSATION CLAWBACK POLICY

        The Board has adopted an Executive Compensation Clawback Policy that applies to all of the Company's executive officers. A copy of the policy is available on the Company's website athttp://www.depomed.com. In 2017, the Company did not recoup, or seek to recoup, any incentive payments or equity awards made to executive officers pursuant the policy.

Table
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Under Section 16(a) of Contentsthe Exchange Act and SEC rules, the Company's directors, executive officers and beneficial owners of more than 10% of any class of equity security are required to file periodic reports of their ownership, and changes in that ownership, with the SEC. Based solely on its review of copies of these reports and representations of such reporting persons, the Company believes that during fiscal year 2017, all such SEC filings were filed on time.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

following areas relevant        The Audit Committee of the Board is responsible for monitoring and reviewing issues involving potential conflicts of interest and reviewing and approving related party transactions. During fiscal year 2017, the Company did not engage, and does currently not propose to engage, in any transaction or series of transactions required to be disclosed by Item 404(a) of Regulation S-K in which the amount involved exceeded or exceeds $120,000 and in which any of the Company's directors or executive officers, any holder of more than 5% of any class of the Company's voting securities or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, nor was any director or executive officer or any of their family members indebted to the Company and its business in concluding that he should serve on the Board: Corporate Strategy; Corporate Management; Commercial Strategy; Pharmaceutical Product Launch; Strategic Transactions; and Corporate Leadership. Mr. Schoeneck currently serves as a directorany amount in excess of FibroGen, Inc., a publicly-held biotechnology company, and AnaptysBio, Inc., a privately-held antibody development company. Mr. Schoeneck holds a B.S. from Jacksonville State University.

David B. Zenoff, D.B.A. has served as a director of the Company since March 2007. Since 1973, Dr. Zenoff has been the President of David B. Zenoff and Associates, Inc., a strategy and management consulting firm. Dr. Zenoff has been on the full-time and part-time faculties of various universities, including Stanford University Graduate School of Business, Columbia Graduate School of Business, and IMD in Lausanne, Switzerland. The Board considered Dr. Zenoff's experience and expertise within the following areas relevant to the Company and its business in concluding that he should serve on the Board: Corporate Strategy; Pharmaceutical Marketing Strategy; Management of Pharmaceutical and Biotechnology companies; Organization Development; Management Practices; Board Processes and Governance; Strategic Transactions; and Corporate Leadership. Dr. Zenoff was a member of the board of directors of Williams-Sonoma for six years and currently serves as a director of ExamWorks Group, Inc. Dr. Zenoff holds a B.A. from Stanford University and an M.B.A. and a D.B.A. from Harvard University.$120,000 at any time.

Table of Contents

SECURITY OWNERSHIP OF DIRECTORSCERTAIN BENEFICIAL HOLDERS AND MANAGEMENT

        The following table below sets forth the beneficialinformation regarding ownership of our Common Stockthe Company's common stock as of March 1, 2018 (or for information based on filings with the SEC as of the Record Date (unlessdates specified otherwise) forbelow) by (a) each person known to the Company to own more than 5% of ourthe outstanding shares of the Company's common stock, (b) each director and director nominee, (c) each named executive officer and (d) all current directors named executive officers and for our current directors and named executive officers as a group. Unless otherwise indicated therein, each personThe information in this table is based solely on statements in filings with the SEC or entity has an address in care of our principal executive offices at 7999 Gateway Blvd., Suite 300, Newark, California 94560.other information made available to the Company that is deemed reliable.

EXECUTIVE OFFICERS AND SENIOR MANAGEMENT

        The Company's executive officers and other members of senior management are set forth in the table below. Biographical information for Mr. Higgins is set forth above under "BOARD OF DIRECTORS."

August J. Moretti has served as Chief Financial Officer and Senior Vice President since January 2012. From 2004 to December 2011, Mr. Moretti served as Chief Financial Officer and Senior Vice President of Alexza Pharmaceuticals, Inc., a publicly-held pharmaceutical company. From 2001 to 2004, Mr. Moretti served as Chief Financial Officer of Alavita, Inc. (formerly Surromed, Inc.). Prior to Alavita, Mr. Moretti was a partner of Heller Ehrman LLP, an international law firm. Mr. Moretti holds a B.A. from Princeton University and a J.D. from Harvard Law School.

Matthew M. Gosling has served as Senior Vice President and General Counsel since January 2011 and Vice President and General Counsel since June 2006. Prior to joining the Company, Mr. Gosling was a partner of Heller Ehrman LLP, an international law firm. Mr. Gosling holds a B.A. from Trinity University and a J.D. from the University of Chicago.

Santosh J. Vetticaden has served as Senior Vice President and Chief Medical Officer since October 2017. Prior to joining the Company, Dr. Vetticaden served as Interim Chief Executive Officer of Insys Therapeutics Inc. from January 2017 to April 2017. Prior to serving as Interim Chief Executive Officer, Dr. Vetticaden served as Chief Medical Officers of Insys starting in April 2015. Prior to Insys, Dr. Vetticaden held the role of Chief Medical Officer at several publicly traded biopharmaceutical companies: Mast Therapeutics, from September 2012 to September 2014, Cubist Pharmaceuticals, from December 2008 to January 2012, and Maxygen, Inc. from February 2007 to August 2008. Dr. Vetticaden has held leadership positions at Johnson & Johnson and Aventis (now Sanofi). Dr. Vetticaden holds an M.D. from the University of Maryland, a Ph.D. from Virginia Commonwealth University and a M.B.A. from the Sloan School of Management at the Massachusetts Institute of Technology.

Mark D. Booth has served as Senior Vice President, General Manager Specialty Business Unit since November 2017. Prior to joining the Company, Mr. Booth served as the Chief Commercial Officer for Orexigen Therapeutics, Inc., a public pharmaceutical company, from August 2009 to September 2015. Prior to Orexigen, Mr. Booth served as President, Takeda Pharmaceuticals North America from October 2001 to June 2008. Prior to Takeda, Mr. Booth served as General Manager and Senior Vice President of Commercial Operations at Immunex Corporation, where he was responsible for Enbrel®. Mr. Booth began his career at Abbott Laboratories, where he held multiple positions, including his last role as Division Vice President and General Manager for the Anti-Infective/GI

franchise, a position he held from June 1998 to December 1999. Mr. Booth holds a B.S. from Northern Illinois University and a M.B.A. from Northwestern University Kellogg School of Management.

Sharon D. Larkin has served as Senior Vice President, Human Resources since April 2017. Prior to joining the Company, Ms. Larkin worked at Abbott Laboratories for 23 years, most recently serving as Divisional Vice President, Human Resources, Medical Devices Group. Ms. Larkin provided worldwide human resources leadership to Abbott's five medical device operating businesses which included Vascular, Diabetes Care, Medical Optics, Structural Heart and Electrophysiology. Prior to Abbott, she held leadership positions at the Federal Bank of Atlanta, Jacksonville Branch. Ms. Larkin holds a B.S. from the Georgia Institute of Technology College of Management.

Sean P. McKercher has served as Senior Vice President, Operations and Business since September 2017. Prior to joining the Company, Mr. McKercher held the position of President and General Manager of Ipsen North America, the U.S. affiliate of Ipsen, a global specialty biopharmaceutical group, from May 2011 to January 2014. From January 2009 until April 2011, Mr. McKercher served as Senior Vice President Corporate Business Development of Ipsen and from April 2007 to December 2008, as Vice President Commercial Development, North America of Ipsen. Prior to Ipsen, Mr. McKercher held senior positions in Abbott Laboratories' U.S. pharmaceutical products division and roles of increasing responsibility in Abbott's international division. Mr. McKercher holds a M.B.A. from York University and a B.Sc. from the University of Waterloo.

Peter W. Schineller has served as Senior Vice President, Sales since July 2017. Prior to joining the Company, between July 2015 and July 2017, Mr. Schineller served as Chief Commercial Officer at SkylineDx B.V., a privately-held diagnostic company. From June 2013 until July 2015, Mr. Schineller served as Chief Commercial Officer at Agendia N.V. Prior to Agendia, Mr. Schineller served as Senior Vice President and Chief Commercial Officer at Alexa Pharmaceuticals. Prior to joining Alexa, Mr. Schineller served in senior commercial roles at Ventana Medical Systems, Inc., Genoptix Medical Laboratories and Cypress Bioscience, Inc. Mr. Schineller has also held positions at Elan Pharmaceuticals, Inc., Dura Pharmaceuticals, Inc. and Abbott Laboratories, Inc. Mr. Schineller holds a B.A. from the State University of New York at Stony Brook.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

        This compensation discussion and analysis describes the material elements of compensation awarded to, earned by, or paid in 2017, to each of the named executive officers. This compensation discussion and analysis focuses on the information contained below under this "EXECUTIVE COMPENSATION" section, and in the related footnotes and narrative.

Executive Summary

        Depomed is a specialty pharmaceutical company focused on pain and other central nervous system (CNS) conditions. Our current specialty pharmaceutical business includes the following three primary products which we market in the United States:

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Gralise® (gabapentin), a once-daily product for the management of postherpetic neuralgia.



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CAMBIA® (diclofenac potassium for oral solution), a non-steroidal anti-inflammatory drug for the acute treatment of migraine attacks.



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Zipsor® (diclofenac potassium) liquid filled capsules, a non-steroidal anti-inflammatory drug for the treatment of mild to moderate acute pain.

        Additionally in December 2017, the Company entered into an agreement with Collegium Pharmaceutical, Inc. to commercialize the NUCYNTA® franchise of pain products in the U.S., and an agreement with Slán Medicinal Holdings Limited and certain of its affiliates (Slán) pursuant to which we acquired Slán's rights to market the specialty drug cosyntropin (Synthetic ACTH Depot) in the U.S., and Slán acquired our rights to Lazanda® (fentanyl) nasal spray.

        Given our existing product base and commercialization agreements, as well as our strong leadership, we believe the Company is well positioned to execute on the three pillars of our commercial strategy of: Maintain, Grow, and Build, while delivering meaningful long-term value to shareholders.

        Our executive compensation program is designed to advance our commercial strategy. In order for our executives to realize incentive payouts the Company must successfully drive net sales and operating income levels, which should further translate into shareholder value. Evidencing this commitment to a pay-for-performance philosophy is the fact that the Company did not fund cash bonus payments for 2017 performance, as well as a formal shift in our long-term incentive vehicle mix to 50% time-based RSUs and 50% performance-based RSUs.

        With these changes, our CEO's target total direct compensation is now 50% performance based.

        The Company's executive compensation actions in 2017 further reflect the fact that the year was a challenging one for the Company and its business. The challenges primarily arose from the Company's reliance on revenues from opioid products, the succession of the Company's Chief Executive Officer in March 2017, the disruption to product supply resulting from the impact of Hurricane Maria on manufacturing operations in Puerto Rico, the fundamental changes to the Company's business described above, and the Company's planned relocation to the Midwest. For instance, in addition to the Chief Executive Officer, certain executive officers transitioned out of the Company in 2017, others have joined the Company and still others have agreed to remain with the Company temporarily to facilitate its relocation to the Midwest. Accordingly, in addition to the objectives described below, the Company's executive compensation actions in 2017 were intended to stabilize the organization, ensure a successful and orderly relocation, and attract and retain capable executives at a critically important time in the Company's development and transformation.

General

        The Company's Compensation Committee is responsible for overseeing our executive compensation program. The Company's compensation philosophy is to provide a competitive balance of cash and equity compensation, benefits, and development opportunities in order to attract and retain the talent necessary to create a collaborative, high-performing work environment that contributes to the Company's overall success and long-term shareholder value. Our executive compensation program is:

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Market competitive, to ensure that the Company attracts and retains executives to lead and manage the Company who are talented, qualified, and capable of achieving the Company's business objectives and to ensure executives are fairly rewarded for their accomplishments; and



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Motivational and retention-oriented, so that executives remain dedicated to the Company and its overall growth and performance.

        The primary components of the Company's executive compensation program are base salary, annual cash bonus and stock-based awards. The Company believes that these components, along with the Company's other benefits and its commitment to career development, foster a productive, team-oriented work environment that offers the Company's employees the flexibility and opportunity to thrive in a collaborative atmosphere and to receive meaningful rewards and recognition for their contributions to the Company's growth and success. The Company views these components of compensation as related but distinct. That is, we do not believe that significant compensation derived from one component of compensation should negate or reduce compensation from other components.

        The Company determines the appropriate level for each compensation component based in part, but not exclusively, on individual performance, competitive compensation information in light of the Company's recruiting and retention goals, and its view of internal equity and consistency. The Company believes that, as is common in the pharmaceutical industry, stock-based awards, salary, and cash bonuses are all necessary to attract and retain employees. The Company allocates compensation between long-term and short-term compensation, and between cash and non-cash compensation, based on benchmarking and attempts to appropriately align management and shareholder interests. The Chief Executive Officer assists the Compensation Committee in its annual review of the base salaries and other compensation elements for other executive officers. Specifically, the Chief Executive Officer makes recommendations to the Committee regarding base salary increases, equity incentive grants, and the level of achievement of individual objectives for the other executive officers. The Chief Executive Officer discusses his recommendations with the Compensation Committee and the Committee then makes a decision on the compensation package for each named officer. The Compensation Committee, without the Chief Executive Officer present, performs an annual review of the base salary and other compensation elements for the Chief Executive Officer.

        The Compensation Committee's objective is to ensure strong alignment among the Company's executive performance, executive compensation and shareholder value. The Compensation Committee's recently appointed members, with the assistance of the Company's recently appointed Chief Executive Officer, will continue to review the Company's compensation practices in light of that objective.

        In connection with this ongoing review, the Compensation Committee continues to revise the executive compensation program to implement and maintain what it believes to be are best practices with respect to executive compensation. The Company's executive compensation corporate governance framework includes the following practices, each of which reinforces our executive compensation objectives:

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we use performance-based incentives in both our short- and long-term programs, to ensure that the interests of our executives are aligned with those of our shareholders;



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Management Continuity Agreements entered into with each of our executive officers provide for double trigger severance benefits, meaning that both a change in control and termination of employment are required for change of control severance benefits to be paid;



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we do not provide for automatic single trigger vesting of equity awards upon the occurrence of a change in control;



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we maintain stock ownership guidelines for executives and nonemployee directors;



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we have a compensation clawback policy applicable to executive officers;



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we prohibit golden parachute excise tax gross-ups for all of our executive officers;



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the Compensation Committee retains the services of an independent executive compensation consultant who provides services directly to the Compensation Committee;



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we conduct an annual say-on-pay vote;



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we regularly review the peer group we use for compensation comparisons to ensure that it appropriately aligns with the Company; and



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we prohibit our directors, officers and employees from engaging in hedging or monetization transactions, including short sales or transactions in publicly traded options, and generally prohibit the pledging of Company securities as collateral.

Review of Competitive Market; Compensation Consultant

        To assist with the analysis of executive compensation for fiscal year 2017, the Compensation Committee engaged Aon Hewitt, Radford, a global professional services firm with expertise consulting on executive compensation matters in general and with specific expertise in the biopharma industry. Aon Hewitt, Radford reports directly to the Compensation Committee, and the Compensation Committee has the sole authority to hire, fire and direct the work of Aon Hewitt, Radford. For fiscal year 2017, Aon Hewitt, Radford advised the Compensation Committee on a variety of compensation-related issues, including:

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refining the Company's peer group for executive compensation purposes;



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providing general information concerning executive compensation trends and developments, and regulatory developments;



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compiling, analyzing and presenting competitive data to assist the Compensation Committee with its executive compensation decisions, including that of the Chief Executive Officer and the Company's other executive officers; and

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providing information and analysis concerning hedging/pledging, clawback and share ownership guidelines

        Pursuant to SEC rules, the Compensation Committee has assessed the independence of Aon Hewitt, Radford and concluded it is independent and that no conflict of interest exists that would prevent Aon Hewitt, Radford from independently providing services to the Compensation Committee.

Peer Group and Market Data

        The Compensation Committee considers various sources of third party compensation information in connection with its compensation decisions. In particular, the committee considers compensation packages offered by its competitors for executive talent. In connection with its fiscal year 2017 compensation review, the Compensation Committee reviewed publicly available compensation information compiled by Aon Hewitt, Radford related to 13 commercial stage specialty pharmaceutical companies with revenues and market capitalizations generally similar to the Company at the time the peer group was developed in April 2017. The companies reviewed included:

Acorda Therapeutics, Inc.
Akorn, Inc.
AMAG Pharmaceuticals, Inc.
Amphastar Pharmaceuticals, Inc.
Emergent BioSolutions, Inc.
Halozyme Therapeutics, Inc.
Horizon Pharma plc
Impax Laboratories Inc.
Ionis Pharmaceuticals, Inc. (f/k/a ISIS Pharmaceuticals, Inc.)
Nektar Therapeutics
Pacira Pharmaceuticals, Inc.
Supernus Pharmaceuticals, Inc.
The Medicines Company

        The Company's peer group for compensation decisions made in early 2017 was similar to the peer group established in April 2017. Certain peers somewhat larger than the Company were removed and replaced with others with profiles similar to the Company. In light of developments in the Company's business, the Committee may review and revise its proxy peers in 2018.

        The Compensation Committee reviews the information described above in order to understand current compensation practices at peer companies. However, the Compensation Committee does not engage in formal benchmarking relative to peer companies. The Committee uses competitive compensation data from the annual total compensation study of peer companies to inform its decisions about overall compensation opportunities and specific compensation elements. Additionally, the Committee uses multiple reference points when establishing targeted compensation levels. The Committee does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies or the broader U.S. market. Instead, the Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as Company, business unit and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning.

Compensation Elements

        Base Salary.    While the Company seeks to ensure that a substantial portion of its executives' compensation depends on the achievement of corporate and individual goals, the Company also seeks to provide its executive officers with competitive annual base salaries in order to attract and retain

talented individuals. In determining appropriate salary levels for a given executive officer, the Compensation Committee considers the following factors:

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individual performance



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experience and skills



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external market conditions;



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level of responsibility;



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breadth, scope, and complexity of the position; and



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executives' salaries relative to each other.

        Based on the criteria above, in February 2017, the Compensation Committee increased the base salary levels of the named executive officers. The salary increases in 2017 included adjustments based on market conditions for certain executives. The increases were effective as of March 1, 2017. There were no base salary adjustments in 2018.

        Cash Bonus.    The Company's executive officers participate in the Depomed, Inc. Annual Bonus Plan (the Bonus Plan), which provides for annual cash bonuses based on the achievement of individual and corporate objectives which the Company believes increases shareholder value. For 2017, executives' cash bonus target as a portion of base salary was 100% for the Chief Executive Officer, 50% for the Company's Chief Financial Officer, the General Counsel and the Chief Medical Officer. The cash bonus target percentages for executive officers remained flat in 2017 relative to 2016, and no changes are planned for 2018.

        Executive officers' bonus payouts are tied in significant part to company-wide corporate objectives approved by the Board that are generally set late in the fourth quarter of the prior year or shortly after the beginning of the current year. Corporate objectives are generally quantitative in nature, so that their achievement can be objectively measured, and are weighted by relative importance. Following the completion of the fiscal year, the Compensation Committee assesses the Company's performance relative to the corporate goals, and applies a "corporate multiplier" based on that assessment. A corporate multiplier of 100% reflects 100% achievement of corporate objectives. The Board makes the final determination of the corporate multiplier, after receiving a recommendation from the Compensation Committee. The weighting of the achievement of corporate objectives as a portion of an executive's total bonus payout is 100% in the case of the Chief Executive Officer and 70% in the case of all other executive officers.

        The Board does not classify individual objectives by their relative difficulty, but believes that the Company's corporate objectives are, on the whole, ambitious but achievable. The corporate multipliers established after assessing the Company's performance relative to the corporate goals were as follows:

        Corporate objectives for 2017 were related to net sales revenue (based on a target of $425 million), adjusted EBITDA (based on a target of $134 million) and retention of identified key personnel (based on a target of 80% retention). In addition, each executive had departmental objectives. Achievement of the Company's overall corporate objectives was considered at Compensation Committee meetings held in October and November 2017 and in January and February 2018. The Compensation Committee concluded that the Company's corporate objectives had not been achieved, and recommended in December 2017 to the full Board that the Company's Bonus Plan not be funded for executive officers or other employees in respect of 2017 performance. In lieu thereof with regard to non-executive employees, the Company implemented a retention program in connection with the Company's relocation pursuant to which employees could receive a retention payment equal to up to 70% of their 2017 bonus target for remaining with the Company for specified periods through as late as June 2018.

        Individual performance of executive officers was considered, and final executive compensation determinations were made, at a Compensation Committee meeting held on February 8, 2018.

        Under the Bonus Plan, the Chief Executive Officer has no individual goals for which he is incentivized separately from the Company's corporate objectives. As such, Mr. Higgins did not receive a bonus for 2017. Dr. Vetticaden joined the Company in late 2017 and was not eligible for a bonus. As the Company did not fund the Bonus Plan for 2017, Messrs. Gosling and Moretti did not receive cash bonuses for 2017 performance.

Stock-Based Awards

        The Compensation Committee has historically granted stock options and restricted stock units (RSUs) to executive officers to motivate them to drive the achievement of corporate objectives, to aid in their retention, and to align their interests with those of the Company's shareholders by providing executives with an equity stake. Stock options granted to executive officers have an exercise price equal to 100% of the fair market value of the Company's common stock (the closing sales price on Nasdaq) on the date of grant, so they have value only to the extent that the market price of the Company's common stock increases after the date of grant. Typically, stock options vest and become exercisable over four years. One-quarter of the shares subject to the option vest after one year in the case of initial option grants. Restricted Stock Units typically vest in three or four equal installments on the anniversary of the grant date.

        In 2018, the Company implemented a new equity award plan for the Chief Executive Officer, Senior Vice Presidents and other Company Vice Presidents who report to the Chief Executive Officer. Under the new plan, the Compensation Committee grants restricted stock units (RSUs) and performance stock units (PSUs) to motivate executives to drive achievement of corporate objectives, to aid in their retention and to align their interests with those of the Company's shareholders. The RSUs granted by the Company vest in three equal installments over approximately three years. The PSUs granted by the Company vest in three equal installments, with performance measured based on Relative Total Shareholder Return (TSR) against the Russell 3000 Pharmaceuticals Total Return Index. Performance is measured over a one, two and three year period relative to 2017, each accounting for

one third of the target award. For equity incentive awards made in February 2018, in consultation with AON Hewitt, Radford, the Committee set target award levels at its February 8, 2018 meeting for the Chief Executive Officer, Senior Vice Presidents, and for other Company Vice Presidents who report to the Chief Executive Officer. The target award levels were based on the Company's 10-day average stock price as of February 5, 2018.

        The Compensation Committee determines the size of a particular equity award based on a holistic assessment of a number of factors, including competitive market levels, the executive's past performance and future potential, the Company's performance relative to corporate objectives, and recent growth or decline in shareholder value. Annual grants are generally made in the first quarter of the fiscal year. The date of the meeting of the Compensation Committee at which the annual grants are made is set in advance, and is not coordinated with the release of information concerning the Company's business. In March 2018, in connection with its determinations regarding executive compensation, the Committee made annual grants to Mr. Higgins (178,600 RSUs and 178,600 PSUs) and Dr. Vetticaden (35,100 RSUs and 31,500 PSUs). In light of the Company's transition and relocation, no grants were made to Messrs. Gosling and Moretti.

Chief Executive Officer Compensation

        Based upon a review of market data and other factors as described in greater detail above under "Review of Competitive Market", the Compensation Committee determined to keep Mr. Higgins' base salary unchanged for 2018 and granted him the equity awards described above. Based on the Company's performance relative to the pre-set objectives for the annual cash bonus program for FY 2017, Mr. Higgins' did not receive a cash bonus payout.

Arthur J. Higgins Offer Letter

        On March 28, 2017, the Company entered into a letter agreement (the Offer Letter) with Arthur J. Higgins pursuant to which Mr. Higgins agreed to become President and Chief Executive Officer of the Company, effective March 28, 2017. In addition, the Board appointed Mr. Higgins to the Board.

        The Offer Letter provides Mr. Higgins with an annual base salary of $800,000 and an annual target cash bonus of 100% of his base salary. The Offer Letter also provides that the Company will grant Mr. Higgins stock options that vest over a four-year period with a value of $1.75 million and restricted stock units that vest over a four-year period with a value of $1.75 million. In addition, the Company agreed to reimburse Mr. Higgins for reasonable out-of-pocket relocation expenses incurred by Mr. Higgins in connection with his relocation to the San Francisco Bay Area. In accordance with the terms of the Offer Letter, on March 31, 2017, the Company granted Mr. Higgins (i) 139,442 restricted stock units that vest 25% on December 1, 2017, 25% on December 1, 2018, 25% on December 1, 2019 and 25% on December 1, 2020 and (ii) 315,884 stock options that vest 12.5% on September 28, 2017 and in 42 equal monthly installments thereafter, such that the stock options will be fully vested and exercisable on March 28, 2021, in each case assuming continued employment through the applicable vesting date.

        Mr. Higgins also entered into the Company's Management Continuity Agreement, which provides, among other things, change in control severance benefits in the event Mr. Higgins' employment is terminated by the Company other than for cause, death or disability or by him for good reason (in each case, as defined in the Management Continuity Agreement), in each case in connection with, or within the period beginning (a) 90 days prior to the effective date of a change in control of the Company and ending (b) 24 months following the effective date of a change in control of the Company. Upon such a qualifying termination of employment, Mr. Higgins will be eligible to receive payments and benefits substantially similar to the payments and benefits as summarized below in the

section entitled "EXECUTIVE COMPENSATION—Potential Payments upon Termination or Change in Control."

        The Management Continuity Agreement further provides, among other things, that in the event Mr. Higgins' employment is terminated by the Company other than for cause, death or disability or by him for good reason (in each case not in connection with a change in control), Mr. Higgins will receive 18 months of base salary, continued health coverage and equity vesting if the termination is on or after January 1, 2018. In addition to the foregoing, Mr. Higgins' equity awards will be accelerated in an amount equal to the applicable period of severance benefits, up to a maximum of 12 months.

CEO Equity Match Program

        In December 2017, the Board approved a one-time incentive program (the Equity Match Program) for Mr. Higgins. The Equity Match Program provides an incentive for Mr. Higgins to purchase shares of the Company's common stock through open-market purchases between December 5, 2017 and February 3, 2018 (the Purchase Period). Under the terms of the Equity Match Program, for each $100,000 of Common Stock heldpurchased by Mr. Higgins during the Purchase Period (up to $600,000 in total), the Company agreed to grant him an award of RSUs (the Matching Units) under the 2014 Plan having a grant-date value equal to the purchase price of the Common Stock purchased.

        Pursuant to the Equity Match Program, Mr. Higgins received 73,529 Matching Units on December 15, 2017. The Matching Units will vest in full on December 15, 2020, subject to Mr. Higgins' continued employment through that date. Additionally, Mr. Higgins must hold the shares he purchased through this vesting period in order to for the Matching Units to vest. Notwithstanding the foregoing, the Matching Units vest in full upon a termination without cause or resignation for good reason (including following a change of control of the Company), or upon Mr. Higgins' death or total and permanent disability.

Severance and Transition Agreements

        Severance and transition arrangements entered into in 2017 with the Company's executive officers are described under "Potential Payments upon Termination or Change in Control."

Compensation Policies and Practices as They Relate to the Company's Risk Management

        The Company believes that its compensation policies and practices for all employees, including executive officers, do not create risks that are reasonably likely to have a material adverse effect on the Company. The Board believes its approach to setting corporate goals and individual objectives, bonus payouts at varying levels of performance, and thorough evaluation of performance results assist in mitigating excessive risk-taking that could harm the Company's value or reward poor judgment by executives. The Board believes the allocation of compensation among base salary and short and long-term cash and equity-linked compensation discourages excessive risk-taking. The Board believes applying Company-wide metrics encourages decision-making that is in the best long-term interests of the Company and its shareholders as a whole. Also, the multi-year vesting of equity awards discourages excessive short-term risk taking.

Other Benefits

        Executive officers are eligible to participate in all of the Company's employee benefit plans, such as medical, dental, group life, disability, and accidental death and dismemberment insurance and 401(k) plan, in each case on substantially the same basis as other employees, subject to applicable law. The Company also provides vacation and other paid holidays to all employees, including executive officers, all of which the Company believes to be comparable to those provided at peer companies.

Tax and Accounting Considerations

        In making compensation decisions affecting the executive officers, the Compensation Committee considers the Company's ability to deduct under applicable federal corporate income tax law compensation payments made to executives. Specifically, the committee has historically considered the requirements and impact of Section 162(m) of the Internal Revenue Code, as amended, which generally disallows a tax deduction for annual compensation in excess of $1 million paid to our named executive officers. Certain compensation that qualifies under applicable tax regulations as "performance-based" compensation is specifically exempted from this deduction rule. However, the 2017 tax reform legislation removed the "performance-based compensation" exception from Section 162(m). Accordingly, awards made after November 2, 2017, generally are not eligible for the "performance-based compensation" exception and will not be deductible to the extent that they cause the compensation of the affected executive officers to exceed $1,000,000 in any year. Awards that were made and subject to binding written contracts in effect on November 2, 2017, are "grandfathered" under prior law and can still qualify as deductible "performance-based compensation," even if paid in future years. The Compensation Committee will continue to monitor any awards that may be grandfathered and endeavor to ensure that they are deductible if and when paid. Going forward, the Compensation Committee cannot assure that the Company will be able to fully deduct all amounts of compensation paid to persons who are named executive officers in the future. Further, because the Compensation Committee believes it is important to preserve flexibility in designing its compensation programs, it has not adopted a policy that all compensation must qualify as deductible under Section 162(m).

Compensation Committee Report

        The Compensation Committee has reviewed this compensation discussion and analysis, discussed it with management and recommended, based on such review and discussion, to the Board that it be included in this Proxy Statement.

Notwithstanding anything to the contrary set forth in any of the Company's filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate future filings, including this Proxy Statement, in whole or in part, the Compensation Committee Report shall not be deemed to be incorporated by reference into any such filings.

Summary Compensation Table

        The following table sets forth information concerning compensation earned for services rendered to the Company by each of our named executive officers for fiscal years 2015, 2016 and 2017 as determined in accordance with applicable SEC rules (the named executive officers).

2017 Grants of Plan-Based Awards

        The following table sets forth information regarding grants of stock and option awards made to the named executive officers during fiscal year 2017 and potential fiscal year 2017 target payouts under the Company's Annual Bonus Plan.

Outstanding Equity Awards at 2017 Fiscal Year-End

        The following table sets forth information regarding outstanding equity awards held by the named executive officers as of December 31, 2017.

2017 Option Exercises and Stock Vested

        The following table sets forth certain information regarding option exercises and the vesting of restricted stock units held by our named executive officers during the fiscal year ended December 31, 2017.

Potential Payments upon Termination or Change in Control

        In February 2016, the Board approved a form of Management Continuity Agreement to be entered into with each of the Company's executive officers. The Company subsequently entered into definitive Management Continuity Agreements with each such officer, which agreements replace and supersede the Management Continuity Agreements previously entered into by the Company and its executive officers.

        The Management Continuity Agreements provide, among other things, that in the event an executive officer is subject to an involuntary termination within 90 days prior to or 24 months following a change of control, the executive officer is entitled to receive: (i) 100% acceleration of such officer's unvested Company equity awards; (ii) a lump sum severance payment equal to two times (if the officer is the chief executive officer) or one time (if the officer is not the chief executive officer) the base salary which the officer was receiving immediately prior to the change of control; (iii) a lump sum payment equal to two times (if such officer is the chief executive officer) or equal to (if the officer is not the chief executive officer) such officer's annual bonus target for the Company's fiscal year in which the termination occurs (iv) continuation of payment by the Company of the full cost of the health insurance benefits provided to such officers immediately prior to the change of control through the earlier of the end of the 24 month period (if the officer is the chief executive officer) or 12 month period (if the officer is not the chief executive officer) following the involuntary termination or until such officer is no longer eligible for such benefits under applicable law; and (v) up to three months of outplacement services not to exceed $5,000 per month.

        In addition, the Management Continuity Agreements provide, among other things, that in the event the executive officer is subject to an involuntary termination (other than in connection with a change of control as described above), the executive officer will receive: (i) acceleration of 12 months' of such officer's unvested Company equity awards if the officer is the chief executive officer; and (ii) severance payments for a period of 18 months (if the officer is the chief executive officer) or 12 months (if the officer is a senior vice president), equal to the base salary which the officer was receiving immediately prior to the change of control; (iii) continuation of payment by the Company of the full cost of the health insurance benefits provided to such officers immediately prior to the involuntary termination through the earlier of the end of the severance period or until such officer is no longer eligible for such benefits under applicable law; and (v) up to three months of outplacement services not to exceed $5,000 per month.

        The executive officer is not entitled to receive a "gross up" payment to account for any excise tax that might be payable pursuant to Section 4999 of the Internal Revenue Code. Instead, the executive officer shall receive the greater of (i) the full severance benefits less any taxes, including excise taxes or (ii) the amount of severance benefits that would result in no excise tax having to be paid. These benefits are contingent upon the executive officer's release of any claims against the Company.

        The following table sets forth potential payments to the Company's named executive officers employed as of December 31, 2017 under the Management Continuity Agreement that would have been made had an involuntary termination occurred within 90 days prior to or 24 months following a change of control as of December 31, 2017. In addition, payments made to Mr. Schoeneck in connection with his resignation as the Chief Executive Officer of the Company, effective March 28, 2017, are summarized below.

Potential Payments—Involuntary Termination Following a Change of Control

        The following table sets forth potential payments to the Company's named executive officers employed as of December 31, 2017 under the Management Continuity Agreement that would have been made if an involuntary termination (other than in connection with a change of control) occurred as of December 31, 2017.

Potential Payments—Involuntary Termination

Transition and Consulting Arrangements with Matthew M. Gosling and August J. Moretti

        On December 8, 2017, the Company entered into a Transition and Consulting Agreement (the Transition Agreements), with each of Matthew M. Gosling and August J. Moretti (the Officers) in connection with Company's planned relocation from the San Francisco Bay Area.

        Pursuant to the Transition Agreements, Mr. Gosling, the Company's current Senior Vice President and General Counsel, and Mr. Moretti, the Company's current Chief Financial Officer and Senior Vice President, will continue their employment with the Company through June 30, 2018 (or up to 60 days thereafter if requested by the Company's Chief Executive Officer) (the Separation Date). Through the Separation Date, the Officers will remain in their current roles and will assist with: (a) the transition of their departments to the Company's new headquarters location; and (b) the transition of their duties to any successor named before the Separation Date (in which event the Officer(s) would assume different titles, but continue to provide services to the Company through the Separation Date).

        The Transition Agreements provide that each Officer shall provide post-termination services as a consultant through the first anniversary of the Separation Date (or up to 60 days thereafter), unless terminated sooner under certain circumstances (the Consulting Period). During the Consulting Period,

each Officer will provide transition and integration services in consideration for a monthly fee of $10,000 for each of the first six months of the Consulting Period, which shall be reduced to $5,000 for each remaining month of the Consulting Period through the termination or expiration of the arrangement.

        Subject to the respective Officer's (i) continued service through the Separation Date, (ii) compliance with the Consulting Agreement, and (iii) execution and non-revocation of the Supplemental Release, each Officer shall be entitled to the following: a pro-rated bonus for 2018 equal to fifty percent of such Officer's target bonus for that year; a performance bonus of $200,000, subject to the achievement of predetermined performance goals; a severance payment equal to 12 months' of the Officer's base salary in effect as of the Separation Date; up to 12 months of health insurance benefits pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA); certain outplacement services; continued vesting of outstanding equity awards through the Consulting Period; and full vesting of outstanding restricted stock units (if any) on the last day of the Consulting Period. In the event of a change in control of the Company, the foregoing payments and vesting would be accelerated. In addition, on the effective date of the Transition agreements, each Officer forfeited all unexercised stock options he held that were granted after January 1, 2015 (with exercise prices ranging from $16.07 per share to $17.61 per share).

Retirement of Thadd Vargas

        On July 12, 2017, the Company entered into an agreement with Mr. Vargas pursuant to which Mr. Vargas retired and resigned as an officer of the Company, effective as of July 31, 2017. In connection with his retirement from the Company, and pursuant to the release of claims executed in connection with his resignation, and not revoked in accordance with applicable law, Mr. Vargas received a lump sum cash payment equal to his current annual base salary and up to 12 months of health insurance benefits pursuant to the terms of COBRA. In addition, approximately 22,000 restricted stock units held by Mr. Vargas vested as scheduled on December 1, 2017. Mr. Vargas also received a consulting fee for providing certain business development related consulting services to the Company from August 2, 2017 through December 31, 2017.

Resignation of Srinivas G. Rao, M.D., Ph. D.

        On June 30, 2017, the Company entered into an agreement with Dr. Rao, pursuant to which Dr. Rao resigned as an officer of the Company, effective July 31, 2017. In connection with the termination of his employment with the Company, and pursuant to his release of claims executed in connection with his termination, Dr. Rao received a lump sum cash payment equal to his current annual base salary and up to 12 months of health insurance benefits pursuant to the terms of COBRA. Dr. Rao is also eligible for three months of outplacement services.

Resignation of James A. Schoeneck

        On March 28, 2017, Mr. Schoeneck resigned as President and Chief Executive Officer and a director of the Company, effective as of that date. In connection with the termination of his employment with the Company, Mr. Schoeneck and the Company entered to into a Waiver and Release on March 28, 2017 (the Waiver and Release Agreement).

        Under the terms of the Waiver and Release Agreement, the Company has shared voting poweragreed to pay Mr. Schoeneck (i) $825,000, which is equal to 12 months of his then-current base salary, payable in equal installments in accordance with the Company's ordinary payroll practices, (ii) the full cost of the health insurance benefits provided to Mr. Schoeneck, his spouse and shared dispositive power.dependents, as applicable, pursuant to the terms of COBRA or other applicable law through the earlier of (a) the end of the 12 month period following the date of the Waiver and Release Agreement or (b) the date on which

Mr. Schoeneck is no longer eligible for such COBRA or other benefits under applicable law and (iii) up to six months of documented, bona fide, outplacement services not to exceed $5,000 per month.

        Pursuant to the Waiver and Release Agreement, Mr. Schoeneck forfeited all of his 1,861,212 outstanding stock options (including vested and unvested stock options) and 314,750 unvested restricted stock units granted to him under the Company's equity compensation plans. In addition, pursuant to the Waiver and Release Agreement, Mr. Schoeneck waived all his rights and benefits under the Management Continuity Agreement entered into by the Company and Mr. Schoeneck on February 12, 2016.

        In addition, Mr. Schoeneck expressly affirmed to the Company in the Waiver and Release Agreement that he fully disclosed to the Company any and all violations of law, regulation or company policy or any other misconduct and/or irregularities relating in any way to the Company about which he was aware and could recall as of the date of such agreement. The Waiver and Release Agreement allows the Company to cease making any payment of the aforementioned benefits to him, and provides that Mr. Schoeneck shall repay to the Company substantially all payments of such benefits he received, if the Company determines in good faith that the representations and warranties made by Mr. Schoeneck to the Company were knowingly false or that Mr. Schoeneck engaged in undisclosed material violations of law, regulation or Company policy that he knew of and did not disclose or any other material misconduct and/or irregularities relating in any way to the Company that he knowingly failed to disclose. The Company's right to cease or clawback such benefits terminates upon the conclusion of the 12 month period of the salary continuation benefits described above.

        The Waiver and Release Agreement also includes a standard a non-disparagement covenant, confidentiality covenant, as well as a release of claims.

2017 Director Compensation

        In accordance with the terms of the Non-Employee Director Compensation and Grant Policy (the Director Compensation Policy) approved by the Board in May 2014, in 2017 each non-employee director received an annual cash retainer fee of $55,000. In 2017, a non-employee chairman of the Board receives an additional $30,000 annual retainer. The retainers described below were paid to non-employee directors for Board committee service in 2017.

        The chairman of the Audit Committee received an additional $20,000 annual retainer, and each other member of the Audit Committee received an additional $12,500 annual retainer.

        The chairman of the Compensation Committee received an additional $15,000 annual retainer, and each other member of the Compensation Committee received an additional $10,000 annual retainer.

        The chairman of the Nominating and Corporate Governance Committee received an additional $10,000 annual retainer fee, and each other member of the Nominating and Corporate Governance Committee received an additional $5,000 annual retainer.

        In addition to the cash compensation described above, in accordance with the Director Compensation Policy, each non-employee director received, on the date of the 2017 Annual Meeting of Shareholders (i) an option having a value equal to $60,000 (calculated using the Black-Scholes Valuation method based on assumptions consistent with the methodology used in the Company's financial statements and with an exercise price equal to the Fair Market Value (as defined in the 2014 Plan) of the Company's common stock as of the date of grant) that vests in 12 equal monthly installments and (ii) an award of restricted stock units having a value of $60,000 based on the Fair Market Value (as defined in the 2014 Plan) of the Company's common stock as of the date of grant that vest on the first anniversary of date on which such award of restricted stock units were made.

        The Board amended the Director Compensation Policy in February 2018, a copy of which is filed as an exhibit to the Company's Annual Report on Form 10-K filed with the SEC on March 1, 2018.

        The following table summarizes non-employee director compensation during fiscal year 2017. Neither Mr. Schoeneck nor Mr. Higgins received equity or cash compensation for his service on the Board. All cash and equity compensation paid to, or earned by, either Mr. Schoeneck or Mr. Higgins in fiscal year 2017 in his capacity as the Company's President and Chief Executive Officer is reflected in the executive compensation tables set forth above.