Definitive Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the
Registrant x Filed
by a Party other than the Registrant ¨
Check the appropriate box:
¨ |
Preliminary Proxy Statement |
¨ |
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
x |
Definitive Proxy Statement |
¨ |
Definitive Additional Materials |
¨ |
Soliciting Material Pursuant to §240.14a-12 |
BIOGEN INC.
(Name of
Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
¨ |
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
1) |
Title of each class of securities to which transaction applies: |
|
2) |
Aggregate number of securities to which transaction applies: |
|
3) |
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it
was determined): |
|
4) |
Proposed maximum aggregate value of transaction: |
¨ |
Fee paid previously with preliminary materials. |
¨ |
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
|
1) |
Amount Previously Paid: |
|
2) |
Form, Schedule or Registration Statement No.: |
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
To be held on
June 10, 2015 at our offices located at
115 Broadway, Cambridge, Massachusetts 02142
Notice of 2015 Annual Meeting of Stockholders
Date: |
Wednesday, June 10, 2015 |
Time: |
9:00 a.m., local time |
115 Broadway
Cambridge, Massachusetts 02142
Record Date: |
Only Biogen stockholders of record at the close of business on April 15, 2015 will be entitled to vote at the meeting. |
Items of Business: |
1. |
|
To elect the eleven nominees identified in this proxy statement to our Board of Directors to serve for a one-year term extending until the 2016 annual meeting of stockholders and
their successors are duly elected and qualified. |
|
2. |
|
To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015.
|
|
3. |
|
To hold an advisory vote on executive compensation. |
|
4. |
|
To approve our 2015 Employee Stock Purchase Plan. |
|
5. |
|
To approve an amendment to our 2006 Non-Employee Directors Equity Plan to extend the term of the plan. |
|
6. |
|
To transact such other business as may be properly brought before the meeting and any adjournments or postponements. |
Our Board of Directors recommends voting FOR the election of all of the director nominees listed in Proposal 1 and FOR Proposals 2, 3, 4 and 5.
Your vote is extremely important regardless of the number of shares you own. Whether or not you expect to attend the annual
meeting in person, we urge you to vote as promptly as possible by telephone or by Internet or by signing, dating and returning a printed proxy card or voting instruction form, as applicable.
This notice and proxy statement are first being sent to stockholders on or about April 30, 2015. Our Annual Report on Form 10-K is being
sent with this notice and proxy statement.
By Order of Our Board of Directors,
SUSAN H. ALEXANDER,
Secretary
225 Binney Street
Cambridge, Massachusetts 02142
April 30, 2015
TABLE OF
CONTENTS
TABLE OF CONTENTS (continued)
General Information About the Meeting and Voting
Biogen Inc.
225 Binney Street
Cambridge, Massachusetts 02142
The Board of Directors of Biogen Inc. is soliciting your proxy to vote at our 2015 annual meeting of stockholders
(Annual Meeting) to be held at 9:00 a.m., local time, on Wednesday, June 10, 2015 at our offices located at 115 Broadway, Cambridge, Massachusetts 02142 for the purposes summarized in the accompanying Notice of 2015 Annual Meeting of
Stockholders. Our 2014 Annual Report on Form 10-K is also available with this Proxy Statement.
In March 2015, we changed our corporate legal name
from Biogen Idec Inc. to Biogen Inc. References in this Proxy Statement to Biogen or the Company, we, us and our refer to Biogen Inc.
Who can vote?
Each share of our
common stock that you own as of the close of business on the record date of April 15, 2015 (Record Date) entitles you to one vote on each matter to be voted upon at the Annual Meeting. As of the Record Date, 235,230,221 shares of our common
stock were outstanding and entitled to vote. We are making this Proxy Statement and other Annual Meeting materials available on the Internet or, upon request, sending printed versions of these materials on or about April 30, 2015 to all
stockholders of record as of the Record Date. For 10 days before the Annual Meeting, a list of stockholders entitled to vote will be available for inspection at our offices located at 225 Binney Street, Cambridge, Massachusetts 02142. If you would
like to review the list, please call our Investor Relations department at (781) 464-2442.
Who can attend the Annual Meeting?
Attendance at the Annual Meeting will be limited to stockholders of Biogen as of the Record Date (or their authorized representatives). If your
shares are held by a bank, broker or other nominee, please bring to the Annual Meeting your bank or brokerage statement evidencing your beneficial ownership of Biogen stock to gain admission to the Annual Meeting. Stockholders who plan to attend the
Annual Meeting must present valid photo identification. Stockholders of record will be verified against an official list available at the registration area. We reserve the right to deny admittance to anyone who cannot show sufficient proof of share
ownership as of the Record Date.
How do proxies work?
Our Board of Directors is asking for your proxy authorizing the individuals named as proxies to vote your shares at the Annual Meeting in the manner you direct. You may abstain from voting on any matter. If you
submit your proxy without specifying your voting instructions, we will vote your shares as follows:
|
|
Proposal 1: Election of Directors: FOR the election of each of our director nominees; |
|
|
Proposal 2: Ratification of PricewaterhouseCoopers LLP: FOR the ratification of the selection of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the fiscal year ending December 31, 2015; |
|
|
Proposal 3: Advisory Vote on Executive Compensation: FOR the advisory vote on executive compensation; |
|
|
Proposal 4: Approval of our 2015 Employee Stock Purchase Plan: FOR the approval of our 2015 Employee Stock Purchase Plan;
|
|
|
Proposal 5: Approval of an Amendment to our 2006 Non-Employee Directors Equity Plan: FOR the approval of the amendment to our 2006
Non-Employee Directors Equity Plan to extend the term of the plan until June 10, 2025; and |
|
|
As to any other matter that may properly come before the meeting or any adjournment or postponement, in accordance with the best judgment of the proxy holders.
|
Shares represented by valid proxies received in time for the Annual Meeting and not revoked before the Annual Meeting will be voted at
the Annual Meeting. You can revoke your proxy and change your vote in the manner described below (under the heading How can I
change my vote?). If your shares are held through a bank, broker or other nominee, please follow the instructions that you were
provided by your bank, broker or other nominee.
How do I vote?
It is important that your shares are represented at the Annual Meeting, whether or not you attend the Annual Meeting in person.
|
|
|
|
|
1 |
|
|
|
|
General Information
About the Meeting and Voting (continued)
If you are a registered stockholder (also called a record holder), there are four ways to vote:
|
|
Telephone: By calling the toll-free telephone number indicated on your proxy card. Easy-to-follow voice prompts allow you to vote your shares
and confirm that your instructions have been properly recorded. |
|
|
Internet: By going to the Internet website indicated on your Notice of Internet Availability of Proxy Materials or proxy card. As with
telephone voting, you can confirm that your instructions have been properly recorded. |
|
|
Mail: By signing, dating and returning a printed proxy card. |
|
|
In Person: By submitting a written ballot in person at the Annual Meeting. To obtain directions to attend the Annual Meeting, please contact
our Investor Relations department at (781) 464-2442. We will pass out ballots at the Annual Meeting to anyone who wishes to vote in person. |
If your shares are held in a brokerage account in your brokers name (this is called street name), please follow the voting instructions provided by your bank, broker or other
nominee. In most cases, you may submit voting instructions by telephone or by Internet to your bank, broker or other nominee, or you can sign, date and return a voting instruction form to your bank, broker or other nominee. If you provide specific
voting instructions by telephone, Internet or mail, your bank, broker or other nominee must vote your shares as you have directed. If you wish to vote in person at the Annual Meeting, you must request a legal proxy from your bank, broker or other
nominee.
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full
set of proxy materials?
We have elected to provide access to our proxy materials on the Internet, consistent with the rules of the Securities
and Exchange Commission (SEC). Accordingly, in most instances we are mailing a Notice of Internet Availability of Proxy Materials to our stockholders. You can access our proxy materials on the website referred to in the Notice of Internet
Availability of Proxy Materials or you may request printed versions of our proxy materials for the Annual Meeting. Instructions on how to access our proxy materials on the Internet or to request printed versions are provided in the Notice of
Internet Availability of Proxy Materials. In addition, you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
What does it mean if I receive more than one notice regarding the Internet availability of
proxy materials or more than one set of printed proxy materials?
If you hold your shares in more than one account, you may receive a separate
Notice of Internet Availability of Proxy Materials or a separate set of printed proxy materials, including a separate proxy card or voting instruction form, for each account. To ensure that all of your shares are voted, please vote by telephone or
by Internet or sign, date and return a proxy card or voting instruction form for each account.
How can I change my vote?
You may revoke your proxy and change your vote at any time before the Annual Meeting by:
|
|
Re-voting by telephone or by Internet as instructed above. |
|
|
Signing and dating a new proxy card or voting instruction form and submitting it as instructed above. |
|
|
Delivering timely written notice of revocation to the Secretary, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142 if your shares are registered in
your name. |
|
|
Attending the Annual Meeting in person and voting in person. Attending the Annual Meeting in person will not in and of itself revoke a previously submitted proxy
unless you specifically request it. If your shares are held in street name by a bank, broker or other nominee, you must request a legal proxy from your bank, broker or other nominee to vote in person at the Annual Meeting.
|
Only your latest vote, in whatever form, will be counted.
Will my shares be counted if I do not vote?
If you are a record holder and do not vote
by telephone, through the Internet or by signing, dating and returning a printed proxy card, your shares will not be voted.
If you are the beneficial
owner of shares held in street name, your bank, broker or other nominee, as the record holder of the shares, is required to vote those shares in accordance with your instructions. If no voting instructions are provided, these record
holders can vote your shares only on discretionary, or routine, matters and not on non-discretionary, or non-routine, matters. Uninstructed shares whose votes cannot be counted on non-routine matters result in what are commonly referred to as
broker non-votes.
|
|
|
|
|
2 |
|
|
|
|
General Information
About the Meeting and Voting (continued)
The proposal to ratify the selection of our independent registered public accounting firm is a routine matter and our
other proposals are non-routine matters. If you do not give your broker voting instructions, your broker (1) will be entitled to vote your shares on the proposal to ratify the selection of our independent registered public accounting firm and
(2) will not be entitled to vote your shares on the other proposals. We urge you to provide instructions to your bank, broker or other nominee so that your votes may be counted on all of these important matters.
You should vote your shares by telephone or by Internet according to the instructions provided by your bank, broker or other nominee or by signing, dating and
returning a printed voting instruction form to your bank, broker or other nominee to ensure that your shares are voted on your behalf.
How many shares must be present to hold the Annual Meeting?
A majority of our issued and outstanding shares of common stock as of the Record Date must be present at the Annual Meeting to hold the Annual Meeting and conduct business. This is called a quorum. Shares voted in
the manner described above (under the heading How do I vote?) will be counted as present at the Annual Meeting. Shares that are present and entitled to vote on one or more of the matters to be voted upon are counted as present for
establishing a quorum. If a quorum is not present, we expect that the Annual Meeting will be adjourned until we obtain a quorum.
What vote is required to approve each proposal and how are votes counted?
|
|
Proposal 1: Election of Directors: Directors are elected by majority vote that is, if more votes are cast for that directors
election than against. Abstentions and broker non-votes, if any, are not counted for purposes of electing directors and will have no effect on the results of this vote. |
|
|
Proposal 2: Ratification of PricewaterhouseCoopers LLP: The affirmative vote of a majority of shares present in person or represented by proxy
and having voting power at the Annual Meeting is required to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015. Abstentions will have the effect
of votes against this proposal. Brokers generally have discretionary authority to vote on the
rat- |
|
|
ification of the selection of our independent registered public accounting firm, thus we do not expect any broker non-votes on this proposal. |
|
|
Proposal 3: Advisory Vote on Executive Compensation: Because this proposal asks for a non-binding, advisory vote, there is no required
vote that would constitute approval. We value the opinions expressed by our stockholders in this advisory vote, and our Compensation and Management Development Committee of our Board of Directors (referred to in this Proxy Statement as the
Compensation Committee), which is responsible for overseeing and administering our executive compensation programs, will consider the outcome of the vote when designing our compensation programs and making future compensation decisions
for our named executive officers. Abstentions and broker non-votes, if any, will not have any effect on the results of those deliberations. |
|
|
Proposal 4: Approval of our 2015 Employee Stock Purchase Plan: The affirmative vote of a majority of shares present in person or represented by
proxy and having voting power at the Annual Meeting is required to approve our 2015 Employee Stock Purchase Plan. Abstentions will have the effect of votes against this proposal and broker non-votes will not have any effect on the results of this
proposal. |
|
|
Proposal 5: Approval of an Amendment to our 2006 Non-Employee Directors Equity Plan: The affirmative vote of a majority of shares present in person
or represented by proxy and having voting power at the Annual Meeting is required to approve the amendment to our 2006 Non-Employee Directors Equity Plan to extend the term of the plan until June 10, 2025. Abstentions will have the effect of votes
against this proposal and broker non-votes will not have any effect on the results of this proposal. |
Are there
other matters to be voted on at the Annual Meeting?
We do not know of any other matters that may come before the Annual Meeting. If any other
matters are properly presented at the Annual Meeting, your proxy authorizes the individuals named as proxies to vote, or otherwise act, in accordance with their best judgment.
Where do I find the voting results of the Annual Meeting?
We will publish the voting
results of the Annual Meeting in a Current Report on Form 8-K filed with the SEC within four
|
|
|
|
|
3 |
|
|
|
|
General Information
About the Meeting and Voting (continued)
business days after the end of the Annual Meeting. You may request a copy of this Form 8-K by contacting Investor Relations, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142,
(781) 464-2442. You will also be able to find a copy of this Form 8-K on the Internet through the SECs electronic data system called EDGAR at www.sec.gov or through the Investors section of our website,
www.biogen.com.
Who should I call if I have any questions?
If you have any questions or require any assistance with voting your shares, please contact your bank, broker or other nominee holding your shares, or our Investor
Relations department at (781) 464-2442.
Important Notice Regarding the Availability of Proxy Materials for Annual Meeting of Stockholders
To Be Held on June 10, 2015:
The Notice of 2015 Annual Meeting of Stockholders, Proxy Statement, and 2014 Annual Report on Form 10-K are
available at the following website: www.edocumentview.com/BIIB.
|
|
|
|
|
4 |
|
|
|
|
PROPOSAL 1 ELECTION OF DIRECTORS
Our Board of Directors currently consists of the following directors, each serving a one-year term extending until the Annual Meeting and until their successors are
duly elected and qualified:
|
|
|
|
|
Alexander J. Denner |
|
Robert W. Pangia |
|
George A. Scangos |
Caroline D. Dorsa |
|
Stelios Papadopoulos |
|
Lynn Schenk |
Nancy L. Leaming |
|
Brian S. Posner |
|
Stephen A. Sherwin |
Richard C. Mulligan |
|
Eric K. Rowinsky |
|
|
All current directors are standing for reelection to serve a one-year term extending until the 2016 annual meeting of stockholders
and until their successors are duly elected and qualified, unless they resign or are removed. Our Board of Directors has nominated these eleven directors for reelection based on its carefully considered judgment that the experience, qualifications,
attributes and skills of our nominees qualify them to serve on our Board of Directors. As described in detail below, our nominees have considerable professional and business expertise.
If any nominee is unable to serve on our Board of Directors, the shares represented by your proxy will be voted for the election of such other person as may be nominated by our Board of Directors. In addition, in
compliance with all applicable state and federal laws and regulations, we will file an amended proxy statement and proxy card that, as applicable, (1) identifies the alternate nominee(s), (2) discloses that such nominees have consented to
being named in the revised proxy statement and to serve if elected and (3) includes the disclosure required by Item 7 of Schedule 14A with respect to such nominees. We know of no reason why any nominee would be unable to accept nomination
or election. All nominees have consented to be named in this Proxy Statement and to serve if elected.
Our Nominees for Director
|
|
|
|
|
Alexander J. Denner, Ph.D.
Age: 45 Committee Memberships:
Corporate Governance (Chair), Finance, Risk Qualifications:
Dr. Denner has significant experience overseeing the operations and research and development of healthcare companies and evaluating corporate governance matters. He also has extensive experience as an investor, particularly with respect to
healthcare companies, and possesses broad healthcare industry knowledge. |
|
|
|
Dr. Denner has served as one of our directors since 2009.
Dr. Denner is a founding partner and Chief Investment Officer of Sarissa Capital Management LP, a registered investment advisor formed in 2012. Sarissa Capital focuses on improving the strategies of companies to better provide shareholder value.
From 2006 to 2011, Dr. Denner served as a Senior Managing Director at Icahn Capital, an entity through which Carl C. Icahn conducts his investment activities. Prior to that, he served as a portfolio manager at Viking Global Investors, a private
investment fund, and Morgan Stanley Investment Management, a global asset management firm. Dr. Denner is also a director of VIVUS, Inc. and ARIAD Pharmaceuticals, Inc., both healthcare companies.
During the past five years, Dr. Denner has also served as a director of the following
healthcare companies: Amylin Pharmaceuticals, Inc., Enzon Pharmaceuticals, Inc. and ImClone Systems Incorporated, where he also served as Chairman of the Executive Committee. |
|
|
|
|
|
5 |
|
|
|
|
PROPOSAL 1
ELECTION OF DIRECTORS (continued)
|
|
|
|
|
Caroline D. Dorsa Age: 56 Committee Memberships: Audit (Chair), Compensation and Management Development, Risk
Qualifications: Ms. Dorsa has financial and accounting expertise and a deep knowledge of the pharmaceutical industry. Her strategic perspective on the
industry is particularly valuable to our Board of Directors as it oversees our growth initiatives and reviews both internal development projects and external opportunities. |
|
|
|
Ms. Dorsa has served as one of our directors since 2010. Ms. Dorsa has been the Executive Vice President and Chief Financial Officer of
Public Service Enterprise Group Incorporated, a diversified energy company, since April 2009 and served on its board of directors from 2003 to April 2009. From February 2008 to April 2009, she served as Senior Vice President, Global Human Health,
Strategy and Integration at Merck & Co., Inc., a pharmaceutical company. From November 2007 to January 2008, Ms. Dorsa served as Senior Vice President and Chief Financial Officer of Gilead Sciences, Inc., a life sciences company. From February
2007 to November 2007, she served as Senior Vice President and Chief Financial Officer of Avaya, Inc., a telecommunications company. From 1987 to January 2007, Ms. Dorsa held various financial and operational positions at Merck & Co., Inc.,
including Vice President and Treasurer, Executive Director of U.S. Customer Marketing and Executive Director of U.S. Pricing and Strategic Planning. |
Nancy L. Leaming Age: 67 Committee Memberships: Audit, Risk Qualifications: Ms. Leaming has well-developed leadership skills and financial acumen and provides insights into the healthcare reimbursement and payor market, where she served for 20 years in senior
operational, financial and managerial roles. |
|
|
|
Ms. Leaming has served as one of our directors since 2008. Ms. Leaming has been an
independent consultant since 2005. From 2003 to 2005, she served as the Chief Executive Officer and President of Tufts Health Plan, a provider of healthcare insurance. From 1986 to 2003, Ms. Leaming served in several executive positions at Tufts
Health Plan, including President, Chief Operating Officer and Chief Financial Officer.
Ms. Leaming is a member of the boards of directors of Hologic, Inc., a provider of diagnostic and surgical products, and Edgewater Technology, Inc., a technology
management consulting firm. |
Richard C. Mulligan, Ph.D.
Age: 60 Committee Memberships: Compensation and
Management Development, Science and Technology (Chair) Qualifications: Dr. Mulligan has scientific expertise in the areas of molecular
biology, genetics, gene therapy, and biotechnology, as well as extensive experience within the healthcare industry, including overseeing the operations and research and development of healthcare companies. |
|
|
|
Dr. Mulligan has served as one of our directors since
2009. Dr. Mulligan is a founding partner of Sarissa Capital Management LP, a registered investment advisor formed in 2012. Sarissa Capital focuses on improving the strategies of companies to better provide shareholder value. In 2013, Dr. Mulligan
became the Mallinckrodt Professor of Genetics, Emeritus, at Harvard Medical School, after serving as the Mallinckrodt Professor of Genetics and Director of the Harvard Gene Therapy Initiative since 1996. Prior to that, he was Professor of Molecular
Biology at the Massachusetts Institute of Technology, a member of the Whitehead Institute for Biomedical Research, and the Chief Scientific Officer of Somatix Therapy Corporation, a drug discovery and development company that he founded.
Dr. Mulligan was named a MacArthur Foundation Fellow in 1981. During the past
five years, Dr. Mulligan has served as a director of Cellectis SA, Enzon Pharmaceuticals, Inc. and ImClone Systems Incorporated, all healthcare companies. |
|
|
|
|
|
6 |
|
|
|
|
PROPOSAL 1 ELECTION OF DIRECTORS (continued)
|
|
|
|
|
Robert W. Pangia Age: 63 Committee Memberships: Compensation and Management Development (Chair), Finance
Qualifications: Mr. Pangia has significant financial acumen and breadth of expertise within the healthcare industry. |
|
|
|
Mr. Pangia served as a director of the Company from 1997 to 2003 during the period the
Company was operated as IDEC Pharmaceuticals, and has served as a director since 2003 following IDECs merger with Biogen Inc. Mr. Pangia has been the Chief Executive Officer of Ivy Sports Medicine, LLC, a medical device company, since July
2011. He has also been a partner in Ivy Capital Partners, LLC, the general partner of Ivy Healthcare Capital, L.P., a private equity fund specializing in healthcare investments, since 2003. From October 2007 to October 2009, he served as the Chief
Executive Officer of Highlands Acquisition Corp., a special purpose acquisition company. From 1996 to 2003, Mr. Pangia was self-employed as an investment banker. From 1987 to 1996, he held various senior management positions at PaineWebber, a
financial services company, including Executive Vice President and Director of Investment Banking for PaineWebber Incorporated of New York, member of the board of directors of PaineWebber, Inc., Chairman of PaineWebber Properties, Inc., and member
of several of PaineWebbers executive and operating committees. During the past
five years, Mr. Pangia has served as a director of McAfee, Inc., a security technology company. |
Stelios Papadopoulos, Ph.D. Age: 66 Committee Memberships: Audit, Finance, Science and Technology
Qualifications: Having founded multiple life sciences companies and worked as an investment banker focused on the life sciences industry, Dr. Papadopoulos
brings to our Board of Directors a first-hand understanding of the demands of establishing, growing and running life sciences businesses. |
|
|
|
Dr. Papadopoulos has served as one of our directors since 2008 and as our independent
Chairman since June 2014. Dr. Papadopoulos also serves as the Chairman of Exelixis, Inc., a drug discovery and development company that he co-founded in 1994. Previously, he was an investment banker with Cowen & Co., LLC, a financial services
company, focusing on the biotechnology and pharmaceutical sectors, from 2000 until his retirement as Vice Chairman in August 2006. Prior to joining Cowen & Co., Dr. Papadopoulos served for 13 years as an investment banker at PaineWebber,
Inc., a financial services company, where he was most recently Chairman of PaineWebber Development Corp., a PaineWebber subsidiary focusing on biotechnology.
Dr. Papadopoulos is also a member of the board of directors of BG Medicine, Inc. and is Chairman of Regulus Therapeutics, Inc., both life sciences companies. During
the past five years, Dr. Papadopoulos has also served as a director of Anadys Pharmaceuticals, Inc., a biopharmaceutical company. |
Brian S. Posner
Age: 53 Committee Memberships: Audit, Corporate
Governance, Finance (Chair) Qualifications: Given his substantial experience as a leading institutional investment manager and advisor,
Mr. Posner brings a professional investors perspective and financial expertise that is valuable to our Board of Directors as it oversees our strategy for enhancing shareholder value. |
|
|
|
Mr. Posner has served as one of our directors since 2008.
Mr. Posner has been a private investor since March 2008 and is the President of Point Rider Group LLC, a consulting and advisory services firm within the financial services industry. From 2005 to March 2008, Mr. Posner served as the President, Chief
Executive Officer and co-Chief Investment Officer of ClearBridge Advisors LLC, an asset management company and a wholly-owned subsidiary of Legg Mason. Prior to that, Mr. Posner co-founded Hygrove Partners LLC, a private investment fund, in
2000 and served as its Managing Partner for five years. He served as a portfolio manager and an analyst at Fidelity Investments, a financial services company, from 1987 to 1996 and, from 1997 to 1999, at Warburg Pincus Asset Management/Credit Suisse
Asset Management where he also served as co-Chief Investment Officer and Director of Research. Mr. Posner is a member of the board of directors of Arch Capital Group Ltd., an insurance company and is a member of the board of trustees of AQR Mutual Funds, an investment fund. During the past five years, Mr.
Posner has also served as a director of Anadys Pharmaceuticals, Inc., a biopharmaceutical company, and as a trustee of RiverPark Funds, an investment fund. |
|
|
|
|
|
7 |
|
|
|
|
PROPOSAL 1 ELECTION OF DIRECTORS (continued)
|
|
|
|
|
Eric K. Rowinsky, M.D. Age: 58 Committee Memberships: Compensation and Management Development, Corporate Governance, Science
and Technology Qualifications: Dr. Rowinsky has extensive research and drug development experience, oncology expertise, and broad scientific and
medical knowledge. |
|
|
|
Dr. Rowinsky has served as one of our directors since 2010. Dr. Rowinsky has been the Head
of Research and Development and Chief Medical Officer of Stemline Therapeutics, Inc., a biotechnology company focusing on the discovery and development of therapeutics targeting cancer stem cells, since January 2012. Dr. Rowinsky is also an
Adjunct Professor of Medicine at New York University and has been an independent consultant since January 2010. Prior to that, he was the Chief Medical Officer of Primrose Therapeutics, Inc., a start-up biotechnology company focusing on the
development of therapeutics for polycystic kidney disease, from August 2010 until its acquisition in September 2011. From 2005 to December 2009, he served as the Chief Medical Officer and Executive Vice President of ImClone Systems Incorporated, a
life sciences company. From 1996 to 2004, Dr. Rowinsky held several positions at the Cancer Therapy & Research Centers Institute for Drug Development, including Director of the Institute and Director of Clinical Research. During that time,
he held the SBC Endowed Chair for Early Drug Development and Clinical Professor of Medicine at the University of Texas Health Science Center at San Antonio. From 1988 to 1996, Dr. Rowinsky was an Associate Professor of Oncology at the Johns
Hopkins School of Medicine and on the staff of the Johns Hopkins Hospital. Dr.
Rowinsky is a member of the boards of directors of Coronado Biosciences, Inc., Navidea Biopharmaceuticals, Inc. and BIND Therapeutics, Inc., all life sciences companies. During the past five years, Dr. Rowinsky has also served as a director of Mast
Therapeutics, Inc. (formerly Adventrx Pharmaceuticals, Inc.), a life sciences company. |
George A. Scangos, Ph.D.
Age: 67 Qualifications: Dr. Scangos has extensive
training as a scientist, significant knowledge and experience with respect to the biotechnology, healthcare and pharmaceutical industries, and a comprehensive leadership background resulting from service on various boards of directors and as an
executive in the pharmaceutical industry. |
|
|
|
Dr. Scangos is our Chief Executive Officer and has served
in this position since July 2010. From 1996 to July 2010, Dr. Scangos served as the President and Chief Executive Officer of Exelixis, Inc., a drug discovery and development company, where he continues to serve on the board. From 1993 to 1996,
Dr. Scangos served as President of Bayer Biotechnology, where he was responsible for research, business development, process development, manufacturing, engineering and quality assurance of Bayers biological products. Before joining Bayer
in 1987, Dr. Scangos was a Professor of Biology at Johns Hopkins University for six years. Dr. Scangos served as non-executive Chairman of Anadys Pharmaceuticals, Inc., a biopharmaceutical company, from 2005 to July 2010 and was a director of the
company from 2003 to July 2010. Dr. Scangos served as the Chair of the California Healthcare Institute in 2010 and was a member of the Board of the Global Alliance for TB Drug Development until 2010.
Dr. Scangos is a member of the board of directors of Agilent Technologies, Inc., a provider of
bioanalytical and electronic measurement solutions. He is also Chairman-elect of the board of directors of Pharmaceutical Research and Manufacturers of America (PhRMA), a member of the Board of Trustees of the Boston Museum of Science and the
Biomedical Science Careers Program, and a member of the National Board of Advisors of the University of California, Davis School of Medicine. Dr. Scangos is currently an Adjunct Professor of Biology at Johns Hopkins
University. |
|
|
|
|
|
8 |
|
|
|
|
PROPOSAL 1
ELECTION OF DIRECTORS (continued)
|
|
|
|
|
Lynn Schenk Age: 70 Committee Memberships: Compensation and Management Development, Corporate Governance, Risk
(Chair) Qualifications: Ms. Schenks strong public policy, government, legal and private sector experience provides vital insights to
our Board of Directors about significant issues affecting the highly regulated life sciences industry. She brings public sector operations and management expertise to our Board of Directors. |
|
|
|
Ms. Schenk served as a director of the Company from 1995 to 2003 during the period the
Company was operated as IDEC Pharmaceuticals, and has served as a director since 2003 following IDECs merger with Biogen Inc. Ms. Schenk is an attorney and consultant in private practice with extensive public policy and business experience.
She is also a trustee of the Scripps Research Institute, a director of the California High Speed Rail Authority Board and a trustee of the University of California, San Diego Foundation. From 1999 to 2003, she served as Chief of Staff to the
Governor of California, during which time she led the effort to create the Institutes for Science and Innovation at the University of California. From 1993 to 1995, Ms. Schenk was a Member of the United States House of Representatives, representing
San Diego, California and served on the House Energy & Commerce Committee with a special emphasis on biotechnology. From 1980 to 1983, she was the California Secretary of Business, Transportation and Housing during which she formed the
California Commission on Industrial Innovation. During the California energy crisis and post-9/11/2001, Ms. Schenk headed the risk management team for the State of Californias Executive Branch.
Ms. Schenk is a member of the board of directors of Sempra Energy, an energy services and
development company, and serves on both the Audit and Environmental Health, Safety and Technology committees of Sempra Energy. |
Stephen A. Sherwin, M.D.
Age: 66 Committee Memberships: Finance, Risk, Science
and Technology Qualifications: Dr. Sherwin has extensive knowledge of the life sciences industry and brings more than 30 years of experience in
senior leadership positions at large and small publicly traded life sciences companies to our Board of Directors. |
|
|
|
Dr. Sherwin has served as one of our directors since 2010.
Dr. Sherwin currently divides his time between advisory work in the life sciences industry and patient care and teaching in his specialty of medical oncology. He is a Clinical Professor of Medicine at the University of California, San Francisco, and
a volunteer Attending Physician in Hematology-Oncology at San Francisco General Hospital. Dr. Sherwin previously served as the Chairman of Ceregene, Inc., a life sciences company that he co-founded, from 2001 until its acquisition by Sangamo
Biosciences, Inc. in 2013. He was also a co-founder and chairman of Abgenix, Inc., an antibody company which was acquired by Amgen Inc. in 2006. From 1990 to October 2009, he served as the Chief Executive Officer of Cell Genesys, Inc., a life
sciences company, and was its Chairman from 1994 until the companys merger with BioSante Pharmaceuticals, Inc. in October 2009. Prior to that, he held various positions at Genentech, Inc., a life sciences company, most recently as Vice
President, Clinical Research. Dr. Sherwin is board certified in internal medicine and medical oncology and currently serves as a Clinical Professor of Medicine at the University of California, San Francisco.
Dr. Sherwin is a member of the boards of directors of Neurocrine Biosciences, Inc., Rigel
Pharmaceuticals, Inc., Verastem, Inc. and Vical Inc., all of which are clinical-stage life sciences companies. He is also Chairman Emeritus of the Biotechnology Industry Organization. During the past five years, Dr. Sherwin also served as a director
of BioSante Pharmaceuticals until its merger with ANI Pharmaceuticals, Inc. in September 2013. |
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH DIRECTOR NOMINEE NAMED ABOVE.
|
|
|
|
|
9 |
|
|
|
|
PROPOSAL 2 RATIFICATION OF THE SELECTION OF OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the
independent registered public accounting firm retained to audit our financial statements. The Audit Committee has selected PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31,
2015. PricewaterhouseCoopers has served as our independent registered public accounting firm since 2003. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a rotation of the
independent registered public accounting firm. Further, in conjunction with the rotation of the auditing firms lead engagement partner required by applicable SEC rules, the Audit Committee and its chairperson are directly involved in the
selection of PricewaterhouseCoopers new lead engagement partner. The Audit Committee believes that the continued retention of PricewaterhouseCoopers at this time is in the best interest of Biogen and its stockholders.
Although stockholder approval of the Audit Committees selection of PricewaterhouseCoopers is not required, our Board of Directors believes that it is a matter
of good corporate practice to solicit stockholder ratification of this selection. If our stockholders do not ratify the selection of PricewaterhouseCoopers as our independent registered public accounting firm, the Audit Committee will reconsider its
selection. Even if the selection is ratified, the Audit Committee always has the ability to change the engagement of PricewaterhouseCoopers if it considers that a change is in Biogens best interest. Representatives of PricewaterhouseCoopers
will attend the Annual Meeting, have the opportunity to make a statement if they so desire, and be available to respond to appropriate
questions.
Audit and Other Fees
The following table shows fees for professional audit services billed to us by PricewaterhouseCoopers for the audit of our annual consolidated financial statements
for the years ended December 31, 2014 and December 31, 2013, and fees billed to us by PricewaterhouseCoopers for other services provided during 2014 and 2013:
|
|
|
|
|
|
|
|
|
Fees |
|
2014 |
|
|
2013 |
|
Audit fees |
|
$ |
4,436,942 |
|
|
$ |
5,055,320 |
|
Audit-related fees |
|
|
43,032 |
|
|
|
50,607 |
|
Tax fees* |
|
|
476,520 |
|
|
|
869,239 |
|
All other fees |
|
|
18,161 |
|
|
|
7,100 |
|
Total |
|
$ |
4,974,654 |
|
|
$ |
5,982,266 |
|
* |
Includes tax compliance fees of $216,108 in 2014 and $311,401 in 2013. |
Audit fees are fees for the audit of our 2014 and 2013 consolidated financial statements included in our Annual Reports on Form 10-K, reviews of our condensed consolidated financial statements included in
our Quarterly Reports on Form 10-Q, review of the consolidated financial statements incorporated by reference into our outstanding registration statements, and statutory audit fees in overseas jurisdictions.
Audit-related fees are fees that principally relate to assurance and related services that are reasonably related to the performance of the audits and
reviews of our consolidated financial statements, including audits of employee benefit plan information.
Tax fees are fees for tax compliance and
planning services.
All other fees in 2014 include $11,061 of fees incurred for services provided in assessing the technical structure and format
of reports submitted to government authorities to ensure compliance with applicable regulations (Technical Compliance Services). All other fees also include license fees for a web-based accounting research tool, which totaled $7,100 in
2014 and 2013, respectively.
|
|
|
|
|
10 |
|
|
|
|
PROPOSAL 2 RATIFICATION OF THE SELECTION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued)
Policy on Pre-Approval of Audit and Non-Audit Services
The Audit Committee has the sole authority to approve the scope of the audit and any audit-related services as well as all audit fees and terms. The Audit Committee
must pre-approve any audit and non-audit services provided by our independent registered public accounting firm. The Audit Committee will not approve the engagement of the independent registered public accounting firm to perform any services that
the independent registered public accounting firm would be prohibited from providing under applicable securities laws, The NASDAQ Stock Market, Inc. (NASDAQ) requirements or Public Company Accounting Oversight Board rules. In assessing whether to
approve the use of our independent registered public accounting firm to provide permitted non-audit services, the Audit Committee tries to minimize relationships that could appear to impair the objectivity of our independent registered public
accounting firm. The Audit Committee will approve permitted non-audit services by our independent registered public accounting firm only when it will be more effective or economical to have such services provided by our independent registered public
accounting firm than by another firm.
The Audit Committee annually reviews and pre-approves the audit, audit-related, tax, and other permissible non-audit
services that can be provided by the independent registered public accounting firm. After the annual review, any proposed services exceeding pre-set levels or amounts or additional services not previously approved requires separate pre-approval by
the Audit Committee or the Chair of the Audit Committee. Any pre-approval decision made by the Chair of the Audit Committee is reported to the Audit Committee at the next regularly scheduled Audit Committee meeting. Our Chief Accounting Officer and
Chief Financial Officer can approve up to an additional $50,000 in the aggregate per calendar year for categories of services that the Audit Committee (or the Chair through its delegated authority) has pre-approved.
All of the services provided by PricewaterhouseCoopers during 2014 were pre-approved in accordance with this policy, except for $11,061 of fees for Technical
Compliance Services described above under the caption All other fees, which were subsequently ratified by the Audit Committee.
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE RATIFICATION OF
THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2015.
|
|
|
|
|
11 |
|
|
|
|
PROPOSAL 3 ADVISORY VOTE ON
EXECUTIVE COMPENSATION
Our Compensation Discussion and Analysis, which appears later in this Proxy Statement, describes our executive
compensation program and the compensation decisions that the Compensation Committee and our Board of Directors made with respect to the 2014 compensation of our named executive officers (listed in the Summary Compensation Table). As required
pursuant to Section 14A of the Securities Exchange Act, our Board of Directors is asking that stockholders cast a non-binding, advisory vote FOR the following resolution:
RESOLVED, that the compensation paid to the Companys named executive officers, as disclosed pursuant to
Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
As we describe in our Compensation Discussion and Analysis, our executive compensation program embodies a pay-for-performance philosophy that supports our business strategy and aligns the interests of our
executives with our stockholders. In particular, our compensation program rewards financial, strategic and operational performance and the goals set for each performance category support our long-range plans. In addition, to discourage excessive
risk taking, we maintain policies for share ownership and
recoupment of compensation, we cap payments under our annual bonus plan, and we require multi-year vesting of long-term incentive awards.
In light of our strong performance in 2014, we believe that the compensation paid to our named executive officers was appropriate. Highlights of our 2014 performance include: our revenue, adjusted free cash flow
and non-GAAP earnings per share for 2014 exceeded the targets we set for our compensation programs; and common stock price performance, a key determinant of payouts under our market stock units, increased 21% in 2014.
For the foregoing reasons, our Board of Directors is asking that stockholders support this proposal. Although the vote you are being asked to cast is non-binding,
we value the views of our stockholders, and the Compensation Committee and our Board of Directors will consider the outcome of the vote when making future compensation decisions for our named executive officers.
We will hold a non-binding, advisory vote of our stockholders on the compensation of our named executive officers every year until the next required stockholder
vote on the frequency of such advisory vote. The next stockholder vote on the frequency of such advisory vote currently is expected to be held at the 2017 annual meeting of stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ADVISORY VOTE ON EXECUTIVE COMPENSATION.
|
|
|
|
|
12 |
|
|
|
|
PROPOSAL 4 APPROVAL OF OUR 2015
EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting, stockholders will be asked to approve the adoption of our 2015 Employee Stock Purchase Plan
(ESPP). The ESPP was adopted by our Board of Directors on December 10, 2014 and will become effective upon receiving stockholder approval at our Annual Meeting.
The purpose of the ESPP is to enable eligible employees of the Company and certain of its subsidiaries to use payroll deductions to purchase shares of our common stock and thereby acquire an ownership interest in
the Company. The ESPP is intended to qualify as an employee stock purchase plan meeting the requirements of Section 423 of the Internal Revenue Code. If approved, the ESPP would replace the Biogen Idec Inc. 1995 Employee Stock
Purchase Plan, which terminates on June 30, 2015.
The maximum aggregate number of shares of our common stock that may be purchased under the ESPP
will be 6,200,000 (ESPP Share Pool), subject to adjustment as provided for in the ESPP. The ESPP Share Pool represents 2.64% of the total number of shares of our common stock outstanding as of April 10, 2015. In establishing the ESPP Share
Pool, our Board of Directors considered the potential dilutive impact to stockholders, the projected participation rate over the ten-year term of the plan based on historic rates of participation under our existing employee stock purchase plan,
equity plan guidelines established by certain proxy advisory firms and advice provided by Frederic W. Cook & Co., Inc., the compensation consultant to the Compensation Committee. For information about options and restricted stock units
outstanding under our existing equity plans and the number of shares available for issuance under these plans, each as of December 31, 2014, please see Equity Compensation Plan Information elsewhere in this Proxy Statement.
The full text of the ESPP is set forth in Appendix A. The following description of certain features of the ESPP is qualified in its entirety by
reference to the full text of the ESPP.
Summary of the ESPP
Administration. The ESPP will be
administered by the Compensation Committee, which will have the authority to interpret and determine eligibility under the plan, prescribe forms, rules and procedures relating to the plan, and otherwise do all things necessary or appropriate to
carry out the purposes of the plan. The Compensation Committee may
delegate its authority under the ESPP to a subcommittee comprised of one or more of its members, to members of our Board of Directors, or to officers or employees of the Company to the extent
permitted by law.
Shares Subject to the Plan. As noted above, the ESPP Share Pool consists of 6,200,000 shares of our common stock, subject to adjustment, as described below. Shares delivered upon exercise of purchase rights under the ESPP may be either
shares of authorized but unissued common stock, treasury stock, or common stock acquired in an open-market transaction. In the event of any change in our outstanding common stock by reason of a stock dividend, stock split, reverse stock split,
split-up, recapitalization, merger, consolidation, reorganization, or other capital change, the aggregate number and type of shares available for purchase under the ESPP, the number and type of shares granted or purchasable during an offering
period, and the purchase price per share under an outstanding purchase right will be appropriately adjusted in a manner that complies with Section 423 of the Internal Revenue Code.
If any purchase right granted under the ESPP expires or terminates for any reason without having been exercised in full or ceases for any reason to be exercisable in whole or in part, the unpurchased shares of
common stock will again be available for purchase pursuant to offerings under the ESPP.
Eligibility. Participation in the ESPP
will be limited to employees of Biogen and any of its designated subsidiaries (a) whose customary employment is for more than five months per calendar year, (b) who customarily work 20 hours or more per week, and (c) who satisfy
the procedural enrollment and other requirements set forth in the ESPP. Under the ESPP, designated subsidiaries include any subsidiary (within the meaning of Section 424(f) of the Internal Revenue Code) of Biogen that has been designated by our
Board of Directors or the Compensation Committee as eligible to participate in the plan.
No employee may be granted a purchase right under the ESPP if,
immediately after the purchase right is granted, the employee would own (or, under applicable statutory attribution rules, would be deemed to own) stock possessing 5% or more of the total combined voting power or value of all classes of stock of the
Company or any of its subsidiaries. In addition, employees who are citizens or residents of a foreign jurisdiction will not be eligible to participate in the
|
|
|
|
|
13 |
|
|
|
|
PROPOSAL 4 APPROVAL OF OUR 2015 EMPLOYEE STOCK PURCHASE PLAN (continued)
ESPP if the grant of a purchase right under the plan is prohibited under the laws of the foreign jurisdiction or compliance with the laws of the foreign jurisdiction would cause the plan to
violate the requirements of Section 423 of the Internal Revenue Code. The Compensation Committee may establish additional eligibility requirements for offering periods that have not yet commenced that are not inconsistent with Section 423
of the Internal Revenue Code.
As of April 10, 2015, approximately 7,600 employees would be eligible to participate in the ESPP, including all of
our executive officers.
General Terms of Participation.
|
|
Offering Periods. The ESPP allows eligible
employees to purchase shares of our common stock during certain offering periods, which generally will consist of successive three-month periods commencing on the first business day of each calendar quarter, anticipated to be on or around
January 1, April 1, July 1 and October 1 of each year, and ending on the last business day of each calendar quarter, anticipated to be on or around March 31, June 30, September 30 and
December 31, as applicable, of each year. The Compensation Committee may change the commencement date, the ending date and the duration of the offering periods to the extent permitted by Section 423 of the Internal Revenue Code. If the
ESPP is approved at the Annual Meeting, the first offering period under the plan will commence on July 1, 2015 and end on September 30, 2015. |
|
|
Method of Participation. Shares will be purchased under the ESPP on the last day of each
offering period (a purchase date) using accumulated payroll deductions, unless the Compensation Committee provides otherwise with respect to the employees of a designated subsidiary in a manner consistent with Section 423 of the Internal
Revenue Code. In order to participate in the ESPP, an eligible employee must complete and submit to the administrator of the ESPP a payroll deduction and participant authorization form in accordance with procedures and prior to the deadlines
prescribed by the administrator of the ESPP. Participation will be effective as of the first day of an offering period. |
|
Participants may elect payroll deductions between 1% and 10% of the participants total eligible earnings per payroll period within an offering period. Eligible earnings
include regular base salary, overtime, shift differentials, annual bonuses, commissions and other sales
|
|
incentives. A participants payroll deduction authorization will remain in effect for subsequent offering periods unless the participants participation in the ESPP terminates, as
described below, or the participant cancels the authorization or submits a new payroll deduction and participant authorization form within the time specified by the administrator of the ESPP prior to the start of the subsequent offering period.
During an offering period, a participant may reduce the amount of his or her payroll deduction authorization one time, but may not increase it. If a participants payroll deduction authorization is reduced to zero percent (0%) during an
offering period, payroll deductions previously accumulated during that offering period will be applied to purchase shares of our common stock on the purchase date for that offering period and the participants participation in the plan will
then terminate. Upon cancellation, any amount withheld from a participants compensation will be returned to the participant, without interest, as soon as administratively practicable. |
|
|
Grant and Exercise of Purchase Rights. On the first day of each offering period, each
participant automatically will be granted a right to purchase shares of our common stock on the last day of the offering period, subject to the limitations set forth in the ESPP. On the last day of each offering period, the payroll deductions
accumulated by each participant during the offering period will be applied automatically to the purchase of shares of our common stock at the purchase price in effect for that offering period. However, no participant may, on any purchase date,
purchase more than 2,500 shares of our common stock (or such lesser number as the Compensation Committee may prescribe). In addition, no participant will be granted a purchase right under the ESPP that would permit the participants right
to purchase shares of our common stock under the ESPP to accrue at a rate that exceeds $25,000 in fair market value for each calendar year, determined in accordance with Section 423 of the Internal Revenue Code. |
|
|
Purchase Price. The purchase price per share of our common stock applicable to purchases
during each offering period under the ESPP will be eighty-five percent (85%) (or such greater percentage as the Compensation Committee may designate) of the lower of (i) the fair market value per share of our common stock on the first day
of the offering period or (ii) the fair market value per share of our common stock on the purchase date.
|
|
|
|
|
|
14 |
|
|
|
|
PROPOSAL 4
APPROVAL OF OUR 2015 EMPLOYEE STOCK PURCHASE PLAN (continued)
|
|
Termination of Purchase Rights. Upon the termination of a participants employment
with the Company or a designated subsidiary, or in the event the participant otherwise ceases to qualify as an eligible employee, any purchase right then held by the participant will be canceled. Payroll deductions accumulated by the participant
during the offering period in which such purchase right terminates will be returned to the participant (or his or her designated beneficiary or legal representative), without interest, as soon as practicable thereafter, and the participant will have
no further rights under the ESPP. |
|
|
Stockholder Rights. No participant will have any stockholder rights with respect to the
shares of common stock covered by his or her purchase right until the shares are actually purchased on the participants behalf. No adjustment will be made for dividends, distributions or other rights for which the record date is prior to the
date of such purchase. |
Transferability. Purchase rights granted to participants under the ESPP are not assignable or transferable and may be exercised only by the participant during his or her lifetime.
Amendment and Termination of the ESPP.
Our Board of Directors has the right to amend the ESPP to any extent and in any manner it may deem advisable, provided that any amendment that would be treated as the adoption of a new plan for purposes of Section 423 of the Internal Revenue
Code will require stockholder approval.
Our Board of Directors also has the right at any time to suspend or terminate the ESPP. In connection with such
a termination or suspension, our Board of Directors may provide, in its discretion, either that the outstanding purchase rights will be exercisable on the purchase date for the applicable offering period (or such earlier date as the Board of
Directors may specify), or that each participants accumulated payroll deductions will be returned to the participant without interest.
Sub-Plans. Consistent with the requirements of Section 423 of the Internal Revenue Code, the Compensation Committee may amend the
terms of the ESPP, or an offering, or provide for separate offerings under the ESPP to, among other things, reflect the impact of local law outside of the United States as applied to one or more eligible employees of a designated subsidiary and may,
where appropriate, establish one or more sub-plans to reflect such amended provisions.
Effective Date and Term. If the ESPP is approved by stockholders at the Annual Meeting, the ESPP will become effective on the date of the Annual Meeting. No purchase rights will be granted under the ESPP after the earliest to occur of
(i) the day before the 10-year anniversary of the effective date of the plan, (ii) the date on which all shares available for issuance under the ESPP have been issued or (iii) the termination of the ESPP by the Company.
Corporate Transactions. In the event of a consolidation, merger or similar transaction, a sale or transfer of all or substantially all of the Companys assets, or a dissolution or liquidation of the Company, the Compensation
Committee may, in its discretion, provide that each outstanding purchase right will be assumed or substituted for a right granted by the acquiror or successor corporation or by a parent or subsidiary of such entity, or will be cancelled with
accumulated payroll deductions returned to each participant, or that the offering period will end before the date of the proposed sale, merger or similar transaction.
New Plan Benefits. Benefits and purchases of shares of our common stock under the ESPP
depend on elections made by employees and the fair market value of our common stock on dates in the future. As a result, it is not possible to determine the benefits that will be received by executive officers and other employees in the future under
the ESPP. As described above, no employee may purchase shares under the ESPP at a rate that exceeds $25,000 in fair market value in any calendar year.
U.S. Federal Income Tax Consequences Relating to the ESPP
The
following is a summary of certain material federal income tax consequences associated with the grant and exercise of purchase rights under the ESPP under current federal tax laws and certain other tax considerations associated with purchase rights
under the ESPP. The summary does not address tax rates or non-U.S., state or local tax consequences, nor does it address employment tax or other federal tax consequences except as noted.
The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. In general, an employee will not recognize U.S. taxable income until the sale
or other disposition of the shares of our common stock purchased under the ESPP (ESPP Shares). Upon such sale or disposition, the
|
|
|
|
|
15 |
|
|
|
|
PROPOSAL 4
APPROVAL OF OUR 2015 EMPLOYEE STOCK PURCHASE PLAN (continued)
employee will generally be subject to tax in an amount that depends on the employees holding period with respect to the ESPP Shares.
|
|
If the ESPP Shares are sold or disposed of more than one year from the date of purchase and more than two years after the first day of the offering period in
which they were purchased, or upon the employees death while owning the ESPP Shares, the employee will recognize ordinary income in an amount generally equal to the lesser of: (i) an amount equal to 15% of the fair market value of the
ESPP Shares on the first day of the offering period (or such other percentage equal to the applicable purchase price discount), and (ii) the excess of the sale price of the ESPP Shares over the purchase price. Any additional gain will be
treated as long-term capital gain. If the ESPP Shares held for the periods described above are sold and the sale price is less than the purchase price, then the employee will recognize a
|
|
|
long-term capital loss in an amount equal to the excess of the purchase price over the sale price of the ESPP Shares. |
|
|
If the ESPP Shares are sold or otherwise disposed of before the expiration of the holding periods described above, other than following the employees death
while owning the ESPP Shares, the employee generally will recognize as ordinary income an amount equal to the excess of the fair market value of the ESPP Shares on the date the ESPP Shares were purchased over the purchase price. Any additional gain
or loss on such sale or disposition will be long-term or short-term capital gain or loss, depending on the employees holding period with respect to the ESPP Shares. |
We are not entitled to a deduction for amounts taxed as ordinary income or capital gain to an employee except to the extent of ordinary income recognized upon a sale or disposition of ESPP Shares prior to the
expiration of the holding periods described above.
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF OUR 2015 EMPLOYEE STOCK PURCHASE PLAN.
|
|
|
|
|
16 |
|
|
|
|
PROPOSAL 5 APPROVAL OF AN AMENDMENT TO OUR 2006
NON-EMPLOYEE DIRECTORS EQUITY PLAN
At the Annual Meeting, stockholders will be asked to approve an amendment to our 2006 Non-Employee Directors Equity
Plan (Directors Plan) to extend the term of the plan. Only our non-employee directors may participate in this plan.
We believe that the ability to grant
stock awards to our non-employee directors is critical to our efforts to attract and retain key talent on our Board of Directors and to encourage ownership of shares of our common stock by our non-employee directors. We currently grant stock awards
to our non-employee directors under our Directors Plan, which originally was adopted by our Board of Directors on April 5, 2006 and approved by stockholders on May 25, 2006. Stockholders subsequently approved an amendment to the Directors
Plan to increase the maximum number of shares of our common stock authorized for issuance under the plan by an additional 750,000 shares, from 850,000 to 1,600,000 shares on June 9, 2010.
The Directors Plan expires by its terms on May 25, 2016 and no further awards may be made under the plan after that date. Accordingly, on March 27, 2015
our Board of Directors amended the Directors Plan to extend the term of the plan for an additional ten years from the date of the Annual Meeting, subject to obtaining stockholder approval of the amendment at this Annual Meeting.
We are not asking stockholders to approve an increase to the number of shares of our common stock that may be issued under the Directors Plan. As of April 10, 2015,
745,250 shares of our common stock remained available for issuance under the Directors Plan. For information about options and restricted stock units outstanding under our existing equity plans, including the Directors Plan, and the number of shares
available for issuance under these plans, each, as of December 31, 2014, please see Equity Compensation Plan Information elsewhere in this Proxy Statement.
The full text of the Directors Plan, as amended to date and as proposed to be amended, is set forth in Appendix B. The following description of certain features of the Directors Plan, as proposed to be
amended, is qualified in its entirety by reference to the full text of the Directors Plan.
Summary of
the Directors Plan
Administration and Awards. The Directors Plan is administered by the Compensation Committee, which has
the authority to exercise all powers and authorities granted to it under the plan, including the authority to grant awards; to determine the type and number of awards to be granted, the number of
shares of our common stock underlying an award and the terms, conditions and restrictions relating to any award; to determine whether, to what extent and under what circumstances an award may be settled, cancelled, forfeited, exchanged or
surrendered; to construe and interpret the plan and any award; to prescribe, amend and rescind rules and regulations relating to the plan; to determine the terms and provisions of award agreements; and to make all other determinations deemed
necessary or advisable for the administration of the plan. The Compensation Committee may also waive or amend the operation of plan provisions related to the exercise of awards after a participants service on our Board of Directors terminates
and, except as otherwise provided in the plan, accelerate or adjust the date on which any award becomes exercisable or vested, so long as the Compensation Committee determines that such acceleration, waiver or adjustment is necessary or desirable.
The Compensation Committee may grant stock options, stock appreciation rights, restricted stock units and other equity-based awards, including dividend
equivalent rights, under the Directors Plan, subject to the limitations described below.
|
|
Awards upon Initial Election. Upon initial election to our Board of Directors,
non-employee directors may be granted, on the date of such initial election, an initial award with respect to a number of shares of our common stock as determined by the Compensation Committee, up to a maximum of 35,000 shares (or
50,000 shares in the case of a non-employee directors initial election as Non-Executive Chairman of our Board of Directors). |
|
|
Annual Awards. Non-employee directors are granted annual awards on the date of each annual
meeting of stockholders with respect to a number of shares of our common stock as determined by the Compensation Committee (which number of shares is prorated in the case of a non-employee director elected to our Board of Directors other than at an
annual meeting of stockholders), up to a maximum of 17,500 shares (or 30,000 shares in the case of the Non-Executive Chairman of our Board of Directors). Annual grants vest on the one-year anniversary of the date of grant or over such
longer period and in such increments as the Compensation Committee may otherwise determine. |
|
|
|
|
|
17 |
|
|
|
|
PROPOSAL 5 APPROVAL OF AN AMENDMENT TO OUR 2006 NON-EMPLOYEE DIRECTORS EQUITY PLAN (continued)
|
|
Maximum Awards. The maximum number of shares of our common stock that may be granted under
initial awards and annual awards under the Directors Plan are calculated in accordance with the share counting formula described below (under the heading Shares Subject to Plan; Share Counting). |
|
|
Retainers and Meeting Fees. To the extent
permitted by the Compensation Committee, a non-employee director may elect to receive annual retainer and/or meeting fees in the form of awards under the Directors Plan. |
|
|
Termination of Service on our Board of Directors. Awards are subject to accelerated
vesting upon the termination of a non-employee directors service on our Board of Directors by reason of death, disability or retirement and upon a change in control of the Company (as such terms are defined in the Directors Plan). In addition,
awards will become fully vested upon an involuntary termination (as defined in the Directors Plan) of a non-employee directors service on our Board of Directors within two years following certain corporate transactions (as defined in the
Directors Plan). In the case of the termination of a non-employee directors service on our Board of Directors for any other reason, unvested awards then held by the director will be forfeited and, in the case of a termination for cause (as
defined in the Directors Plan), stock options and stock appreciation rights (whether then vested or unvested) will be cancelled and forfeited. In general (and except upon a termination for cause), stock options will remain exercisable following the
termination of a non-employee directors service on our Board of Directors for three years, subject to earlier termination upon the expiration of the applicable term of the stock option, and stock appreciation rights will remain exercisable for
three years following retirement, one year following death or disability, or six months following any other termination, subject, in each case, to earlier termination upon the expiration of the applicable term of the stock appreciation right. In the
event of a non-employee directors death within six months following a termination of service other than for cause, stock appreciation rights that were vested and outstanding at the time of such death will remain exercisable for one year
following the date of such death, subject to earlier termination upon the expiration of the applicable term of the stock appreciation right. |
|
|
Restrictions on Repricing. Except in connection with certain corporate transactions
involving the Company, outstanding stock options and stock appreciation rights
|
|
|
may not be repriced, regranted or otherwise amended to reduce the applicable exercise price without prior stockholder approval. |
Eligibility. All non-employee
directors of Biogen who are independent under applicable NASDAQ rules are eligible to participate in the Directors Plan. As of April 10, 2015, 10 non-employee directors were eligible to participate in the Directors Plan.
Shares Subject to the Plan; Share Counting. Subject to adjustment as described in the plan, the maximum aggregate number of shares of our common stock reserved for issuance under the Directors Plan is 1,600,000 shares. Each share underlying an award other
than a stock option or a stock appreciation right reduces the number of shares of our common stock available for issuance under the Directors Plan by 1.5 shares, and each share underlying a stock option or a stock appreciation right reduces the
number of available shares under the Directors Plan by one share (even if fewer shares are actually issued upon exercise of the stock appreciation right). Shares subject to an award that remain unissued upon the cancellation, surrender, exchange or
termination of the award generally may again become available for issuance under the Directors Plan in an amount calculated in accordance with the share counting formula described in the preceding sentence. In the event of a dividend or other
distribution or any recapitalization, reclassification, reorganization, merger, share exchange or other similar corporate transaction or event, unless otherwise determined by the Compensation Committee with respect to certain distributions, the
number and kind of shares of stock that may be issued in connection with awards, the number and kind of shares of stock or other property issuable in connection with outstanding awards, the exercise price or purchase price relating to outstanding
awards and the limits on awards under the Directors Plan will be equitably adjusted. On April 10, 2015, the closing price of our common stock as reflected on the NASDAQ Global Select Market was $425.65.
Types of Awards
|
|
Stock Options. The Compensation Committee may grant non-qualified stock options under the
Directors Plan. The exercise price of a stock option will be equal to the fair market value of a share of our common stock on the date the stock option is granted and the term of a stock option
|
|
|
|
|
|
18 |
|
|
|
|
PROPOSAL 5 APPROVAL OF AN AMENDMENT TO OUR 2006 NON-EMPLOYEE DIRECTORS EQUITY PLAN (continued)
|
may not exceed 10 years. Payment of the exercise price may be made in cash or by check or, to the extent permitted by the Compensation Committee, in shares of our common stock, through
broker-assisted cashless exercise or by such other method as the Compensation Committee may permit. Any stock option with an exercise price less than the fair market value of a share of our common stock on the last day on which the stock option is
exercisable will be deemed to have been exercised on a net share settlement basis at the close of business on that day. |
|
|
Stock Appreciation Rights. Stock appreciation rights may be awarded under the Directors
Plan. The exercise price of a stock appreciation right will be equal to the fair market value of a share of our common stock on the date it is granted (or such greater amount as determined by the Compensation Committee) and the term of a stock
appreciation right may not exceed 10 years. Upon exercise of a stock appreciation right, a non-employee director will be entitled to receive a payment in an amount determined by multiplying the excess of the fair market value of a share of our
common stock on the date of exercise over the exercise price of the stock appreciation right by the number of shares with respect to which the stock appreciation right is exercised. The payment may be made in cash or shares of our common stock, at
the discretion of the Compensation Committee. The Compensation Committee may also grant stock appreciation rights in tandem with stock options, subject to such terms and conditions as the Compensation Committee may establish.
|
|
|
Restricted Stock and Restricted Stock Units. Restricted stock and restricted stock units
may be awarded under such terms and conditions as shall be established by the Compensation Committee. The Compensation Committee will determine the price, if any, to be paid by a non-employee director for each share of restricted stock granted. Any
dividends paid on shares of restricted stock will be held in escrow until all restrictions or conditions to the vesting of such shares have lapsed. Settlement of vested restricted stock units may be made in the form of cash, shares of our common
stock or a combination thereof, as determined by the Compensation Committee. |
|
|
Other Awards. The Compensation Committee may grant other awards valued in whole or in part
by reference to, or
|
|
|
otherwise based on, shares of our common stock, on terms and conditions as determined by the Compensation Committee. |
|
|
Dividend Equivalent Rights. The Compensation Committee may provide for dividend equivalent
rights with respect to any award. |
Transferability.
Awards under the Directors Plan may not be transferred other than by will or the laws of descent and distribution, pursuant to a qualified domestic relations order, or as otherwise determined
by the Compensation Committee in its discretion. Awards may be exercisable during a non-employee directors lifetime only by the director (or by his or her legal representative).
Corporate Transactions; Change in Control. In the event of certain mergers or
consolidations of the Company, the liquidation or dissolution of the Company or the sale or disposition of all or substantially all of the Companys assets, the Compensation Committee will provide for either the assumption or substitution of
awards by the successor corporation or its parent, the acceleration of the vesting or exercisability of awards or, following the acceleration of the vesting or exercisability of awards, provide for the cash-out of awards or, upon notice to
participants, for the termination of stock options and stock appreciation rights to the extent not exercised by a specified date. Unless otherwise determined by the Compensation Committee, in the event of a change in control of the Company, all
awards will become fully vested.
Amendment and Termination. The Board of Directors may amend, suspend, modify or terminate the Directors Plan at any time, subject to stockholder approval to the extent such approval is appropriate or required by the NASDAQ rules or other
applicable law. No amendment or termination of the Directors Plan may reduce a non-employee directors rights under any outstanding award without the consent of the affected director.
Term. If approved by stockholders, the term of the Directors Plan will be extended for
an additional ten years from the date of the Annual Meeting and no award may be granted under the Directors Plan after June 10, 2025.
New Plan Benefits. Our Board of Directors has not granted any awards under the Directors Plan subject to stockholder approval of this
Proposal 5. Subject to the limitations set
|
|
|
|
|
19 |
|
|
|
|
PROPOSAL 5 APPROVAL OF AN AMENDMENT TO OUR 2006 NON-EMPLOYEE DIRECTORS EQUITY PLAN (continued)
forth in the plan, the Compensation Committee has full discretion to determine the number of shares subject to awards to be granted under the Directors Plan. As a result, future benefits or
amounts that would be received under the Directors Plan are not determinable at this time. For information regarding equity awards granted to our non-employee directors during our most recently completed fiscal year please see Director
Compensation elsewhere in this Proxy Statement.
Other
Information. If stockholders do not approve this Proposal 5, the Directors Plan will continue in accordance with its terms and no awards may be granted under the Directors Plan after May 25,
2016.
U.S. Federal Income Tax Consequences Relating to the Directors Plan
The following is a summary of certain material federal income tax consequences with respect to awards that may be granted under to the Directors Plan under current
federal tax laws and certain other tax considerations associated with awards under the Directors Plan. The summary does not address tax rates or non-U.S., state or local tax consequences, nor does it address employment tax or other federal tax
consequences except as noted.
|
|
Stock Options. Stock options granted under the Directors Plan will be non-statutory
options (i.e., stock options that are not eligible for incentive stock option treatment under the Internal Revenue Code). In general, a director will not be taxed at the time a stock option is granted, but will recognize ordinary income in
connection with the exercise of the stock option equal to the excess (at the time of exercise) of the fair market value of the shares acquired upon exercise over the exercise price. A corresponding deduction will generally be available to us. Upon a
subsequent disposition of the shares purchased, any recognized gain or loss is treated as a capital gain or loss, depending on the directors holding period with respect to the shares purchased. |
|
|
Stock Appreciation Rights. In general, a director will not be taxed at the time a
stock appreciation right is granted, but will recognize ordinary income in connection with the exercise of the stock appreciation right in an amount equal to the cash or the fair market value of the shares received on the exercise date. A
corresponding deduction will generally be available to us.
|
|
|
Restricted Stock. In general, a director who has received restricted stock subject to
a substantial risk of forfeiture will not recognize income until the risk of forfeiture lapses. When the risk of forfeiture lapses, the director will recognize ordinary income in an amount equal to the excess of the fair market value of the shares
at that time over the purchase price, if any. However, a director may make an election under Section 83(b) of the Internal Revenue Code to be taxed on restricted stock when it is acquired rather than later, when the substantial risk of
forfeiture lapses. A director who makes an effective 83(b) election will realize ordinary income in an amount equal to the fair market value of the shares as of the time of acquisition less any price paid for the shares. If a director makes an
effective 83(b) election, no additional income results by reason of the lapsing of the restrictions. We are generally entitled to a deduction at the time that the director is required to recognize ordinary income. |
|
For purposes of determining capital gain or loss on a sale of shares awarded under the Directors Plan, the holding period in the shares begins when the director realizes taxable
income with respect to the transfer of the shares. The directors tax basis in the shares equals the amount paid for the shares plus any income realized with respect to the transfer. If a director makes an effective 83(b) election and later
forfeits the shares, the tax loss realized as a result of the forfeiture is limited to the excess of what the participant paid for the shares (if anything) over the amount (if any) realized in connection with the forfeiture.
|
|
|
Restricted Stock Units. In general, a director who is awarded restricted stock units
will not recognize income, and we will not be allowed a deduction, at the time the award is made. Instead, the director will generally recognize ordinary income at the time the restricted stock units vest and are settled (and a corresponding
deduction is generally available to us). |
|
|
Section 409A. Section 409A of the Internal Revenue Code imposes an additional
20% income tax, plus, in some cases, a further income tax in the nature of interest, on nonqualified deferred compensation that does not comply with deferral, payment-timing and other formal and operational requirements specified in
Section 409A of the Internal Revenue Code and related regulations and that is not exempt from those requirements. Stock options and stock appreciation rights granted under the
|
|
|
|
|
|
20 |
|
|
|
|
PROPOSAL 5 APPROVAL OF AN AMENDMENT TO OUR 2006 NON-EMPLOYEE DIRECTORS EQUITY PLAN (continued)
|
|
Directors Plan are intended to be exempt from Section 409A of the Internal Revenue Code. The Directors Plan gives the Compensation Committee the flexibility to prescribe terms for other
awards that are consistent with the requirements of, or an exemption from, Section 409A of the Internal Revenue Code. |
|
|
Certain Change of Control Payments. Under Section 280G of the Internal Revenue Code,
the vesting or accelerated exercisability of stock options or the vesting and payment of other awards in connection with a
|
|
|
change of control of a corporation may be required to be valued and taken into account in determining whether participants have received compensatory payments contingent on the change in control
in excess of certain limits. If these limits are exceeded, a substantial portion of amounts payable to the participant, including income recognized by reason of the grant, vesting or exercise of awards, may be subject to an additional 20% federal
tax and may be non-deductible to us. |
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF AN AMENDMENT TO OUR 2006 NON-EMPLOYEE DIRECTORS EQUITY PLAN.
|
|
|
|
|
21 |
|
|
|
|
STOCK OWNERSHIP
The following table and accompanying notes provide information about the beneficial ownership of our common stock by:
|
|
each stockholder known by us to be the beneficial owner of more than 5% of our common stock; |
|
|
each of our named executive officers (listed in the Summary Compensation Table); |
|
|
each of our directors and nominees for director; and |
|
|
all of our directors and executive officers as a group. |
Except as otherwise noted, the persons identified have sole voting and investment power with respect to the shares of our common stock beneficially owned. Beneficial ownership is determined in accordance with the
rules of the SEC and includes voting and investment power with respect to the shares. Except as otherwise noted, the information below is as of April 10, 2015 (Ownership Date).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Shares Owned (1) |
|
|
Shares Subject to Options and Stock Units (2) |
|
|
Total Number of Shares Beneficially Owned |
|
|
Percentage of Outstanding Shares (3) |
|
FMR LLC (4) 245 Summer Street Boston, MA
02110 |
|
|
19,788,112 |
|
|
|
|
|
|
|
19,788,112 |
|
|
|
8.41 |
% |
PRIMECAP Management Company (5) 225 South Lake Avenue Suite
400 Pasadena, CA 91101 |
|
|
17,170,693 |
|
|
|
|
|
|
|
17,170,693 |
|
|
|
7.30 |
% |
BlackRock, Inc. (6) 55 East 52nd Street New York,
NY 10022 |
|
|
15,356,403 |
|
|
|
|
|
|
|
15,356,403 |
|
|
|
6.53 |
% |
The Vanguard Group (7) 100 Vanguard Boulevard
Malvern, PA 19355 |
|
|
12,730,694 |
|
|
|
|
|
|
|
12,730,694 |
|
|
|
5.41 |
% |
T. Rowe Price (8) 100 E. Pratt Street
Baltimore, MD 20201 |
|
|
12,176,548 |
|
|
|
|
|
|
|
12,176,548 |
|
|
|
5.17 |
% |
Paul J. Clancy |
|
|
22,257 |
|
|
|
|
|
|
|
22,257 |
|
|
|
* |
|
Alexander J. Denner |
|
|
6,325 |
|
|
|
|
|
|
|
6,325 |
|
|
|
* |
|
Caroline D. Dorsa |
|
|
14,468 |
|
|
|
27,570 |
|
|
|
42,038 |
|
|
|
* |
|
Adriana Karaboutis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Adam M. Koppel
(9) |
|
|
130 |
|
|
|
3,612 |
|
|
|
3,742 |
|
|
|
* |
|
Nancy L. Leaming |
|
|
6,359 |
|
|
|
|
|
|
|
6,359 |
|
|
|
* |
|
Richard C. Mulligan |
|
|
6,325 |
|
|
|
|
|
|
|
6,325 |
|
|
|
* |
|
Robert W. Pangia |
|
|
14,003 |
|
|
|
17,125 |
|
|
|
31,128 |
|
|
|
* |
|
Stelios Papadopoulos |
|
|
14,235 |
|
|
|
|
|
|
|
14,235 |
|
|
|
* |
|
Brian S. Posner |
|
|
4,580 |
|
|
|
|
|
|
|
4,580 |
|
|
|
* |
|
Eric K. Rowinsky |
|
|
10,440 |
|
|
|
|
|
|
|
10,440 |
|
|
|
* |
|
Alfred W. Sandrock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
George A. Scangos
(10) |
|
|
54,570 |
|
|
|
|
|
|
|
54,570 |
|
|
|
* |
|
Lynn Schenk
(11) |
|
|
6,425 |
|
|
|
|
|
|
|
6,425 |
|
|
|
* |
|
Stephen A. Sherwin |
|
|
3,280 |
|
|
|
12,000 |
|
|
|
15,280 |
|
|
|
* |
|
Executive officers and directors as a
group (23 persons) (9)(12) |
|
|
248,290 |
|
|
|
77,384 |
|
|
|
325,674 |
|
|
|
* |
|
|
|
|
|
|
22 |
|
|
|
|
STOCK OWNERSHIP (continued)
* |
Represents beneficial ownership of less than 1% of our outstanding shares of common stock. |
(1) |
The shares described as owned are shares of our common stock directly or indirectly owned by each listed person. |
(2) |
Includes options that are or will become exercisable and restricted stock units that will vest within 60 days of the Ownership Date. |
(3) |
The calculation of percentages is based upon 235,230,221 shares outstanding on the Ownership Date, plus for each of the individuals listed above the shares subject to options and
restricted stock units reflected in the column under the heading Shares Subject to Options and Restricted Stock Units. |
(4) |
Based solely on information as of December 31, 2014 contained in a Schedule 13G/A filed with the SEC by FMR LLC, Edward C. Johnson III and Abigail P. Johnson on
February 13, 2015, which also indicates that FMR LLC, Edward C. Johnson III and Abigail P. Johnson each have sole dispositive power over 19,788,112 shares and FMR LLC has sole voting power over 863,387 shares. |
(5) |
Based solely on information as of December 31, 2014 contained in a Schedule 13G/A filed with the SEC by PRIMECAP Management Company on February 13, 2015, which also
indicates that it has sole voting power over 3,286,734 shares and sole dispositive power over 17,170,693 shares. |
(6) |
Based solely on information as of December 31, 2014 contained in a Schedule 13G/A filed with the SEC by BlackRock, Inc. on January 29, 2015, which also indicates that
it has sole voting power with respect to 13,270,498 shares, sole dispositive power with respect to 15,339,351 shares and shared voting and dispositive power with respect to 17,052 shares. |
(7) |
Based solely on information as of December 31, 2014 contained in a Schedule 13G filed with the SEC by The
|
|
Vanguard Group on February 11, 2015, which also indicates that it has sole voting power with respect to 409,652 shares, sole dispositive power with respect to 12,344,242 shares and shared
dispositive power with respect to 386,452 shares. |
(8) |
Based solely on information as of December 31, 2014 contained in a Schedule 13G filed with the SEC by T. Rowe Price on February 12, 2015, which also indicates that it
has sole voting power with respect to 3,978,108 shares and sole dispositive power with respect to 12,176,548 shares. |
(9) |
Includes shares underlying market stock units that will vest within 60 days of the Ownership Date, assuming the maximum possible number of shares that are eligible for vesting on
the vesting date. |
(10) |
Includes 10,756 shares held in a trust of which Dr. Scangos is a trustee. |
(11) |
Includes 3,100 shares held in a trust of which Ms. Schenk is a trustee. |
(12) |
Includes 13,856 shares held indirectly through trusts. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires our executive officers, directors and greater than 10% stockholders to file initial reports of ownership
and changes of ownership of our common stock. As a practical matter, we assist our directors and executive officers by monitoring transactions and completing and filing Section 16 forms on their behalf. Based solely on information provided to
us by our directors and executive officers, we believe that during 2014 all such parties complied with all applicable filing requirements.
|
|
|
|
|
23 |
|
|
|
|
CORPORATE GOVERNANCE
Corporate Governance Highlights
We strive to maintain effective corporate governance practices to ensure that our company is managed for the long-term benefit of our stockholders.
We review our corporate governance principles and practices on a regular basis. Since our last annual meeting of stockholders in 2014, we placed significant focus
on our board committees and rights of our stockholders, and have enacted the following changes:
|
|
Board Committee Changes: We reviewed the composition and rotated the members of certain of
our committees, realigned the risk oversight responsibilities of our board committees, established a separate Risk Committee of the Board to assist the Board of Directors in overseeing risk associated with our business and operations, and
established a separate Finance Committee of the Board to assist the Board of Directors in overseeing our financial strategy, policies and practices. |
|
|
Proxy Access. We adopted a proxy access bylaw effective for our 2016 annual meeting of
stockholders, which permits a stockholder, or a group of up to 20 stockholders, owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials nominees for director constituting
up to 25% of the Board of Directors, subject to the requirements set forth in our Bylaws. |
In addition to our recent board committee
changes and implementation of proxy access, we believe that our overall governance features include a number of practices and policies that are favorable to our Company and stockholders, including the following:
|
|
Our full Board of Directors is elected annually. |
|
|
Ten of our eleven directors are independent directors. Dr. Scangos is not considered independent because he is an executive officer of the Company.
|
|
|
All committees of the Board of Directors consist of independent directors. |
|
|
We have an independent Chairman of the Board. |
|
|
We separate the role of Chief Executive Officer from that of Chairman of the Board. |
|
|
We do not have a stockholder rights plan (sometimes called a poison pill).
|
|
|
We require any nominee for director who does not receive a majority vote in an uncontested election to tender his or her resignation to the Board of Directors,
which the Board will consider whether to accept such resignation. |
|
|
We allow stockholders holding an aggregate of at least 25% of our outstanding shares to call a special meeting of stockholders, subject to the terms and
conditions set forth in our Bylaws. |
|
|
Our stockholders are permitted to act by written consent in lieu of a meeting. |
|
|
We have corporate governance principles, which are published on our website. |
|
|
We have stock ownership guidelines for our executive officers and directors. |
|
|
Our insider trading policy prohibits our employees and directors from hedging or pledging our securities or otherwise engaging in derivative transactions.
|
Director Independence
Board of Directors. All of our directors and nominees for director, other than
Dr. Scangos, our Chief Executive Officer, satisfy the independence requirements of NASDAQ. In determining that Dr. Papadopoulos is independent, our Board of Directors considered that Dr. Papadopoulos is a director or advisor to
certain companies with which we collaborate.
Committees. The committees of our Board of Directors consist solely of independent directors, as defined by NASDAQ rules. The members of the Audit Committee also meet the additional SEC and NASDAQ independence and
experience requirements applicable specifically to audit committee members. In addition, all of the members of the Compensation Committee are non-employee directors within the meaning of the rules under Section 16 of the Securities Exchange Act
and outside directors for purposes of Section 162(m) of the Internal Revenue Code, and the Board of Directors has affirmatively determined that the members of our Compensation Committee satisfy the additional independence requirements
specifically applicable to compensation committee members.
Leadership
Structure. We currently separate the roles of Chairman of the Board of Directors and Chief Executive Officer. Stelios Papadopoulos, an independent director, is
|
|
|
|
|
24 |
|
|
|
|
CORPORATE GOVERNANCE
(continued)
Chairman of the Board and has served as such since June 2014. Among other responsibilities, our Chairman:
|
|
presides at meetings of our Board of Directors, executive sessions of our independent directors and our annual meetings of stockholders;
|
|
|
reviews and assists in setting the agenda and schedule for our Board of Directors meetings in collaboration with our Chief Executive Officer;
|
|
|
advises the committee chairs in fulfilling their responsibilities to the Board of Directors; |
|
|
recommends to the Board of Directors the retention of any advisors who report directly to the Board of Directors; |
|
|
serves as a liaison for stockholder communications with the Board of Directors; |
|
|
leads the process of evaluating our Chief Executive Officer; and |
|
|
discharges such other responsibilities as the Board of Directors may assign from time to time. |
We believe that having an independent Chairman promotes a greater role for the independent directors in the oversight of the Company, including oversight of
material risks facing the Company, encourages active participation by the independent directors in the work of our Board of Directors, enhances our Board of Directors role of representing stockholders interests, and improves our Board of
Directors ability to supervise and evaluate our Chief Executive Officer and other executive officers.
Nominating Processes
The Corporate Governance Committee is responsible for identifying individuals qualified to become members of our Board of Directors and reviewing candidates recommended by stockholders. Stockholders may recommend
nominees for consideration by the Corporate Governance Committee by submitting the names and supporting information to the Secretary, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142. Any such recommendation should include at a minimum
the name(s) and address(es) of the stockholder(s) making the recommendation and appropriate biographical information for the proposed nominee(s). Candidates who are recommended by stockholders will be considered in the same manner as candidates from
other sources. For all potential candidates, the Corporate Governance Committee will consider all factors it deems relevant, including at a minimum those listed below in the subsection
titled Director Qualification Standards and Diversity. Director nominations are recommended by the Corporate Governance Committee to our Board of Directors and must be approved by a
majority of independent directors.
In addition, our Bylaws contain provisions that address the process by which a stockholder may nominate an individual
to stand for election to our Board of Directors at an annual meeting of stockholders.
|
|
Stockholder Nominations Not for Inclusion in Companys Proxy Statement. In order to
nominate a director candidate for election at an annual meeting of stockholders, a stockholder must give timely notice in writing to our Secretary at our principal executive offices and otherwise comply with the provisions of our Bylaws. To be
timely, our Bylaws provide that we must have received a stockholders notice not less than 90 days and not more than 120 days in advance of the first anniversary of the date our proxy statement was released to our stockholders in connection
with the previous years annual meeting of stockholders. However, if no annual meeting of stockholders was held in the previous year or the date of the annual meeting of stockholders is more than 30 days before or more than 60 days after the
first anniversary of the previous years annual meeting of stockholders, we must receive a stockholders notice not earlier than the close of business on the 120th day prior to such annual meeting of stockholders and not later than the
close of business on the later of (1) the 90th day prior to such annual meeting of stockholders and (2) the 10th day following the day on which public announcement of the date of such annual meeting of stockholders is first made.
|
Information required by our Bylaws to be in the notice includes, among other things, the name, contact information
and security ownership information for the candidate and the person making the nomination, any voting commitment by the candidate, whether the person making the nomination is part of a group that intends to deliver a proxy statement or solicit
proxies, and other information about the proposed nominee that must be disclosed in proxy solicitations under Section 14 of the Securities Exchange Act and the related rules and regulations under that Section. The Corporate Governance Committee
may also require any proposed nominee to furnish such other information as may be reasonably required to determine the eligibility of such proposed nominee to serve on our Board of Directors.
|
|
|
|
|
25 |
|
|
|
|
CORPORATE GOVERNANCE
(continued)
|
|
Stockholder Nominations Under Proxy Access Bylaw. Our Bylaws provide that under certain
circumstances, a stockholder, or group of up to 20 stockholders, who have maintained continuous ownership of at least 3% of our common stock for at least 3 years may nominate and include a specified number of director nominees in our annual meeting
proxy statement. |
|
Ø
|
Number of Stockholder-Nominated Candidates. The number of stockholder-nominated candidates appearing in our
annual meeting proxy statement cannot exceed 25% of the number of directors then serving on the Board. If 25% is not a whole number, the maximum number of stockholder-nominated candidates would be the closest whole number below 25%. The following
persons will be considered stockholder-nominated candidates and counted against the 25% maximum: (i) stockholder-nominated candidates that the Board of Directors determines to include in the Companys proxy materials as Board-nominated
candidates, (ii) any stockholder-nominated candidate that is subsequently withdrawn, and (iii) any director who had been a stockholder-nominated candidate at any of the three preceding annual meetings of stockholders and whose reelection
at the upcoming annual meeting is being recommended by the Board. Nominating stockholders are required to provide a list of their proposed nominees in rank order. If the number of stockholder-nominated candidates exceeds 25%, the highest ranking
qualified individual from the list proposed by each nominating stockholder, beginning with the nominating stockholder with the largest qualifying ownership and proceeding through the list of nominating stockholders in descending order of qualifying
ownership, will be selected for inclusion in the Company proxy materials until the maximum number is reached. If the maximum number of stockholder-nominated candidates is not reached after the highest ranking qualified individual has been selected,
this process will continue as many times as necessary, following the same order each time, until the maximum number is reached. |
|
Ø
|
Nominating Procedure. Requests to include stockholder-nominated candidates in the Companys proxy
materials must be received no earlier than 150 days and no later than 120 days before the anniversary of the date that the Company issued its proxy statement for the previous years annual
|
|
meeting of stockholders. However, if no annual meeting of stockholders was held in the previous year or the date of the annual meeting of stockholders is more than 30 days before or later than
the first anniversary of the previous years annual meeting of stockholders, we must receive the request not later than the close of business on the earlier of (i) the 60th day prior to the date we issue our proxy statement in connection
with such annual meeting of stockholders or (2) the 10th day after public announcement of the date of such annual meeting of stockholders is first made. The nominating stockholder or group of stockholders also must deliver the information
required by our Bylaws, and each nominee must meet the qualifications required by our Bylaws. |
|
Ø
|
Supporting Statement. Nominating stockholders are permitted
to include in the proxy statement a 500-word statement in support of their nominee(s). The Company may omit any information or statement that it, in good faith, believes would violate any applicable law or
regulation. |
Annual Elections and Majority Voting
Our directors are elected annually to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. Our directors
must be elected by a majority of votes cast in uncontested elections (meaning any election for which the number of directors nominated does not exceed the number of directors to be elected at such meeting), and by a plurality of votes cast in
contested elections (meaning any election for which the number of directors nominated exceeds the number of directors to be elected at such meeting, regardless of whether such nominees were proposed by the Company or by stockholders). In addition,
following their appointment or election by stockholders to our Board of Directors, directors must submit an irrevocable resignation that will be effective upon (1) the failure to receive the required number of votes for reelection at the next
annual meeting of stockholders at which they face reelection and (2) acceptance of such resignation by our Board of Directors. If an incumbent director fails to receive the number of votes required for reelection, our Board of Directors
(excluding the director in question) will, within 90 days after certification of the election results, decide whether to accept the directors resignation taking into account such factors as it deems relevant. Such factors may include the
stated reasons why stockholders voted against such directors reelection, the qualifications of the director and whether
|
|
|
|
|
26 |
|
|
|
|
CORPORATE GOVERNANCE
(continued)
accepting the resignation would cause us to fail to meet any applicable listing standards or would violate state law. Our Board of Directors will promptly disclose its decision in a filing with
the SEC.
Director Qualification Standards and Diversity
Our Corporate Governance Principles provide that directors should possess the highest personal and professional ethics and integrity, understand and be aligned with
our core values, and be committed to representing the long-term interests of our stockholders. Our directors must also be inquisitive and objective and have practical wisdom and mature judgment. In accordance with our Corporate Governance
Principles, we endeavor to have a Board of Directors that collectively represents diverse experience at strategic and policy-making levels in business, government, education, healthcare, science and technology, and the international arena, and
collectively has knowledge and expertise in the functional areas of accounting and finance, risk management and compliance, strategic and business planning, corporate governance, human resources, marketing and commercial, and research and
development. Consistent with our Corporate Governance Principles, in selecting nominees to our Board of Directors, the Corporate Governance Committee considers the diversity of skills and experience that a potential nominee possesses and the extent
to which such diversity would enhance the perspective, background, knowledge and experience of our Board of Directors as a whole. The Board of Directors considers personal diversity, including gender, ethnic and racial diversity, as an additional
benefit to the Board of Directors as a whole.
Our directors must be willing to devote sufficient time to carrying out their duties and responsibilities
effectively. We
ask directors not to serve on more than six boards of public companies including ours. In addition, our Chief Executive Officer may not serve on more than two boards of directors of public
companies in addition to ours.
Our Board of Directors does not believe that arbitrary term limits on directors service are
appropriate, nor does it believe that directors should expect to be re-nominated. Regular evaluations are an important determinant for continued tenure, and, to that end, our Board of Directors and its committees perform a self-evaluation on a
regular basis and as may be required by applicable laws, rules and regulations. Our Corporate Governance Principles provide that directors should offer their resignation in the event of any significant change in personal circumstances, including a
significant change in principal job responsibilities or any circumstances that may adversely affect their ability to effectively carry out their duties and responsibilities or in the case of a significant conflict of interest that cannot otherwise
be resolved. Our directors are also expected, but not required, to offer their resignation to our Board of Directors effective at the annual meeting of stockholders in the year of their 75th birthday.
|
|
|
|
|
27 |
|
|
|
|
CORPORATE GOVERNANCE
(continued)
Committees and Meetings
Our Board of Directors has six standing
committees, which are described in the table below. The chair of each committee periodically reports to our Board of Directors on committee deliberations and decisions. Each committees charter is posted on our website, www.biogen.com,
under the Corporate Governance subsection of the Investors section of the website. Also posted there are our Corporate Governance Principles which, together with our committee charters, comprise our governance framework.
|
|
|
|
|
|
|
|
|
Committee |
|
Function |
|
Members |
|
Meetings in 2014 |
|
Audit |
|
Assists our Board of Directors in its oversight of:
the integrity of our financial statements;
our accounting and financial reporting processes; the independence, qualifications and performance of our independent registered public accounting firm;
our tax strategy; and our internal audit and corporate compliance functions. The Audit Committee has the sole authority and direct responsibility for the appointment, compensation, retention, evaluation and oversight of the work of our independent registered public accounting firm. The
Audit Committee Report is set forth below. |
|
Caroline D. Dorsa (Chair) Nancy L. Leaming Stelios Papadopoulos
Brian S. Posner |
|
|
10 |
|
Compensation and Management
Development |
|
Assists our Board of Directors with oversight of executive compensation and management development, including:
recommending to our Board of Directors the compensation for our Chief Executive Officer, and approving the compensation for our other executive officers;
administration of our equity and other management incentive plans; executive and senior management development programs (including succession plans for executives and senior management);
and
recommending to our Board of Directors the compensation of our independent directors. The Compensation and Management Development Committee Report is set forth in the section titled Executive Compensation and Related Information. |
|
Robert W. Pangia (Chair) Caroline D. Dorsa Richard C. Mulligan
Eric K. Rowinsky Lynn
Schenk |
|
|
9 |
|
Corporate Governance |
|
Assists our Board of Directors in assuring sound corporate governance practices and identifying qualified nominees to our Board of Directors and its committees. |
|
Alexander J. Denner (Chair) Brian S. Posner Eric K. Rowinsky Lynn Schenk |
|
|
5 |
|
Finance |
|
Assists our Board of Directors with oversight of our financial strategy, policies and practices. |
|
Brian S. Posner (Chair) Alexander J. Denner Robert W. Pangia
Stelios Papadopoulos Stephen A.
Sherwin |
|
|
3 |
|
Risk |
|
Assists our Board of Directors with oversight of managements exercise of its responsibility to assess and manage risks associated with our
business and operations. For more information on our Board oversight of risks, please see Risk Oversight below. |
|
Lynn Schenk (Chair) Alexander J. Denner Caroline D. Dorsa
Nancy L. Leaming Stephen A.
Sherwin |
|
|
3 |
|
Science and
Technology |
|
Assists our Board of Directors with oversight of our key strategic decisions involving research and development matters and our intellectual property
portfolio. |
|
Richard C. Mulligan (Chair)
Stelios Papadopoulos Eric K.
Rowinsky Stephen A. Sherwin |
|
|
5 |
|
|
Determined by our Board of Directors to be an audit committee financial expert. |
|
|
|
|
|
28 |
|
|
|
|
CORPORATE GOVERNANCE (continued)
Our Board of Directors met 10 times in 2014. No current director attended fewer than 75% of the total number of
meetings of our Board of Directors and the committees on which he or she served during 2014. Under our Corporate Governance Principles, our independent directors are required to meet without management present at least four times each year.
Independent directors may also meet without management present at such other times as determined by our Chairman, or if requested by at least two other directors. In 2014, our independent directors met without management present four times. In
addition, we expect all of our directors and director nominees to attend our annual meetings of stockholders. All of our directors attended our 2014 annual meeting of stockholders.
Risk Oversight
Our Board of Directors provides oversight of
material risks facing the Company. Our Board of Directors regularly receives information about our material strategic, operational, financial and compliance risks and managements
response to, and mitigation of, such risks. In addition, our risk management systems, including our risk assessment processes, internal controls over financial reporting, compliance programs and
internal and external auditing procedures are designed, in part, to inform management and our Board of Directors about our material risks. As part of its risk oversight function, our Board of Directors and its committees review this framework, its
operation and our strategies for generating long-term value for our stockholders to ensure that such strategies will not motivate management to take excessive risks.
In determining the allocation of risk oversight responsibilities, our Board of Directors and its committees generally oversee material risks within their identified area of concern. The Board and each committee
meet regularly with management to ensure that management has identified relevant risks and is adequately assessing, monitoring, and taking appropriate action to mitigate risk. A summary of the key areas of risk oversight responsibility of the Board
and each of its committees is set forth below:
|
|
|
Board or Committee |
|
Area of Risk Oversight |
Board |
|
Managements
exercise of its responsibility to assess and manage risks related to corporate and commercial strategy and execution, pricing and reimbursement, competition, information technology and cybersecurity, and other material risks. |
Audit |
|
Managements
exercise of its responsibility to assess and manage risks associated with the Companys financial, accounting, disclosure, corporate compliance and anti-bribery and anti-corruption matters. |
Compensation and
Management Development |
|
Managements
exercise of its responsibility to assess and manage risks related to our workforce and compensation matters. |
Corporate
Governance |
|
Risks associated with
corporate governance and board succession, and review of director independence, potential conflicts of interest and related party transactions involving directors and executive officers. |
Finance |
|
Managements
exercise of its responsibility to assess and manage financial, capital and credit risks. |
Risk |
|
The Companys risk governance framework and infrastructure designed to identify, assess, manage and monitor the Companys material risks;
The risk management policies, guidelines and practices implemented by Company management; The allocation of risk oversight responsibilities to the Board and its committees;
Managements exercise of its responsibility to identify, assess and manage material risks not allocated to the Board or another committee; and
Managements exercise of its responsibility to manage material government and other investigations. |
Science and
Technology |
|
Managements exercise of its responsibility to assess and manage risks associated with the Companys research and development activities, clinical development and intellectual
property. |
|
|
|
|
|
29 |
|
|
|
|
CORPORATE GOVERNANCE
(continued)
Compensation Risk Assessment
The Compensation Discussion and Analysis (CD&A) section of this Proxy Statement describes our compensation policies, programs and practices for our executive
officers. Our goal-setting, performance assessment and compensation decision-making processes described in the CD&A apply to all employees. Our long-term incentive program provides different forms of awards depending upon an employees
level, but is otherwise consistent throughout the Company. We offer a limited number of cash incentive plans, with employees eligible for either our annual cash incentive plan or a sales incentive compensation plan; no employee is eligible to
participate in more than one cash incentive plan at any time. Our annual cash incentive plan is consistent for all participants globally, with the same Company performance goals, payout curves and administrative provisions regardless of the
participants job level, location or function in the Company. In the CD&A, we describe the risk-mitigation controls for our compensation programs, including the role of our Compensation Committee to review and approve the design, goals and
payouts under our annual cash incentive plan and long-term incentive program as well as approving each executive officers compensation. In addition, we have reviewed the processes, controls and design of our sales incentive compensation plans.
Based on our assessment, we believe that our compensation policies, programs and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
Audit Committee Report
The Audit Committees role is to act on
behalf of our Board of Directors in the oversight of all aspects of Biogens financial reporting, internal control and audit functions. The roles and responsibilities of the Audit Committee are set forth in the written charter adopted by our
Board of Directors, which is posted on our website, www.biogen.com, under the Corporate Governance subsection of the Investors section of the site. Management has primary responsibility for the financial statements and the
reporting process, including the systems of internal controls.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed
with management the audited consolidated financial statements contained in Biogens 2014 Annual Report on Form 10-K. The Audit Committee discussed with PricewaterhouseCoopers LLP, Biogens independent registered public accounting firm, the
overall scope and plans for the audit. The Audit Committee met with PricewaterhouseCoopers, with and without management present, to discuss the results of its examination,
managements response to any significant findings, its observations of Biogens internal controls, the overall quality of Biogens financial reporting, the selection, application
and disclosure of critical accounting policies, new accounting developments and accounting-related disclosure, the key accounting judgments and assumptions made in preparing the financial statements and whether the financial statements would have
materially changed had different judgments and assumptions been made, and other pertinent items related to Biogens accounting, internal controls and financial reporting. The Audit Committee also discussed with representatives of Biogens
corporate internal audit staff their purpose and authority and their audit plan.
The Audit Committee also reviewed and discussed with
PricewaterhouseCoopers the matters required to be discussed with the Audit Committee under generally accepted auditing standards (including Public Company Accounting Oversight Board Auditing Standard No. 16). In addition, the Audit
Committee discussed with PricewaterhouseCoopers the independence of PricewaterhouseCoopers from management and Biogen, including the written disclosures and letter concerning independence received from PricewaterhouseCoopers required by applicable
requirements of the Public Company Accounting Oversight Board. The Audit Committee has determined that the provision of non-audit services to Biogen by PricewaterhouseCoopers is compatible with its independence.
During 2014, the Audit Committee provided oversight and advice to management in connection with Biogens system of internal control over financial reporting in
response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. In connection with this oversight, the Audit Committee reviewed a report by management on the effectiveness of Biogens
internal control over financial reporting. The Audit Committee also reviewed PricewaterhouseCoopers Report of Independent Registered Public Accounting Firm included in Biogens Annual Report on Form 10-K for the fiscal year ended
December 31, 2014 related to its audit of the effectiveness of internal control over financial reporting.
In reliance on these reviews and
discussions, the Audit Committee recommended to our Board of Directors that the audited consolidated financial statements be included in Biogens Annual Report on Form 10-K for the fiscal year ended December 31, 2014 for filing with the
SEC.
The Audit Committee of our Board of Directors:
Caroline D. Dorsa (Chair)
Nancy L. Leaming
Stelios Papadopoulos
Brian S. Posner
|
|
|
|
|
30 |
|
|
|
|
EXECUTIVE COMPENSATION AND
RELATED INFORMATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (CD&A) describes the compensation strategy, philosophy, policies, and practices underlying our executive compensation
program for 2014. It also provides information regarding the manner and context in which compensation was earned by and awarded to our 2014 named executive officers listed below, whom we refer to collectively as Named Executive Officers
or NEOs.
|
|
|
|
|
George Scangos, Ph.D. Chief
Executive Officer |
|
|
Paul Clancy, M.B.A.
Executive Vice President, Chief Financial
Officer |
|
|
Adriana Karaboutis, M.S.
Executive Vice President, Technology & Business
Solutions |
|
|
Alfred Sandrock, M.D., Ph.D.
Group Senior Vice President, Chief Medical
Officer |
|
|
Adam Koppel, M.B.A., M.D., Ph.D. Senior Vice President, Chief Strategy Officer |
Executive Summary
2014 Highlights
2014 was a very good year for Biogen and the patients we serve, as we
reached or exceeded many of our financial, operational and strategic goals. We successfully launched four products in two distinct therapeutic markets, advanced several potential therapeutic options across a broad set of disease areas, enhanced our
pipeline through strategic transactions and collaborations, strengthened our research and development and leadership teams, and continued our leadership in a number of social and environmental initiatives.
Stockholder Alignment - Total Shareholder Return
Our stock price increased from $279.57 to $339.45 per share during 2014, reflecting strong stock price appreciation and a one-year total shareholder return (TSR) of
21%. This compares to our peer group median one-year TSR of 31% and the Standard & Poors 500 (S&P 500) one-year TSR of 15%. Our three-year TSR is 46% compared with our peer group median three-year TSR of 38% and the three-year
S&P 500 TSR of 22%. Our peer group is described below under External Market Competitiveness and Peer Group.
Financial
Performance
Significant financial growth was achieved in 2014 when compared to another year of strong performance in 2013, as demonstrated by our
increase in revenues, net income and diluted earnings per share (EPS), as shown below.
A reconciliation of our GAAP to non-GAAP financial measures is provided in Appendix C to this Proxy Statement.
Product and Pipeline Developments
We
solidified our leadership position in multiple sclerosis (MS), expanded our portfolio of therapies for patients and strengthened our research and development organization as described below.
|
|
TECFIDERA® was approved in the
European Union (EU) and launched in more than 10 countries. It is now the number one prescribed oral MS therapy in the U.S. and Germany. |
|
|
PLEGRIDY® was approved and
launched in the EU and U.S. for the treatment of relapsing MS. Developed by our own scientists, PLEGRIDY is an important part of our strategy to maintain a leadership position in the interferon class of MS treatments. |
|
|
ZINBRYTA, a monoclonal antibody being tested in relapsing remitting MS, had positive top-line Phase 3 results. We believe ZINBRYTA has the potential to
|
|
|
|
|
|
31 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
|
|
become another important treatment option for the diverse needs of MS patients. |
2014 also marked an important milestone for our company as we launched treatments for hemophilia following the US approvals of ALPROLIX® for hemophilia B and ELOCTATE® for
hemophilia A. These longer-acting therapies represent the first meaningful innovation in the treatment of hemophilia in many years. In furtherance of our commitment to the hemophilia community, we and our collaborator, Swedish Orphan Biovitrum AB,
announced plans to donate up to one billion international units of ALPROLIX and ELOCTATE for humanitarian aid programs in the developing world. This reflects our mission to help provide underserved patients with access to our therapies.
We also advanced a number of programs in our pipeline and remained focused on bringing forward the next-generation of potential treatments.
|
|
We announced positive top-line results from our Phase 1b trial of BIIB037 in patients with Alzheimers disease. Based on these results, we have started
planning for a Phase 3 trial. |
|
|
Our Phase 2 results for anti-LINGO in acute optic neuritis showed evidence of biological repair of the visual system. We believe these data suggest that our
anti-LINGO antibody induced remyelination, and we are now focused on the data from our anti-LINGO trial in MS. |
|
|
Our collaborator, Isis Pharmaceuticals, advanced the spinal muscular atrophy program, SMNRX, to Phase 3 in both infant and childhood forms of the disease. |
We also increased the number of promising assets in our pipeline through strategic acquisitions and collaborations, including our agreement with Sangamo BioSciences
to develop and commercialize product candidates using gene editing technologies for the treatment of two inherited blood disorders, sickle cell disease and beta-thalassemia, and our agreement with Eisai Co., Ltd. to jointly develop and commercialize
two Eisai product candidates in Alzheimers Disease.
Through our biosimilar joint venture, Samsung Bioepis, we made important
progress toward our objective of becoming active in the development of biosimilar pharmaceuticals. Samsung Bioepis marketing authorization application for a biosimilar version of Enbrel® (etanercept) was recently accepted for review by the European Medicines Agency. It
is our belief that biosimilars will become increasingly important in the role of healthcare and we believe we are well positioned to contribute to this evolution.
Finally, during the year, we strengthened our research and development organization through the hiring of leading researchers to join our internal research team.
Leadership Team
At the core of
what we do are our people and our leaders. As a result, our goal is to find top-tier talent with the skills necessary to imagine and lead us into the future. We advanced this goal in 2014 with the addition of two key members to our leadership
team.
|
|
Adriana Karaboutis, EVP, Technology & Business Solutions. We strengthened our executive team with the addition of Ms. Karaboutis, a highly experienced, technology executive. Ms. Karaboutis joined us in September 2014 from Dell Inc., where she was vice president
and chief information officer with responsibility for Dells overall IT enterprise and customer service. As the pace of digital innovation accelerates, we expect Ms. Karaboutis will play a critical role in our mission by leveraging data
and information as a new approach to gain insights in improving research and achieving business goals. |
|
|
Adam Koppel, SVP and Chief Strategy Officer.
Dr. Koppel joined us in May 2014 to lead our corporate strategy and portfolio management efforts. He brings a unique perspective and experience to our organization and the executive team as a
physician, scientist and executive, and as a leading industry investor and consultant to pharmaceutical and biotechnology companies. We believe his background and expertise will help us to bolster our position at the intersection of medicine,
science and economics. |
In determining the compensation of Ms. Karaboutis and Dr. Koppel, the Compensation Committee followed
the same compensation philosophy and objectives described below and also took into consideration the value of compensation forfeited at their prior employment when determining their compensation and one-time sign-on awards. Each of
Ms. Karaboutis and Dr. Koppel are Named Executive Officers in 2014, due primarily to the sign-on awards granted to each of them in connection with their hire.
|
|
|
|
|
32 |
|
|
|
|
EXECUTIVE COMPENSATION
AND RELATED INFORMATION (continued)
Other Achievements
In 2014, we received a number of accolades for our workplace and community efforts and involvement, including the following:
|
|
Recognized as one of the top places to work in The Boston Globes annual workplace survey. |
|
|
Awarded the Star of STEM (Science Technology Engineering Mathematics) by The Museum of Science, Boston, in recognition of our broad support of STEM education.
|
|
|
Named as the Global Biotechnology Industry Leader on the Dow Jones Sustainability World Index, an index that tracks the economic, environmental and social
strategy and performance of the 2,500 largest companies in the S&P Global Broad Market IndexSM. |
|
|
Recognized as number two on Corporate Knights Global 100 Most Sustainable Corporations in the World index. |
The Compensation Committee considered the foregoing achievements when it reviewed and assessed each of the pay-for-performance compensation elements for each of the
Named Executive Officers in 2014.
2014 Executive Compensation Programs
We believe our executive compensation programs are effectively designed and have worked well to implement a pay-for-performance culture that is aligned with the
interests of our stockholders.
In 2014, our executive compensation programs consisted of base salary, short- and long-term incentives and other
benefits. Approximately 81% of our compensation programs were performance-based and pay-at-risk for our NEOs
(other than Ms. Karaboutis and Dr. Koppel, who were not employed by us for the full year):
In 2013, we undertook a comprehensive review of our total rewards offerings to ensure that they were optimized not only in the
dollars invested but also in the perceived value of the programs by all our employees including the NEOs. Our review indicated that the investment we make in our overall compensation programs correlates well with the perceived value of these
programs by our employees.
|
|
|
|
|
33 |
|
|
|
|
EXECUTIVE COMPENSATION
AND RELATED INFORMATION (continued)
In 2014, we made the following modest changes to our executive compensation programs to further align our programs
with our peer group and general market practices, and to simplify our incentives to make it easier for our executives to stay focused on achieving our short- and long-term Company goals.
|
|
|
Description |
|
2014 Compensation Changes |
Long-term
Incentives |
|
The terms of our Market Stock Units (MSUs) were amended to align them more generally with our Cash-Settled Performance Units (CSPUs). MSUs
granted in 2014: vest in three annual installments, compared to four annual installments for MSUs granted in 2013; and
have a maximum award opportunity of 200% of target for achievement of maximum stretch goals, compared to a maximum of 150% of target for MSUs granted in 2013.
We now use a 30-day average stock price to convert CSPUs into a cash value and to set the start
and end prices in determining stock performance for MSUs, which we believe better aligns the value of the awards with stock price performance close to the vesting date. |
Share Ownership Guidelines |
|
To better align with our peer group and prevalent market practice in the general industry, our share ownership guidelines are now based on a multiple of salary. |
Executive
Physicals |
|
The reimbursement benefit we offered for financial planning services was expanded to cover reimbursement for executive physicals, which we believe emphasizes the importance of health and
wellness. The maximum limit for reimbursement remains unchanged but an executive now has flexibility to choose which benefit will be reimbursed. |
Severance |
|
We enhanced the starting severance coverage for NEOs who are executive vice presidents from nine months for up to one year of service to 12 months for up to one year of service. We believe
this will enhance our ability to attract leading executives given that this level of severance is common in the market. The maximum severance coverage remains unchanged at 21 months. |
Other key decisions in recognition of the Companys strong achievements against the 2014 pre-established
performance goals can be found below under the heading 2014 Performance-Based Plans.
2014 Advisory Vote on Executive
Compensation
At our 2014 annual meeting of stockholders, 97% of the votes cast were in favor of the compensation of our Named Executive Officers
in our annual Say on Pay proposal. The Compensation Committee viewed this as very positive support for our executive compensation programs and their alignment with long-term stockholder value creation and took note that the
Companys executive compensation programs have been effective in implementing the Companys stated compensation philosophy and objectives.
Our
Compensation Committee is committed to continually reviewing our executive compensation programs on a proactive basis to ensure the ongoing alignment of our Company and stockholders as discussed above.
Roles & Responsibilities
Role of the Compensation Committee
The Compensation Committee oversees and administers
our executive compensation programs. The roles and responsibilities of the Compensation Committee are set forth in its written charter adopted by our Board of Directors, which can be found on our website, www.biogen.com, under the
Corporate Governance subsection of the Investors section of the site.
Role of the Independent Compensation
Consultant
The Compensation Committee believes that independent advice is important in developing Biogens executive compensation programs.
Frederic W. Cook & Co., Inc. (FWC) is currently engaged as the Compensation Committees independent compensation consultant. FWC does not provide any other services to Biogen.
Reporting directly to the Compensation Committee, FWC provides guidance on trends in CEO, executive and non-employee director compensation, the development of specific executive compensation programs, and the
composition of the Companys compensation peer group. Additionally, FWC prepares a report on CEO pay that compares each element of
|
|
|
|
|
34 |
|
|
|
|
EXECUTIVE COMPENSATION
AND RELATED INFORMATION (continued)
compensation to chief executive officers in comparable positions at companies in our peer group. Using this and other similar information, the Compensation Committee recommends, and our Board of
Directors approves, the elements and target levels of our CEOs compensation. FWC also engages in other matters as needed and as directed solely by the Compensation Committee.
During 2014, the Company paid FWC approximately $196,490 in consulting fees directly related to these services. The Compensation Committee assesses FWCs independence annually and, in accordance with
applicable SEC and NASDAQ rules, confirmed in December 2014 that FWCs work did not raise any conflict of interest and that FWC remains independent under applicable rules.
Role of our CEO
Each year, our CEO provides an assessment of each executive
officers performance during the prior year and recommends to the Compensation Committee the compensation to be awarded to each executive officer other than for himself. The recommended compensation is based on numerous factors including:
Company, team and individual performance; potential for future contributions; leadership behaviors; external market competitiveness; internal pay comparisons; and other factors deemed relevant.
To understand external market competitiveness of the compensation for our executive officers, our CEO and the Compensation Committee review a report analyzing
publicly available information and surveys prepared by our internal compensation group and reviewed by FWC. The report compares the compensation of each executive officer, other than our CEO, relative to data for comparable positions at companies in
our peer group, by compensation element (see External Market Competitiveness and Peer Group below for further details). The Compensation Committee considers all of the information presented, discusses the recommendations with our CEO and
with FWC, and applies its judgment to determine the elements of compensation and target compensation levels for each executive officer.
Our CEO also
provides a self-assessment of his achievements for the prior year. The Compensation Committee reviews and considers this in determining the CEOs performance and in recommending for approval by the Board of Directors the compensation of our
CEO. Our CEO does not participate in the deliberations regarding his own compensation.
Executive Compensation Philosophy and Objectives
Our executive compensation programs are designed to drive the creation of long-term stockholder value by delivering performance-based compensation that is
competitive with our peer group in order to attract and retain extraordinary leaders who can perform effectively and succeed in a demanding business environment. We achieve this by designing programs that are:
|
|
Mission Focused and Business Driven. Our executive compensation programs support the
relentless pursuit of delivering meaningful and innovative therapies to patients by providing our executives with incentives to achieve the near and long-term objectives of the business. Substantially all of our executive rewards programs are tied
directly, and meaningfully, to Company performance. Our objective is to emphasize the importance of achieving short-term goals while building and sustaining a foundation for long-term success. |
|
|
Competitively Advantageous. We benchmark our executive compensation programs against a
peer group of biotechnology and pharmaceutical companies that we believe are representative of the companies we primarily compete with for talent, balanced with factors such as business scope and size, including revenue and market capitalization,
business focus, and geographic scope of operations. We consider peer group practices as one of many factors taken into account in developing programs that we believe are most meaningful to our leaders and the Company, and which enable us to recruit,
retain and inspire our leadership team to achieve their best for Biogen and our stockholders. |
|
|
Performance Differentiated. We believe
strongly in pay-for-performance and endeavor to significantly differentiate rewards by delivering the highest rewards to our best performers and little or no rewards to those who do not perform at pre-established levels.
|
|
|
Ownership Aligned. At Biogen, we believe
every employee contributes to the success of the Company and, as such, every employee has a vested interest in the Companys success. To reinforce this alignment with our stockholders, we strongly encourage stock ownership through our
equity-based compensation programs. For members of our executive team, who set and lead the future strategic direction of our Company, we ensure that a significant portion of their total pay opportunity is
|
|
|
|
|
|
35 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
|
equity-based to maintain alignment between the interests of our executive officers and our stockholders. |
|
|
Flexible. We are committed to providing
flexible benefits designed to allow our diverse global workforce to choose reward opportunities that meet their varied needs so that they are inspired to perform their very best on behalf of patients and stockholders each day.
|
External Market Competitiveness and Peer Group
Market practices are one of our considerations when determining the executive compensation levels and program designs at Biogen. While we review external market
practices to ensure that we provide programs designed to attract, retain and inspire extraordinary talent, we do not target a specific market percentile or simply replicate the market practice. Instead, we strive to provide meaningful rewards that
are tied to our mission of delivering innovative therapies to our patients so that our leaders are inspired and rewarded appropriately for their achievements.
Each year our compensation consultant reviews the external market landscape and evaluates the composition of our peer group for appropriateness. Our peer group is primarily composed of biotechnology and
pharmaceutical companies, as we compete with companies in both of these sectors for executive talent. Also included is a life sciences tools and services company, Life Technologies, as it meets our size criteria, is in a similar industry code, and
has been selected by proxy advisory firms as a comparator. The companies included in the peer group used in connection with our compensation decisions in February 2014 were the following:
|
Biotech Peers |
Amgen
Celgene Gilead
Sciences Vertex Pharmaceuticals |
Pharmaceutical
Peers |
Actavis*
Allergan Bristol-Myers
Squibb Eli Lilly
Endo Health Solutions Forest
Laboratories* Mylan
Merck |
Life Sciences Tools &
Services |
Life Technologies** |
* |
Actavis plc acquired Forest Laboratories in July 2014. |
** |
Thermo Fisher Scientific acquired Life Technologies in early 2014.
|
The Compensation Committee selects our peer group based on comparable companies that approximate (1) our scope
of business, including revenue and market capitalization, (2) our global geographical reach, (3) our research-based business with multiple marketed products, and (4) a comparable pool of talent for which we compete.
As of March 2013, at the time the Compensation Committee reviewed and set Biogens peer group that was used as a reference when making compensation decisions
in February 2014, Biogen compared to its peer group in the following financial metrics as follows:
Data Source: Standard & Poors Research Insight
(1) |
As of December 31, 2012 Biogens revenue was $5,516M. |
(2) |
Biogens market cap was $39,353M as of March 2013. |
(3) |
As of the fiscal years ended December 31, 2010, 2011 and 2012, Biogens percentage of R&D expense to revenue for the three year period was 25%.
|
(4) |
As of December 31, 2012, Biogens net income was $1,380M. |
In March 2014, after compensation decisions for the prior year were determined, the Compensation Committee conducted a comprehensive review of our peer group and
determined that AbbVie would be added to the peer group going forward due to the consolidation of companies in the peer group due to then pending acquisitions of Life Technologies and Forest Laboratories.
For each of the companies in our peer group, we analyze the companys Compensation Discussion and Analysis and other data publicly filed during the prior year
to identify the executives at such companies whose positions are comparable to those held by our executive officers. We then compile and analyze the data for each comparable position. Our competitive analysis includes the structure and design of the
compensation programs as well as the targeted value of the compensation.
For our NEOs other than our Chief Executive Officer, we also use compensation
surveys to assess competitive
|
|
|
|
|
36 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
practices and levels of compensation as the data available in publicly available filings of companies in our peer group addresses only a limited number of our executive positions. For 2014,
consistent with past years, we used the Towers Watson U.S. CDB Pharmaceutical Executive Compensation Database survey (Towers Watson). We chose this survey because of the number of companies in our peer group that participate in it, the
number of positions reported by the survey which continue to be comparable to our executive positions, and the high standards under which we understand the survey is conducted (including data collection and analysis methodologies). All of the
companies in our peer group are represented in a special cross-section of the survey focused on our peer group, other than Life Technologies due to its 2014 acquisition by Thermo Fisher Scientific.
Compensation Elements
The Compensation Committee determines the elements of compensation we provide to our executive officers. The elements of our executive compensation programs and their objectives are as follows:
|
|
|
|
|
Element |
|
|
|
Objective(s) |
Base
Salary |
|
|
|
Provides a fixed level of compensation that is competitive with the external market and reflects each executives contributions, experience, responsibilities and potential to contribute
to our future success. |
Annual Bonus Plan |
|
|
|
Aligns short-term compensation with the annual goals of the Company. |
|
|
|
Motivates and rewards the achievement of annual goals that support short- and long-term value creation. |
Long-term Incentives |
|
|
|
Aligns executives interests with the long-term interests of our stockholders by linking awards to increases in our stock price. |
|
|
|
|
Motivates and rewards the achievement of stock price growth and pre-established financial goals. |
|
|
|
|
Promotes executive retention and stock ownership, and focuses executives on enhancing stockholder value. |
Benefits |
|
|
|
Promotes health and wellness. |
|
|
|
|
Provides financial protection in the event of disability or death. |
|
|
|
|
Provides tax-beneficial ways for executives to save towards their retirement, and encourages savings through competitive matches to executives retirement
savings. |
Compensation Pay Mix
The Compensation Committee determines the general mix of the elements of our executive compensation programs. It does not target a specific mix of value for our
compensation elements in either the program design or pay decisions. Rather, the Compensation Committee reviews the pay mix to ensure an appropriate level of performance-based compensation is apportioned to the short-term and even more to the
long-term to ensure alignment with our business goals and performance.
Additionally, the Compensation Committee believes the greater the leadership
responsibilities, the greater the impact an individual will have on Biogens future strategic direction. Therefore, for our executive officers, additional emphasis is placed on performance-based compensation, with a particular emphasis on
long-term incentives.
The 2014 pay mix for our CEO and our other Named Executive Officers is set forth below:
* |
Reflects salary, target bonus and approximate LTI grant date value received in 2014. NEO pay mix excludes Ms. Karaboutis and Dr. Koppel due to partial year employment
with Biogen in 2014. |
|
|
|
|
|
37 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
Performance Goals and
Target Setting Process
Early each year, the Compensation Committee reviews and establishes the pay level of each element of total compensation
for our executive officers. Total compensation is comprised of base salary, target annual bonus and long-term incentives. A summary of the process the Compensation Committee follows in setting compensation is described below:
|
|
|
|
|
Target Setting |
|
Monitoring & Tracking The Compensation Committee closely monitors the progress against the performance goals throughout the year and engages
in dialogue with management on such progress. |
|
Results & Awards: Compensation Committee Actions
|
The Compensation Committee assesses the outcomes of the prior year to ensure that the intended behaviors and results were achieved with the incentives.
The Compensation Committee and the CEO discuss potential goals for the upcoming year that are tied to the short and longer-term strategic goals of the Company.
The annual business plan for the year is approved by the Board of Directors and incentive goals and targets are aligned. Payout curves are established for each goal and is approved by the
Compensation Committee. The goals are then cascaded to the executives so that there is full Company alignment to the critical objectives that have been set forth for the year.
Other actions include the review of base salaries, bonus and LTI targets, plan designs, benefits, and peer group. |
|
|
Reviews and certifies the annual Company results
against the pre- established goals for the performance-based plans. Reviews and discusses the perform ance of the CEO. Reviews and discusses the Com pany, team, and individual performance of each executive offi cer as assessed by
the CEO. Reviews
and discusses the CEOs recommended compensation levels for each executive officer other than his own in the context of such executive officers contributions to the Company and his or her poten tial.
Approves the final
executive officer compensation for each NEO other than the CEO, including base sal ary, bonus and long term incentive awards. Reviews CEO compensation and recommends to the Board of Direc tors for approval the compensation of the CEO,
including base salary, bonus and long-term incentive awards. |
|
|
|
|
|
38 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
2014 Base Salary
In 2014, in determining Dr. Scangos base salary, the Board of Directors reviewed the base salaries of comparable chief executive officer positions in our
peer group and considered Dr. Scangos pay mix, capabilities, performance and future expected contributions. Based on their review, Dr. Scangos base salary remained the same. The Compensation Committee undertook a similar review
when approving the base salaries for Mr. Clancy and Dr. Sandrock, and approved a 5.0% and 3.0% increase compared to 2013 for each of Mr. Clancy and Dr. Sandrock, respectively. Ms. Karaboutis and Dr. Koppels
base salaries were determined at the time they were hired based on similar considerations. Base salaries in 2014 positioned our CEO and our other Named Executive Officers on average, at the median, compared to persons with comparable jobs within our
peer group. The base salary of each of our Named Executive Officers in 2014 compared to 2013 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
2013 Salary |
|
|
2014 Salary |
|
|
% Increase |
|
G. Scangos |
|
$ |
1,375,000 |
|
|
$ |
1,375,000 |
|
|
|
No change |
|
P. Clancy |
|
$ |
671,652 |
|
|
$ |
701,876 |
|
|
|
5.0% |
|
A. Karaboutis(1) |
|
|
n/a |
|
|
$ |
600,000 |
|
|
|
n/a |
|
A. Sandrock |
|
$ |
550,000 |
|
|
$ |
566,500 |
|
|
|
3.0% |
|
A. Koppel(1)
|
|
|
n/a |
|
|
$ |
525,000 |
|
|
|
n/a |
|
(1) |
The executive was hired in 2014. |
2014 Performance-Based Plans
Our executive compensation programs place a heavy emphasis on performance-based rewards. We maintain a short-term
incentive plan, known as our annual bonus plan, as well as a long-term incentive plan. Awards to our NEOs under our annual bonus plan are made under our 2008 Performance-Based Management Incentive Plan, and awards under our long-term incentive plan
are granted under our 2008 Omnibus Equity Plan. Awards under our annual bonus plan are directly tied to the achievement of our annual operating goals, which are aligned with the Companys short- and long-term strategic plans. Our long-term
incentives are directly tied to the performance of the price of shares of our common stock, which align our executives long-term interests with the interests of our stockholders.
In setting our annual goals, in addition to our internal forecasts, we consider analysts projections for our performance and the performance of companies in our peer group, as well as broad economic and
industry trends. We establish
challenging targets that result in payouts at target levels only when Company performance warrants it. The Compensation Committee is responsible for reviewing and approving our annual Company
goals, targets and levels of payout (e.g., threshold, target and maximum) and for reviewing and determining actual performance results at the end of the performance period.
In setting and approving the performance goals for our executive officers and for the Company under both the short- and long-term plans, the Compensation Committee considers the alignment of such goals to our
business plan and the degree of difficulty of attainment and the potential for the goals to encourage inappropriate risk-taking. The Compensation Committee has determined that the structures of our executive compensation programs do not put our
patients, investors or the Company at any material risk.
Annual Bonus Plan
Our annual bonus plan is a cash incentive plan that rewards near-term financial, strategic and operational performance. The Compensation Committee reviews our
annual target bonus opportunities by job level each year to ensure they are competitive. The target annual bonus opportunity as a percent of year-end base salary for each of our Named Executive Officers in 2014 compared to 2013 was follows:
|
|
|
|
|
|
|
|
|
|
|
Name |
|
2013 Target % |
|
|
2014 Target % |
|
|
% Increase |
G. Scangos |
|
|
140 |
% |
|
|
140 |
% |
|
No change |
P. Clancy |
|
|
55 |
% |
|
|
55 |
% |
|
No change |
A. Karaboutis(1) |
|
|
n/a |
|
|
|
55 |
% |
|
n/a |
A. Sandrock |
|
|
50 |
% |
|
|
50 |
% |
|
No change |
A. Koppel(1)
|
|
|
n/a |
|
|
|
40 |
% |
|
n/a |
(1) |
The executive was hired in 2014. |
The approved target bonus
opportunities for 2014 were below the median target amounts provided by companies in our peer group. On average, the 2014 target total cash compensation (e.g., base salary plus annual bonus at target performance) for our Named Executive Officers,
aside from the CEO, was below the median of our peer group given our heavier focus on long-term incentives. Our CEOs target total cash compensation was slightly above the median of our peer group.
2014 Annual Bonus Plan Design
For our 2014 annual bonus
plan, awards for our Named Executive Officers were based solely on the achievement of
|
|
|
|
|
39 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
Company goals. Identical to last years plan design, to further reinforce the importance of achieving the Companys 2014 goals as an integrated leadership team, each executive
officers individual goals were identical to the Company goals. Accordingly, the corresponding Individual Multiplier and Company Multiplier percentages are the same.
The 2014 annual bonus plan provided for a payout ranging from 0% to 150% for each Company goal, which, after the determination of the level of achievement of each goal and application of the weighting assigned to
each goal (discussed below under 2014 Company Performance Goals and Results) determined the Company Multiplier and the Individual Multiplier. The Company Multiplier and Individual Multiplier also ranged from 0% to 150% as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Multipliers |
|
Below Threshold |
|
|
Threshold |
|
|
Target |
|
|
Max |
|
Company |
|
|
0% |
|
|
|
50% |
|
|
|
100% |
|
|
|
150% |
|
Individual |
|
|
0% |
|
|
|
50% |
|
|
|
100% |
|
|
|
150% |
|
We determined the individual annual bonus payments for 2014 using the following calculation:
The 2014 annual bonus plan provided that if the Company Multiplier was 0%, there would be no payout. Further, because the
Individual Multiplier was the same as the Company Multiplier for 2014, the combined multiplier, and therefore the annual bonus multiplier of each Named Executive Officer, cannot exceed 225%.
2014 Company Performance Goals and Results
Company goals were established at the start of 2014 with assigned
weights that reflected the Companys focus on the following priorities:
|
|
Strengthen Financial performance results; |
|
|
Capitalize on the value of our commercial portfolio; and |
|
|
Extend our capabilities and portfolio to catalyze future value through our pipeline. |
The goals and weights we selected reflect the importance of linking reward opportunities to both near-term results and our progress in achieving longer-term
results. The goals we selected in 2014 were designed to measure the achievement of our annual strategic priorities relating to our commercial opportunities and pipeline progress. Our financial performance targets were based on the annual operating
plan and long-range plan approved by our Board of Directors and with reference to analyst consensus for Biogen revenue and non-GAAP EPS based on the most current analyst reports at the time we set our targets.
The following table presents our financial targets relative to analyst consensus for 2014:
|
|
|
|
|
40 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
2014 Annual Bonus Plan Company Target and Results
Table
Set forth below is a summary of the Companys goals and weights that the Compensation Committee established for the 2014 annual bonus
plan and the degree to which we attained these goals. As described below, the Company Performance Multiplier was 145%, which included a six percentage point upward adjustment. The Compensation Committee increased the performance multiplier beyond
the original payout reflected in our annual operating plan in recognition of the continued exceptional performance and effort across the entire business evidenced by the management of growth, global execution of new product introductions, and the
successful clinical readouts and significant value increase to our pipeline. Because the Individual Multiplier was the same as the Company Multiplier for 2014, the combined annual bonus multiplier was 210.25% for each Named Executive Officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Range |
|
|
|
|
|
|
|
Company Goals |
|
Weight |
|
|
Threshold |
|
|
Target |
|
|
Max |
|
|
Results |
|
|
Payout |
|
FINANCIAL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
|
25 |
% |
|
$ |
10.16 |
|
|
$ |
11.58 |
|
|
$ |
13.00 |
|
|
$ |
13.23
|
(1) |
|
|
150 |
% |
Revenue |
|
|
25 |
% |
|
$ |
8,365M |
|
|
$ |
8,870M |
|
|
$ |
9,375M |
|
|
$ |
9,471M
|
(1) |
|
|
150 |
% |
CAPITALIZE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expand MS Franchise |
|
|
20 |
% |
|
|
Patient numbers are not disclosed for competitive reasons |
|
|
|
Above
Goal |
|
|
|
150 |
% |
Launch and Optimize Hemophilia Franchise |
|
|
5 |
% |
|
|
|
|
|
|
At Goal (2) |
|
|
|
100 |
% |
EXTEND |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Build and Advance Total Pipeline |
|
|
25 |
% |
|
|
Increase pipeline value based on the shape of the
pipeline and the economic value |
|
|
|
Above Goal
(3) |
|
|
|
117 |
% |
Weighted Company Performance Multiplier |
|
|
|
139
|
%*
|
Exceptional Performance Adjustment |
|
|
|
+6 |
% |
FINAL Company Performance
Multiplier |
|
|
|
145 |
% |
*Numbers |
may not foot due to rounding. |
Notes |
to 2014 Annual Bonus Plan Company Targets and Results Table |
(1) |
These financial measures were based on our publicly reported revenue of $9,703 million and our publicly announced non-GAAP diluted EPS of $13.83. For purposes of the 2014 annual
bonus plan, revenue and EPS were reduced to account for the overall impact on revenue net of cost of goods sold above plan related to the Hemophilia launch; the inventory build above plan related to US interferon, US Tysabri and US/EU+ Tecfidera and
unplanned revenue related to US Government pricing. In addition, the impact of foreign exchange rate fluctuations was neutralized. Note: Adjusted results do not include the financial impact of the exceptional performance adjustment of six percentage
points applied to the annual bonus plan Company performance multiplier as mentioned above. |
(2) |
We adjusted our metric relating to our Hemophilia franchise to exclude the additional net patients that exceeded the number of net patient additions used in our annual operating
plan for purposes of the calculation of the bonus multiplier. Specific details are not disclosed for competitive reasons. |
(3) |
The Company continued to expand and re-shape its pipeline of promising pre-clinical and clinical stage programs, through advancement of internal programs, entering into multiple
external collaborations, and exceeding expectations of the level of confidence in and momentum of its clinical stage portfolio. Specific details are not disclosed for competitive reasons. |
|
|
|
|
|
41 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
2014 Annual Bonus Plan Awards
Based on the Compensation Committees evaluation and our Board of Directors evaluation of Dr. Scangos and the other Named Executive Officers, it was determined that the final bonus awards under the
2014 annual bonus plan were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name(1) |
|
Year-end
Salary
(A)
x |
|
|
Target Bonus %
(B) x |
|
|
Overall Multiplier
(C)
= |
|
|
Bonus Award
(D)
|
|
G. Scangos |
|
$ |
1,375,000 |
|
|
|
140 |
% |
|
|
210.25 |
% |
|
$ |
4,047,313 |
|
P. Clancy |
|
$ |
701,876 |
|
|
|
55 |
% |
|
|
210.25 |
% |
|
$ |
811,632 |
|
A. Karaboutis |
|
$ |
600,000 |
|
|
|
55 |
% |
|
|
210.25 |
% |
|
$ |
188,165 |
|
A. Sandrock |
|
$ |
566,500 |
|
|
|
50 |
% |
|
|
210.25 |
% |
|
$ |
595,533 |
|
A. Koppel |
|
$ |
525,000 |
|
|
|
40 |
% |
|
|
210.25 |
% |
|
$ |
279,441 |
|
Notes to the 2014 Annual Bonus Plan Awards Table
(1) |
Bonus awards for Ms. Karaboutis and Dr. Koppel were pro-rated to reflect active service upon joining Biogen in 2014. The start dates for Ms. Karaboutis and
Dr. Koppel were September 24, 2014, and May 15, 2014, respectively. |
Long-Term Incentives (LTI)
All annual LTI awards granted to our executives are performance-based and are designed to reward long-term Company performance. Our executive
LTI program consists primarily of Cash-Settled Performance Units (CSPUs) and Market Stock Units (MSUs). The award is equally weighted between the two LTI vehicles. We still grant time-based restricted stock units (RSUs) to executives, but only in
lieu of CSPUs at the time of hire for executives who start employment after June 30th, as the performance period for CSPUs is substantially in progress at their time of hire.
Our LTI planning range is set so that our overall total compensation approximates the median of our peer group and allows for individual LTI award differentiation. Our LTI grant values are differentiated based on
an executives individual performance, potential future contributions, market competitiveness, as well as other factors. We also review overall total compensation of our executive officers against our peer group due to our heavier weighting in
pay mix towards long-term incentives. On average, our LTI grant values for our Named Executive Officers for 2014 position their overall compensation just above the median values of our peer group in cases where there are comparable positions at the
peer companies.
We have an established annual grant practice that follows the completion of our internal performance reviews of our executive officers
as well as our external market review of
equity practices of our peer group, including the data from the Towers Watson survey described earlier. Since 2004, we have made our annual LTI grants in February of each year following our
annual earnings release. The date of each annual LTI grant coincides with grants to the CEO, which is granted upon the approval by our Board of Directors. Other grants, such as those made in connection with a new hire, are granted on the first
trading day of the month following the date of hire.
In 2014, the overall approximate LTI grant date values based on the planned and approved LTI values
were as follows:
|
|
|
|
|
Name |
|
Annual LTI Value |
|
G. Scangos |
|
$ |
11,800,000 |
|
P. Clancy |
|
$ |
2,750,000 |
|
A. Karaboutis(1) |
|
|
n/a |
|
A. Sandrock(2) |
|
$ |
1,500,000 |
|
A. Koppel(1) |
|
|
n/a |
|
Notes to the 2014 Annual Long-Term Incentives Awards Table
(1) |
Ms. Karaboutis and Dr. Koppel received a one-time LTI grant in connection with the commencement of their employment (see Summary Compensation Table for further
details). |
(2) |
In 2013, the Compensation Committee approved a one-time LTI award to be granted in 2014 to encourage Dr. Sandrocks continued employment. The amount of this retention
grant was $5 million, divided equally between RSUs and MSUs. This grant will vest in equal tranches over four years starting in 2016 and is not subject to any accelerated vesting upon retirement. |
The actual value that will be realized from the CSPUs depends on our 2014 revenue, non-GAAP EPS performance, adjusted free cash flow and the 30-day average common
stock price on each of the dates they vest. The actual value that will be realized from the MSUs depends on our 30-day average common stock price growth between the grant date and each of the dates they vest. Our common stock price is influenced by
the Companys performance as well as external market factors.
2014 CSPUs
CSPUs are performance-based restricted stock units that are subject to a one-year performance period. Our 2014 CSPU awards are eligible to vest upon the achievement of an equal weighting of revenue, non-GAAP EPS,
and adjusted free cash flow results when compared to pre-established goals set at the start of the performance period by the Compensation Committee. Revenue and EPS
meas-
|
|
|
|
|
42 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
ures were selected as in past years, and are the same financial measures utilized in the determination of the 2014 annual cash bonuses which were paid in 2015. We selected these measures to
reinforce the importance of achieving and exceeding our financial goals and to provide further incentive to achieve such results. In order to further motivate the executives to work toward the achievement of these goals, we allowed a higher maximum
payout (200%) for results above the maximum of the same
performance goals set for the bonus plan. An adjusted free cash flow measure was also selected, similar to past years, because it is viewed as a critical measure to align the interests of
management with those of our shareholders as it reflects net cash flows provided by operating activities less capital expenditures. The long-term cash flow generation of a company most reflects the intrinsic value of an enterprise. As such, cash
flow encourages management to optimize capital expenditures, invest prudently in high return projects, and optimize working capital.
2014 Cash-Settled Performance
Units Company Target and Results Table
The final CSPU performance multiplier was determined by the Compensation Committee and applied to the target
units granted to determine the actual units earned. The following chart shows the pre-established performance goals and the actual results that comprise the final CSPU Multiplier for 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Goals (1) |
|
Weight
% |
|
Target Performance Range |
|
|
|
Payout |
|
|
Threshold |
|
Target |
|
Max |
|
Results |
|
EPS |
|
33.3% |
|
$10.16 |
|
$11.58 |
|
$13.44 |
|
$13.23 |
|
176.3% |
Revenue |
|
33.3% |
|
$8,365M |
|
$8,870M |
|
$9,525M |
|
$9,471M |
|
182.0% |
Adjusted Free Cash Flow |
|
33.3% |
|
$2,374M |
|
$2,715M |
|
$3,163M |
|
$3,093M |
|
167.6% |
Weighted CSPU Performance Multiplier |
|
175%* |
*Numbers may not foot due to rounding.
Notes to 2014 Cash-Settled Performance Units Company Targets and Results Table
(1) |
See Notes to 2014 Annual Bonus Plan Company Targets and Results Table for definitions and adjustments related to EPS and Revenue goals and results. These adjustments also
impacted Adjusted Free Cash Flow resulting in a reduction of $148M. |
The 2014 CSPUs were also subject to stock price performance and service-based vesting over three years from the grant
date, in furtherance of the Companys long-term pay-for-performance philosophy and to encourage employee retention. Once vested, the CSPUs were converted to cash, except that, with respect to the 2014 grants to the executive officers, the
Compensation Committee may settle such grants in shares of our common stock or in cash at its discretion. Starting in 2014, in order to better align the value of the cash award with stock price performance close to the date of vest, the conversion
factor was changed from a 60-day to a 30-day average stock price on the applicable vesting date.
CSPU Illustration:
|
|
|
|
|
43 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
2014 MSUs
MSUs are performance-based restricted stock units that are earned based on the growth of our common stock price from the date of grant to each of the annual vesting
dates. Starting in 2014, MSUs vest in three annual installments. On each vesting date, the performance multiplier is derived based on the stock price growth rate between the 30-day average stock price on the grant date and the 30-day average stock
price leading up to and including each of the three annual vesting dates. The performance multiplier will continue to be calculated using a 60-day average stock price for MSUs granted prior to 2014.
Starting in 2014, the maximum payout of MSUs increased from 150% to 200% of the target grant, consistent with the CSPU plan design. Based on Monte-Carlo valuation
simulations, the increased potential value derived by this change will generally be offset by the reduced performance period with shares vesting equally over three years. Once the performance multiplier is determined, it is then applied to the
target number of units granted to each executive and can increase or decrease the overall number of actual shares earned based on stock price performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Below
Threshold |
|
|
Threshold |
|
|
Target |
|
|
Max |
|
Stock Price Growth |
|
|
< -50% |
|
|
|
-50% |
|
|
|
0%
(no change) |
|
|
|
+100% |
|
Performance Multiplier |
|
|
0% |
|
|
|
50% |
|
|
|
100% |
|
|
|
200% |
|
They are then scheduled to vest on the applicable vesting date.
MSU Illustration:
The vesting period ties executive compensation even more directly to our common stock price performance. On each vesting date,
the earned awards are settled in shares of our common stock.
The following table shows the vesting date, performance period and performance multiplier applied for MSUs vesting in
2014 and 2015:
|
|
|
|
|
|
|
|
|
Grant Date |
|
Vest Date |
|
Performance Period |
|
Performance Multiplier |
|
2/2014 |
|
2/2015 |
|
1 year |
|
|
122% |
|
2/2013 |
|
2/2014 |
|
1 year |
|
|
150% |
|
|
2/2015 |
|
2 years |
|
|
150% |
|
2/2012 |
|
2/2014 |
|
2 years |
|
|
150% |
|
|
2/2015 |
|
3 years |
|
|
150% |
|
2/2011 |
|
2/2014 |
|
3 years |
|
|
150% |
|
|
2/2015 |
|
4 years |
|
|
150% |
|
Retirement Plans
We maintain a Supplemental Savings Plan (SSP), which is a non-qualified deferred compensation plan covering our executive officers and other management employees in the U.S. We offer this plan as part of the
retirement savings component of our benefits program. We designed the SSP to be competitive with the nonqualified deferred compensation plans offered by companies in our peer group. Details of the SSP are presented in the narrative preceding the
2014 Non-Qualified Deferred Compensation Table below.
Other Benefits
In addition to eligibility for the benefit programs generally provided to all employees, such as our employee stock purchase plan and medical, dental, vision, life
and disability insurance, we provide certain supplemental benefits to executives. These benefits include:
Life Insurance
All of our U.S. executives, including our Named Executive Officers, receive Company-paid term life insurance equal to three times annual base
salary, up to a maximum benefit of $1,500,000. Employees who are not executives receive Company-paid term life insurance equal to two times their annual base salary. The additional value of Company-provided life insurance for our executive officers
reflects competitive practices and is consistent with our philosophy to provide appropriate levels of financial security for our employees based on their positions within the Company. The cost of Company-paid life insurance in excess of a $50,000
insurance level is taxable income to U.S. employees and is not grossed up by the Company.
|
|
|
|
|
44 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
Executive Physicals, Tax Preparation, Financial and Estate Planning
Our executive officers, other than our CEO, are eligible for reimbursement of expenses incurred for tax preparation, financial and estate planning services, as well
as the purchase of tax preparation and financial planning software, subject to annual expense limits of $7,500 for executive vice presidents and $5,500 for senior vice presidents. Such reimbursements are taxable income to our executives and are not
grossed up.
Starting in 2014, all of our executive officers, including our CEO, became eligible for reimbursement for the cost of their executive
physicals, subject to the annual expense limit noted directly above. This additional benefit provides our executives with additional flexibility to proactively manage their health and wellness.
Post-termination Compensation and Benefits
We provide severance benefits to all of our executives if they are terminated without cause or in certain other instances following a corporate transaction or a corporate change in control. The terms of these
arrangements and the amounts payable under them are described below for each Named Executive Officer in the subsection titled Potential Payments Upon Termination or Change in Control. We provide these benefits because we believe that
some severance protection is necessary to help our executives maintain their focus on the best interests of the Company when providing advice to the Company and making strategic decisions about a potential corporate transaction or change in control,
and encourages effective leadership in the closing and integration of approved transactions.
Share
Ownership Guidelines
We maintain share ownership guidelines for our executive officers to strengthen and reinforce the link our compensation
programs create between our executives and our stockholders. A summary of our share ownership guidelines are set forth below.
|
|
|
Level |
|
Number of Shares Equal in Value to: |
CEO |
|
6x salary |
EVP/Group SVP |
|
3x salary |
SVP |
|
2x salary |
Executive officers have five years from their initial appointment to meet the requirement. In the event the requirement
is not met within that time, 100% of vested shares are required to be held until the requirement is satisfied. Only shares owned outright or otherwise earned are credited toward the share
ownership requirement. Unvested time-vested restricted stock units are not included in the calculation. All of our executive officers currently meet the share ownership requirement or are still within the five-year period to meet such requirement.
Recoupment of Compensation
We may recover compensation from our employees who engage in detrimental or competitive activity. Detrimental activity includes any action or failure to act that constitutes financial malfeasance that is materially
injurious to the Company, violates our Code of Business Conduct (Values in Action), results in a restatement of our earnings or financial results or results in a violation or breach of law or contract. Competitive activity includes any action or
failure to act that violates non-disclosure, non-competition and/or non-solicitation agreements. Our current annual cash incentive plan, the 2008 Performance-Based Management Incentive Plan, provides for the forfeiture and/or repayment of awards and
our current long-term incentive plan, the 2008 Omnibus Equity Plan, also provides for the cancellation of LTI grants in these circumstances. In addition, cash sign-on bonuses to our NEOs may be forfeited if they voluntarily resign from the Company
within a pre-determined period of time.
Insider Trading, Hedging and Pledging Policy Prohibitions
We maintain a Global Insider Trading Policy that prohibits our employees and directors from, among other things, engaging in hedging or derivative
transactions with respect to the Companys equity securities, purchasing Company stock on margin or pledging Company securities as collateral for a loan, or engaging in short sales of the Companys securities.
Tax-Deductibility of Compensation
Section 162(m) of the Internal Revenue Code (Section 162(m)) limits to $1 million the amount a company may deduct for compensation paid to its CEO and any of its other three named executive officers (excluding
the chief financial officer). This limitation does not, however, apply to compensation meeting the definition of qualifying performance-based compensation.
|
|
|
|
|
45 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
Management regularly reviews the provisions of our plans and programs, monitors legal developments and works with the
Compensation Committee and its consultant to review and consider Section 162(m) tax deductibility of compensation payments. Our Compensation Committee, however, believes that a compensation program that attracts, retains and rewards executive
talent and achievement is necessary for our success and, therefore, is in the best interests of the Company and our stockholders and that, in establishing the cash and equity incentive compensation program for the Companys executive officers,
the potential deductibility of the compensation payable under that program should only be one of a number of relevant factors taken into consideration. Consequently, our Compensation Committee may pay or provide, and has paid or provided,
compensation in excess of $1 million that is not exempt from the deduction limitations under Section 162(m).
Amounts of base salary above $1
million are not deductible by the Company. Our annual bonus plan payouts in 2015 for our 2014 plan year and our 2014 LTI grants of CSPUs and MSUs are intended to fall within the exception for qualifying performance-based compensation (and therefore
to be tax-deductible compensation) under Section 162(m).
Sign-on bonuses such as those paid to Ms. Karaboutis and Dr. Koppel in
connection with their initial employment, and RSUs, as currently structured, are not considered
performance-based for purposes of Section 162(m). Therefore, the value of those equity awards at the time they vest or are settled, in combination with the amount of salary and certain other
elements of compensation, in excess of $1 million paid to our Chief Executive Officer and the three highest paid executive officers, other than the Chief Financial Officer, is not tax deductible by us.
Compensation and Management Development Committee Report
The Compensation and Management Development Committee furnishes the following report:
The Compensation Committee has
reviewed and discussed the Compensation Discussion and Analysis with Biogen management. Based on this review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included
in this Proxy Statement.
Submitted by,
Robert W. Pangia
(Chair)
Caroline D. Dorsa
Richard C. Mulligan
Eric K. Rowinsky
Lynn Schenk
|
|
|
|
|
46 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
Summary Compensation
Table
The following table shows the compensation paid to or earned by our Named Executive Officers during the years ended December 31,
2012, December 31, 2013 and December 31, 2014, for the year(s) in which they were a named executive officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
(a) |
|
Year (b) |
|
|
Salary
(c) |
|
|
Bonus(1)
(d) |
|
|
Stock Awards(2)
(e) |
|
|
Non-Equity Incentive Plan Compensation(3) (f) |
|
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings(4)
(g) |
|
|
All Other Compensation(5) (h) |
|
|
Total
(i) |
|
George A. Scangos |
|
|
2014 |
|
|
$ |
1,375,000 |
|
|
|
|
|
|
$ |
12,120,939 |
|
|
$ |
4,047,313 |
|
|
$ |
86,634 |
|
|
$ |
1,001,483 |
|
|
$ |
18,631,369 |
|
Chief Executive Officer |
|
|
2013 |
|
|
$ |
1,498,462 |
|
|
|
|
|
|
$ |
9,195,217 |
|
|
$ |
3,560,480 |
|
|
$ |
89,477 |
|
|
$ |
671,511 |
|
|
$ |
15,015,147 |
|
|
|
|
2012 |
|
|
$ |
1,294,231 |
|
|
|
|
|
|
$ |
7,955,654 |
|
|
$ |
3,785,600 |
|
|
$ |
38,787 |
|
|
$ |
377,530 |
|
|
$ |
13,451,802 |
|
Paul J. Clancy |
|
|
2014 |
|
|
$ |
698,389 |
|
|
|
|
|
|
$ |
2,824,497 |
|
|
$ |
811,632 |
|
|
$ |
25,454 |
|
|
$ |
330,045 |
|
|
$ |
4,690,017 |
|
EVP, Chief |
|
|
2013 |
|
|
$ |
745,223 |
|
|
|
|
|
|
$ |
2,808,961 |
|
|
$ |
683,258 |
|
|
$ |
27,771 |
|
|
$ |
221,043 |
|
|
$ |
4,486,256 |
|
Financial Officer |
|
|
2012 |
|
|
$ |
635,820 |
|
|
|
|
|
|
$ |
2,287,448 |
|
|
$ |
607,941 |
|
|
$ |
18,702 |
|
|
$ |
141,584 |
|
|
$ |
3,691,495 |
|
Alfred W. Sandrock |
|
|
2014 |
|
|
$ |
564,596 |
|
|
|
|
|
|
$ |
6,820,257 |
|
|
$ |
595,533 |
|
|
$ |
25,042 |
|
|
$ |
163,955 |
|
|
$ |
8,169,383 |
|
Group SVP, Chief |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adriana Karaboutis |
|
|
2014 |
|
|
$ |
133,846 |
|
|
$ |
2,000,000 |
|
|
$ |
5,265,820 |
|
|
$ |
188,165 |
|
|
|
|
|
|
$ |
159,026 |
|
|
$ |
7,746,857 |
|
EVP, Technology and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adam M. Koppel |
|
|
2014 |
|
|
$ |
306,923 |
|
|
$ |
2,000,000 |
|
|
$ |
4,109,423 |
|
|
$ |
279,441 |
|
|
|
|
|
|
$ |
16,810 |
|
|
$ |
6,712,597 |
|
SVP, Chief Strategy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Summary Compensation Table
(1) |
The amounts in column (d) for Ms. Karaboutis and Dr. Koppel reflect a one-time time-restricted cash payment made to them in 2014 at the time they commenced
employment with the Company to account for forfeitures of certain compensation from their prior employer. Ms. Karaboutis joined us in September 2014 and Dr. Koppel joined us in May 2014. |
(2) |
The amounts in column (e) reflect the grant date fair value computed in accordance with FASB ASC Topic 718 for awards granted during 2014, 2013 and 2012, excluding the
effect of estimated forfeitures. The amount for Dr. Sandrock represents grants of MSUs, CSPUs and RSUs. The amount for Ms. Karaboutis represents grants of MSUs and RSUs. The amounts for all other Named Executive Officers for 2014, 2013 and
2012 represent grants of MSUs and CSPUs. The fair value for MSU grants are estimated as of the date of grant using a lattice model with a Monte Carlo simulation. Assumptions used in this calculation are included on page F-39 in footnote 16 of our
2014 Annual Report on Form 10-K. The MSU and CSPU grants are estimated based on target performance. Further details on these awards and how the grant date fair values are determined can be found in the 2014 Grants of Plan-Based Awards Table. The
table below shows the target and maximum payouts possible for the 2014, 2013 and 2012 MSU and CSPU awards based on the value at the date of grant and the payout ranges. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
|
2013 |
|
|
|
|
2012 |
|
Executive Officer |
|
Target Payout |
|
|
Maximum Payout |
|
|
|
|
Target Payout |
|
|
Maximum Payout |
|
|
|
|
Target Payout |
|
|
Maximum Payout |
|
Dr. Scangos |
|
$ |
12,120,939 |
|
|
$ |
24,241,878 |
|
|
|
|
$ |
9,195,217 |
|
|
$ |
16,042,945 |
|
|
|
|
$ |
7,955,654 |
|
|
$ |
13,933,385 |
|
Mr. Clancy |
|
$ |
2,824,497 |
|
|
$ |
5,648,994 |
|
|
|
|
$ |
2,808,961 |
|
|
$ |
4,900,886 |
|
|
|
|
$ |
2,287,448 |
|
|
$ |
4,006,149 |
|
Dr. Sandrock |
|
$ |
4,319,927 |
|
|
$ |
8,639,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Karaboutis |
|
$ |
2,530,175 |
|
|
$ |
5,060,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Koppel |
|
$ |
4,109,423 |
|
|
$ |
8,218,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
The amounts in column (f) reflect actual bonuses paid under our annual bonus plan. |
(4) |
The amounts in column (g) reflect earnings in the Supplemental Savings Plan (SSP) that are in excess of 120% of the applicable federal long-term rate. The federal long-term
rates applied in this calculation are 4.11%, 2.74%, and 3.15% for 2014, 2013 and 2012, respectively. A description of the SSP is presented in the narrative preceding the 2014 Non-Qualified Deferred Compensation Table. |
|
|
|
|
|
47 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
(5) |
The amounts in column (h) for 2014 reflect the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer |
|
Company Matching Contribution to 401(k)
Plan Account |
|
|
Company
Contribution
to SSP Account |
|
|
Personal Health & Wellness, Financial and Tax
Planning Reimbursement(6) |
|
|
Value of
Company- Paid Life Insurance Premiums |
|
|
Other(7) |
|
Dr. Scangos |
|
|
|
|
|
$ |
1,000,529 |
|
|
|
|
|
|
$ |
954 |
|
|
|
|
|
Mr. Clancy |
|
$ |
15,600 |
|
|
$ |
311,228 |
|
|
$ |
1,936 |
|
|
$ |
1,282 |
|
|
|
|
|
Dr. Sandrock |
|
$ |
15,600 |
|
|
$ |
136,306 |
|
|
$ |
11,000 |
|
|
$ |
1,049 |
|
|
|
|
|
Ms. Karaboutis |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
191 |
|
|
$ |
158,835 |
|
Dr. Koppel |
|
$ |
13,327 |
|
|
$ |
2,815 |
|
|
|
|
|
|
$ |
668 |
|
|
|
|
|
(6) |
Dr. Scangos is only eligible to participate in the executive physical element of the reimbursement program. The amount for Dr. Sandrock includes the 2014 benefit of
$5,500 and reimbursement during 2014 of the 2013 benefit of $5,500. |
(7) |
The amount for Ms. Karaboutis reflects relocation benefits under our executive relocation policy. This amount includes a tax gross-up of $54,021. |
|
|
|
|
|
48 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
2014 Grants of Plan-Based
Awards
The following table shows additional information regarding all grants of plan-based awards made to our Named Executive Officers for the year
ended December 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
|
|
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards (#)(1) |
|
|
All Other
Stock Awards: Number of Shares or Units (#)
(i) |
|
|
Grant Date Fair Value of Stock Awards(2) (j) |
|
Name
(a) |
|
Grant Date (b) |
|
|
Notes |
|
|
Threshold (c) |
|
|
Target
(d) |
|
|
Maximum (e) |
|
|
|
|
Threshold (f) |
|
|
Target (g) |
|
|
Maximum (h) |
|
|
|
George A. Scangos |
|
|
2/12/2014 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,873 |
|
|
|
15,745 |
|
|
|
31,490 |
|
|
|
|
|
|
$ |
6,220,613 |
|
|
|
2/12/2014 |
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,133 |
|
|
|
18,265 |
|
|
|
36,530 |
|
|
|
|
|
|
$ |
5,900,326 |
|
|
|
2/12/2014 |
|
|
|
(5 |
) |
|
$ |
481,250 |
|
|
$ |
1,925,000 |
|
|
$ |
4,331,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul J. Clancy |
|
|
2/12/2014 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,835 |
|
|
|
3,670 |
|
|
|
7,340 |
|
|
|
|
|
|
$ |
1,449,962 |
|
|
|
2/12/2014 |
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,128 |
|
|
|
4,255 |
|
|
|
8,510 |
|
|
|
|
|
|
$ |
1,374,535 |
|
|
|
2/12/2014 |
|
|
|
(5 |
) |
|
$ |
96,508 |
|
|
$ |
386,032 |
|
|
$ |
868,572 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alfred W. Sandrock |
|
|
2/12/2014 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
|
|
2,000 |
|
|
|
4,000 |
|
|
|
|
|
|
$ |
790,198 |
|
|
|
2/12/2014 |
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,160 |
|
|
|
2,320 |
|
|
|
4,640 |
|
|
|
|
|
|
$ |
749,453 |
|
|
|
2/12/2014 |
|
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,335 |
|
|
|
6,670 |
|
|
|
13,340 |
|
|
|
|
|
|
$ |
2,780,276 |
|
|
|
|
2/12/2014 |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,740 |
|
|
$ |
2,500,330 |
|
|
|
|
2/12/2014 |
|
|
|
(5 |
) |
|
$ |
70,813 |
|
|
$ |
283,250 |
|
|
$ |
637,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adriana Karaboutis |
|
|
10/01/2014 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,198 |
|
|
|
6,395 |
|
|
|
12,790 |
|
|
|
|
|
|
$ |
2,530,175 |
|
|
|
|
10/01/2014 |
|
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,420 |
|
|
$ |
2,400,370 |
|
|
|
|
10/01/2014 |
|
|
|
(5 |
) |
|
$ |
82,500 |
|
|
$ |
330,000 |
|
|
$ |
742,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/01/2014 |
|
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,087 |
|
|
$ |
335,274 |
|
Adam M. Koppel |
|
|
6/02/2014 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,710 |
|
|
|
5,420 |
|
|
|
10,840 |
|
|
|
|
|
|
$ |
2,109,410 |
|
|
|
6/02/2014 |
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,143 |
|
|
|
6,285 |
|
|
|
12,570 |
|
|
|
|
|
|
$ |
2,000,013 |
|
|
|
6/02/2014 |
|
|
|
(5 |
) |
|
$ |
52,500 |
|
|
$ |
210,000 |
|
|
$ |
472,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the 2014 Grants of Plan-Based Awards Table
(1) |
Reflects the estimated future payouts of awards granted in 2014 under our annual bonus plan and our long-term incentive program for each Named Executive Officer as of the grant
date. |
(2) |
Represents the grant date fair value as determined in accordance with FASB ASC Topic 718. The fair value for MSU grants is estimated as of the date of grant using a lattice model
with a Monte Carlo simulation. Assumptions used in this calculation are included on page F-39 in footnote 16 of our 2014 Annual Report on Form 10-K. The grant date fair value of CSPUs was determined by multiplying the target award by the fair market
value of the Companys common stock on the grant date. The grant date fair value of RSUs was determined by multiplying the number of RSUs granted by the fair market value of the Companys common stock on the grant date.
|
(3) |
These amounts relate to the annual grant of MSUs. These are performance stock units tied to the growth in our stock price between the grant date and each of three annual vesting
dates. The number of MSUs earned will be determined on each vesting date based on the stock price growth rate between the 30-day average stock price on the grant date and the 30-day average stock price leading up to and including each of the
applicable vesting dates. Columns (f), (g), and (h) represent the number of MSUs earned at the threshold of 50%, target of 100%, and the maximum of 200%, respectively. The award becomes eligible to vest ratably over three years.
|
(4) |
These amounts relate to the annual grant of CSPUs. These are performance stock units tied to our 2014 financial performance and subsequently subject to time-based vesting. The
number of CSPUs earned is determined in early 2015 based on actual 2014 revenue, earnings per share and adjusted free cash flow performance versus target. Earned CSPUs will vest ratably over three years. These awards are settled in cash or stock at
the discretion of the Compensation Committee upon the vesting date based on the 30-day average of our stock price on the applicable vesting date. Columns (f),(g), and (h) represent the number of CSPUs earned if the Company Multiplier were 50%,
100%, and 200%, respectively. |
(5) |
These amounts relate to the 2014 annual bonus plan. The amounts shown in column (d) represent the 2014 target payout amount based on the target percentage applied to each
Named Executive Officers base salary as of December 31, 2014. For 2014, the bonus targets were 140% of base salary for Dr. Scangos, 55% of base salary Mr. Clancy and Ms. Karaboutis, 50% of base salary for Dr. Sandrock,
and 40% of base salary for Dr. Koppel. In 2014, because the Individual Multiplier was the same as the Company Multiplier under the 2014 annual bonus plan, the amounts in column (c), (d) and (e) represent a payment if the Company
Multiplier and the Individual Multiplier were each 50%, 100% and 150%, respectively. The amounts for Ms. Karaboutis and Dr. Koppel reflect annualized opportunities; the actual bonuses for 2014 for Ms. Karaboutis and Dr. Koppel
were prorated based on their respective hire dates. Actual amounts paid to each Named Executive Officer under the 2014 annual bonus plan are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
|
|
|
|
|
|
49 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
(6) |
These amounts reflect a one-time special retention grant of MSUs to Dr. Sandrock. Columns (f), (g), and (h) represent the number of MSUs earned at the threshold of 50%,
target of 100%, and the maximum of 200%, respectively. The award becomes eligible to vest ratably over four years starting on the second anniversary of the grant date. |
(7) |
The award in column (i) for Dr. Sandrock reflects a one-time special retention grant of time-based RSUs. The award becomes eligible to vest ratably over four years
starting on the second anniversary of the grant date. |
(8) |
The awards in column (i) for Ms. Karaboutis reflect time-based RSUs granted as sign-on awards in connection with her initial employment to account for forfeitures in
her prior employer upon joining with Biogen. Consistent with our LTI program for executives, Ms. Karaboutis was awarded these RSUs in lieu of CSPUs as her employment began well into the performance year. These RSUs vest ratably over three
years. |
|
|
|
|
|
50 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
Outstanding Equity Awards
at 2014 Fiscal Year-End
The following table summarizes the equity awards that were outstanding as of December 31, 2014 for each of our Named
Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
Plan Awards |
|
Name (a) |
|
Grant
Date
(b) |
|
|
Notes |
|
|
Number of Shares
or Units of Stock That Have
Not Vested(1) (c) |
|
|
Market Value
of Shares or Units of Stock That Have
Not Vested (2)
(d) |
|
|
Number of Unearned
Shares or Units That
Have Not Vested(3)
(e) |
|
|
Market Value
of Unearned Shares or Units That Have
Not Vested(2)
(f) |
|
George A. Scangos |
|
|
2/10/2011 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
18,833 |
|
|
$ |
6,392,862 |
|
|
|
2/9/2012 |
|
|
|
|
|
|
|
14,716 |
|
|
$ |
4,995,346 |
|
|
|
|
|
|
|
|
|
|
|
2/9/2012 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
22,544 |
|
|
$ |
7,652,561 |
|
|
|
2/12/2013 |
|
|
|
|
|
|
|
28,289 |
|
|
$ |
9,602,715 |
|
|
|
|
|
|
|
|
|
|
|
2/12/2013 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
27,569 |
|
|
$ |
9,358,297 |
|
|
|
2/12/2014 |
|
|
|
|
|
|
|
31,964 |
|
|
$ |
10,850,095 |
|
|
|
|
|
|
|
|
|
|
|
2/12/2014 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
31,490 |
|
|
$ |
10,689,281 |
|
Paul J. Clancy |
|
|
2/9/2011 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
4,691 |
|
|
$ |
1,592,360 |
|
|
|
2/8/2012 |
|
|
|
|
|
|
|
4,167 |
|
|
$ |
1,414,318 |
|
|
|
|
|
|
|
|
|
|
|
2/8/2012 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
6,385 |
|
|
$ |
2,167,388 |
|
|
|
2/12/2013 |
|
|
|
|
|
|
|
8,642 |
|
|
$ |
2,933,663 |
|
|
|
|
|
|
|
|
|
|
|
2/12/2013 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
8,422 |
|
|
$ |
2,858,848 |
|
|
|
2/12/2014 |
|
|
|
|
|
|
|
7,446 |
|
|
$ |
2,527,630 |
|
|
|
|
|
|
|
|
|
|
|
2/12/2014 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
7,340 |
|
|
$ |
2,491,563 |
|
Alfred W. Sandrock |
|
|
2/9/2011 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
1,824 |
|
|
$ |
619,157 |
|
|
|
2/8/2012 |
|
|
|
|
|
|
|
1,667 |
|
|
$ |
565,727 |
|
|
|
|
|
|
|
|
|
|
|
2/8/2012 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
2,555 |
|
|
$ |
867,295 |
|
|
|
3/1/2012 |
|
|
|
(3b |
) |
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
$ |
2,036,700 |
|
|
|
12/3/2012 |
|
|
|
(3b |
) |
|
|
|
|
|
|
|
|
|
|
834 |
|
|
$ |
283,101 |
|
|
|
2/12/2013 |
|
|
|
|
|
|
|
2,440 |
|
|
$ |
828,204 |
|
|
|
|
|
|
|
|
|
|
|
2/12/2013 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
2,381 |
|
|
$ |
808,230 |
|
|
|
2/12/2014 |
|
|
|
|
|
|
|
4,060 |
|
|
$ |
1,378,167 |
|
|
|
|
|
|
|
|
|
|
|
2/12/2014 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
4,000 |
|
|
$ |
1,357,800 |
|
|
|
2/12/2014 |
|
|
|
(3c |
) |
|
|
|
|
|
|
|
|
|
|
7,740 |
|
|
$ |
2,627,343 |
|
|
|
2/12/2014 |
|
|
|
(3d |
) |
|
|
|
|
|
|
|
|
|
|
13,340 |
|
|
$ |
4,528,263 |
|
Adriana Karaboutis |
|
|
10/1/2014 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
12,790 |
|
|
$ |
4,341,566 |
|
|
|
10/1/2014 |
|
|
|
(3b |
) |
|
|
|
|
|
|
|
|
|
|
7,420 |
|
|
$ |
2,518,719 |
|
|
|
12/1/2014 |
|
|
|
(3b |
) |
|
|
|
|
|
|
|
|
|
|
1,087 |
|
|
$ |
368,982 |
|
Adam M. Koppel |
|
|
6/2/2014 |
|
|
|
(3a |
) |
|
|
|
|
|
|
|
|
|
|
10,840 |
|
|
$ |
3,679,638 |
|
|
|
6/2/2014 |
|
|
|
|
|
|
|
10,999 |
|
|
$ |
3,733,526 |
|
|
|
|
|
|
|
|
|
Notes to the Outstanding Equity Awards at 2014 Fiscal Year End Table
(1) |
CSPUs were granted in 2014, 2013 and 2012. Reflects the number of CSPUs earned and eligible to vest based on our financial performance for each of 2014, 2013 and 2012, but that
have not satisfied the service-based vesting requirement as of December 31, 2014. CSPUs that have been earned upon satisfaction of the performance conditions vest ratably over three years. The cash payout for these awards will be based on our
60-day average stock price at vesting for awards granted prior to 2014 and the 30-day average stock price at vesting for awards granted in 2014. |
(2) |
The market value of awards is based on the closing price of our common stock on December 31, 2014 ($339.45), as reported by the NASDAQ Global Select Market.
|
|
|
|
|
|
51 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
(3) |
(a) MSUs were granted in 2014, 2013, 2012 and 2011. These are performance stock units tied to the growth in our stock price between the dates of grant and vesting. The number
granted is eligible to vest ratably over four years for grants made prior to 2014, and three years for grants made in 2014. The number and value shown in columns (e) and (f), respectively, reflect maximum performance results for MSUs granted in
each of these years based on year-end estimates trending above target. |
|
(b) |
Time-vested RSUs vest 33% on the first three anniversaries of grant, unless otherwise noted. |
|
(c) Reflects time-vested RSUs granted as a one-time special retention award to Dr. Sandrock, vesting ratably over four years starting on the second anniversary of the grant
date. |
|
(d) Reflects MSUs granted as a one-time special retention award to Dr. Sandrock, vesting ratably over four years starting on the second anniversary of the grant date.
|
|
|
|
|
|
52 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
2014 Stock Vested
Our executive officers must use pre-established trading plans to sell shares of Biogen stock. Trading plans may only be entered into when the
executive is not in possession of material non-public information about the Company, and we require a waiting period following the establishment of a trading plan before any trades may be executed. Our policy is designed to provide safeguards that
will allow our executives an opportunity to realize the value intended by the Company in granting equity-based LTI awards.
Our Named Executive Officers
are also subject to the share ownership guidelines described above in the subsection titled Share Ownership Guidelines.
The following table
shows information regarding vesting of stock awards for each Named Executive Officer during the year ended December 31, 2014. There were no stock option exercises during 2014 by any of our Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards |
|
Name(1) |
|
Number of Shares Acquired on Vesting(2) |
|
|
Value Realized
on Vesting(3) |
|
George A. Scangos |
|
|
101,639 |
|
|
$ |
31,170,459 |
|
Paul J. Clancy |
|
|
28,865 |
|
|
$ |
8,944,975 |
|
Alfred W. Sandrock |
|
|
17,703 |
|
|
$ |
5,716,328 |
|
Notes to the 2014 Stock Vested Table
(1) |
Ms. Karaboutis and Dr. Koppel did not have any awards that vested during 2014. |
(2) |
Upon vesting, the CSPUs were settled in cash while the MSUs and RSUs were settled in shares of our common stock. The number of actual shares of common stock acquired on vesting
after shares were withheld to pay the minimum withholding of taxes was as follows: |
|
|
|
|
|
|
|
|
|
Name |
|
MSUs |
|
|
RSUs |
|
Dr. Scangos |
|
|
32,506 |
|
|
|
|
|
Mr. Clancy |
|
|
8,368 |
|
|
|
|
|
Dr. Sandrock |
|
|
3,558 |
|
|
|
3,611 |
|
(3) |
The value realized for MSUs and RSUs are calculated as of the closing price of the common stock of the Company on the vesting date, multiplied by the total number of shares that
vested on such date. The value realized for CSPUs is calculated using the 60-day average closing price of the common stock of the Company through the vesting date. Under the terms of our 2008 Omnibus Equity Plan, Dr. Scangos CSPU payment
in cash for 2014 was capped at $12.0 million. |
|
|
|
|
|
53 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
2014 Non-Qualified
Deferred Compensation
Our Supplemental Savings Plan (SSP) covers our executive officers and other management employees in the U.S.
Employees whose base salary and annual cash incentives for the year exceed a specified limit ($260,000 in 2014) receive a Company-paid restoration match on the portion of their base salary, annual cash incentive and payments of cash-settled
performance units that exceeds this limit; the restoration match equals 6% of this excess compensation. The restoration match feature is intended to replace the amount of matching employer contributions that the participant would otherwise have been
eligible to receive under our 401(k) plan but for the $260,000 limit imposed by Section 401(a)(17) of the Internal Revenue Code. In addition, eligible employees may make voluntary contributions of up to 80% of their base salary and 100% of
their annual cash incentives, cash payments from CSPUs and, ending with the 2014 grants, their equity compensation to the SSP, and thereby defer income taxes on such amounts until distribution is made from the SSP. The Company does not match
participants voluntary contributions to the SSP. Our SSP provides for immediate vesting of the restoration match consistent with our immediate vesting of the Company match provided under our 401(k) plan.
Notional SSP accounts are maintained for each participant. Accounts include employee and employer contributions and
reflect the performance of notional investments selected by the employee or a default investment if the employee does not make a selection. These notional investment options include the mutual funds offered under our 401(k) plan as well as a fixed
rate option which earns a rate of return determined each year by the Companys retirement committee. For contributions to the SSP fixed rate option in 2014, this rate of return is set at 6.00%. Contributions to the fixed rate option continue to
earn at the rate of return that was in effect during the year of contribution. The excess of the interest rate paid on the fixed rate option above 120% of the applicable federal long-term rate (compounded quarterly) earned by our Named Executive
Officers during 2014 is shown in the Summary Compensation Table. We fund the SSP liabilities through corporate owned life insurance (COLI) which we purchase with the written consent of SSP participants. We believe that the COLI policies will be
sufficient to cover plan liabilities through the projected payout date so the plan will not require direct funding by the Company.
The following table shows a summary of all
contributions to, earnings on and distributions received from the non-qualified deferred compensation plan for each of our Named Executive Officers for the year ended December 31, 2014. The account balances as of year-end include all
contributions and interest amounts earned by our Named Executive Officers through the end of 2014 plus the SSP contributions that the Company made in early 2015 based on earnings in the last quarter of 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Executive Contributions in Last Fiscal Year(1),(2) |
|
|
Company Contributions in Last Fiscal Year(3) |
|
|
Aggregate Earnings in Last Fiscal Year(4) |
|
|
Aggregate Distributions in Last Fiscal Year |
|
Aggregate Balance at Last Fiscal Year-End(5) |
|
George A. Scangos |
|
$ |
1,205,644 |
|
|
$ |
1,000,529 |
|
|
$ |
488,155 |
|
|
|
|
$ |
7,183,562 |
|
Paul J. Clancy |
|
|
|
|
|
$ |
311,228 |
|
|
$ |
65,223 |
|
|
|
|
$ |
1,164,937 |
|
Alfred W. Sandrock |
|
|
|
|
|
$ |
136,306 |
|
|
$ |
58,024 |
|
|
|
|
$ |
924,760 |
|
Adriana Karaboutis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adam M. Koppel |
|
|
|
|
|
$ |
2,815 |
|
|
|
|
|
|
|
|
$ |
2,815 |
|
Notes to the 2014 Non-Qualified Deferred Compensation Table
(1) |
The amounts in this column are also included in columns (c), (e) and (f) of the Summary Compensation Table as non-qualified deferral of salary, non-qualified deferral
of CSPU payments and non-qualified deferral of payments under our annual bonus plan, respectively. |
|
|
|
|
|
54 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
(2) |
The following table lists the compensation deferrals during 2013 and 2012 by the Named Executive Officers, as reported in the proxy statement for our 2014 and 2013 annual meeting
of stockholders. |
|
|
|
|
|
|
|
|
|
|
|
Amounts Previously Reported as Deferred |
|
Name |
|
2013 |
|
|
2012 |
|
George A. Scangos |
|
$ |
1,285,526 |
|
|
$ |
939,423 |
|
(3) |
The amounts in this column are also included in column (h) of the Summary Compensation Table for 2014 as Company contributions to the SSP. |
(4) |
Earnings in excess of 120% of the applicable federal long-term rate are reported in column (g) of the Summary Compensation Table for 2014 for Dr. Scangos ($86,634),
Mr. Clancy ($25,454) and Dr. Sandrock ($25,042). Ms. Karaboutis and Dr. Koppel did not have any portion of their account allocated to the fixed-rate option. |
(5) |
This column includes Company contributions and compensation earned and deferred in prior years, which was disclosed in the prior proxy statements. |
Potential Payments Upon Termination or Change in Control
Executive Severance Policy
Definition of Key Terms Relating to our Executive Severance Plan
Our Executive Severance Policy and benefits
refer to certain key terms. These terms are defined in our 2008 Omnibus Equity Plan. In February 2014, we amended our 2008 Omnibus Equity Plan to make certain modifications to the definition of a corporate change in control. The following is a
summary of these terms as amended:
|
|
Corporate Change in Control: The acquisition by one or more persons of more than 50% of our outstanding stock, the consummation of a merger or
consolidation of the Company with any other company where our stockholders own less than 50% of the voting securities of the surviving company immediately after such merger or consolidation, or a change in a majority of our continuing directors
within a twenty-four month period. Continuing directors includes directors as of February 12, 2014 and directors serving on the Board after that date who were appointed, nominated for reelection or elected to the Board with the approval of a
majority of the continuing directors who were members of the Board at the time of such appointment, nomination or election. |
|
|
Corporate Transaction: A merger or consolidation in which Biogen is not the surviving corporation or which results in the acquisition of all or
substantially all of the Companys then outstanding stock by a single person or entity or group of persons or entities acting in concert, or a liquidation, dissolution or sale of all or substantially all of the assets of Biogen.
|
|
|
Involuntary Employment Action: Following a corporate change in control or corporate transaction, a termination by the Company without cause or a
resignation by the employee because of a material reduction in his or her authority, duties and responsibilities, a reduction in his or her base pay or target bonus opportunity or a relocation of his or her principal office by more than 100 miles
roundtrip. |
Arrangements for Mr. Clancy, Ms. Karaboutis, and Drs. Sandrock and Koppel
Each of our Named Executive Officers other than Dr. Scangos participate in executive severance plans under which they were eligible to receive the following
benefits if certain events occurred during 2014:
|
|
In the event of a termination other than for cause (as defined in our 2008 Omnibus Equity Plan) and other than for reason of the executives death or
disability, a lump sum severance payment equal to the following: |
|
|
|
In the case of Named Executive Officers who are executive vice presidents, which includes Mr. Clancy and Ms. Karaboutis, a minimum of twelve months of
such Named Executive Officers then annual base salary and target annual cash incentive, with an additional two and one-half months for each full year of service to a maximum benefit of 21 months; and |
|
|
|
In the case Named Executive Officers who are senior vice presidents, which includes Drs. Sandrock and Koppel, a minimum of nine months of such Named Executive
Officers then annual base salary and target annual cash incentive, with an additional two months for each full year of service to a maximum benefit of 18 months.
|
|
|
|
|
|
55 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
The number of months of severance a Named Executive Officer is entitled to is referred to herein as the
severance period.
|
|
If, within two years following a corporate transaction or a corporate change in control, the Named Executive Officer experiences a termination other than for
cause or for reason of death or disability (as defined in our 2008 Omnibus Equity Plan) or experiences an involuntary employment action (as defined in our 2008 Omnibus Equity Plan), a lump sum severance payment equal to:
|
|
|
|
Two times the Named Executive Officers then annual base salary plus target annual bonus in the case of Named Executive Officers who are executive vice
presidents (Mr. Clancy and Ms. Karaboutis); and |
|
|
|
1.5 times that Named Executive Officers then annual base salary plus target annual bonus in the case of Named Executive Officers who are senior vice
presidents (Drs. Sandrock and Koppel). |
These payments are in lieu of any payment in the preceding paragraph.
The payment of these severance benefits is conditioned upon execution of an irrevocable release in favor of the Company. These executive severance
arrangements do not pay severance upon a termination for cause, voluntary retirement or upon death or disability.
Our annual bonus plan provides for a
prorated target bonus payment for terminations due to the death or disability of the participant, and for terminations arising from an involuntary employment action. As the annual bonus plan provides for payment of a full bonus to any participant
remaining employed on the last day of the plan year, this amount is not included in the Potential Post-Termination Payments Table.
In any case where
severance is payable under the plan, our Named Executive Officers would also receive continuation of medical and dental insurance benefits until the earlier of the last date of the severance period or the date the executive becomes eligible to
participate in another employers medical and dental insurance plans. Named Executive Officers who are executive vice presidents are also provided up to twelve months of executive-level outplacement services at our cost and Named Executive
Officers who are senior vice presidents are provided up to nine months of these services.
Dr. Scangos Arrangements
We have an employment agreement with Dr. Scangos. The current term of his agreement ends July 15, 2015, at which time the term will automatically renew for additional 12 month periods until the
agreement is otherwise terminated in accordance with its terms. Under Dr. Scangos employment agreement, if his employment is terminated by the Company without cause or if he terminates his employment for good reason (referred to in his
employment agreement as an involuntary employment action), then he will be entitled to a lump sum payment of cash severance in the amount of two times his annual base salary and target annual bonus. In addition, all of his outstanding awards under
the Companys long-term incentive program will continue to vest as if he had remained employed by the Company for the duration of the vesting period and all awards that require exercise by him will remain exercisable until the earlier of three
years after the involuntary employment action or the original expiration date. Dr. Scangos would also receive continuation of medical and dental benefits until the earlier of 24 months following the date his employment terminates or the date
upon which he becomes eligible to receive substantially comparable benefits through another employer. In addition, he would be entitled to receive a pro rata portion of his annual cash bonus for the year such termination occurs based on actual
performance or, in the event of a termination within two years following a change in control, the target annual bonus. Dr. Scangos would also be provided up to nine months of executive-level outplacement services at our cost. The payment of
Dr. Scangos severance benefits is conditioned upon execution of general release in favor of the Company.
Further, under
Dr. Scangos employment agreement, if Dr. Scangos retires, all of his outstanding awards under the Companys long-term incentive program will continue to vest as if he had remained employed by the Company for the duration of the
vesting period and all awards that require exercise by him will remain exercisable until the earlier of three years after his retirement or the original expiration date. If Dr. Scangos employment is terminated by reason of death or
disability, all of his outstanding awards under the Companys long-term incentive program will vest in full (at the target level) upon the termination date and Dr. Scangos or his legal representative will have until the earlier of one year
after the termination date or the original expiration date to exercise awards that require exercise.
|
|
|
|
|
56 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
Excise Tax Provisions
Before June 2009, we maintained an excise tax gross-up policy for all of our executives, including certain of our Named Executive Officers. Under this policy, if payments to these executive officers in the event of
a corporate transaction or corporate change in control were subject to excise tax under Internal Revenue Code Section 4999, we would pay the executive officer an additional amount that equals the amount of the excise tax, plus the income and
other payroll taxes arising from our payment of the excise tax amount (280G tax gross-up), so that the executive officer realized the full intended benefit.
In June 2009, we changed our excise tax gross-up policy so that newly-hired executives are not eligible for any 280G tax gross-up but may elect to have severance payments reduced to an amount that will not be
subject to excise tax. Consistent with this policy, Drs. Scangos and Koppel and Ms. Karaboutis are not eligible for a 280G tax gross-up. As they were already eligible for this benefit prior to June 2009, Mr. Clancy and Dr. Sandrock
remain eligible for a 280G tax gross-up.
Awards Under Equity Plans
Under the provisions of our equity plans, if a corporate change in control occurs, all outstanding options and stock awards under our equity plans granted prior to February 12, 2014 become fully exercisable or
vested, as the case may be, and options will remain exercisable until the original option expiration date.
As amended in February 2014, awards granted
under our 2008 Omnibus Equity Plan on or after February 12, 2014,
unless otherwise determined by the Compensation Committee at the time of grant, will not vest or become exercisable upon a corporate change in control (i.e., upon a single trigger),
but will vest or become exercisable in full immediately prior to an involuntary employment action that occurs within two years following a corporate change in control (i.e., upon a double trigger).
In the event of a corporate transaction, we can either cause the surviving corporation to assume all equity awards or accelerate their vesting and exercisability
immediately before the corporate transaction. If the equity awards are assumed and an executive officers employment is terminated in an involuntary employment action within two years following the corporate transaction, the equity awards that
are assumed will become fully vested and, if applicable, exercisable. Under our equity plans, any assumed awards that become vested will remain exercisable through the earlier of twelve months from the termination date or the original option
expiration date.
If the holder of an equity award retires, which is defined under our equity plans as leaving the employment of Biogen after reaching
age 55 with at least ten years of service, each then outstanding equity award not yet vested or exercisable will become immediately vested or exercisable upon such termination at a rate of 50% of the shares unvested at the time of retirement plus an
additional 10% of the shares for each full year of service beyond ten years of service. Options vested under these provisions remain exercisable for 36 months from retirement or until the original option expiration date, if sooner. Dr. Sandrock
is the only Named Executive Officer eligible for potential payments under this retirement provision for grants made to him prior to 2014.
|
|
|
|
|
57 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
Potential Post-Termination Payments Table
The following table summarizes the potential payments to each Named Executive Officer under various termination events. The table assumes that
the event occurred on December 31, 2014, and the calculations use the closing price of our common stock as reported by the NASDAQ Global Select Market on December 31, 2014, which was $339.45 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Payment Elements(1)
(a) |
|
Retirement(2) (b) |
|
|
Involuntary by the Company
Without Cause and Not Following a
Corporate Transaction or Corporate
Change in Control (c) |
|
|
Involuntary
Employment Action Following
a Corporate
Transaction or Corporate
Change in Control
(d) |
|
George A. Scangos |
|
|
|
|
|
|
|
|
|
Severance |
|
|
|
|
|
$ |
6,600,000 |
|
|
$ |
6,600,000 |
|
Performance-based Restricted Stock Units |
|
$ |
54,804,471 |
|
|
|
|
|
|
$ |
54,804,471 |
|
Medical, Dental and Vision |
|
|
|
|
|
$ |
25,638 |
|
|
$ |
25,638 |
|
Total(3) |
|
$ |
54,804,471 |
|
|
$ |
6,625,638 |
|
|
$ |
61,430,109 |
|
Paul J. Clancy |
|
|
|
|
|
|
|
|
|
Severance |
|
|
|
|
|
$ |
1,903,839 |
|
|
$ |
2,175,816 |
|
Performance-based Restricted Stock Units |
|
|
|
|
|
|
|
|
|
$ |
14,881,539 |
|
Medical, Dental and Vision |
|
|
|
|
|
$ |
32,424 |
|
|
$ |
37,056 |
|
280G Tax
Gross-Up(4) |
|
|
|
|
|
|
|
|
|
|
|
|
Total(3) |
|
|
|
|
|
$ |
1,936,263 |
|
|
$ |
17,094,411 |
|
Alfred W. Sandrock |
|
|
|
|
|
|
|
|
|
Severance |
|
|
|
|
|
$ |
1,274,625 |
|
|
$ |
1,274,625 |
|
Non-Performance- and Performance-based Restricted Stock Units |
|
$ |
6,008,414 |
|
|
|
|
|
|
$ |
13,292,332 |
|
Medical, Dental and Vision |
|
|
|
|
|
$ |
27,792 |
|
|
$ |
27,792 |
|
280G Tax
Gross-Up(4) |
|
|
|
|
|
|
|
|
|
|
|
|
Total(3) |
|
$ |
6,008,414 |
|
|
$ |
1,302,417 |
|
|
$ |
14,594,749 |
|
Adriana Karaboutis |
|
|
|
|
|
|
|
|
|
Severance |
|
|
|
|
|
$ |
930,000 |
|
|
$ |
1,860,001 |
|
Non-Performance- and Performance-based Restricted Stock Units |
|
|
|
|
|
|
|
|
|
$ |
5,129,768 |
|
Medical, Dental and Vision |
|
|
|
|
|
$ |
19,288 |
|
|
$ |
38,576 |
|
Total(3) |
|
|
|
|
|
$ |
949,288 |
|
|
$ |
7,028,345 |
|
Adam M. Koppel |
|
|
|
|
|
|
|
|
|
Severance |
|
|
|
|
|
$ |
551,250 |
|
|
$ |
1,102,500 |
|
Performance-based Restricted Stock Units |
|
|
|
|
|
|
|
|
|
$ |
5,847,620 |
|
Medical, Dental and Vision |
|
|
|
|
|
$ |
13,896 |
|
|
$ |
27,792 |
|
Total(3) |
|
|
|
|
|
$ |
565,146 |
|
|
$ |
6,977,912 |
|
Notes to the Potential Post-Termination Payments Table
(1) |
This table excludes payments under our annual bonus plan which would have been earned based on employment on December 31, 2014. In the event of an executives death or
disability, the value of the accelerated restricted stock units would be as shown in column (d). |
(2) |
Dr. Scangos and Dr. Sandrock were the only Named Executive Officers eligible for potential payments upon retirement at December 31, 2014. Under
Dr. Scangos employment agreement, upon retirement, all of his outstanding awards under the Companys long-term incentive program will continue to vest as if he had remained employed by the Company for the duration of the vesting
period and all awards that require exercise by him will remain exercisable until the earlier of three years after retirement or the original expiration date. Under Dr. Sandrocks retention award agreement, all equity awards granted in 2014
and beyond are not eligible for accelerated vesting upon retirement. |
(3) |
The Named Executive Officers are also provided up to 12 months of executive-level outplacement services at a cost of $38,000 at the executive vice president level and nine months
at a cost of $28,000 at the senior vice president level. |
(4) |
Based on the assumptions described above and assuming that (a) all outstanding awards are cashed out in connection with the applicable event and valued using a price per
share equal to $339.45 and (b) equity awards granted within one year of the change in control transaction were presumed to be in contemplation of the transaction, no amounts payable to these executives will be subject to the so-called golden
parachute tax and the executive would not be entitled to an excise tax gross-up. |
|
|
|
|
|
58 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
Director Compensation
This section describes our compensation program for our non-employee directors and shows the compensation paid to or earned by our non-employee
directors during 2014.
Dr. Scangos receives no compensation for his service on our Board of Directors. The following table presents the retainers
and fees for all non-employee members of our Board of Directors in effect from January 1 through June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
Retainers |
|
Through 6/30/14 |
|
|
Fees |
|
Through 6/30/14 |
|
Annual Board Retainer |
|
$ |
50,000 |
|
|
Board of Directors Meetings (per meeting day): |
|
|
|
|
Annual Retainers (in addition to Annual Board Retainer): |
|
|
|
|
|
In-person attendance |
|
$ |
2,500 |
|
|
|
|
|
|
Telephonic attendance |
|
$ |
1,500 |
|
Independent Chairman of the Board |
|
$ |
60,000 |
|
|
Committee Meetings (per meeting) |
|
$ |
1,500 |
|
Finance and Audit Committee Chair |
|
$ |
20,000 |
|
|
|
|
|
|
|
Compensation and Management Development Committee Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Corporate Governance Committee Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Science and Technology Committee Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Finance and Audit Committee Member (other than Chair) |
|
$ |
5,000 |
|
|
|
|
|
|
|
Effective July 1, 2014, following changes in our committee composition and Chairman leadership, the retainers and fees for our
non-employee directors were amended as follows:
|
|
|
|
|
|
|
|
|
|
|
Retainers |
|
Effective 7/1/14 |
|
|
Fees |
|
Effective 7/1/14 |
|
Annual Board Retainer |
|
$ |
65,000 |
|
|
Board of Directors Meetings (per meeting day): |
|
|
|
|
Annual Retainers (in addition to Annual Board Retainer): |
|
|
|
|
|
In-person attendance |
|
$ |
2,500 |
|
|
|
|
|
|
Telephonic attendance |
|
$ |
1,500 |
|
Independent Chairman of the Board |
|
$ |
50,000 |
|
|
Committee Meetings (per meeting) |
|
$ |
1,500 |
|
Audit Committee Chair |
|
$ |
25,000 |
|
|
Attendance at Annual Science and Technology Committee Portfolio Review (per day) |
|
|
|
|
Compensation and Management Development Committee Chair |
|
$ |
20,000 |
|
|
|
$ |
1,500 |
|
Corporate Governance Committee Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Finance Committee Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Risk Committee Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Science and Technology Committee Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Audit Committee Member (other than Chair) |
|
$ |
5,000 |
|
|
|
|
|
|
|
Our non-employee directors are also eligible to be paid a fee of $1,000 for each full day of service to the Company other than in
connection with meetings of our Board of Directors or its committees.
Our directors may defer all or part of their cash compensation and, ending with
the 2014 grants, their equity compensation under our Voluntary Board of Directors Savings Plan, which is similar to our Supplemental Savings Plan described in the narrative preceding the 2014 Non-Qualified Deferred Compensation Table, but without
any Company matching features. If directors choose to defer compensation, the plan periodically will credit their accounts with amounts of deemed investment
|
|
|
|
|
59 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
results as if their deferred compensation was invested in notional investments selected by the director or a default investment if the director does not make a selection. These notional
investment options include the mutual funds available under our 401(k) plan as well as a fixed rate option which earns a rate of return determined each year by the Companys retirement committee. For director contributions to the fixed rate
option in 2014, this rate of return is set at 6.00%. Contributions to the fixed rate option continue to be credited with the rate of return that was in effect during the year of contribution.
Directors are also reimbursed for actual expenses incurred in attending meetings of our Board of Directors and its committees, as well as service to our Board of Directors unrelated to such meetings.
Awards Under Our Non-Employee Directors Equity Plan
Our 2006 Non-Employee Directors Equity Plan was approved by stockholders at the 2006 annual meeting of stockholders, and approved in amended form at the 2010 annual meeting of stockholders. The term of the plan is
scheduled to expire on May 25, 2016. As described in Proposal 5, we are asking stockholders to approve an amendment to the 2006 Non-Employee Directors Equity Plan to extend the term of the plan until June 10, 2025.
General Provisions of the Plan
Non-employee
directors receive grants effective with the date of each annual meeting of stockholders (or a pro rata grant upon election other than at an annual meeting of stockholders), up to an annual maximum of 17,500 shares of our common stock (or 30,000
shares for the independent Chairman of the Board). Annual grants vest on the one-year anniversary of the date of grant or over a longer period in the discretion of the Compensation Committee.
In 2014, grants to directors were recommended by both the Compensation Committee and the Corporate Governance Committee, and approved by our Board of Directors, with the independent Chairman recused from discussion
and voting upon his awards.
Grants During 2014
In June 2014, the Compensation Committee and the Corporate Governance Committee recommended, and our Board of Directors approved annual grants to non-employee directors with a grant date fair value of $270,000 for
each director and an additional grant of $135,000 for the independent Chairman. While the grant date fair values were above the median of our peer group used for compensation purposes (as described above), our cash compensation for directors is
below the median of that same peer group. The June 2014 annual grants were awarded in the form of restricted stock units vesting in full on the first anniversary of the grant date.
As more fully described in Proposal 5, awards granted under the 2006 Non-Employee Directors Equity Plan will be subject to accelerated vesting upon termination of the directors service by reason of death,
disability, retirement and upon a change in control (as such terms are defined in the plan). In addition, director awards will become fully vested upon an involuntary termination of the directors service within two years following certain
mergers or other corporate transactions, as defined in the plan.
Our directors must use pre-established trading plans to sell shares of our common
stock. Trading plans may only be entered into when the director is not in possession of material non-public information about the Company, and we require a waiting period following the establishment of a trading plan before any trades may be
executed. Our policy is designed to provide safeguards that will allow our directors to have an opportunity to realize the value intended by the Company in granting equity-based awards.
We maintain share ownership guidelines for our non-employee directors. A summary of our share ownership guidelines for our directors is set forth below.
|
|
|
Position |
|
Share Ownership Requirement(1) |
Non-Employee
Chairman |
|
Number of shares equal in value to 5x the total annual cash retainer for the Chair Position and the Chairs Board retainer |
Non-Employee
Directors (excluding Chairman) |
|
Number of shares equal in value to 5x the annual cash retainer for Board members |
(1) |
The director has five years from the date of initial election or appointment to meet the stock ownership requirement.
|
|
|
|
|
|
60 |
|
|
|
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION (continued)
2014 Director
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name (a) |
|
Fees Earned
or Paid in Cash
(b) |
|
|
Stock Awards(1) (c) |
|
|
Change in Pension Value and
Nonqualified Deferred Compensation Earnings(2)
(d) |
|
|
All Other Compensation(3) (e) |
|
Total
(f) |
|
Alexander J. Denner |
|
$ |
114,625 |
|
|
$ |
269,509 |
|
|
|
|
|
|
|
|
$ |
384,134 |
|
Caroline D. Dorsa |
|
$ |
121,500 |
|
|
$ |
269,509 |
|
|
|
|
|
|
|
|
$ |
391,009 |
|
Nancy L. Leaming |
|
$ |
124,875 |
|
|
$ |
269,509 |
|
|
|
|
|
|
|
|
$ |
394,384 |
|
Richard C. Mulligan |
|
$ |
100,625 |
|
|
$ |
269,509 |
|
|
|
|
|
|
|
|
$ |
370,134 |
|
Robert W. Pangia |
|
$ |
122,000 |
|
|
$ |
269,509 |
|
|
|
$31,226 |
|
|
|
|
$ |
422,735 |
|
Stelios Papadopoulos |
|
$ |
143,000 |
|
|
$ |
404,263 |
|
|
|
|
|
|
|
|
$ |
547,263 |
|
Brian S. Posner |
|
$ |
119,625 |
|
|
$ |
269,509 |
|
|
|
|
|
|
|
|
$ |
389,134 |
|
Eric K. Rowinsky |
|
$ |
106,000 |
|
|
$ |
269,509 |
|
|
|
|
|
|
|
|
$ |
375,509 |
|
Lynn Schenk |
|
$ |
135,500 |
|
|
$ |
269,509 |
|
|
|
|
|
|
|