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TABLE OF CONTENTS
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 (Amendment No. )
Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 |
BEIGENE, LTD. | ||||
(Name of Registrant as Specified In Its Charter) | ||||
N/A | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | 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: | |||
(5) | Total fee paid: | |||
o | Fee paid previously with preliminary materials. | |||
o | 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.: | |||
(3) | Filing Party: | |||
(4) | Date Filed: |
This document shall also serve as a circular to holders of the ordinary shares of BeiGene, Ltd. for the purposes of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.
BEIGENE, LTD.
(NASDAQ Trading Symbol: BGNE; HKEx Stock Code: 06160)
c/o Mourant Ozannes CorporateGovernance Services (Cayman) Limited
94 Solaris Avenue, Camana Bay
Grand Cayman KY1-1108
Cayman Islands
NOTICE OF 2017 ANNUAL2018 EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 2017 Annual2018 Extraordinary General Meeting of Shareholders (the "EGM") of BeiGene, Ltd. (the "Company") will be held on June 1, 2017,December 7, 2018, at 2:8:30 p.m.a.m. local time, at the offices of Ernst & Young at EY Tower, 100 Adelaide St. W, Toronto, Canada.Bullpen, Charles Unit 4A, The Albany, 127 South Ocean Boulevard, New Providence, The Bahamas. The purpose of the meeting is to consider and pass the following:
1.
2. special resolution: to adopt the Fifth Amended and Restated Memorandum and Articles of Association of the Company to comply with the Rules (the "HK Listing Rules") Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as described in this Proxy Statement;
3. ordinary resolution: within the parameters of Rule 13.36 of the HK Listing Rules, to approve the granting of a share issue mandate to the Board of Directors to issue, allot or deal with unissued ordinary shares and/or American Depositary Shares ("ADSs") not exceeding 20% of the total number of issued ordinary shares of the Company as at the date of passing of such proposed ordinary resolution up to the next annual general meeting ("AGM") of the Company, subject to the conditions described in this Proxy Statement;
4. ordinary resolution: to re-elect Timothy Chenauthorize the Company and its underwriters, at their sole discretion, to serve asallocate to each of Baker Bros. Advisors LP and Hillhouse Capital Management, Ltd. and parties affiliated with each of them (the "Existing Shareholders"), up to a Class I director untilmaximum amount of shares in order to maintain the 2020 annualsame shareholding percentage of each of the Existing Shareholders (based on the then-outstanding share capital of the Company) before and after the allocation of the corresponding securities issued pursuant to an offering conducted pursuant to the general meetingmandate set forth above for a period of shareholders and until his successor is duly elected and qualified,five years, which period will be subject to his earlier resignation or removal;
5. ordinary resolution: to re-elect John V. Oyler to serve as a Class I director untilapprove the 2020 annual general meeting of shareholdersSecond Amended and until his successor is duly electedRestated 2016 Share Option and qualified, subject to his earlier resignation or removal;
6. ordinary resolution: to ratifyapprove the appointment of Ernst & Young Hua Ming LLP as the Company's independent registered public accounting firm for the year ending December 31, 2017;Second Amended and
7. to transact such other business as may properly come before the meeting and any adjournment or postponement.
The proposals for the election of directors relate solely to the election of Class I directors nominated by the Board of Directors.
Our Board of Directors has fixed the close of business5:00 p.m. (Cayman Islands Time) on April 20, 2017October 25, 2018 as the record date. Holders of record of our ordinary shares as of the close of business5:00 p.m. (Cayman Islands Time) on the record date are entitled to attend and vote at the meeting and any adjournment or postponement. Holders of American Depositary Shares, orrecord of our ADSs, each representing 13 of our ordinary shares, of record as of the record date who wish to exercise their voting rights for the underlying ordinary shares must act through Citibank, N.A., the depositary of the ADSs.
The accompanying Proxy Statement more fully describes the details of the business to be conducted at the Annual Meeting.EGM. After careful consideration, our Board of Directors has approved the proposals and recommends that you vote FOR each director nominee and FOR each other proposal described in thethis Proxy Statement.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this Proxy Statement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Proxy Statement.
This Proxy Statement, for which the directors collectively and individually accept full responsibility, includes particulars given in compliance with the HK Listing Rules for the purpose of giving information with regard to the Company. The directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this Proxy Statement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this Proxy Statement misleading.
As at the date of this Proxy Statement, the Board of Directors of the Company comprises Mr. John V. Oyler as Chairman and Executive Director, Dr. Xiaodong Wang as Non-executive Director, and Mr. Timothy Chen, Mr. Donald W. Glazer, Mr. Michael Goller, Mr. Ranjeev Krishana, Mr. Thomas Malley, Mr. Jing-Shyh (Sam) Su and Mr. Qingqing Yi as Independent Non-executive Directors.
Your vote is important. As promptly as possible, you are urged to complete, sign, date and return the accompanying proxy form to Mourant Ozannes CorporateGovernance Services (Cayman) Limited (for holders of our ordinary shares) before the timeshares registered on our Cayman Islands register) and to Computershare Hong Kong Investor Services Limited (for holders of the Annual Meetingour ordinary shares registered on our Hong Kong register) no later than 5:00 p.m., Hong Kong Time, on December 4, 2018 or your voting instructions to Citibank, N.A. (for holders of theour ADSs) no later than 10:00 a.m., New York Time, on May 23, 2017December 3, 2018 if you wish to exercise your voting rights.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON JUNE 1, 2017DECEMBER 7, 2018
The accompanying Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2016 will also be available to the public at http://ir.beigene.comwww.beigene.com under "Annual Reports.""Investors—NASDAQ investors" and "—HKEX investors", on the website of the U.S. Securities and Exchange Commission (www.sec.gov) and on the website of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk). The form of proxy for use at the EGM is also enclosed. Such form of proxy is also published on the websites of the Company (www.beigene.com), the U.S. Securities and Exchange Commission (www.sec.gov), and Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk).
By Order of the Board of Directors, | ||
|
April 26, 2017November 8, 2018
Notice to holders of the ordinary shares of BeiGene, Ltd:
If you are in any doubt as to any aspect of this Proxy Statement or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this Proxy Statement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Proxy Statement.
BEIGENE, LTD.
PROXY STATEMENT FOR2017 ANNUAL
2018 EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TABLE OF CONTENTS
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GENERAL INFORMATION | 1 | |||
OVERVIEW OF PROPOSALS | 6 | |||
| 7 | |||
PROPOSAL 2 RESTATED ARTICLES | 8 | |||
PROPOSAL 3 | 10 | |||
PROPOSAL 4 CONNECTED PERSON PLACING AUTHORIZATION | 11 | |||
PROPOSAL 5 APPROVAL OF THE BEIGENE, LTD. SECOND AMENDED AND RESTATED 2016 SHARE OPTION AND INCENTIVE PLAN | 14 | |||
PROPOSAL 6 APPROVAL OF THE BEIGENE, LTD. SECOND AMENDED AND RESTATED 2018 EMPLOYEE SHARE PURCHASE PLAN | 25 | |||
TRANSACTION OF OTHER BUSINESS | 29 | |||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | ||||
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DELIVERY OF PROXY MATERIALS | 34 |
i
BEIGENE, LTD.
PROXY STATEMENT
FOR THE 2017 ANNUAL2018 EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of BeiGene, Ltd. (the "Board of Directors") of BeiGene, Ltd. for use at its 2017 Annual2018 Extraordionary General Meeting of Shareholders (the "Annual Meeting""EGM") to be held on June 1, 2017December 7, 2018 at 2:8:30 p.m.a.m. local time at the offices of Ernst & Young at EY Tower, 100 Adelaide St. W, Toronto Canada,Bullpen, Charles Unit 4A, The Albany, 127 South Ocean Boulevard, New Providence, The Bahamas, for the purpose of considering and, if thought fit, passing the resolutions specified in the Notice of AnnualExtraordinary General Meeting. This Proxy Statement is being mailed to shareholders on or about April 27, 2017.November 9, 2018.
For a proxy to be effective, it must be properly executed and dated and lodged (together with a duly signed and dated power of attorney or other authority (if any) under which it is executed (or a notarially certified copy of such power of attorney or other authority)) at the offices of our registrar in the Cayman Islands, Mourant Ozannes CorporateGovernance Services (Cayman) Limited (the "Registrar""Cayman Registrar") (for holders of our ordinary shares registered on our Cayman Islands register of members (the "Cayman Register")) or at the offices of our registrar in Hong Kong, Computershare Hong Kong Investor Services Limited (the "HK Registrar") (for holders of our ordinary shares registered on our Hong Kong register of members (the "HK Register")) so as to be received before the time of the Annual Meeting.no later than 5:00 p.m., Hong Kong Time, on December 4, 2018. Each proxy properly tendered will, unless otherwise directed by the shareholder, be votedvoted:
(1) FOR the director nomineesadoption of an official Chinese company name "" for BeiGene, Ltd. as described in this Proxy Statement,Statement;
(2) FOR the appointmentadoption of Ernst & Young Hua Ming LLPthe Fifth Amended and Restated Memorandum and Articles of Association of the Company (the "Restated Articles") to comply with the Rules (the "HK Listing Rules") Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as described in this Proxy Statement;
(3) FOR the Company's independent registered public accounting firmapproval, within the parameters of Rule 13.36 of the HK Listing Rules, of the granting of a share issue mandate to the Board of Directors to issue, allot or deal with unissued ordinary shares and/or American Depositary Shares ("ADSs") not exceeding 20% of the total number of issued ordinary shares of the Company as at the date of passing of such proposed ordinary resolution up to the next annual general meeting ("AGM") of the Company, subject to the conditions described in this Proxy Statement;
(4) FOR the authorization of the Company and its underwriters, at their sole discretion, to allocate to each of Baker Bros. Advisors LP and Hillhouse Capital Management, Ltd. and parties affiliated with each of them (the "Existing Shareholders"), up to a maximum amount of shares in order to maintain the same shareholding percentage of each of the Existing Shareholders (based on then-outstanding share capital of the Company) before and after the allocation of the corresponding securities issued pursuant to an offering conducted pursuant to the general mandate set forth above for a period of five years, which period will be subject to an extension on a rolling basis each year, conditional on the year ending December 31, 2017,approval of the shareholders who are not Existing Shareholders, subject to the conditions described in this Proxy Statement;
(5) FOR the approval of the Second Amended and Restated 2016 Share Option and Incentive Plan;
(6) FOR the approval of the Second Amended and Restated 2018 Employee Share Purchase Plan; and
(7) at the discretion of the proxy holder(s) with regard to all other matters that may properly come before the meeting.
We will pay all of the costs of soliciting proxies. Our directors, officers and employees may also solicit proxies; however, we will not pay them additional compensation for any of these services. Proxies may be solicited by telephone, email, facsimile, personal solicitation or otherwise.
In this Proxy Statement, the terms "BeiGene," "we," "us," and "our" refer to BeiGene, Ltd andLtd., unless the context otherwise requires, refer to its subsidiaries.subsidiaries as well. The mailing address of our principal executive offices is c/o Mourant Ozannes CorporateGovernance Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, Grand Cayman KY1-1108, Cayman Islands.
We Please note that while our proxy materials are an "emerging growth company" under applicable United States federal securities laws and therefore are permittedavailable on our website, no other information contained on the website is incorporated by reference into or considered to take advantagebe part of reduced public company reporting requirements. As an emerging growth company, we provide in this Proxy Statement the disclosure permitted under the Jumpstart Our Business Startups Act of 2012, including the compensation disclosures required of a "smaller reporting company," as that term is defined in Rule 12b-2 under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, as an emerging growth company, we are not required to conduct votes seeking approval, on an advisory basis, of the compensation of our named executive officers or the frequency with which such votes must be conducted. We will remain an "emerging growth company" until the earliest of (1) the last day of the fiscal year in which we have more than $1.0 billion in annual revenue; (2) the date we qualify as a "large accelerated filer," with at least $700 million of equity securities held by non-affiliates; (3) the issuance, in any three-year period, by BeiGene of more than $1.07 billion in non-convertible debt securities; and (4) December 31, 2021.document.
Shareholders Entitled to Vote; Record Date
Only holders of record of our ordinary shares, par value $0.0001US$0.0001 per share, at the close of business5:00 p.m. (Cayman Islands Time) on April 20, 2017, Cayman Islands timeOctober 25, 2018 (the "record date") are entitled to receive notice of, and to attend and to vote at, the Annual Meeting.EGM. As of the close of business5:00 p.m. (Cayman Islands Time) on the record date, we had outstanding 518,602,349771,063,184 ordinary shares outstanding, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting.EGM. On the record date, approximately 256,548,929586,752,777 of the 771,063,184 outstanding ordinary shares were held
in the name of Citibank, N.A. (the "Depositary") as depositary for the ADS,ADSs, which issues company-sponsored American Depositary Receipts, ("ADRs"), evidencing ADSs that in turn each represent 13 of our ordinary shares. Each shareholder of record is entitled to one vote for each ordinary share held by such shareholder.
Quorum
We are an exempted company incorporated in the Cayman Islands with limited liability, and our affairs are governed by our amended and restated memorandum and articles of association, which we refer to as our "articles"; the Companies Law (as amended) of the Cayman Islands, which we refer to as the Cayman"Cayman Companies Law,Law"; and the common law of the Cayman Islands.
The quorum required for a general meeting of shareholders at which an ordinary resolution is proposed consists of such shareholders present in person or by proxy who together hold shares carrying the right to at least a simple majority of all votes capable of being exercised on a poll. The quorum required for a general meeting at which a special resolution is proposed consists of such shareholders present in person or by proxy who together hold shares carrying the right to at least two-thirds of all votes capable of being exercised on a poll.
Voting
An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person or by proxy at a general meeting, while a special resolution requires the affirmative vote of at least two-thirds of the votes cast by the shareholders entitled to vote who are present in person or by proxy at a general meeting (except for certain types of winding up of the company, in which case the required majority to pass a special resolution shallis 100%). Both ordinary resolutions and special resolutions may also be 100%).passed by a unanimous written resolution signed by all the shareholders of our Company, as permitted by the Cayman Companies Law and our articles. A special resolution is required for important matters such as a change of name and amendments to our articles.articles (Proposals 1 and 2). Our shareholders may effect certain changes by ordinary resolution, including increasing the amount of our authorized share capital, consolidating and dividing all or any of our share capital into shares of larger amounts than our
existing shares and cancelling any authorized but unissued shares.shares (Proposal 3 through 6). We have received irrevocable undertakings from shareholders holding 40.9% of shares entitled to vote at the EGM to approve the Restated Articles (Proposal 2).
Voting
Persons who hold our ordinary shares directly on the Cayman Register on the record date ("Cayman record holders") must (1) must return a proxy card (a) by mail or by hand to the offices of the Cayman Registrar: Mourant Ozannes CorporateGovernance Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, Grand Cayman KY1-1108, Cayman Islands, or (b) by email at CaymanAdmin@mourantozannes.comBeiGene@mourant.com; or (2) attend the Annual MeetingEGM in person in order to vote on the proposals.
Persons who hold our ordinary shares directly on the HK Register on the record date ("HK record holders," and together with the Cayman record holders, "record holders") must (1) return a proxy card by mail or by hand to the offices of the HK Registrar: Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong; or (2) attend the EGM in person to vote on the proposals.
Persons who own our ordinary shares indirectly on the record date through a brokerage firm, bank or other financial institution, including persons who own our ordinary shares in the form of ADSs through the Depositary ("beneficial owners"), must return a voting instruction form to have their shares or the shares underlying their ADSs, as the case may be, voted on their behalf. Brokerage firms, banks or other financial institutions that do not receive voting instructions from beneficial owners may either vote these shares on behalf of the beneficial owners if permitted by applicable rules or return a proxy leaving these shares un-voted (a "broker non-vote").
ADR ADS holders are not entitled to vote directly at the Annual Meeting,EGM, but the Deposit Agreement, dated as of February 5, 2016, as amended (the "Deposit Agreement"), existsby and among the Depositary, the Company and the holders of ADRs pursuant to whichADSs permits registered holders of ADRsADSs as of the record date are entitled to instruct the Depositary how to exercise voting rights pertaining to the ordinary shares so represented. The Depositary has agreed that it will endeavor, insofar as practicable and permitted under applicable law and the provisions of the Deposit Agreement, to vote (in person or by delivery to BeiGene of a proxy) the ordinary shares registered in the name of the Depositary in accordance with the voting instructions received from the ADRADS holders. If the Depository does not receive instructions from a holder, such holder shall be deemed, and the Depository shall (unless
otherwise specified in the notice distributed to holders of ADRs)ADSs) deem such holder, to have instructed the Depository to give a discretionary proxy to a person designated by us to vote the ordinary shares represented by such holders' ADSs, provided that no such discretionary proxy shallmay be given by the Depositary with respect to any matter to be voted upon whichthat we inform the Depositary that (a) we do not wish such proxy to be given, (b) substantial opposition exists, or (c) the rights of holders of ordinary shares may be materially adversely affected. In the event that the instruction card is executed but does not specify the manner in which the ordinary shares represented are to be voted (i.e.(i.e., by marking a vote "FOR","FOR," "AGAINST" or any other option), the Depositary will vote in respect of each proposal as recommended by the Board which isas described in the Notice of AnnualExtraordinary General Meeting. Instructions from the ADRADS holders must be sent to the Depositary so that the instructions are received by no later than 10:00 a.m. New York timeTime on May 23, 2017.December 3, 2018.
Abstentions and broker non-votes will be counted for the purpose of determining the presence or absence of a quorum, but will not be counted for the purpose of determining the number of votes cast on a given proposal.
We have retained the Cayman Registrar to hold and maintain our register of members.Cayman Register and the HK Registrar to maintain our HK Register. The Cayman Registrar and the HK Registrar will be engaged by us to take delivery of completed proxy forms posted to it in accordance with the details above.
We encourage you to vote by proxy by mailing or emailing or sending by hand an executed proxy card. Voting in advance of the meeting will ensure that your shares will be voted and reduce the likelihood that we will be forced to incur additional expenses soliciting proxies for the Annual Meeting.EGM. Any record holder of our ordinary shares may attend the Annual MeetingEGM in person and may revoke the enclosed form of proxy at any time by:
Beneficial owners of our ordinary shares and ADSs representing our ordinary shares who wish to change or revoke their voting instructions should contact their brokerage firm, bank or other financial institution or the Depositary, as applicable, for information on how to do so. Generally, however, beneficial owners of our ordinary shares and ADSs representing our ordinary shares who wish to change or revoke their voting instructions may do so until 10:00 a.m. New York time on May 23, 2017. Beneficial owners who wish to attend the Annual MeetingEGM and vote in person should contact their brokerage firm, bank or other financial institution holding our ordinary shares on their behalf in order to obtain a "legal proxy" which will allow them to both attend the meeting and vote in person. Without a legal proxy, beneficial owners cannot vote at the Annual MeetingEGM because their brokerage firm, bank or other financial institution may have already voted or returned a broker non-vote on their behalf. Record holders of ADSs who wish to attend the Annual MeetingEGM and vote in person should contact the Depositary (and beneficial owners wishing to do the same should contact their brokerage firm, bank or other financial institution holding their ADSs) to cause their ADSs to be cancelled and the underlying shares to be withdrawn in accordance with the terms and conditions of the Deposit Agreement so as to be recognized by us as a record holder of our ordinary shares.
No Appraisal Rights
Our shareholders have no rights under the Cayman Companies Law or under our articles to exercise dissenters'or appraisal rights with respect to the proposals being voted on.
Expenses of Solicitation
We are making this solicitation and will pay the entire cost of preparing and distributing the proxy materials and soliciting votes. If you choose to access the proxy materials over the Internet, you are responsible for any Internet access charges that you may incur. Our officers, directors and employees may, without compensation other than their regular compensation, solicit proxies through further mailings, personal conversations, facsimile transmissions, emails, or otherwise. Proxy solicitation expenses that we will pay include those for preparation, mailing, returning, and tabulating the proxies.
Procedure for Submitting Shareholder Proposals
The Cayman Companies Law provides shareholders with only limited rights to requisition a general meeting and does not provide shareholders with a right to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association. Our articlesFourth Amended and Restated Memorandum and Articles of Association (the "Existing Articles") allow our shareholders holding in aggregate not less than a simple majority of the voting rights of issued shares and entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our Board of Directors is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. However, under our Existing Articles, our shareholders may propose only ordinary resolutions to be put to a vote at such meetings and shall have no right to propose resolutions with respect to the election, appointment or removal of directors. Our articlesIf our Restated Articles are adopted at the EGM, our shareholders holding in aggregate not less than one-tenth of the voting rights of issued shares and entitled to vote at general
meetings will be allowed to requisition an extraordinary general meeting of our shareholders, in which case our Board of Directors is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Additionally, under the Restated Articles, at a properly requisitioned extraordinary general meeting, our shareholers will have right to propose resolutions with respect to the election, appointment or removal of directors. Neither our Existing Articles nor Restated Articles provide noany other right to put any proposals before annual general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are not obligated by law to call shareholders' annual general meetings. However, our corporate governance guidelines require us to call such meetings every year to the extent required by the listing rules of any stock exchange listing rules.on which our ordinary shares or ADSs are traded.
Shareholders may present proper proposals for inclusion in our proxy statement and for consideration at our next annual general meeting of shareholders by submitting their proposals in writing to us in a timely manner. In order to be considered for inclusion in the proxy statement for the 20182019 annual general meeting of shareholders, shareholder proposals must be received at our principal executive offices no later than December 26, 2017,27, 2018, and must otherwise comply with the requirements of Rule 14a-8 of the U.S. Securities Exchange Act.Act of 1934, as amended (the "Exchange Act"). Any shareholder proposal for the annual general meeting of shareholders in 2018,2019, which is submitted outside the processes of Rule 14a-8, shall be considered untimely unless received by the Company in writing no later than March 13, 2018.12, 2019. If the date of the annual meeting is moved by more than 30 days from the date contemplated at the time of the previous year's proxy statement, then notice must be received within a reasonable time before we begin to print and send proxy materials. If that happens, we will publicly announce the deadline for submitting a proposal in a press release or in a document filed with the SEC.U.S. Securities and Exchange Commission ("SEC") and announced in Hong Kong via thehkexnews.hk website. A copy of all notices of proposals by shareholders should be sent to us at c/o Mourant Ozannes CorporateGovernance Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, Grand Cayman KY1-1108, Cayman Islands.
This Proxy Statement contains three proposals requiring shareholder action. Proposals 1 and 2 request the election of two directors to the Board of Directors. Proposal 3 requests the ratification of the appointment of Ernst & Young Hua Ming LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017. Each of the proposals is discussed in more detail in the pages that follow.
PROPOSALS 1 AND 2ELECTION OF DIRECTORS
Our articles provide that persons standing for election as directors at a duly constituted general meeting with requisite quorum shall be elected by an ordinary resolution of our shareholders, which requires the affirmative vote of a simple majority of the votes cast on the resolution by the shareholders entitled to vote who are present in person or by proxy at the meeting. Our articles further provide that our Board of Directors will be divided into three groups designated as Class I, Class II and Class III with as nearly equal a number of directors in each group as possible. Directors assigned to Class I shall initially serve until the first annual general meeting of shareholders following the effectiveness of our articles upon completion of our initial public offering (the "Articles Effectiveness Date"); directors assigned to Class II shall initially serve until the second annual general meeting of shareholders following the Articles Effectiveness Date; and directors assigned to Class III shall initially serve until the third annual general meeting of shareholders following the Articles Effectiveness Date.
Commencing with the first annual general meeting of shareholders following the Articles Effectiveness Date, each director of each class the term of which shall then expire shall, upon the expiration of his or her term, be eligible for reelection at such annual general meeting to hold office for a three-year term and until such director's successor has been duly elected. Our articles provide that, unless otherwise determined by shareholders in a general meeting, our Board will consist of not less than three directors. We have no provisions relating to retirement of directors upon reaching a specified age.
In the event of a vacancy arising from the resignation of a former director or as an addition to the existing board, our Board of Directors may, by the affirmative vote of a simple majority of the remaining directors present and voting at a board meeting, appoint any person to be a director.
For so long as our shares or ADSs are listed on NASDAQ, our directors are required to comply with the director nomination procedures of the NASDAQ Stock Market Rules, and our Board is required to include at least such number of independent directors the NASDAQ Stock Market Rules requires.
The terms of the Class I directors are scheduled to expire on the date of the 2017 Annual Meeting. Based on the recommendation of the Nominating and Corporate Governance Committee of the Board of Directors, the Board of Directors' nominees for election by the shareholders are current Class I members: Timothy Chen and John V. Oyler. If elected, each nominee will serve as a director until the annual general meeting of shareholders in 2020 and until his successor is duly elected and qualified, subject to his earlier resignation or removal. Ke Tang, who currently is a Class I director, notified us of his decision not to stand for re-election to the Board of Directors when his current term expires at the Annual Meeting. Mr. Tang will continue to serve as a member of the Board of Directors and a member of the Audit Committee until the Annual Meeting.
The names of and certain information about the directors in each of the three groups are set forth below. There are no family relationships among any of our directors or executive officers.
The proxy in the form presented will be voted, unless otherwise indicated, for the election of the Class I director nominees to the Board of Directors. If any of the nominees should for any reason be unable or unwilling to serve at any time prior to the Annual Meeting, the proxies will be voted for the election of a substitute nominee designated by the Board of Directors.
Nominees for Class I Directors
The names of the nominees for Class I directors and certain information about each as of April 26, 2017 are set forth below.
Name | Position(s) | Director Since | Age | ||||||
---|---|---|---|---|---|---|---|---|---|
Timothy Chen | Director | 2016 | 60 | ||||||
John V. Oyler | Founder, Chief Executive Officer and Chairman | 2010 | 49 |
Set forth below are the biographies of each director, as well as a discussion of the particular experience, qualifications, attributes, and skills that led our Board of Directors to conclude that each such person nominated to serve or currently serving on our Board of Directors should serve as a director.
Nominees for Election for a Three-Year Term Ending at the 2020 Annual General Meeting
Timothy Chen has served as a member of our Board of Directors since February 2016. Mr. Chen has served as the Corporate Vice President of Hon Hai Technology Group and President of Asia Pacific Telecom since January 2016. He was the President of Telstra International Group from November 2012 to December 2015. He has also served as Chairman of the board of Autohome Inc.
since 2012. Previously, Mr. Chen was a partner of a China Opportunities Fund within GL Capital Group from 2010 to 2012. He was the CEO of National Basketball Association China from 2007 to 2010, the Corporate Vice President of Microsoft and the CEO of its Greater China region from 2003 to 2007, the Corporate Vice President of Motorola and the Chairman and President of Motorola (China) Electronics from 2001 to 2003. Before Microsoft, he was the CEO of 21CN Cybernet, a company listed on the Hong Kong Stock Exchange, from 2000 to 2001. Prior to 2000, Mr. Chen spent eight years in China with Motorola, including serving as the General Manager responsible for the sales and marketing for the Greater China Cellular Infrastructure Division. He also spent nine years with AT&T Bell Laboratories in the United States. Mr. Chen holds an MBA degree from the University of Chicago, a master's degree in both computer science and mathematics from Ohio State University, and a bachelor's degree from Chiao Tung University. We believe that Mr. Chen's extensive business expertise in Asia and globally qualify him to serve as a member of our Board of Directors.
John V. Oyler is our Founder and has served as our principal executive officer and a member of our Board of Directors since 2010. From 2005 to 2009, Mr. Oyler served as President and Chief Executive Officer of BioDuro, LLC, a drug discovery outsourcing company, which was acquired by Pharmaceutical Product Development Inc. in 2010. From 2002 to 2004, Mr. Oyler served as Chief Executive Officer of Galenea Corp., a biopharmaceutical company dedicated to the discovery of novel therapies for central nervous system diseases, which initially were developed at Massachusetts Institute of Technology. From 1997 to 2002, Mr. Oyler was a Founder and the President of Telephia, Inc. which was sold to The Nielsen Company in 2007. From 1997 to 1998, Mr. Oyler served as Co-Chief Executive Officer of Genta Incorporated (NASDAQ: GNTA), an oncology-focused biopharmaceutical company. Mr. Oyler began his career as a management consultant at McKinsey & Company. Mr. Oyler received his B.S. from Massachusetts Institute of Technology and MBA from Stanford University. Mr. Oyler's qualifications to serve on our Board of Directors include his extensive leadership, executive, managerial, business and pharmaceutical and biotechnology company experience, along with his years of industry experience in the development and commercialization of pharmaceutical products.
Directors Not Standing for Election or Re-Election
The names of and certain information as of April 26, 2017 about the members of the Board of Directors who are not standing for re-election at this year's Annual Meeting are set forth below.
Name | Position(s) | Director Since | Age | ||||||
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Donald W. Glazer | Director | 2013 | 72 | ||||||
Michael Goller | Director | 2015 | 42 | ||||||
Ranjeev Krishana | Director | 2014 | 43 | ||||||
Thomass Malley | Director | 2016 | 48 | ||||||
Ke Tang | Director | 2014 | 37 | ||||||
Xiaodong Wang, Ph.D. | Director | 2016 | 54 | ||||||
Qingqing Yi | Director | 2014 | 45 |
Directors Continuing in Office Until the 2018 Annual General Meeting
Donald W. Glazer has served as a member of our Board of Directors since February 2013. Mr. Glazer has served as a member of the Board of Trustees of GMO Trust, a mutual fund group, since 2000 and as the Chairman of the Board since 2005. Mr. Glazer was a Co-Founder and Secretary, and from 2002 until 2010, Vice Chairman, of Provant, Inc., a provider of performance improvement training solutions. From 1992 to 1995 Mr. Glazer was President of Mugar/Glazer Holdings and from 1992 to 1993 served as Vice Chairman—Finance of New England Television Corp and WHDH-TV, Inc. From 1997 to the present, Mr. Glazer has served as Advisory Counsel to Goodwin Procter LLP. From 1970 to 1978 Mr. Glazer was an associate and from 1978 to 1992 a partner at Ropes & Gray LLP, a
Boston law firm. At Ropes & Gray, Mr. Glazer chaired the firm's Emerging Companies Group. Mr. Glazer was also a Lecturer in Law at Harvard Law School from 1978 to 1991, teaching a course called The Business Lawyer. Mr. Glazer is a former member of the boards of directors of Environics Inc.; Kronos Incorporated; Reflective Technologies, Inc.; and Teleco Oilfield Services Inc. Mr. Glazer received his A.B. from Dartmouth College; J.D. from Harvard Law School, where he was an editor of the Harvard Law Review; and L.L.M. from the University of Pennsylvania Law School. Additionally, Mr. Glazer is a co-author of both Glazer and FitzGibbon on Legal Opinions, Third Edition (Aspen Publishers) and Massachusetts Corporation Law & Practice, Second Edition (Aspen Publishers). Mr. Glazer's qualifications to serve on our Board of Directors include his extensive leadership, executive, managerial, business, and corporate legal experience.
Michael Goller has served as a member of our Board of Directors since April 2015. Mr. Goller has been with Baker Bros. Advisors LP since 2005 and currently serves as a Managing Director. Prior to joining Baker Bros., Mr. Goller served as an Associate of JPMorgan Partners, LLC where he focused on venture investments in the life sciences sector from 1999 to 2003. Mr. Goller began his career as an investment banker with Merrill Lynch and Co. from 1997 to 1999. Mr. Goller holds a B.S. in Molecular and Cell Biology from The Pennsylvania State University and Master's degrees in each of Biotechnology (School of Engineered and Applied Sciences) and Business Administration (Wharton School) from the University of Pennsylvania. We believe that Mr. Goller is qualified to serve on our Board of Directors based on his experience in the life sciences industry and for his knowledge in financial and corporate development matters.
Thomas Malley has served as a member of our Board of Directors since January 2016. Mr. Malley has served as President of Mossrock Capital, LLC, a private investment firm, since May 2007. Mr. Malley worked for Janus Mutual Funds in positions of increasing responsibility from April 1991 to May 2007. From January 1999 to May 2007, Mr. Malley served as the portfolio manager of the Janus Global Life Sciences Fund and also led the Janus Healthcare team of analysts. From 1991 to 1998, Mr. Malley served as an equity analyst for Janus covering, among others, healthcare and biotechnology stocks. Mr. Malley has been a director of OvaScience, Inc. since October 2012, and a director of Kura Oncology, Inc. since 2015. Previously, he served as a director of Synageva BioPharma Corp., a public biopharmaceutical company, from 2006 to 2015, until its acquisition by Alexion Pharmaceuticals, Inc., Puma Biotechnology, Inc., a public biopharmaceutical company, from 2011 to 2015, and Cougar Biotechnology, Inc., a public biopharmaceutical company, from 2007 to 2009, until its acquisition by Johnson and Johnson. Mr. Malley holds a B.S. in Biology from Stanford University. Our Board of Directors believes that Mr. Malley's experience in the biopharmaceutical industry, including serving on other boards of directors, and his executive experience qualify him to serve on our Board of Directors.
Directors Continuing in Office Until the 2019 Annual General Meeting
Ranjeev Krishana has served as a member of our Board of Directors since October 2014. Mr. Krishana has worked at Baker Bros. Advisors LP from 2011 to the present and currently serves as Head of International Investments. Prior to joining Baker Bros., Mr. Krishana held a series of commercial, strategy, and business development leadership roles for Pfizer, Inc.'s pharmaceutical business across a variety of international regions and markets, including Asia, Eastern Europe, and Latin America. Mr. Krishana was at Pfizer from 2003 to 2007 and from 2008 to 2011. From 2008 to 2010, Mr. Krishana was based in Beijing, China, where he served as a Senior Director and a member of the Pfizer China Leadership Team. Mr. Krishana began his career as a strategy consultant at Accenture plc. Mr. Krishana holds a B.A. in Economics and Political Science from Brown University, and a Masters of Public Policy from Harvard University. We believe Mr. Krishana's knowledge of the healthcare sector across international markets qualifies him to serve on our Board of Directors.
Xiaodong Wang, Ph.D. is our Founder and has served as the Chairman of our scientific advisory board since 2011. Dr. Wang became a member of our Board of Directors in February 2016. Dr. Wang
has served as the founding Director of the National Institute of Biological Sciences in Beijing since 2003 and became its Director and Investigator in 2010. Previously, he was a Howard Hughes Medical Institute Investigator from 1997 to 2010 and held the position of the George L. MacGregor Distinguished Chair Professor in Biomedical Sciences at the University of Texas Southwestern Medical Center in Dallas, Texas from 2001 to 2010. In 2004, Dr. Wang founded Joyant Pharmaceuticals, Inc., a venture capital-backed biotechnology company focused on the development of small molecule therapeutics for cancer. Dr. Wang received his Ph.D. in Biochemistry from the University of Texas Southwestern Medical Center and B.S. in Biology from Beijing Normal University. Dr. Wang has been a member of the National Academy of Science, USA since 2004 and a foreign associate of the Chinese Academy of Sciences since 2013. We believe that Dr. Wang's extensive experience in cancer drug research, combined with his experience in the biotech industry, qualify him to serve as a member of our Board of Directors.
Qingqing Yi has served as a member of our Board of Directors since October 2014. Mr. Yi is a Principal at Hillhouse Capital. He has worked with Hillhouse since the inception of the firm in 2005. Prior to joining Hillhouse, Mr. Yi was an Equity Research Analyst at China International Capital Corporation. Mr. Yi's work at Hillhouse includes investments in the healthcare and consumer sectors in both its public and private equity portfolios. He received a B.S in Engineering from Shanghai Maritime University, as well as an MBA from University of Southern California. We believe Mr. Yi's extensive experience in capital markets and knowledge of the healthcare sector qualifies him to serve on our Board of Directors.
Discontinuing Directors at the 2017 Annual General Meeting
Ke Tang has served as a member of our Board of Directors since October 2014. Mr. Tang has been a Vice President at CITIC PE Private Equity Funds Management Co., Ltd. since 2013. Mr. Tang has also served as an Executive Director of Changsheng Medial, a medical service company focusing on renal diseases since July 2014. From 2012 to 2013, Mr. Tang served as Investment Manager at the Principal Investment Department at Goldman Sachs Group, responsible for private equity investments in China. Before that, Mr. Tang served as an Associate and Executive Director at the investment banking division of Goldman Sachs Asia from 2008 to 2012. Mr. Tang holds a B.A. from Southeast University and an MBA from Kellogg School of Management at Northwestern University. We believe Mr. Tang's knowledge of the healthcare sector, along with his extensive experience in capital markets, qualifies him to serve on our Board of Directors.
Vote Required and Board of Directors' Recommendation
Each director nominated for election will be elected if a simple majority of the votes cast by the shareholders entitled to vote who are present in person or by proxy vote in favor of such director. Broker non-votes and abstentions with respect to one or more Class I directors will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of the election.
The proposals for the election of directors relate solely to the election of Class I directors nominated by the Board of Directors.
The Board of Directors recommends that shareholders vote FOR the election of each of the Class I director nominees listed above.
PROPOSAL 3RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On the recommendation of the Audit Committee of the Board of Directors (the "Audit Committee"), the Board of Directors has appointed Ernst & Young Hua Ming LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2017. The Board of Directors recommends that shareholders vote for ratification of this appointment. If this proposal is not approved at the Annual Meeting, the Board of Directors will reconsider its appointment. Even if the appointment is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered accounting firm at any time during the year if the Audit Committee determines that such a change would be in our shareholders' best interests.
Ernst & Young Hua Ming LLP has audited our financial statements for the fiscal years ended December 31, 2016 and 2015. We expect representatives of Ernst & Young Hua Ming LLP to be available telephonically at the Annual Meeting and available to respond to appropriate questions. They will have the opportunity to make a statement if they desire to do so.
Auditor's Fees
The following table summarizes the fees of Ernst & Young Hua Ming LLP, our registered independent public accounting firm, billed to us for each of the last two fiscal years (in thousands).
Fee Category | 2016 | 2015 | |||||
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Audit Fees(1) | $ | 1,241 | $ | 753 | |||
Audit-related Fees | — | — | |||||
Tax Fees(2) | 42 | 17 | |||||
All Other Fees(3) | 65 | — | |||||
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Total Fees | $ | 1,348 | $ | 770 | |||
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Pre-approval Policies
In connection with our initial public offering, our Board of Directors has adopted policies and procedures for the pre-approval of audit and non-audit services by our Audit Committee for the purpose of maintaining the independence of our independent auditor. We may not engage our independent auditor to render any audit or non-audit service unless either the service is approved in advance by the Audit Committee or the engagement to render the service is entered into pursuant to the Audit Committee's pre-approval policies and procedures. The Audit Committee pre-approved all services performed since the pre-approval policy was adopted.
Vote Required and Board of Directors' Recommendation
The approval of Proposal 3 requires that a simple majority of the votes cast by the shareholders entitled to vote who are present in person or by proxy vote in favor of this proposal. Shares that are voted "abstain" will not affect the outcome of this proposal. Brokers have discretion to vote on the proposal for ratification of the independent registered public accounting firm.
The Board of Directors recommends that shareholders vote FOR ratification of the appointment ofErnst & Young Hua Ming LLP as our independent registered public accounting firm for the fiscal yearending December 31, 2017.
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the person(s) named in the accompanying proxy intend to vote on such matters in accordance with their best judgment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us regarding beneficial ownership of our share capital as of April 20, 2017 by:
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all securities shown as beneficially owned by them.
The table lists applicable percentage ownership based on 518,602,349 ordinary shares outstanding as of April 20, 2017 and also lists applicable percentage ownership. Options to purchase ordinary shares that are exercisable within 60 days of April 20, 2017 are deemed to be beneficially owned by the persons holding these options for the purpose of computing percentage ownership of such persons, but are not treated as outstanding for the purpose of computing any other person's ownership percentage. Beneficial ownership representing less than 1% is denoted with an asterisk (*).
Unless otherwise noted below, the address of each person listed on the table is: c/o Mourant Ozannes Corporate Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, Grand Cayman KY1-1108, Cayman Islands.
Name of Beneficial Owner | Number of Ordinary Shares Beneficially Owned | Percentage of Ordinary Shares Beneficially Owned | |||||
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5% or Greater Shareholders | |||||||
Entities affiliated with Baker Bros. Advisors LP(1) | 128,086,032 | 24.7 | % | ||||
FMR LLC(2) | 50,465,025 | 9.7 | |||||
Entities affiliated with Hillhouse Capital Management, Ltd.(3) | 48,369,439 | 9.3 | |||||
Merck Sharp & Dohme Research GmbH(4) | 31,589,038 | 6.1 | |||||
Named Executive Officers and Directors | |||||||
John V. Oyler(5) | 79,385,357 | 15.2 | % | ||||
Howard Liang(6) | 2,310,833 | * | |||||
Ji Li(7) | 1,069,000 | * | |||||
Timothy Chen(8) | 153,542 | * | |||||
Donald W. Glazer | 4,882,006 | * | |||||
Michael Goller | — | — | |||||
Ranjeev Krishana | — | — | |||||
Thomas Malley(9) | 574,250 | * | |||||
Ke Tang | — | — | |||||
Xiaodong Wang(10) | 16,147,573 | 3.1 | |||||
Qingqing Yi | — | — | |||||
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All Directors and Executive Officers as a Group (13 persons)(11) | 105,122,561 | 19.9 | % | ||||
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Company carries out the voting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees. The address for FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.
The following table sets forth the name, age and position of each of our executive officers as of April 26, 2017:
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You should refer to "Proposals 1 and 2: Election of Directors" above for information about our Founder, Chief Executive Officer and Chairman, John V. Oyler. Biographical information for our other executive officers, as of April 26, 2017, is set forth below.
Howard Liang, Ph.D. has served as our Chief Financial Officer and Chief Strategy Officer since July 2015. Dr. Liang has more than 20 years of combined experience on Wall Street as an analyst covering the biotechnology and pharmaceutical sectors and as a scientist in the biopharmaceutical industry. Prior to joining us, from 2005 to 2015, Dr. Liang was at Leerink Partners LLC, a leading investment bank specializing in the healthcare industry, where he served as a Managing Director and Head of Biotechnology Equity Research. Dr. Liang served as a Senior Biotechnology Analyst at two full-service investment banks: A.G. Edwards Inc., from 2004 to 2005, and JMP Securities, from 2003 to 2004. From 2000 to 2003, Dr. Liang served as an Associate Analyst at Prudential Securities, where he covered major and specialty pharmaceuticals. Before Wall Street, from 1992 to 2000, Dr. Liang was with Abbott Laboratories, where he was a Senior Scientist and a member of one of the pharmaceutical industry's leading structure-based discovery teams. During his career as a scientist, Dr. Liang authored a review and 13 papers including six in Nature, Science, and Proceedings of the National Academy of Sciences. Dr. Liang received his B.S. in Chemistry from Peking University and both his MBA and Ph.D. in Biochemistry and Molecular Biology from the University of Chicago.
Amy Peterson, M.D. joined our Company in August 2016 as our Chief Medical Officer, Immuno-Oncology. Prior to joining us, Dr. Peterson served as Vice President of Clinical Development at Medivation, Inc. from December 2012 to July 2016 and as Senior Medical Director from August 2011 to December 2012. At Medivation, she was primarily responsible for the development of enzalutamide and talazoparib in breast cancer and of pidilizumab in diffuse large B-cell lymphoma. Previously, she served as Associate Group Medical Director at Genentech from March 2010 to August 2011 where she was responsible for the development of early stage molecules targeting multiple major pathways in oncology. Prior to joining Genentech, Dr. Peterson was an Instructor of Medicine in Oncology at the University of Chicago, where she conducted translational research in tumor immunology in conjunction with Dr. Thomas F. Gajewski. Dr. Peterson received her M.D. from Thomas Jefferson University, and she completed her residency in Internal Medicine at Northwestern Memorial Hospital and Fellowship in Hematology and Oncology at the University of Chicago. She holds a Bachelor of Arts degree from Wesleyan University.
Jane Huang, M.D. joined our Company in September 2016 as our Chief Medical Officer, Hematology. Prior to joining us, Dr. Huang served as the Vice President, Clinical Development at Acerta Pharma from April 2015 to September 2016, where she oversaw global clinical development of the BTK inhibitor, acalabrutinib. Previously, she worked at Genentech from 2005 to March 2015, serving most recently as Group Medical Director, where she played a leading role in drug development programs for several molecules at all stages of development, including venetoclax and obinutuzumab.
She is also adjunct clinical faculty and an attending physician in Oncology at Stanford University. Dr. Huang received her Bachelor of Science degree in Biological Sciences from Stanford University and her M.D. from University of Washington School of Medicine. She is board certified in hematology, oncology, and internal medicine, and she completed her residency in Internal Medicine and fellowships in Hematology and Oncology at Stanford University.
Ji Li, Ph.D. joined our Company in May 2016 as our Global Head of Business Development. Prior to joining us, Dr. Li served as Vice President of Business Development and Licensing at Merck Inc. from December 2013 to 2016, where he was responsible for late-stage inbound and outbound business development opportunities across all therapeutic areas globally. From August 2010 to August 2013, Dr. Li served as Executive Licensing Director for External Research and Development at Amgen, where he led the company's efforts in sourcing and evaluation of product partnering opportunities across all therapeutic areas and at all stages of drug development. He served as a member of our Board of Directors from January 2015 to February 2016. Dr. Li received his B.S. in Pharmacology from Shanghai Medical University and his Ph.D. in Neuroscience from Mount Sinai School of Medicine.
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
Other than compensation arrangements, we describe below transactions and series of similar transactions, since January 1, 2016, to which we were a party or will be a party, in which:
In connection with the completion of our initial public offering, we adopted a related party transactions policy that requires all future transactions between us and any director, executive officer, holder of 5% or more of any class of our capital shares or any member of the immediate family of, or entities affiliated with, any of them, or any other related persons (as defined in Item 404 of Regulation S-K) or their affiliates, in which the amount involved is equal to or greater than $120,000, be approved in advance by our Audit Committee. Any request for such a transaction must first be presented to our Audit Committee for review, consideration and approval. In approving or rejecting any such proposal, our Audit Committee is to consider the relevant facts and circumstances available and deemed relevant to the Audit Committee, including, but not limited to, the extent of the related party's interest in the transaction, and whether the transaction is on terms no less favorable to us than terms we could have generally obtained from an unaffiliated third party under the same or similar circumstances.
Certain of the transactions described below were entered into prior to the adoption of this written policy but each such transaction was approved by our Board of Directors. Prior to our Board of Directors' consideration of a transaction with a related person, the material facts as to the related person's relationship or interest in the transaction were disclosed to our Board of Directors, and the transaction was not approved by our Board of Directors unless a majority of the directors approved the transaction.
We believe that all of the transactions described below were made on terms no less favorable to us than could have been obtained from unaffiliated third parties. Compensation arrangements for our directors and named executive officers are described in the section of this Proxy Statement titled "Executive Compensation."
Sales and Purchases of Securities
Participation in Our Initial Public Offering
In our initial public offering in February 2016, certain of our directors, executive officers and 5% shareholders and their affiliates purchased an aggregate of 2,627,680 ADSs. Each of those purchases was made through the underwriters at the initial public offering price of $24.00 per ADS. Certain purchases were made at the public offering price through a directed share program offered to our directors, officers, employees and business associated in connection with our initial public offering (the "Directed Share Program"). The following table sets forth the aggregate number of ADSs that these
directors, executive officers and 5% shareholders and their affiliates purchased in our initial public offering:
Purchaser(1) | Number of ADSs | Total Purchase Price | |||||
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Entities affiliated with Baker Bros. Advisors LP(2) | 1,912,680 | $ | 45,904,320 | ||||
Entities affiliated with Hillhouse Capital Management, Ltd.(3) | 700,000 | $ | 16,800,000 | ||||
Howard Liang(4) | 5,000 | $ | 120,000 | ||||
RuiRong Yuan(5) | 10,000 | $ | 240,000 |
Participation in Our Follow-on Public Offering
In our follow-on public offering in November 2016, certain of our directors and 5% shareholders and their affiliates purchased an aggregate of 2,455,315 ADSs. Each of those purchases was made through the underwriters at the public offering price of $32.00 per ADS. In the offering, CB Biotech Limited and Dr. Wang sold 375,000 ADSs and 93,750 ADSs, respectively, at the public offering price of $32.00 per ADS. The following table sets forth the aggregate number of ADSs that these directors, executive officers and 5% shareholders and their affiliates purchased in our follow-on public offering:
Purchaser(1) | Number of ADSs | Total Purchase Price | |||||
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Entities affiliated with Baker Bros. Advisors LP(2) | 1,760,495 | $ | 56,335,840 | ||||
Entities affiliated with Hillhouse Capital Management, Ltd.(3) | 664,820 | $ | 21,274,240 | ||||
Thomas Malley(4) | 30,000 | $ | 960,000 |
Consulting Arrangements
Donald W. Glazer, a member of our Board of Directors, has been providing strategic consulting services to our company since our inception in 2010. As full compensation for his consulting services, on November 24, 2010, in connection with the initial formation of our company, we issued 4,000,000 ordinary shares to Mr. Glazer at $0.0001 per share to vest over five years. Those shares are fully vested. We also reimbursed Mr. Glazer for the out of pocket expenses incurred in connection with his consulting services.
Dr. Xiaodong Wang, our Founder, Chairman of the Scientific Advisory Board and director, has been providing scientific and strategic advisory services to us. Dr. Wang currently receives an annual fixed fee of $100,000. In March 2016, we granted him a cash bonus in the amount of $86,176. In November 2016, we granted him an option to purchase 1,613,430 ordinary shares that option had fair value on the grant date of $3,123,600. As of December 31, 2016, the aggregate number of shares subject to options held by Dr. Wang was 7,112,597. In April 2017, we granted him a cash bonus in the amount of $86,176.
Note Exchange
On February 2, 2011, we issued an 8% senior note for an aggregate principal amount of $10 million to Merck Sharp & Dohme Research GmbH ("MSD"). On January 26, 2016, we entered into a note amendment and exchange agreement with MSD. On February 8, 2016, the entire outstanding unpaid principal and interest of the MSD note as of February 2, 2016 ($14,693,281) was automatically exchanged for 7,942,314 of our ordinary shares at $1.85 per share, the initial offering price per ordinary share calculated based on the initial public offering price per American Depositary Share divided by 13, the ordinary share-to-ADS ratio.
Warrant Exercises
On February 8, 2016, in connection with the closing of our initial public offering, entities affiliated with Baker Bros. Advisors LP exercised warrants previously granted to them to purchase 2,592,593 ordinary shares at an exercise price of $0.675 per share.
On February 8, 2016, in connection with the closing of our initial public offering, John V. Oyler exercised warrants previously granted to him to purchase 57,777 Series A preferred shares at an exercise price of $0.675 per share, which shares were converted into 57,777 ordinary shares.
Employment Agreements
For more information regarding employment agreements with certain of our executive officers, see "Executive Compensation—Employment Agreements with Our Named Executive Officers."
Indemnification Agreements
Cayman Islands law does not limit the extent to which a company's articles of association may provide indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as providing indemnification against civil fraud or the consequences of committing a crime. Our amended and restated memorandum and articles of association provide that each officer or director shall be indemnified out of assets of our
company against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such directors or officer, other than by reason of such person's dishonesty, willful default or fraud, in or about the conduct of our company's business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or elsewhere.
In addition, we have entered into new agreements to indemnify our directors and executive officers. These agreements, among other things, indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or executive officer.
Agreements With Our Shareholders
In connection with our preferred share financings, we entered into (1) an investors' rights agreement, (2) a right of first refusal and co-sale agreement and (3) a voting agreement, in each case, with the purchasers of our preferred shares and certain holders of our ordinary shares. The primary rights under each of these terminated upon the closing of our initial public offering, other than certain registration rights for certain holders of our ordinary shares.
On November 16, 2016, we entered into an additional registration rights agreement with 667, L.P., Baker Brothers Life Sciences, L.P. and 14159, L.P. (collectively, the "Baker Entities"), Hillhouse BGN Holdings Limited, Gaoling Fund, L.P. and YHG Investment, L.P. (collectively, the "Hillhouse Entities") (each an "Investor" and collectively, the "Investors"), all of which are existing shareholders of our Company. The Baker Entities are affiliated with two of the Company's directors, Michael Goller and Ranjeev Krishana. The Hillhouse Entities are affiliated with one of the Company's directors, Michael Yi. The registration rights agreement provides that, subject to certain limitations, if at any time and from time to time, the Investors demand that we register the Company's ordinary shares and any other securities of the Company held by the Investors at the time any such demand is made on a registration statement on Form S-3 for resale under the Securities Act, we would be obligated to effect such registration. Our registration obligations under the registration rights agreement will continue in effect for up to four years and include our obligation to facilitate certain underwritten public offerings of our ordinary shares or ADSs by the Investors in the future. The registration rights agreement also requires the Company to pay expenses relating to such registrations and indemnify the Investors against certain liabilities.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of our Compensation Committee has at any time during 2016 been an officer or employee of the Company. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors and persons who beneficially own more than 10% of our ordinary shares (collectively, "Reporting Persons") to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Reporting Persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of such reports received or written representations from certain Reporting Persons during the fiscal year ended December 31, 2016, we believe that all Reporting Persons complied with all Section 16(a) reporting requirements.
Composition of Our Board of Directors
Our Board of Directors currently consists of nine members, all of whom were elected pursuant to the board composition provisions of a voting agreement that terminated upon the closing of our initial public offering. Currently, we are not subject to any contractual obligations regarding the election of our directors. Our Nominating and Governance Committee and Board of Directors may therefore consider a broad range of factors relating to the qualifications and background of nominees, which may include diversity and is not limited to race, gender or national origin. We have no formal policy regarding board diversity. Our Nominating and Governance Committee's and Board of Directors' priority in selecting board members is identification of persons who will further the interests of our Company through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge of our business, understanding of the competitive landscape and professional and personal experiences and relevant expertise. Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation or removal.
Our amended and restated articles of association provide that our directors may be removed by the affirmative vote of the holders of at least two-thirds of the votes cast at a shareholder meeting and that any vacancy on our board of directors, including a vacancy resulting from an enlargement of our Board of Directors, may be filled only by vote of a majority of our directors then in office.
In accordance with the terms of our amended and restated memorandum and articles of association, our Board of Directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of shareholders in the year in which their term expires.
Ke Tang, who currently is a Class I director, notified us of his decision not to stand for re-election to the Board of Directors when his current term expires at the Annual Meeting.
Our amended and restated memorandum and articles of association provide that the authorized number of directors may be changed only by ordinary resolution of the shareholders. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class shall consist of one third of the Board of Directors.
Board and Committee Matters
Our Board of Directors has determined that all members of the Board of Directors, except John V. Oyler and Xiaodong Wang, are independent, as determined in accordance with the rules of the NASDAQ Stock Market. In making such independence determination, our Board of Directors considered the relationships that each such non-employee director has with us and all other facts and circumstances that the Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our share capital by each non-employee director. In considering the independence of the directors listed above, our Board of Directors considered the association of our directors with the holders of more than 5% of our share capital. We expect that the composition and functioning of our Board of Directors and each of our committees will continue to comply with all applicable requirements of the NASDAQ Stock Market and the rules and regulations of the SEC. There are no family relationships among any of our directors or executive officers.
Corporate Governance
We adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code is posted on the Corporate Governance section of our website, which is located athttp://ir.beigene.com. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.
Board Meetings and Committees
Our Board of Directors held 11 meetings during 2016. The directors regularly hold executive sessions at meetings of the Board of Directors. During 2016, each of the directors then in office attended at least 75% of the aggregate of all meetings of the Board of Directors and all meetings of the committees of the Board of Directors on which such director then served, except Timothy Chen. Now that we are a public company, continuing directors and nominees for election as directors in a given year are encouraged to attend the annual general meeting of shareholders, barring significant commitments or special circumstances. This is our first annual general meeting of shareholders since we became a public company.
During 2016, our Board of Directors had three standing committees: Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
Audit Committee
Thomas Malley, Ke Tang and Qingqing Yi currently serve on the Audit Committee, which is chaired by Thomas Malley. Our Board of Directors has determined that each member of the Audit Committee is "independent" for Audit Committee purposes as that term is defined in the rules of the SEC and the NASDAQ Stock Market. Our Board of Directors has designated each of Thomas Malley and Ke Tang as an "audit committee financial expert," as defined in SEC rules. The Audit Committee's responsibilities include:
The Audit Committee held six meetings during 2016. The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and the NASDAQ Stock Market. A copy of the Audit Committee charter is available on our website athttp://ir.beigene.com.
Compensation Committee
Qingqing Yi, Ranjeev Krishana and Timothy Chen currently serve on the Compensation Committee, which is chaired by Qingqing Yi. Our Board of Directors has determined that each member of the Compensation Committee is "independent" as that term is defined in the rules of the NASDAQ Stock Market. The Compensation Committee's responsibilities include:
The Compensation Committee held seven meetings during 2016. The Compensation Committee operates under a written charter adopted by the Board of Directors, which is available on our website athttp://ir.beigene.com.
Nominating and Corporate Governance Committee
Donald W. Glazer and Michael Goller currently serve on the Nominating and Corporate Governance Committee, which is chaired by Donald W. Glazer. Our Board of Directors has determined
that each member of the Nominating and Corporate Governance Committee is "independent" as that term is defined in the rules of the NASDAQ Stock Market. The Nominating and Corporate Governance committee's responsibilities include:
The Nominating and Corporate Governance committee held two meetings during 2016. The Nominating and Corporate Governance Committee operates pursuant to a written charter adopted by the Board of Directors, which is available on our website athttp://ir.beigene.com.
Director Nominations
The Board of Directors will consider and approve from time to time the criteria that it deems necessary or advisable for director candidates. The Board of Directors has full authority to modify such criteria as it deems necessary or advisable. The Board of Directors has delegated to the Nominating and Corporate Governance Committee the responsibility for developing and recommending to the Board of Directors for its consideration and approval criteria for director candidates. The Nominating and Corporate Governance Committee has adopted policies and procedures for director candidates. The Board of Directors may, however, rescind its delegation and assume the responsibilities it previously delegated to the Nominating and Corporate Governance Committee.
The Board of Directors has delegated to the Nominating and Corporate Governance Committee the responsibility to identify candidates for nomination to the Board of Directors (including candidates to fill vacancies) and assessing their qualifications in light of the policies and principles in our Corporate Governance Guidelines and the Committee's charter. The Nominating and Corporate Governance Committee will recommend director candidates for the Board of Directors' consideration and review the candidates' qualifications with the Board of Directors. The Board of Directors retains the authority to nominate a candidate for election by the securityholders as a director and to fill vacancies. In identifying director candidates, the Nominating and Corporate Governance Committee may consider all facts and circumstances it deems appropriate, including, among other things, the skills of the candidate, his or her depth and breadth of business experience and other background characteristics, his or her independence and the needs of the Board of Directors.
Our Nominating and Corporate Governance Committee and Board of Directors may therefore consider a broad range of factors relating to the qualifications and background of nominees, which may include diversity and is not limited to race, gender or national origin. We have no formal policy regarding board diversity. Our Nominating and Corporate Governance Committee's and Board of Directors' priority in selecting board members is identification of persons who will further the interests of our shareholders through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge of our business, understanding of the competitive landscape and professional and personal experiences and relevant expertise.
Director Nominations by Shareholders
Any shareholder wishing to recommend a director candidate for consideration by the Nominating and Corporate Governance committeeCommittee should provide the following information within the timeframe set forth by our memorandum and articles of associationExisting Articles and SEC rules to BeiGene, Ltd., c/o Mourant Ozannes CorporateGovernance Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, Grand Cayman KY1-1108, Cayman Islands, Attention: Secretary: (a) the name and address of record of the shareholder; (b) a representation that the shareholder is a record holder of our securities or, if the shareholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the Exchange Act; (c) the candidate's name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the past five years; (d) a description of the qualifications and background of the candidate that addresses the criteria for board membership approved by our board of directors; (e) a description of all arrangements or understandings between the shareholder and the candidate; (f) the consent of the candidate (i) to be named in the proxy statement for our next shareholder meeting and (ii) to serve as a director if elected at that meeting; and (g) and any other information regarding the candidate that is required to be included in a proxy statement filed pursuant to SEC rules.rules and Listing Rules of HKEx. The Nominating and Corporate Governance Committee may seek further information from or about the shareholder making the recommendation, the candidate, or any such other beneficial owner, including information about all business and other relationships between the candidate and the shareholder and between the candidate and any such other beneficial owner.
Securityholder Communications
The Board of Directors provides to every securityholder the ability to communicate with the Board of Directors, as a whole, and with individual directors on the Board of Directors through an established process for securityholder communication. For a securityholder communication directed to the Board of Directors as a whole, securityholders may send such communication to the attention of our Secretary via Regular Mail or Expedited Delivery Service to: BeiGene, Ltd., c/o Mourant Ozannes Corporate Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, Grand Cayman KY1-1108, Cayman Islands, Attn.: Board of Directors c/o Secretary.
For a securityholder communication directed to an individual director in his or her capacity as a member of the Board of Directors, securityholders may send such communication to the attention of the individual director via Regular Mail or Expedited Delivery Service to: BeiGene, Ltd., c/o Mourant Ozannes Corporate Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, Grand Cayman KY1-1108, Cayman Islands, Attn.: [Name of Individual Director].
We will forward by Regular Mail any such securityholder communication to each director, and the Chairman of the Board of Directors in his capacity as a representative of the Board of Directors, to whom such securityholder communication is addressed to the address specified by each such director and the Chairman of the Board of Directors.
Board Leadership Structure and Role in Risk Oversight
Our Chief Executive Officer, John V. Oyler, is the Chairman of the Board of Directors. The Board of Directors believes that Mr. Oyler is the director best suited to identify strategic opportunities and focus of the Board of Directors due to his extensive understanding of our business as a founder. The Board of Directors also believes that the combined role of Chairman and Chief Executive Officer can promote the effective execution of strategic initiatives and facilitate the flow of information between management and the Board of Directors. We do not have a lead independent director.
Our Board of Directors oversees the management of risks inherent in the operation of our business and the implementation of our business strategies. Our Board of Directors performs this
oversight role by using several different levelsOVERVIEW OF PROPOSALS
This Proxy Statement contains six proposals requiring shareholder action:
Proposal 1 requests the adoption of review. In connectionan official Chinese company name "" for BeiGene, Ltd.
Proposal 2 requests the adoption of the Restated Articles to comply with its reviews of our operations and corporate functions, our Board of Directors addresses the primary risks associated with those operations and corporate functions. In addition, our Board of Directors reviews the risks associated with our business strategies periodically throughout the year.HK Listing Rules as described in this Proxy Statement.
Each of our board committees also overseesProposal 3 requests the management of our risk that fallsapproval, within the committee's areasparameters of responsibility. In performing this function, each committee has full access to management, as well as the ability to engage advisors. Our Chief Financial Officer reports to the Audit Committee and is responsible for identifying, evaluating and implementing risk management controls and methodologies to address any identified risks. In connection with its risk management role, our Audit Committee meets privately with representatives from our independent registered public accounting firm and our Chief Financial Officer. The Audit Committee oversees the operation of our risk management program, including the identificationRule 13.36 of the primary risks associated with our business and periodic updates to such risks, and reports to our Board of Directors regarding these activities.
Audit Committee Report
The information contained in this report shall not be deemed to be (1) "soliciting material," (2) "filed" with the SEC, (3) subject to Regulations 14A or 14CHK Listing Rules, of the Exchange Act, or (4) subjectgranting of a share issue mandate to the liabilities of Section 18 of the Exchange Act. This report shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act, except to the extent that we specifically incorporate it by reference into such filing.
The Audit Committee operates under a written charter approved by the Board of Directors which provides that its responsibilities include the oversightto issue, allot or deal with unissued ordinary shares and/or ADSs not exceeding 20% of the qualitytotal number of our financial reports and other financial informationissued ordinary shares of the Company as at the date of passing of such proposed ordinary resolution up to the next AGM, subject to the conditions described in this Proxy Statement.
Proposal 4 requests the authorization of the Company and its compliance with legalunderwriters, at their sole discretion, to allocate to each of the Existing Shareholders, up to a maximum amount of shares in order to maintain the same shareholding percentage of each of the Existing Shareholders (based on the then-outstanding share capital of the Company) before and regulatory requirements;after the appointment, compensation,allocation of the corresponding securities issued pursuant to an offering conducted pursuant to the general mandate set forth above for a period of five years, which period will be subject to an extension on a rolling basis each year, conditional on the approval of the shareholders who are not Existing Shareholders, subject to the conditions described in this Proxy Statement.
Proposal 5 requests the approval of the Second Amended and oversightRestated 2016 Share Option and Incentive Plan.
Proposal 6 requests the approval of our independent registered public accounting firm, Ernst & Young Hua Ming LLP, including reviewing their independence; reviewingthe Second Amended and approvingRestated 2018 Employee Share Purchase Plan.
Each of the planned scope of our annual audit; reviewing and pre-approving any non-audit services that may be performed by Ernst & Young Hua Ming LLP; the oversight of our internal audit function; reviewing with management and our independent registered public accounting firm the adequacy of internal financial controls; and reviewing our critical accounting policies and estimates and the application of accounting principles generally acceptedproposals is discussed in more detail in the United Statespages that follow.
Results of America.EGM
The Audit Committee oversees our financial reporting process on behalf Results of the Board of Directors. Management is responsible for our internal controls, financial reporting process, and compliance with laws and regulations and ethical business standards. Ernst & Young Hua Ming LLP is responsible for performing an independent audit of our consolidated financial statements in accordance withEGM will be posted on the standardswebsite of the Public Company Accounting Oversight Board (United States). The Audit Committee's main responsibility is to monitor and oversee this process.
The Audit Committee reviewed and discussed with management our audited financial statements for the fiscal year ended December 31, 2016. The Audit Committee discussed with Ernst & Young Hua Ming LLP the matters required to be discussed by Public Company Accounting Oversight Board ("PCAOB") Auditing Standard No. 1301,(Communications with Audit Committeeswww.beigene.com,) and SEC Regulation S-X Rule 207,on the website of Hong Kong Exchanges and Clearing Limited (Communications with Audit Committeeswww.hkexnews.hk. The Audit Committee has received) upon the written disclosures and the letter from the independent registered public accounting firm required by applicable requirementsconclusion of the PCAOB regardingEGM and on the independent registered public accounting firm's communications withwebsite of the Audit Committee concerning independence, and has discussed withSEC (www.sec.gov) in a Current Report on Form 8-K filed by us within four business days of the independent registered public accounting firmconclusion of the independent registered public accounting firm's independence.EGM.
The Audit Committee considered any fees paid to Ernst & Young Hua Ming LLP for the provision of non-audit related services and does not believe that these fees compromise Ernst & Young Hua Ming LLP's independence
PROPOSAL 1
OFFICIAL CHINESE COMPANY NAME
General
We are a commercial-stage biotechnology company with a substantial presence in performing the audit.
BasedChina through our local subsidiaries. Our securities are listed on the reviewStock Exchange of Hong Kong Limited (the "HKEx") and discussions referred to above, the Audit Committee recommended to theNasdaq Global Select Market ("NASDAQ"). Our Board of Directors believes that such audited financial statementsit is advisable to adopt an official Chinese company name "" for BeiGene, Ltd.
Vote Required and Board of Directors' Recommendation
Approval of Proposal 1 requires the favorable vote of at least a two-thirds majority of the votes cast by the shareholders entitled to vote who are present in person or by proxy at the EGM. Broker non-votes and abstentions with respect to Proposal 1 will not be included in our Annual Report on Form 10-Ktreated as votes cast for this purpose and, therefore, will not affect the year ended December 31, 2016,outcome of the vote.
The Board of Directors recommends that shareholders vote FOR the adoption of an official Chinese company name for filing with the SEC.
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EXECUTIVE COMPENSATIONPROPOSAL 2
RESTATED ARTICLES
OverviewGeneral
Our compensation programs are designed to:
Our Compensation Committee is primarily responsible for developing and implementing our compensation policies and establishing and approving the compensation for all of our executive officers; with respect to the Chief Executive Officer and Chief Financial Officer, the Compensation Committee reviews and makes recommendations to the full Board of Directors for approval.has approved, declared advisable and is recommending that our shareholders approve the Restated Articles to amend our Existing Articles at the EGM. Details of the proposed amendments to the Existing Articles are set out below. The Compensation Committee overseesfollowing discussion is qualified in its entirety by reference to the proposed Restated Articles, a copy of which is attached to this Proxy Statement asAppendix A and is incorporated herein by reference.Appendix A is marked to show the proposed changes that would be made.
Background
Since August 8, 2018, our compensation and benefit plans and policies, administers our equity incentive plans, reviews and approves annually all compensation decisions relatingordinary shares have been listed on the HKEx. In connection with the listing, we undertook to the HKEx to put forth resolutions to our executive officers,shareholders at an EGM to be convened within four months of the consummation of the listing to amend certain provisions of our Existing Articles to comply with the HK Listing Rules, and makes recommendationswe have received irrevocable undertakings from shareholders holding 40.9% of shares entitled to vote at the EGM to approve the Restated Articles.
The Existing Articles are available on the websites of the Company (www.beigene.com) and Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk).
Description and Purpose of the Restated Articles
Shareholder Meeting Requisition
To comply with the HK Listing Rules, in the proposed Restated Articles, we propose to amend our Existing Articles such that holders of one-tenth of voting rights of our issued share capital may requisition a general meeting of shareholders, compared to the full Boardsimple majority requirement currently set out in our Existing Articles.
Director Appointment and Removal
Paragraph 4(3) of Directors onAppendix 3 and paragraph 5(1) of Part B of Appendix 13 of the HK Listing Rules provide that directors may be removed at any time by ordinary resolution of the members. Under our Existing Articles, any director may be removed by a special resolution of the members. To comply with the HK Listing Rules, in the proposed Restated Articles, we propose to amend our Existing Articles such that (1) the shareholders requisitioning a general meeting of shareholders may put forward resolutions to appoint or remove directors, and (2) at that meeting so convened the affirmative vote of a simple majority of the issued shares as of the applicable record date shall be sufficient to approve the appointment or removal of directors.
Director Compensation for Loss of Office or Retirement
Paragraph 5(4) of Part B of Appendix 13 of the HK Listing Rules provides that the articles of association shall stipulate that the issuer in general meeting must approve the payment to any director or past director of any sum by way of compensation for loss of office or as consideration for or in connection with his or her retirement from office (not being a payment to which the Chief Executive Officer and Chief Financial Officer. The Compensation Committee considers recommendations fromdirector is contractually entitled). To comply with the HK Listing Rules, in the proposed Restated Articles, we propose to amend our Chief Executive Officer regardingExisting Articles such that any compensation for loss of office or as consideration in connection with a director's retirement (not being a payment to which he/she is contractually entitled) is subject to the compensationapproval of our executive officers other than the Chief Executive Officer and Chief Financial Officer. Our Compensation Committee has the authority under its charter to engage the services ofshareholders at a consulting firm or other outside advisor to assist it in designing our compensation programs and in making compensation decisions.
In 2016, the Compensation Committee retained Willis Towers Watson to assist in an evaluation of our compensation philosophy, validation of our compensation peer group, develop competitive market data to benchmark the compensation for our named executive officers and advise on matters related to our compensation structure and programs generally. The compensation consultant also consults with the Compensation Committee about non-employee director compensation. Based on consideration of the factors set forth in the rules of the SEC and NASDAQ, the Compensation Committee has determined that their relationship with Willis Towers Watson and the work performed by Willis Towers Watson on behalf of the Compensation Committees has not raised any conflict of interest.
Executive Compensation Components
Our executive compensation consists of base salary, performance-based cash compensation, long-term incentive compensation in the form of share options, restricted shares and broad-based benefits programs. The Compensation Committee considers a number of factors in setting compensation for our executive officers, including company performance, as well as the executive's performance, experience, responsibilities and the compensation of executive officers in similar positions at comparable companies.
Base Salary
Base salary is intended to provide compensation for day-to-day performance. The Compensation Committee believes that a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives. Base salaries for our named executive officers are intended to be competitive with those received by other individuals in similar positions at the companies with which we compete for talent. Base salaries are originally established at the time the executive is hired based on individual experience, skills and expected contributions, our understanding of what executives in similar positions at peer companies were paid, and alsogeneral meeting.
negotiations duringMeeting Notice Requirement
Paragraph 3(1) of Part B of Appendix 13 of the hiring process.HK Listing Rules provides that the articles of association shall stipulate that any annual general meeting must be called by notice of at least 21 days, and that any other general meeting (including an extraordinary general meeting) must be called by notice of at least 14 days and the articles of association shall stipulate that the notice convening a meeting shall contain particulars of the resolutions to be considered at that meeting. The base salariesnote to paragraph 3(1) of Part B of Appendix 13 of the HK Listing Rules further provides that the articles of association may provide that issuers may convene a general meeting on shorter notice than required under this provision or the companies' articles of association if it is agreed: (a) in the case of an annual general meeting, by all the members entitled to attend and vote at the meeting; and (b) in any other case, by a majority in number of the members having the right to attend and vote at the meeting, being a majority together representing at least 95% of the total voting rights at the meeting of all the members. To comply with the HK Listing Rules, in the proposed Restated Articles, we propose to amend our named executive officersExisting Articles such that the notice period for any annual general meeting shall be at least 21 calendar days' advance notice and the notice period for any other general meeting shall be at least 14 calendar days' advance notice.
The Restated Articles also contain consequential changes to the amendments described above, including but not limited to in relation to the numbering of the provisions of the Existing Articles.
General Effects of the Restated Articles
Upon shareholder adoption of the Restated Articles, the Restated Articles will become effective immediately and will be filed with the Cayman Islands Registrar of Companies.
We believe that the Restated Articles provide better protections for shareholders. Our ADSs will continue to trade on the NASDAQ Global Select Market under the symbol "BGNE", and our ordinary shares will continue to trade on the HKEx under the stock code "06160".
Vote Required and Board of Directors' Recommendation
Approval of Proposal 2 requires the favorable vote of at least a two-thirds majority of the votes cast by the shareholders entitled to vote who are reviewed annuallypresent in person or by proxy at the EGM. Broker non-votes and mayabstentions with respect to Proposal 2 will not be adjustedtreated as votes cast for this purpose and, therefore, will not affect the outcome of the vote.
The Board of Directors recommends that shareholders vote FOR the adoption of the Restated Articles.
PROPOSAL 3
GENERAL MANDATE TO ISSUE SHARES
In order to reflect market conditions,give the financial positionCompany the flexibility to issue ordinary shares and/or ADSs if and when appropriate and in accordance with Rule 13.36 of the HK Listing Rules, the Company proposes an ordinary resolution at the EGM to approve the granting of a share issue mandate to the Board of Directors to issue, allot or deal with unissued ordinary shares and/or ADSs not exceeding 20% of the total number of issued ordinary shares of the Company as at the date of passing of such proposed ordinary resolution (i.e., a total of 154,472,636 ordinary shares on the basis that no further ordinary shares are issued or repurchased before the EGM) up to the next AGM of the Company (the "General Mandate to Issue Shares").
The Board of Directors does not have any current plan to issue any new shares pursuant to the General Mandate to Issue Shares.
The adoption of the General Mandate to Issue Shares is not conditioned on the shareholder approval of the Connected Person Placing Authorization described in Proposal 4.
Vote Required and Board of Directors' Recommendation
Approval of Proposal 3 requires the favorable vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person or by proxy at the EGM. Broker non-votes and abstentions with respect to Proposal 3 will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of the vote.
The Board of Directors recommends that shareholders vote FOR the approval of the General Mandate to Issue Shares.
PROPOSAL 4
CONNECTED PERSON PLACING AUTHORIZATION
As a bio-pharmaceutical company, the Company believes that efficient access to capital on a continuing basis is essential to funding the Company's business plans, and participation in capital raisings by biotech focused funds with deep industry knowledge (such as the Company's existing shareholders, Baker Bros. Advisors LP and Hillhouse Capital Management, Ltd. and parties affiliated with each of them (the "Existing Shareholders")), is often crucial to the success of capital raising transactions. In connection with the Company's listing on the HKEx in August 2018, the Company therefore applied for, and the HKEx granted, a waiver (the "Waiver") from strict compliance with Rule 13.36(1) of the HK Listing Rules and the independent shareholder approval requirements set out in Chapter 14A of the HK Listing Rules in respect of the Connected Person Placing Authorization (as defined below).
In order to give the Company the flexibility to issue ordinary shares and/or ADSs to certain connected persons if and when appropriate and to comply with the HK Listing Rules, the Company proposes an ordinary resolution at the EGM to authorize the Company and its underwriters, at their sole discretion, to, in the Company's securities offerings, allocate to each of the Existing Shareholders, up to a maximum amount of shares in order to maintain the same shareholding percentage of each of the Existing Shareholders (based on then-outstanding share capital of the Company) before and after the allocation of the corresponding securities issued pursuant to an offering conducted pursuant to the General Mandate to Issue Shares set forth in Proposal 3 for a period of five years, which period will be subject to an extension on a rolling basis each year, subject to the following conditions: (the "Connected Person Placing Authorization")
(1) the Company will put forward Proposals 3 and 4 to its shareholders in the next general meeting following the HKEx listing, which will be convened within four months after its listing;
(2) the Connected Person Placing Authorization and the shareholder approval of the General Mandate to Issue Shares are not interdependent in that our shareholders may approve the General Mandate to Issue Shares without approving the Connected Person Placing Authorization;
(3) the Existing Shareholders shall abstain from voting on the Connected Person Placing Authorization;
(4) the Connected Person Placing Authorization is only valid to the extent the Existing Shareholders individually hold less than 50% of the then-outstanding share capital of the Company;
(5) any securities issued to the Existing Shareholders in an offering conducted pursuant to the General Mandate to Issue Shares shall be for cash consideration only and not as consideration for any acquisition;
(6) none of the Existing Shareholders shall be entitled to have representatives on the committee of the Board of Directors responsible for determining specific pricing of any offering;
(7) apart from the potential pro rata allocation, the Existing Shareholders will subscribe for securities on the same terms and conditions as all other placees in any offering and neither of the Existing Shareholders shall be entitled to any preferential treatment with respect to any offering conducted;
(8) the Company will put forward Proposals 3 and 4 to its shareholders at each subsequent annual general meeting after its listing on the HKEx; and
(9) the Company remains listed on the NASDAQ.
Subject to the conditions above, if the Connected Person Placing Authorization is approved at the EGM, the Company and its underwriters will be able to, in the Company's securities offerings, place a pro rata amount of securities to the Existing Shareholders in connection with issuances of the Company's shares under a general mandate approved by the Company's shareholders, during an initial five-year period after the EGM, with such five-year period subject to an extension on a rolling basis at each subsequent annual general meeting of the Company. Our Board of Directors does not have any current plan to issue any new shares to the Existing Shareholders pursuant to the Connected Person Placing Authorization.
As of October 25, 2018, the Existing Shareholders had the following interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to section 336 of the Hong Kong Securities and Futures Ordinance ("SFO"):
Name of Shareholder | Capacity / Nature of interest | Number of Shares/ underlying shares | Approximate percentage of holding(1) | ||||||
---|---|---|---|---|---|---|---|---|---|
Julian C. Baker(2) | Beneficial interest / Interest in controlled corporations | 161,880,677 | 21.0 | % | |||||
Felix J. Baker(2) | Beneficial interest / Interest in controlled corporations | 161,880,677 | 21.0 | % | |||||
Baker Bros. Advisors (GP) LLC.(2) | Interest in controlled corporations | 161,745,282 | 21.0 | % | |||||
Baker Bros. Advisors LP(2) | Interest in controlled corporations | 161,745,282 | 21.0 | % | |||||
Baker Brothers Life Sciences Capital, L.P.(2) | Beneficial interest | 145,425,622 | 18.9 | % | |||||
Hillhouse Capital Management Ltd.(3) | Interest in controlled corporations | 76,563,367 | 9.9 | % | |||||
Gaoling Fund, L.P.(3) | Beneficial interest | 58,995,800 | 7.7 | % |
Notes:
Vote Required and Board of Directors' Recommendation
Approval of Proposal 4 requires the favorable vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person or by proxy at the EGM and who are not Existing Shareholders. Broker non-votes and abstentions with respect to Proposal 4 will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of the vote.
The Board of Directors recommends that shareholders vote FOR the approval of the Connected Person Placing Authorization.
PROPOSAL 5
APPROVAL OF THE BEIGENE, LTD. SECOND AMENDED AND RESTATED 2016 SHARE OPTION AND INCENTIVE PLAN
Overview
Our Board of Directors believes that share options and other share-based incentive awards play an important role in our success by encouraging and enabling our (and our subsidiaries') employees, officers, non-employee directors and consultants upon whose judgement, initiative and efforts we largely depend for the successful conduct of our business. Our Board of Directors anticipates that providing such persons with a direct equity stake in our Company will assure a closer identification of the interests of such individuals with those of our Company and our executives' performanceshareholders, thereby stimulating their efforts on our behalf and strengthening their desire to remain with our Company.
On November 7, 2018, our Board of Directors approved the BeiGene, Ltd. Second Amended and Restated 2016 Share Option and Incentive Plan, subject to shareholder approval (the "2016 Plan", and as wellamended, the "Second A&R 2016 Plan"). The Second A&R 2016 Plan includes the following key changes:
existing Independent Director Compensation Policy, as previously disclosed in our Current Report on Form 8-K filed on June 8, 2018, with the SEC, independent directors are paid an officer's responsibilities.annual cash retainer of US$50,000 and additional fees for service as a member or chair of each committee of the Board of Directors on which they serve, ranging from US$5,000 to US$22,500 per year, as specified in the policy. Additionally, independent directors are granted equity awards valued at US$300,000 in connection with their initial election or appointment to the Board of Directors, pro-rated in the first year of service, and annual equity awards valued at US$300,000 on the date of each annual meeting of shareholders. Each of the awards consists of one-half stock options and one-half restricted share units ("RSUs"), vesting on the earlier of the first anniversary of date of grant or the date of the next annual meeting of shareholders, and in full upon death, disability or the occurrence of specified events in connection with a change of control of the Company.
The Second A&R 2016 Plan was designed to enhance the flexibility of the Compensation Committee of our Board of Directors (the "Compensation Committee") in granting share options and other awards to our (and our subsidiaries') officers, employees, non-employee directors and consultants and to ensure that we can continue to grant share options and other awards to such persons at levels determined to be appropriate by the Compensation Committee. In August 2018, in accordance with the HK Listing Rules, our Board of Directors adopted the Amended and Restated 2016 Share Option and Incentive Plan to remove the "evergreen" feature from the 2016 Plan that provided for an automatic annual increase to the number of shares reserved under the 2016 Plan and to make other changes required by the HK Listing Rules. These amendments did not require shareholder approval.
The increase of 38,553,159 ordinary shares, or 5% of our outstanding shares as of September 30, 2018, to the aggregate number of shares contemplated by the Second A&R 2016 Plan is intended to approximate the 5% increase that would have been added to the plan on January 1, 2019, had the evergreen remained in place. As the "evergreen" provision was removed, there will not be an automatic increase in the number of shares reserved under the 2016 Plan on January 1, 2019 or in future years. If the Second A&R 2016 Plan is not approved by our shareholders, the existing Amended and Restated 2016 Share Option and Incentive Plan will remain in effect and we currently anticipate that we will exhaust all the shares available for issuance under our 2016 Plan by mid-2019, and such shares could be exhausted sooner as we continue planned increases in headcount to support our business growth. A copy of the Second A&R 2016 Plan is attached to this Proxy Statement asAppendix B and is incorporated herein by reference.
If the Second A&R 2016 Plan is approved by our shareholders, the Company will make an application to the HKEx for the listing of the additional shares that will be issued under the Second A&R 2016 Plan.
As of December 31, 2017, we have granted options, restricted share units, or RSUs, and restricted shares covering 101,414,629 ordinary shares under our 2016 Plan, of which 6,651,462 share options, nil RSUs and 300,000 restricted shares have expired, terminated or forfeited, and of which 1,667,430 options have been exercised, nil ordinary shares were issued upon settlement of vested RSUs and 268,750 restricted shares were vested. The number of options, RSUs and restricted shares outstanding under the base salaries2016 Plan as of December 31, 2017 was 90,251,295, 1,469,442 and 806,250, respectively, and there were 2,090,472 ordinary shares available for grant under the 2016 Plan, not including any shares that might in the future be added back to the shares available for issuance under the 2016 Plan as a result of forfeiture, cancelation, hold-back, reacquisition, expiration or other termination (other than by exercise).
As of September 30, 2018, we have granted options, RSUs and restricted shares covering 120,148,890 ordinary shares under our 2016 Plan, of which 12,552,514 share options, 408,915 RSUs and 418,750 restricted shares have expired or terminated, and of which 9,984,194 options have been exercised, 440,414 ordinary shares were issued upon settlement of vested RSUs and 656,250 restricted shares were vested. The number of options, RSUs and restricted shares outstanding under the 2016 Plan as of September 30, 2018 was 84,826,614; 10,561,239; and 300,000, respectively, and there were 19,646,274 ordinary shares available for grant under the 2016 Plan, not including any shares that might in the future be added back to the shares available for issuance under 2016 Plan as a result of forfeiture, cancelation, hold-back, reacquisition, expiration or other termination (other than by exercise). A total of 771,063,184 ordinary shares were outstanding as of September 30, 2018. The weighted average exercise price of all share options outstanding as of September 30, 2018 under our 2016 Plan was US$4.25. The weighted average remaining life of all share options outstanding as of September 30, 2018 under our 2016 Plan was 8.6 years.
As of September 30, 2018, we have granted options and RSUs covering 1,967,459 ordinary shares under our Amended and Restated 2018 Inducement Equity Plan (the "2018 Inducement Plan"), of which nil share options and 21,593 RSUs have expired or terminated, and of which nil options have been exercised and nil ordinary shares were issued upon settlement of vested RSUs. The number of options and RSUs outstanding under the 2018 Inducement Plan as of September 30, 2018 was 79,404; and 1,866,462, respectively, and there were 10,054,134 ordinary shares available for grant under the 2018 Inducement Plan, not including any shares that might in the future be added back to the shares available for issuance under 2018 Inducement Plan as a result of forfeiture, cancellation, hold-back, reacquisition, expiration or other termination (other than by exercise). A total of 771,063,184 ordinary shares were outstanding as of September 30, 2018. The weighted average exercise price of all share options outstanding as of September 30, 2018 under our 2018 Inducement Plan was US$13.66. The weighted average remaining life of all share options outstanding as of September 30, 2018 under our 2018 Inducement Plan was 9.9 years.
Proposal 5 seeks shareholder approval of the Second A&R 2016 Plan.
SUMMARY OF THE MATERIAL FEATURES OF THE SECOND A&R 2016 PLAN
While our Board of Directors is aware of and has considered the potential dilutive effect of additional awards and option grants, it also recognizes the performance and motivational benefits of equity compensation and believes that the 2016 Plan, including the increase in available shares contemplated by the Second A&R 2016 Plan, is consistent with our executive compensation philosophy and the compensatory practices of other biotechnology companies in our peer group. The exercise price of any option grants under the Second A&R 2016 Plan will be at the greater of (x) the fair market value of our namedordinary shares on the close of business on the date such option is granted, based on the closing price of our ADSs on the NASDAQ, and (y) the average closing price of our ordinary shares over the preceding five trading days, based on the closing price of our ADSs on the NASDAQ. Furthermore, since our Board of Directors typically grants awards to employees that vest over a four-year period, employees must generally remain with our Company in order to reap the potential benefits of their awards.
The following material features of the Second A&R 2016 Plan are designed to protect our shareholders' interests and to reflect corporate governance best practices, including:
Based solely on the closing price of our ADSs as reported by NASDAQ on September 28, 2018 and the maximum number of ordinary shares that would have been available for future awards under
the 2016 Plan as of such date, taking into account the proposed increase described herein, the maximum aggregate market value of the ordinary shares that could potentially be issued under the Second A&R 2016 Plan is US$771,008,181. The ordinary shares underlying any awards under the Second A&R 2016 Plan or the 2011 Plan that are forfeited, cancelled, held back upon exercise or settlement to satisfy the exercise price or tax withholding, reacquired prior to vesting, or are otherwise terminated (other than by exercise) are added back to the ordinary shares available for issuance under the Second A&R 2016 Plan.
Rationale for Share Increase
Given our increased headcount and our continued efforts to develop and commercialize our product portfolio, which will require further expansion of our organizational structure, the share increase contemplated by the Second A&R 2016 Plan is critical to our ongoing effort to build shareholder value. We currently anticipate that we may exhaust all the shares available for issuance under our 2016 Plan by mid-2019 if the Second A&R 2016 Plan is not approved (and such shares may be exhausted sooner if we continue to increase the size of our organization, including increases in headcount).
In August 2018, in accordance with the HK Listing Rules, we removed the "evergreen" feature that provided for an automatic annual increase of 5% of our outstanding ordinary shares to the number of shares reserved under the 2016 Plan. The increase of 38,553,159 shares, or 5% of our outstanding shares as of September 30, 2018, to the aggregate number of shares contemplated by the Second A&R 2016 Plan is intended to approximate the 5% increase that would have been added on January 1, 2019, had the evergreen remained in place. As the "evergreen" provision was removed, there will not be an automatic increase in the number of shares reserved under the 2016 Plan on January 1, 2019 or in future years.
Our equity incentive program is broad-based and equity incentive awards are also an important component of our executive officers were as describedand non-executive employees' compensation. We operate in "—Summary Compensation Table—2016" below.
Performance-Based Cash Bonus
an industry and in geographies where there is an incredibly competitive market for the hiring and retention of a talented workforce, which we believe is critical for our success. Our Compensation Committee has the authority to award annual performance-based cash bonuses to our executive officers and make recommendations to the full Board of Directors believe that we must continue to offer a competitive equity compensation program in order to attract, retain and motivate the talented and qualified employees necessary for approvalour continued growth and success.
We attempt to manage our long-term shareholder dilution by limiting the number of performance-based cash bonusesequity incentive awards granted annually. The Compensation Committee carefully monitors our annual net burn rate, total dilution, and equity expense in order to maximize shareholder value by granting only the appropriate number of equity incentive awards that it believes is necessary to attract, reward, and retain employees. Our "burn rate", as detailed below, has been higher than some of our peers in recent years due to the tremendous growth in our employee workforce, which increased from approximately 321 employees in 2016 to over 1,700 employees today. Our compensation philosophy reflects broad-based eligibility for equity incentive awards, and we grant awards to substantially all of our employees. By doing so, we link employee interests with shareholder interests throughout the organization and motivate our employees to act as owners of the business.
Employee Growth
Since the beginning of 2016, our employee workforce has increased by approximately 885%, from 192 employees at December 31, 2015 to more than 1,700 employees as of September 30, 2018. Given that we grant equity awards to substantially all of our employees, this has substantially stressed the
availability of shares under our equity plans. The following table sets forth the increase in the number of employees for each of the last two fiscal years:
| 2017 | 2016 | |||||
---|---|---|---|---|---|---|---|
Number of Employees (beginning of year) | 321 | 192 | |||||
Number of Employees (end of year) | 900 | 321 | |||||
Total Number of New Employees (net) | 579 | 129 | |||||
Percentage Increase | 280.1 | % | 167.2 | % |
Burn Rate
The following table sets forth information regarding historical awards granted and earned for the Chief Executive Officer2016 and Chief Financial Officer. Unless2017 period, and the corresponding burn rate, which is defined as the number of shares subject to certain equity-based awards granted in a year divided by the weighted average ordinary shares outstanding for that year, for each of the last two fiscal years:
| 2017 | 2016 | |||||
---|---|---|---|---|---|---|---|
Share Options Granted | 62,085,462 | 38,921,219 | |||||
Time-Based Full-Value Shares and Units Granted | 1,769,442 | 1,075,000 | |||||
Total Awards Granted(1) | 63,854,904 | 39,996,219 | |||||
Weighted average ordinary shares outstanding during the fiscal year | 543,185,460 | 403,619,446 | |||||
Annual Burn Rate | 11.8 | % | 9.9 | % | |||
Two-Year Average Burn Rate | 11.0% |
If the Second A&R 2016 Plan, including the request to increase the share reserve by an additional 38,553,159 ordinary shares, is approved by shareholders, we will have approximately 58,199,433 ordinary shares available for grant after the EGM, which is based on 19,646,274 ordinary shares available for grant under the 2016 Plan at September 30, 2018 and the 38,553,159 shares subject to this proposal. Our Compensation Committee determined the size of the requested share increase based on projected equity awards to anticipated new hires, projected annual equity awards in 2019 to existing employees, and an assessment of the magnitude of increase that our shareholders would likely find acceptable. We anticipate that if our request to increase the share reserve is approved by shareholders, it will be sufficient to provide equity incentives to attract, retain, and motivate our employees through mid-2020, although it is possible that we will exhaust the share pool sooner if we continue to expand our workforce to support our growing business at a rate higher than we currently expect.
Summary of the Second A&R 2016 Plan
The following is a summary of certain significant features of the Second A&R 2016 Plan. This summary is subject to the specific provisions contained in the full text of the Second A&R 2016 Plan set forth inAppendix B to this Proxy Statement.
The Second A&R 2016 Plan provides us with flexibility to use various equity-based incentive and other awards as compensation tools to motivate our workforce. These tools include share options, share appreciation rights, restricted shares, restricted share units, unrestricted shares, and dividend equivalent rights.
The ordinary shares we issue pursuant to awards granted under the Second A&R 2016 Plan are authorized but unissued ordinary shares or ordinary shares that we reacquire. Subject to certain
limitations, the ordinary shares underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without any issuance of ordinary shares, or are otherwise providedterminated (other than by exercise) under the Second A&R 2016 Plan and the 2011 Plan will be added back to the ordinary shares available for issuance under the Second A&R 2016 Plan.
The Second A&R 2016 Plan is administered by the Compensation Committee. The Compensation Committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of his or her employment agreement, the target annual cash bonus opportunities for our namedSecond A&R 2016 Plan. Full and part-time officers, employees, non-employee directors and other key persons (including consultants) as selected from time to time by the Compensation Committee are eligible to participate in the Second A&R 2016 Plan. As of September 30, 2018, approximately 1,276 individuals were eligible to participate in the Second A&R 2016 Plan, which included five executive officers, 1,262 employees who are expressed as a percentage of base salarynot officers, and generally established by oureight non-employee directors. The Compensation Committee based on competitive market data and recommendations bymay delegate to the Chief Executive Officer (other than in connection with his own compensation). In 2017, the Board of Directors and Compensation Committee approved performance-based cash bonuses for our named executive officers as described in "Summary Compensation Table—2016" below. These payments were awarded in recognition of our named executive officer's performance in achieving corporate, clinical, and operational milestones in 2016.
Equity Incentive Compensation
Equity incentive grants to our named executive officers are made at the discretionchairman of the Compensation Committee underall or part of the terms ofCompensation Committee's authority and duties with respect to granting awards and to our equity incentive plans except for equity incentive grants forchief executive officer or chief financial officer the Chief Executive Officer and Chief Financial Officer, whichauthority to grant awards to employees who are approved by the full Board of Directors. We believe that equity incentivesnot subject to vesting over time or upon achievementthe reporting and other provisions of performance objectives canSection 16 of the U.S. Securities Exchange Act.
The Second A&R 2016 Plan permits the granting of options to purchase ordinary shares that are not intended to qualify as incentive share options under Section 422 of the Internal Revenue Code, as amended ("the Code"). The exercise price of each share option will be an effective vehicle for the long-term element of compensation, as these awards align individual and team performance with the achievement of our strategic and financial goals over time and with shareholders' interests. In 2016,determined by the Compensation Committee made share option and restricted share grants to our named executive officers as specified inbut may not be less than the "Outstanding Equity Awards at Fiscal Year-End Table—2016" below. All options to purchase shares granted to executives have exercise prices equal to at leasthigher of (i) the fair market value of our ordinary shares on the date of grant and therefore reward executive officers only if(ii) the average fair market value of the ordinary shares for the five business days immediately preceding the date of grant, each as determined by reference to the closing price of our ADSs on the NASDAQ. The term of each share price increasesoption will be fixed by the Compensation Committee and may not exceed 10 years from the date of grant.
Employee Benefits The Compensation Committee will determine at what time or times each option may be exercised.
In additionThe Compensation Committee may award share appreciation rights subject to such conditions and restrictions as it may determine. Share appreciation rights entitle the recipient to ordinary shares, or cash, equal to the primary elementsvalue of the appreciation in our share price over the exercise price. The exercise price of each share appreciation right may not be less than 100% of fair market value of the shares on the date of grant to a grantee who is subject to U.S. tax.
The Compensation Committee may award restricted shares or restricted share units to participants subject to such conditions and restrictions as it may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment or service with us through a specified vesting period. The Compensation Committee may also grant ordinary shares that are free from any restrictions under the Second A&R 2016 Plan. Unrestricted ordinary shares may be granted to participants in recognition of past services or for other valid consideration and may be issued in lieu of cash compensation described above,due to such participant.
The Compensation Committee may grant dividend equivalent rights to participants that entitle the named executive officers also participaterecipient to receive credits for dividends that would be paid if the recipient held a specified number of ordinary shares.
The Second A&R 2016 Plan provides that, upon the effectiveness, of a "sale event," as defined in the same broad-based employee benefits programs available toSecond A&R 2016 Plan, the successor entity may assume, continue or substitute for outstanding awards, as appropriately adjusted. To the extent that awards are not assumed or continued or substituted by the successor entity, all of ourawards granted under the Second A&R 2016 Plan shall terminate. In connection with such termination, all options and share appreciation rights shall become fully exercisable and all other employees (which may vary based on the location of employment), including health insurance, pension benefits, employee housing fund, welfare benefits, lifeawards with time-based vesting conditions will become fully vested and disability insurance, dental insurance, and retirement plan. We do not provide special benefits to our named executive officers except as otherwise described in this Proxy Statement.
Summary Compensation Table—all awards with performance conditions may become fully vested. In addition, in connection with the termination of the Second A&R 2016 Plan upon a sale event, we may make or provide for a cash payment to participants holding options and share appreciation rights, equal to the difference between the per share cash consideration payable to shareholders in the sale event and the exercise price of the options or share appreciation rights and we may make or provide for a similar payment to participants under other awards.
The Board of Directors may amend or discontinue the Second A&R 2016 Plan and the Compensation Committee may amend or cancel outstanding awards for purposes of satisfying changes in law or any other lawful purpose, but no such action may adversely affect rights under an award without the holder's consent. Certain amendments to the Second A&R 2016 Plan, such as any increase to the number of ordinary shares that may be made available for awards, may require the approval of our shareholders.
The Board of Directors approved the Second A&R 2016 Plan on November 7, 2018, and the Second A&R 2016 Plan shall become effective on the date it is approved by shareholders. No awards may be granted under the Second A&R 2016 Plan after November 7, 2028. If the Second A&R 2016 Plan is not approved by shareholders, the 2016 Plan will continue in effect until it expires, and awards may be granted thereunder, in accordance with its terms.
NEW PLAN BENEFITS
Because the grant of awards under the Second A&R 2016 Plan is within the discretion of the Compensation Committee, we cannot determine the dollar value or number of ordinary shares that will in the future be received by or allocated to any participant in the Second A&R 2016 Plan. Accordingly, in lieu of providing information regarding benefits that will be received under the Second A&R 2016 Plan, the following table presentsprovides information regardingconcerning the total compensation awarded to, earnedbenefits that were received by the following persons and paidgroups during the fiscal years ended December 31, 2016 and 2015 to our Chief Executive Officer and the two most highly-compensated2017: each named executive officer; all current executive officers, (other than the Chief Executive Officer)as a group; all current directors who were serving asare not executive officers, at the end of the year ended December 31, 2016. These individualsas a group; and all employees who are our namednot executive officers, for 2016.as a group.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Restricted Share Awards ($)(1) | Option Awards ($)(1) | All Other Compensation ($) | Total ($) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
John V. Oyler | 2016 | 350,004 | (2)(3) | 320,000 | (4) | — | 3,963,960 | 7,952 | (2)(5) | 4,641,916 | ||||||||||||
Founder, Chief Executive | 2015 | 344,705 | (6)(7) | 172,352 | (8) | 3,890,991 | 16,206 | (6)(9) | 4,424,254 | |||||||||||||
Officer and Chairman | ||||||||||||||||||||||
Howard Liang | 2016 | 350,001 | (10) | 182,001 | (4) | — | 3,392,840 | 7,875 | (11) | 3,932,717 | ||||||||||||
Chief Financial Officer and Chief | 2015 | 160,417 | (12) | 48,650 | (8) | 1,622,880 | — | 1,831,947 | ||||||||||||||
Strategy Officer | ||||||||||||||||||||||
Ji Li | 2016 | 230,865 | (13) | 92,346 | (4) | 970,096 | 3,813,331 | — | 5,106,638 | |||||||||||||
Global Head of Business | ||||||||||||||||||||||
Development |
| Options | | | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| RSUs | ||||||||||||
| Average Exercise Price per Ordinary Share (US$)(1) | | |||||||||||
Name and Position | Number of Ordinary Shares | Dollar Value (US$)(2) | Number of Ordinary Shares | ||||||||||
John V. Oyler, Founder, Chief Executive Officer and Chairman | 7.70 | 935,000 | 3,963,123 | 515,000 | |||||||||
Howard Liang, Chief Financial Officer and Chief Strategy Officer | 3.46 | 1,250,000 | — | — | |||||||||
Amy Peterson, Chief Medical Officer, Immuno-oncology | 3.49 | 1,016,178 | — | — | |||||||||
Jane Huang, Chief Medical Officer, Hematology | 3.49 | 980,465 | — | — | |||||||||
Ji Li, Former Executive Vice President, Global Head of Business Development(3) | 3.49 | 750,000 | — | — | |||||||||
All current executive officers, as a group | 4.28 | 4,931,643 | 3,963,123 | 515,000 | |||||||||
All current non-employee directors, as a group | 2.93 | 1,889,944 | 3,155,108 | 410,000 | |||||||||
All employees who are not executive officers, as a group | 3.73 | 54,818,443 | 3,979,091 | 544,442 |
Employment Agreementsis no longer with Our Named Executive Officers
We have entered into employment agreements with each of our named executive officers.
John V. Oyler On April 25, 2017, we and certain of our subsidiaries entered into employment agreements with John V. Oyler, pursuant to which Mr. Oyler will continue to serve as our Chief
Executive Officer. Mr. Oyler is entitled to a base salary of $590,000, which is subject to review and adjustment in accordance with company policy. Mr. Oyler's base salary will be allocated between us and certain of our subsidiaries. Mr. Oyler is eligible for an annual bonus, with a target level of $320,000 and a minimum payout level of 15% of the base salary, based on performance criteria determined by our Board of Directors. Mr. Oyler is eligible to participate in our employee benefit plans generally available to our employees, subject to the terms of those plans. Mr. Oyler's employment agreements also provide for certain transportation and international travel benefits and tax equalization payments. His employment agreements have an initial three-year term and automatically renews for additional one-year terms unless either party provides written notice of nonrenewal. Mr. Oyler's employment can be terminated at will by either party. Upon termination of Mr. Oyler's employment for any reason, we will pay (i) accrued but unpaid base salary during the final payroll period of employment; (ii) unpaid vacation time; (iii) unpaid annual bonus from the previous calendar year; and (iv) any business expenses incurred, documented and substantiated but not yet reimbursed (collectively, the "Final Compensation"). If Mr. Oyler's employment is terminated by us other than for "cause" (as defined in his employment agreements) or if Mr. Oyler terminates his employment for "good reason" (as defined in his employment agreements), Mr. Oyler is entitled to (i) the Final Compensation, (ii) a lump sum equal to the base salary divided by 12, then multiplied by the Severance Period, (iii) the post-termination bonus calculated based on the target bonus for the year and the number of days passed through the date of termination, (iv) a $20,000 one-time bonus and (v) acceleration of the vesting schedule of his equity grants by 20 months. The "Severance Period" is 20 months; provided that if Mr. Oyler's employment is terminated without cause or for good reason during the initial three-year term, the Severance Period will be the greater of 20 months or the number of the months remaining in the initial three-year term; provided further that if Mr. Oyler's employment terminates during the 12 month period following a "change in control" (as defined in his employment agreements), then the Severance Period will be 24 months. His employment agreement provide that all unvested options will immediately vest upon a "change in control." Mr. Oyler's employment agreements also prohibit Mr. Oyler from engaging in certain competitive and solicitation activities during his employment and 18 months after the termination of his employment.
Howard Liang, Ph.D. On July 13, 2015, we entered into an employment agreement with Dr. Liang for the position of Chief Financial and Chief Strategy Officer. Dr. Liang currently receives a base salary of $350,000, which is subject to review and adjustment in accordance with company policy. Dr. Liang is eligible for an annual merit bonus of up to $105,000, based on performance as determined by our Compensation Committee. Dr. Liang was also granted an option to purchase up to 4,900,000 ordinary shares, which vests over four years. Dr. Liang is eligible to participate in our employee benefit plans generally available to our employees, subject to the terms of those plans. Dr. Liang's employment has no specified term, but can be terminated at will by either party. Dr. Liang's employment may be terminated by us without "cause" (as defined in his employment agreement), and if so he would receive his base salary and health and dental insurance payments during a nine-month severance period and other benefits including acceleration of the vesting schedule of his initial option grant by six months, unless Dr. Liang breaches his confidentiality obligations. Dr. Liang may terminate his employment with "good reason" (as defined in his employment agreement) upon 30 days' written notice received within 60 days of the occurrence of the event. If we do not cure the action identified in Dr. Liang's notice, he is entitled to the same benefits as if we terminated his employment without cause, subject to his execution of a release of claims and unless he breaches his confidentiality obligations. We may also terminate Dr. Liang's employment for cause, in certain cases upon 30 days' written notice, and Dr. Liang may also terminate his employment without good reason upon 90 days' written notice, in either case, in which he would then only be entitled to receive certain accrued obligations.
Ji Li, Ph.D. On April 28, 2016, we entered into an employment agreement with Dr. Li for the position of Executive Vice President and Global Head of Business Development. Dr. Li currently receives a base salary of $350,000, which is subject to review and adjustment in accordance with
company policy. Dr. Li is eligible for an annual merit bonus of up to $140,000, based on performance as determined by our Compensation Committee. Dr. Li was granted an option to purchase up to 2,376,000 ordinary shares, which vests over four years. Dr. Li was also granted 475,000 restricted shares, which vest in equal installments annually over a four-year period. Dr. Li is eligible to participate in our employee benefit plans generally available to our employees, subject to the terms of those plans. Dr. Li's employment has no specified term, but can be terminated at will by either party. Dr. Li's employment may be terminated by us without "cause" (as defined in his employment agreement), and if so he would receive his base salary and health and dental insurance payments during a nine-month severance period and other benefits including acceleration of the vesting schedules of his initial option grant and restricted share award by 12 months (or 18 months if such termination occurs within 12 months following a "change in control" (as defined in his employment agreement)), unless Dr. Li breaches his confidentiality obligations. Dr. Li may terminate his employment with "good reason" (as defined in his employment agreement) upon 30 days' written notice received within 60 days of the occurrence of the event. If we do not cure the action identified in Dr. Li's notice, he is entitled to the same benefits as if we terminated his employment without cause, subject to his execution of a release of claims and unless he breaches his confidentiality obligations. We may also terminate Dr. Li's employment for cause, in certain cases upon 30��days' written notice, and Dr. Li may also terminate his employment without good reason upon 90 days' written notice, in either case, in which he would then only be entitled to receive certain accrued obligations.
Outstanding Equity Awards at Fiscal Year-End Table—2016
The following table summarizes, for each of our named executive officers, the number of ordinary shares underlying outstanding options and share awards held as of December 31, 2016.
| Option Awards | Stock Awards | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of Shares That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) | |||||||||||||
John V. Oyler | |||||||||||||||||||
3,230,142 | 8,170,358 | (2) | 0.50 | 7/19/2025 | |||||||||||||||
— | 2,047,500 | (3) | 2.84 | 11/15/2026 | |||||||||||||||
Howard Liang | |||||||||||||||||||
1,735,417 | 3,164,583 | (4) | 0.50 | 7/1/2025 | |||||||||||||||
— | 1,752,500 | (5) | 2.84 | 11/15/2026 | |||||||||||||||
Ji Li | 475,000 | (8) | 1,111,500 | ||||||||||||||||
— | 2,376,000 | (6) | 2.05 | 5/2/2026 | |||||||||||||||
— | 260,000 | (7) | 2.29 | 7/12/2026 |
service. The exercisability of this option will be accelerated upon a change in control or certain termination events.
Compensation Risk Assessment
We believe that although a portion of the compensation provided to our executive officers and other employees is performance-based, our executive compensation program does not encourage excessive or unnecessary risk taking. This is primarily due to the fact that our compensation programs are designed to encourage our executive officers and other employees to remain focused on both short-term and long-term strategic goals, in particular in connection with our pay-for-performance compensation philosophy. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us.
Benefit Plans
Our full-time employees in the People's Republic of China ("PRC"), including some of our named executive officers, participate in a government mandated defined contribution plan, pursuant to which pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that our PRC subsidiaries make contributions to the government for these benefits based on percentages of the employees' salaries.
Our U.S. subsidiary maintains a 401(k) retirement plan for all of its full-time employees in the United States, including some of our named executive officers, with an opportunity to save for retirement on a tax-advantaged basis. Pursuant to the 401(k) plan, participants will be able to elect to defer their current compensation by up to the statutorily prescribed annual limit, with additional salary deferral amounts available to participants beginning in the year they become 50 years of age. Our U.S. subsidiary matches 50% of employee contributions, limited to the first 6% of compensation, those employer-matching contributions to vest 50% after one year and be fully vested after the second anniversary of the employment date.
Rule 10b5-1 Plans
Our policy governing transactions in our securities by directors, officers and employees permits our officers, directors and certain other persons to enter into trading plans complying with Rule 10b5-1 under the Exchange Act. Under these trading plans, the individual relinquishes control over the transactions once the trading plan is put into place. Accordingly, sales under these plans may occur at any time, including possibly before, simultaneously with, or immediately after significant events involving our Company.
Equity Compensation Plan Information
The following table contains information about our equity compensation plans as of December 31, 2016.2017.
Plan Category | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-average Exercise Price of Outstanding Option, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | 35,440,793 | (1) | $ | 2.34 | 34,712,601 | (2) | 91,720,736 | (1) | US$ | 3.27 | 2,090,472 | (2) | ||||||||
Equity compensation plans not approved by security holders | 41,638,950 | (3) | 0.42 | — | (4) | 36,751,603 | (3) | 0.43 | — | (4) | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 77,079,743 | — | 34,712,601 | 128,472,339 | — | 2,090,472 |
Compensation Committee ReportTable of Contents
The following table contains information contained in this report shall not be deemedabout our equity compensation plans as of September 30, 2018.
Plan Category | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | 95,387,853 | (1) | US$ | 4.25 | 23,146,274 | (2) | ||||
Equity compensation plans not approved by security holders | 36,166,110 | (3) | 0.46 | 10,054,134 | (4) | |||||
| | | | | | | | | | |
Total | 131,553,963 | — | 33,200,408 |
Tax Aspects Under the U.S. Code
The following is a summary of the Exchange Act,principal U.S. federal income tax consequences of certain transactions under the Second A&R 2016 Plan. It describes the consequences based on U.S. federal laws in effect as of the date of mailing of this proxy statement. This summary does not describe all U.S. federal tax consequences under the Second A&R 2016 Plan, nor does it describe foreign, state or (4) subjectlocal tax consequences.
Share Options. No income is realized by the optionee at the time the option is granted. Generally (i) at exercise, ordinary income is realized by the optionee in an amount equal to the liabilities of Section 18 of the Exchange Act. This report shall not be deemed incorporated bydifference
reference into anybetween the option price and the fair market value of our other filingsthe ordinary shares on the date of exercise, and the Company receives a tax deduction for the same amount, and (ii) at disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term capital gain or loss depending on how long the ordinary shares have been held. Upon exercise, the optionee will also be subject to Social Security taxes on the excess of the fair market value over the exercise price of the option.
Other Awards. The Company generally will be entitled to a tax deduction in connection with an award under the Exchange ActSecond A&R 2016 Plan in an amount equal to the ordinary income realized by the participant at the time the participant recognizes such income. Participants typically are subject to income tax and recognize such tax at the time that an award is exercised, vests or becomes non-forfeitable, unless the Securities Act, exceptaward provides for a further deferral.
Parachute Payments. The vesting of any portion of an option or other award that is accelerated due to the occurrence of a change of control may cause a portion of the payments with respect to such accelerated awards to be treated as "parachute payments" as defined in the Code. Any such parachute payments may be non-deductible to the Company, in whole or in part, and may subject the recipient to a non-deductible 20% federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).
Limitation on Deductions. Under Section 162(m) of the Code, assuming that such section were applicable, the Company's deduction for certain awards under the Second A&R 2016 Plan may be limited to the extent that we specifically incorporate it by reference into such filing.any "covered employee" (within the meaning of Section 162(m) of the Code) receives compensation in excess of US$1 million a year.
Vote Required and Board of Directors' Recommendation
The Compensation Committee reviewedapproval of Proposal 5 requires the favorable vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person or by proxy. Broker non-votes and discussedabstentions with managementrespect to Proposal 5 will not be treated as votes cast for this purpose and, therefore, will not affect the disclosure included inoutcome of the Executive Compensation section of this Proxy Statement. Based on that review and discussions, the Compensation Committee recommended to thevote.
The Board of Directors recommends that shareholders vote FOR approval of the disclosure included in the Executive Compensation section be included in this Proxy Statement for the year ended December 31,BeiGene, Ltd. Second Amended and Restated 2016 for filing with the SEC.
|
DIRECTOR COMPENSATIONPROPOSAL 6
APPROVAL OF THE BEIGENE, LTD. SECOND AMENDED AND RESTATED 2018 EMPLOYEE
SHARE PURCHASE PLAN
General
On November 7, 2018, our Board of Directors approved the BeiGene, Ltd. Second Amended and Restated 2018 Employee Share Purchase Plan (the "Second A&R 2018 ESPP"), subject to shareholder approval. We are seeking shareholder approval of the Second A&R 2018 ESPP to increase the maximum number of ordinary shares that will be made available for sale thereunder by 3,855,315 shares, or 0.5% of our outstanding shares as of September 30, 2018. When the BeiGene, Ltd. 2018 Employee Share Purchase Plan (the "2018 ESPP") was adopted and approved by our stockholders in June 2018, the 2018 ESPP had a maximum number of shares available for sale of 3,500,000 ordinary shares. As of September 30, 2018, 3,500,000 ordinary shares remained available for future issuance under the 2018 ESPP, as the first offering period commenced on September 4, 2018 and has not yet been completed.
In August 2018, in accordance with the HK Listing Rules, our Board of Directors adopted theAmended and Restated 2018 Employee Share Purchase Plan to remove the "evergreen" feature from the 2018 ESPP that provided for an automatic annual increase of 0.5% of our outstanding ordinary shares to the number of shares reserved under the 2018 ESPP and to make other changes required by the HK Listing Rules. These amendments did not require shareholder approval. The increase to the aggregate number of shares contemplated by the Second A&R 2018 ESPP is intended to approximate the 0.5% increase that would have been added on January 1, 2019, had the evergreen remained in place. As the "evergreen" provision was removed, there will not be an automatic increase to the number of shares reserved under the 2018 ESPP on January 1, 2019 or in future years.
Our Board of Directors believes it is in the best interests of the Company and our shareholders to continue to provide our employees with the opportunity to acquire an ownership interest in the Company through their participation in the Second A&R 2018 ESPP, encouraging them to remain in our employ and more closely aligning their interests with those of our shareholders.
The Second A&R 2018 ESPP, which is a discretionary employee share purchase scheme of the Company and does not involve the grant of incentive options over new ordinary shares or other new securities issued by the Company, does not constitute a share option scheme as defined in Chapter 17 of the HK Listing Rules.
The following summary of certain major features of the Second A&R 2018 ESPP is subject to the specific provisions contained in the full text of the Second A&R 2018 ESPP set forth inAppendix C to this Proxy Statement and is incorporated herein by reference.
Our Board of Directors has adoptedbelieves it is in the best interest of the Company and our shareholders that the Second A&R 2018 ESPP be approved. Shareholders are requested in this Proposal 6 to approve the Second A&R 2018 ESPP. If the Second A&R 2018 ESPP is not approved by shareholders, the existing Amended and Restated 2016 Share Option and Incentive Plan will remain in effect, and it is possible that we would need to terminate the plan if additional shares are not authorized by shareholders prior to exhausting the current authorization.
The Second A&R 2018 ESPP allows eligible employees to purchase our ordinary shares (including in the form of ADSs) at a 15% discount to the market price of our ordinary shares or ADSs. Employees purchase our ordinary shares or ADSs at the end of an independent director compensation policy thatoffering period using funds deducted from their payroll during the offering period. The Second A&R 2018 ESPP is partan important component of a total compensationthe benefits package that is designed to enable us to attract and retain, on a long-term basis, high caliber independent directors. Under the policy, all independent directors are paid cash compensation as set forth below:
| Annual Retainer ($) | |||
---|---|---|---|---|
Board of Directors: | ||||
All independent directors | $ | 45,000 | ||
Audit Committee: | ||||
Chairperson | 20,000 | |||
Non-Chairperson members | 10,000 | |||
Compensation Committee: | ||||
Chairperson | 15,000 | |||
Non-Chairperson members | 7,500 | |||
Nominating and Corporate Governance Committee: | ||||
Chairperson | 10,000 | |||
Non-Chairperson members | 5,000 |
Under our independent director compensation policy, each newly appointed or elected independent director is eligible to receive a one-time grant of a non-qualified option to purchase 260,000 ordinary shares. The date of grant is the date he or she first becomes an independent director. These options become exercisable in three equal annual installments during the three years following the grant date, subject to the director's continued service on the Board of Directors.
In addition, on the date of each annual general meeting of shareholders, each continuing independent director who has served as a director for the previous six months is eligible to receive a non-qualified option to purchase 169,988 ordinary shares. The annual grants become exercisable on the earlier of the one-year anniversary of the date of grant or the date of our next annual general meeting of shareholders, subject to the director's continued service on the Board.
The foregoing options will have an exercise price equal to one thirteenth of the fair market value of an ADS on the NASDAQ Stock Market on the date of grant and be subject to the terms of the 2016 Plan.
We also reimburse all reasonable out-of-pocket expenses incurred by independent directors in attending board and committee meetings.
The following table sets forth a summary of the compensation we paidoffer to our directors during 2016. Other than as set forthemployees. We believe that it is a key factor in the table, we did not pay any compensation, make any equity awards or non-equity awards to, or pay any other compensation to, any members of our Board of Directors in 2016. Mr. Oyler, our Founder, Chief Executive Officer and Chairman, receives no compensation for his service as a director and, consequently, is not included in this table. Dr. Xiaodong Wang, Chair of our Scientific Advisory Board, also receives no compensation for his service as a director. The
retaining existing employees, recruiting and retaining new employees and aligning and increasing the interest of all employees in our success.
If the Second A&R 2018 ESPP is approved by our shareholders, the Company will make an application to the HKEx for the listing of the additional shares that will be issued under the Second A&R 2018 ESPP.
Summary of the Second A&R 2018 ESPP
Administration. The Second A&R 2018 ESPP is administered under the direction of the Compensation Committee, which has authority to interpret the provisions of the Second A&R 2018 ESPP and to make all other determinations necessary or advisable in administering it.
Eligibility. All employees of the Company and participating subsidiaries who have completed at least six months of employment at the beginning of each offering period are eligible to participate in the Second A&R 2018 ESPP, other than employees who would own 5% or more of the voting power of our ordinary shares after exercising their rights to purchase shares under the Second A&R 2018 ESPP. As of September 30, 2018, approximately 971 employees would have been eligible to participate in the Second A&R 2018 ESPP.
Shares Available for Issuance. Assuming the Second A&R 2018 ESPP is approved by our shareholders at the EGM, 7,355,315 ordinary shares will be available for issuance under the Second A&R 2018 ESPP.
Participation. To participate in the Second A&R 2018 ESPP, an eligible employee authorizes payroll deductions in an amount not less than 1% nor greater than 10% of his or her "eligible earnings" (i.e. , gross cash compensation, receivedincluding regular base pay (including overtime pay and commissions, to the extent determined by Mr. Oylerthe Compensation Committee), but excluding incentive or bonus awards, allowances and reimbursements for expenses such as relocation allowances or travel expenses, income or gain on the exercise of share options, and similar items) for each full payroll period in the offering period. To ensure that U.S. Internal Revenue Service share limitations are not exceeded, no individual participant may be granted the right under the 2018 ESPP to purchase ordinary shares (including in the form of ADSs) that accrues at a rate which exceeds US$25,000 of fair market value of such shares for any calendar year, determined as of the grant date.
Purchases. Eligible employees enroll in an offering period (which generally will begin on each March 1 and September 1 and last for six months unless otherwise determined by our Compensation Committee in advance) during the open enrollment period prior to the start of that offering period.
Shares are purchased at a price equal to 85% of the fair market value of our ordinary shares on either the first business day of the offering period or the last business day of the offering period, whichever is lower. The closing price of our ADSs on October 25, 2018, as quoted on the NASDAQ was US$113.81 per ADS, or US$8.75 per ordinary share.
Termination of Employment. If a participating employee during 2016voluntarily resigns or is presentedterminated by us prior to the last day of an offering period, the employee's option to purchase terminates and the cash amount in "Summary Compensation Table—2016."the employee's account is returned to the employee.
Adjustments Upon Change in Capitalization. In the event of a recapitalization, reclassification, share split, reverse split, combination of shares, exchange of shares, share dividend, or similar event, the number and kind of shares that may be purchased under the Second A&R 2018 ESPP will be adjusted proportionately such that the proportionate interest of participating employees remains the same, to the extent practicable. In the event of a change in control, each outstanding option will be assumed or an equivalent option will be substituted. In the event outstanding options are not assumed
Name(1) | Fees Earned or Paid in Cash($) | Option Awards($)(2) | All Other Compensation($) | Total($) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Timothy Chen | 13,125 | 714,293 | — | 727,418 | |||||||||
Donald W. Glazer | 13,750 | — | — | 13,750 | |||||||||
Michael Goller | 12,500 | — | — | 12,500 | |||||||||
Ranjeev Krishana | 13,125 | — | — | 13,125 | |||||||||
Thomas Malley | 59,583 | 656,282 | — | 715,865 | |||||||||
Ke Tang | 13,750 | — | — | 13,750 | |||||||||
Xiaodong Wang(3) | — | — | 3,309,776 | 3,309,776 | |||||||||
Qingqing Yi(4) | — | — | — | — |
or substituted, the offering period with respect to which such outstanding option relates will be shortened by setting a new exercise date prior to the date of the change in control.
Participation Adjustment. If the number of unsold shares that are available for purchase under the Second A&R 2018 ESPP is insufficient to permit exercise of all rights deemed exercised by all participating employees, a participation adjustment will be made, and the number of shares purchasable by all participating employees will be reduced proportionately. Any funds remaining in a participating employee's account after such exercise are refunded to the employee, without interest.
Amendment. Our Board of Directors may amend the Second A&R 2018 ESPP at any time and in any respect. However, without the approval of our shareholders, no amendment may (i) increase the number of shares that may be issued under the Second A&R 2018 ESPP or (ii) change the class of employees eligible to receive options under the 2018 ESPP, if such action would be treated as the adoption of a new plan for purposes of Section 423(b) of the Internal Revenue Code.
Termination. Our Board of Directors may terminate the Second A&R 2018 ESPP at any time and for any reason or for no reason.
U.S. Federal Income Tax Consequences. The Second A&R 2018 ESPP, and the rights of participating employees to make purchases thereunder, is intended to qualify for treatment under the provisions of Sections 421 and 423 of the Internal Revenue Code. Under these provisions, no income will be taxable to a participant until the shares purchased under the Second A&R 2018 ESPP are sold or otherwise disposed of.
Upon sale or other disposition of the shares, the participant will generally be subject to optionstax and the amount of the tax will depend upon the holding period. If the shares are sold or otherwise disposed of more than two years from the first day of the relevant offering period (and more than one year from the date the shares are purchased), then the participant generally will recognize ordinary income measured as the lesser of:
Any additional gain will be treated as long-term capital gain.
If the shares are sold or otherwise disposed of before the expiration of this holding period, the participant will recognize ordinary income generally measured as the excess of the fair market value of the shares on the date the shares are 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 holding period.
We are not entitled to a deduction for amounts taxed as ordinary income or capital gain to a participant except to the extent ordinary income is recognized by participants upon a sale or disposition of shares prior to the expiration of the holding period(s) described above. In all other cases, no deduction is allowed to us.
The foregoing tax discussion is a general description of certain expected U.S. federal income tax results under current law. No attempt has been made to address any state, local, foreign or estate and gift tax consequences that may arise in connection with participation in the Second A&R 2018 ESPP.
New Plan Benefits. Participation in the Second A&R 2018 ESPP is at the election of each eligible employee and the amounts received by a participant under the Second A&R 2018 ESPP depend on the fair market value of our ordinary shares and ADSs on future dates. Therefore, the benefits or number
of ordinary shares or ADSs that will be received by any participant if the Second A&R 2018 ESPP is approved are not currently determinable.
Vote Required and Board of Directors' Recommendation
Approval of Proposal 6 requires the favorable vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person or by proxy at the EGM. Broker non-votes and abstentions with respect to Proposal 6 will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of the vote.
The Board of Directors recommends that shareholders vote FOR approval of the BeiGene, Ltd. Second Amended and Restated 2018 Employee Share Purchase Plan.
The Board of Directors knows of no other matters that will be presented for consideration at the EGM as of the date of this Proxy Statement. If any other matters are properly brought before the EGM, the person(s) named in the accompanying proxy intend to vote on such matters in accordance with their best judgement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us regarding beneficial ownership of our share capital as of October 25, 2018, by:
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all securities shown as beneficially owned by them.
The table lists applicable percentage ownership based on 771,063,184 ordinary shares outstanding as of December 31, 2016 for the independent directors was: Mr. Chen: 460,626October 25, 2018 and Mr. Malley: 552,752. None of the other independent directors heldalso lists applicable percentage ownership. Any options to purchase ordinary shares orthat are exercisable and RSUs that will vest within 60 days of October 25, 2018 are deemed to be beneficially owned by the persons holding these options and RSUs for the purpose of computing percentage ownership of such persons, but are not treated as outstanding for the purpose of computing any other unvested share-based awards asperson's ownership percentage. Beneficial ownership representing less than 1% is denoted with an asterisk (*).
Table of December 31, 2016.Contents
Unless otherwise noted below, the address of each person listed on the table is: c/o Mourant Governance Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, Grand Cayman KY1-1108, Cayman Islands.
Name of Beneficial Owner | Number of Ordinary Shares Beneficially Owned | Percentage of Ordinary Shares Beneficially Owned | |||||
---|---|---|---|---|---|---|---|
5% or Greater Shareholders | |||||||
Entities affiliated with Baker Bros. Advisors LP(1) | 161,513,646 | 20.9 | % | ||||
FMR LLC(2) | 77,169,208 | 10.0 | |||||
Entities affiliated with Hillhouse Capital Management, Ltd.(3) | 76,563,367 | 9.9 | |||||
Entities affiliated with Wellington Management Group LLP(4) | 45,405,027 | 5.9 | |||||
Named Executive Officers and Directors | |||||||
John V. Oyler(5) | 73,513,974 | 9.4 | % | ||||
Xiaobin Wu(6) | 277,745 | * | |||||
Howard Liang(7) | 5,093,314 | * | |||||
Amy Peterson(8) | 1,409,894 | * | |||||
Jane Huang(9) | 1,300,127 | * | |||||
Ji Li(10) | 237,833 | * | |||||
Timothy Chen(11) | 477,072 | * | |||||
Donald W. Glazer(12) | 4,406,466 | * | |||||
Michael Goller(13) | 66,664 | * | |||||
Ranjeev Krishana(14) | 66,664 | * | |||||
Thomas Malley(15) | 928,488 | * | |||||
Jing-Shyh (Sam) Su | — | — | |||||
Xiaodong Wang(16) | 17,864,064 | 2.3 | |||||
Qingqing Yi(17) | 66,664 | * | |||||
All Directors and Executive Officers as a Group (13 persons)(18) | 105,471,136 | 13.3 | % |
members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act ("Fidelity Funds") advised by Fidelity Management & Research Company, a wholly owned subsidiary of FMR LLC, which power resides with the valuation methodologies specified inFidelity Funds' Boards of Trustees. Fidelity Management & Research Company carries out the notesvoting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees. The address for FMR LLC is 245 Summer Street, Boston, MA 02210.
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, including audited consolidated financial statements, accompaniesCopies of this Proxy Statement. Copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and the exhibits theretoStatement are available from the Company without charge upon written request of a shareholder. Copies of these materialsthis Proxy Statement are also available online through the SEC atwww.sec.gov. and on our website atwww.beigene.com under "Investors—NASDAQ investors" and "—HKEX investors." The Company may satisfy SEC rules regarding delivery of proxy materials, including this Proxy Statement, and the Annual Report, by delivering a single set of proxy materials to an address shared by two or more Company shareholders. This delivery method can result in meaningful cost savings for the Company. In order to take advantage of this opportunity, the Company may deliver only a single set of proxy materials to multiple shareholders who share an address, unless contrary instructions are received prior to the mailing date. Similarly, if you share an address with another shareholder and have received multiple copies of our proxy materials, you may write or call us at the address and phone number below to request delivery of a single copy of the proxy materials in the future. We undertake to deliver promptly upon written or oral request a separate copy of the proxy materials, as requested, to a shareholder at a shared address to which a single copy of the proxy materials was delivered. If you hold ordinary shares as a record shareholder and prefer to receive separate copies of proxy materials either now or in the future, please contact the Company's investor relations department at BeiGene, Ltd., c/o BeiGene USA, Inc., 55 Cambridge Parkway, Suite 700W, Cambridge, MA 02142. If you hold ordinary shares in the form of ADSs through the Depositary or hold ordinary shares through a brokerage firm or bank and you prefer to receive separate copies of proxy materials either now or in the future, please contact the Depositary, your brokerage firm or bank, as applicable.
EACH SHAREHOLDER IS URGED TO COMPLETE, DATE, SIGN
AND PROMPTLY RETURN THE ENCLOSED PROXY.PROXY CARD.
THE COMPANIES LAW (2013 REVISIONAS AMENDED) OF THE
CAYMAN ISLANDS COMPANY LIMITED BY SHARES FOURTH
FIFTH AMENDED AND RESTATED
MEMORANDUM AND ARTICLES OF ASSOCIATION
OF
BEIGENE, LTD.
(Adopted by special resolution passed on January 14, 2016 and effective on February 8, 2016 immediately prior to the completion of the Company's initial public offering of its ordinary shares represented by American Depositary Shares, December 7, 2018)
THE COMPANIES LAW (2013 REVISIONAS AMENDED) OF THE
CAYMAN ISLANDS COMPANY LIMITED BY SHARES FOURTH
FIFTH AMENDED AND RESTATED
MEMORANDUM OF ASSOCIATION
OF
BEIGENE, LTD.
(Adopted by special resolution passed onJanuary 14, 2016 and effective on February 8, 2016 immediately prior to the completion of the Company's initial public offering of its ordinary shares represented by American Depositary SharesDecember 7, 2018)
.
THE COMPANIES LAW (2013 REVISIONAS AMENDED) OF
THE CAYMAN ISLANDS COMPANY LIMITED
BY SHARESFOURTHFIFTH AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF
BEIGENE, LTD.
(Adopted by special resolution passed onJanuary 14, 2016 and effective on February 8, 2016 immediately prior to the completion of the Company's initial public offering of its ordinary shares represented by American Depositary SharesDecember 7, 2018)
ADS | means an American Depositary Share representing the Ordinary Shares. | |||
Articles | means these articles of association of the Company as amended from time to time. | |||
|
| |||
Auditor | means the person for the time being performing the duties of auditor of the Company (if any). | |||
Board orBoard of Directors orDirectors | means the directors of the Company for the time being, or as the case may be, the directors assembled as a board or as a committee thereof. | |||
Cayman Islands | means the Cayman Islands, a British Overseas Territory. | |||
Chairman | means the chairman of the Board. | |||
Class orClasses | means any class or classes of Shares as may from time to time be issued by the Company. | |||
Class I | means the group of Directors that serves until the first annual general meeting following the | |||
Class II | means the group of Directors that serves until the second annual general meeting following the | |||
Class III | means the group of Directors that serves until the third annual general meeting following the | |||
Commission | means the United States of America Securities and Exchange Commission or any other federal agency for the time being administering the Securities Act. |
Company | means the above named company. | |||
Company's Website | means the main corporate and investor relations website of the Company, the address or domain name of which has been notified to Members. | |||
Designated Stock Exchanges | means The NASDAQ Stock Market LLC in the United Statesfor so long as the Company's Shares or ADSs are there listed, The Hong Kong Stock Exchange Limited for so long as the Company's Shares or ADSs are there listed and any other stock exchange on which the Company's Shares or ADSs are listed for trading. | |||
Designated Stock Exchange Rules | means the relevant code, rules and regulations, as amended, from time to time, applicable as a result of the original and continued listing of any Shares or ADSs on the Designated Stock Exchanges. | |||
Directors | means the directors for the time being of the Company. | |||
Effectiveness Date | means February 8, 2016. | |||
Electronic Record | has the same meaning as in the Electronic Transactions Law. | |||
electronic communication | means electronic posting to the Company's Website, transmission to any number, address or internet website or other electronic delivery methods as otherwise decided and approved upon by vote of the Board of Directors. | |||
Electronic Transactions Law | means the Electronic Transactions Law of the Cayman Islands, as amended from time to time. | |||
Indemnified Person | means every Director (including any alternate Director appointed pursuant to the provisions of these Articles), Secretary, assistant secretary, or other officer for the time being and from time to time of the Company (but not including the Company's Auditors) and the personal representatives of the same. | |||
Independent Director | means a Director who is an independent director defined in the Designated Stock Exchange Rules as determined by the Board of Directors. | |||
Interested Director | means a Director who has a direct or indirect interest in any contract, business or arrangement in which the Company or its affiliates is a party or becomes a party to. | |||
Law | means the Companies Law of the Cayman Islands as amended from time to time. | |||
Member | has the same meaning as in the Law. | |||
Memorandum | means the memorandum of association of the Company, as amended from time to time. | |||
month | means calendar month. |
Ordinary Resolution | means a resolution: | |||
(a) | passed by a simple majority of the votes cast by Members who, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company, and in computing a majority, regard shall be had to the number of votes to which each Member is entitled; or | |||
(b) | approved in writing by all of the Members entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Members and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments, if more than one, is executed. | |||
Ordinary Share | means an ordinary share of US$0.0001 par value each, in the capital of the Company having the rights, benefits and privileges set out in these Articles. | |||
paid up | means paid up as to the par value in respect of the issue of any Shares and includes credited as paid up. | |||
Person | means any natural person, firm, company, joint venture, partnership, corporation, association or other entity (whether or not having a separate legal personality) or any of them as the context so requires. | |||
Register of Members | means the register of Members maintained in accordance with the Law and includes (except where otherwise stated) any duplicate register of Members. | |||
Registered Office | means the registered office for the time being of the Company. | |||
Seal | means the common seal of the Company (if adopted) and includes every duplicate seal. | |||
Secretary | means any Person appointed by the Directors to perform any of the duties of the secretary of the Company. | |||
Securities Act | means the United States Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. | |||
Share | means a share in the Company and includes a fraction of a share in the Company. | |||
Share Premium Account | means the share premium account established in accordance with these Articles and the Companies Law. | |||
signed | means bearing a signature or representation of a signature affixed by mechanical means or an electronic symbol or process attached to or logically associated with an electronic communication and executed or adopted by a person with the intent to sign the electronic communication. |
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Special Resolution | means a special resolution of the Company passed in accordance with the Law, being a resolution: | |||
(a) | passed by a majority of at least two-thirds of such Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given, regard being had in computing a majority to the number of votes to which each Member is entitled; or | |||
(b) | approved in writing by all of the Members entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Members and the effective date of the Special Resolution so adopted shall be the date on which the instrument or the last of such instruments, if more than one, is executed. | |||
Treasury Share | means a Share held in the name of the Company as a treasury share in accordance with the Law. | |||
United States | means the United States of America, its territories, its possessions and all areas subject to its jurisdiction. | |||
year | means calendar year. |
Members at least 14 days prior to the specified time of payment, and each Member shall pay to the Company at the time or times so specified the amount called on such Shares.
date on which the instrument of transfer was lodged with the Company send to each of the transferor and the transferee notice of the refusal.
REGISTRATION OF EMPOWERING INSTRUMENTS
REDEMPTION, PURCHASE AND SURRENDER OF SHARES
such of the issued Shares of the Company as at that date of the deposit carries the right of voting at general meetings of the Company.
may propose only Ordinary Resolutions to be considered and voted upon at such meeting | |||
PROCEEDINGS AT GENERAL MEETINGS
CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS
DEPOSITARY AND CLEARING HOUSES
the same powers on behalf of the recognised clearing house (or its nominee(s)) or depositary (or its nominee(s)) which he represents as that recognised clearing house (or its nominee(s)) or depositary (or its nominee(s)) could exercise if it were an individual Member holding the number and Class of Shares specified in such authorisation.
POWERS AND DUTIES OF DIRECTORS
member of any specified company or firm and is to be regarded as interested in any contract or transaction which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made or transaction so consummated. Subject to the Designated Stock Exchange Rules and disqualification by the chairman of the relevant Board meeting, an Interested Director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of the Directors at which any such contract or transaction or proposed contract or transaction shall come before the meeting for consideration.
ACCOUNTS, AUDIT AND ANNUAL RETURN AND DECLARATION
and allot the Shares or debentures, credited as fully paid, to the Members (or as they may direct) in those proportions, or partly in one way and partly in the other, but the Share Premium Account, the capital redemption reserve and profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued Shares to be allotted to Members credited as fully paid;
and any such agreement made under this authority being effective and binding on all those Members; and
In proving service by post or courier service it shall be sufficient to prove that the letter containing the notice or documents was properly addressed and duly posted or delivered to the courier service.
unless the same shall happen through such Indemnified Person's own dishonesty, willful default or fraud.
any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company.
AMENDMENT OF ARTICLES OF ASSOCIATION
CLOSING OF REGISTER OR FIXING RECORD DATE
REGISTRATION BY WAY OF CONTINUATION
EXCLUSIVE JURISDICTION OF CAYMAN ISLANDS COURTS
BEIGENE, LTD.
SECOND AMENDED AND RESTATED
2016 SHARE OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the BeiGene, Ltd. Second Amended and Restated 2016 Share Option and Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers, employees, Non-Employee Directors and Consultants of BeiGene, Ltd. (the "Company") and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its businesses to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company will assure a closer identification of their interests with those of the Company and its shareholders, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
"Administrator" means either the Board or the compensation committee of the Board or a similar committee performing the functions of the compensation committee and which is comprised of not less than two Non-Employee Directors who are independent.
"ADSs" means American depositary shares. Each ADS represents 13 Shares.
"ASC 718" means Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation.
"Award" or"Awards," except where referring to a particular category of grant under the Plan, shall include Non-Qualified Share Options, Share Appreciation Rights, Restricted Share Units, Restricted Share Awards, Unrestricted Share Awards and Dividend Equivalent Rights.
"Award Certificate" means a written or electronic document setting forth the terms and provisions applicable to an Award granted under the Plan. Each Award Certificate is subject to the terms and conditions of the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
"Consultant" means any natural person that provides bona fide services to the Company, and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities.
"Dividend Equivalent Right" means an Award entitling the Grantee to receive credits based on cash dividends that would have been paid on the Shares specified in the Dividend Equivalent Right (or other award to which it relates) if such Shares had been issued to and held by the Grantee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Fair Market Value" of the Shares on any given date means the fair market value of the Shares determined in good faith by the Administrator; provided, however, that if the ADSs are admitted to quotation on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), NASDAQ Global Market or another national securities exchange, the determination shall be made by reference to market quotations. If there are no market quotations for such date, the determination shall be made by reference to the last date preceding such date for which there are market quotations.
"Grantee" is a recipient of an Award under this Plan.
"Non-Employee Director" means a member of the Board who is not also an employee of the Company or any Subsidiary.
"Non-Qualified Share Option" means any Share Option that is not an incentive share option.
"Option" or"Share Option" means any option to purchase Shares granted pursuant to Section 5.
"Restricted Shares" means the Shares underlying a Restricted Share Award that remain subject to a risk of forfeiture or the Company's right of repurchase.
"Restricted Share Award" means an Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant.
"Restricted Share Units" means an Award of share units subject to such restrictions and conditions as the Administrator may determine at the time of grant.
"Sale Event" shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company's outstanding voting power and outstanding Shares immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding Shares or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Shares of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company's outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.
"Sale Price" means the value as determined by the Administrator of the consideration payable, or otherwise to be received by the Company's shareholders, per Share pursuant to a Sale Event.
"Shares" means the ordinary shares, par value US$0.0001 per share, of the Company, subject to adjustments pursuant to Section 3.
"Share Appreciation Right" means an Award entitling the recipient to receive Shares having a value equal to the excess of the Fair Market Value of the Shares on the date of exercise over the exercise price of the Share Appreciation Right multiplied by the number of Shares with respect to which the Share Appreciation Right shall have been exercised.
"Subsidiary" means any corporation or other entity (other than the Company) in which the Company has at least a 50 percent interest, either directly or indirectly.
"Unrestricted Share Award" means an Award of Shares free of any restrictions.
SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS
(a) Administration of Plan. The Plan shall be administered by the Administrator.
(b) Powers of Administrator. The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of Non-Qualified Share Options, Share Appreciation Rights, Restricted Share Awards, Restricted Share Units,
Unrestricted Share Awards and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more Grantees;
(iii) to determine the number of Shares to be covered by any Award;
(iv) to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and Grantees, and to approve the forms of Award Certificates;
(v) to accelerate at any time the exercisability or vesting of all or any portion of any Award in circumstances involving the Grantee's death, disability, retirement or termination of employment, or a change in control (including a Sale Event);
(vi) subject to the provisions of Section 5(c), to extend at any time the period in which Share Options may be exercised; and
(vii) at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan Grantees.
To the extent required under the rules of any securities exchange or market system on which the Shares are listed, amendments to the terms of Share Options granted under the Plan shall be subject to approval by the Company' shareholders entitled to vote at a meeting of shareholders.
(c) Delegation of Authority to Grant Awards. Subject to applicable law, the Administrator, in its discretion, may delegate to the chairman of the Compensation Committee of the Board of Directors of the Company all or part of the Administrator's authority and duties with respect to the granting of Awards to individuals who are not subject to the reporting of Section 16 of the Exchange Act. Subject to applicable law, the Administrator, in its discretion, may delegate to the Chief Executive Officer and/or Chief Financial Officer of the Company all or part of the Administrator's authority and duties with respect to the granting of Awards to individuals who are not subject to the reporting of Section 16 of the Exchange Act. Any such delegation by the Administrator shall include a limitation as to the number of Shares underlying Awards that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price and the criteria for exercisability or vesting. The Administrator may revoke or amend the terms of a delegation at any time, but such action shall not invalidate any prior actions of the Administrator's delegate or delegates that were consistent with the terms of the Plan
(d) Award Certificate. Awards under the Plan shall be evidenced by Award Certificates that set forth the terms, conditions and limitations for each Award which may include, without limitation, the term of an Award and the provisions applicable in the event employment or service terminates.
(e) Indemnification. Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys' fees) arising or resulting therefrom to the fullest extent
permitted by law and/or under the Company's articles of association or any directors' and officers' liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.
(f) Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a); and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Act or any other United States securities law, the Code, or any other United States governing statute or law.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Shares Issuable. The maximum number of Shares that have been reserved and available for issuance under the Plan shall be 159,823,772 Shares, of which 58,199,4332 Shares are reserved and remain available for issuance (representing approximately 7.5% (or less) of the issued share capital of the Company as of December 7, 2018, being the effective date of the approval of this second amended and restated Plan by the shareholders (the "Amended Effective Date")). For purposes of this limitation, the Shares underlying any awards granted under this Plan or the Company's 2011 Option Plan (including any grants made prior to the Amended Effective Date) that are forfeited, canceled, held back upon exercise of an Option or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of Shares or otherwise terminated (other than by exercise) shall be added back to the Shares available for issuance under the Plan, provided that (i) the Shares reserved and available for issuance under the Plan, the Company's 2018 Inducement Equity Plan (as amended and restated) and the Company's 2018 Employee Share Purchase Plan (as amended and restated) shall not exceed 77,236,318 Shares as of the Amended Effective Date, being 10% (or less) of the issued share capital of the Company as of the Amended Effective Date, (ii) where the Company cancels an Option and issues a new Option to the same Grantee, the issue of such new Option shall be made only to the extent that there are Shares reserved and available for issuance excluding the cancelled Option and (iii) notwithstanding the foregoing, no Shares underlying any Share Options granted under this Plan or the Company's 2011 Option Plan (including any grants made prior to the Amended Effective Date) shall be added back to the Shares available for issuance under the Plan unless such Share Options have lapsed or otherwise been terminated in accordance with the terms of the Plan. In the event the Company repurchases Shares on the open market, such Shares shall not be added to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the Company.
(b) Maximum Awards to Independent, Non-Employee Directors. Notwithstanding anything to the contrary in this Plan, the value of all Awards awarded under this Plan and all other cash compensation paid by the Company to any independent, Non-Employee Director in any calendar year shall not exceed US$1 million, provided that such limit shall not apply to the initial awards awarded under this Plan and all other cash compensation paid by the Company to any new independent, Non-Employee Director in the first calendar year of such director joining the Board of Directors. For the purpose of this limitation, the value of any Award shall be its grant date fair value, as determined in accordance with ASC 718 or successor provision but excluding the impact of estimated forfeitures related to service-based vesting provisions.
(c) Maximum Individual Limit. Unless approved by the Company's shareholders in general meeting, the total number of Shares issued and to be issued upon the exercise of Share Options granted and to be granted under the Plan and any other plan of the Company to a Grantee within any 12-month period shall not exceed 1% of the Shares in issue at the date of any grant.
(d) Changes in Shares. Subject to Section 3(e), if, as a result of any reorganization, recapitalization, reclassification, share dividend, share split, reverse share split or other similar change in the Company's share capital, the outstanding Shares are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such Shares or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding Shares are converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of Shares reserved for issuance under the Plan, (ii) the number and kind of Shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase price, if any, per Share subject to each outstanding Restricted Share Award, and (iv) the exercise price for each Share subject to any then outstanding Share Options and Share Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Share Options and Share Appreciation Rights) as to which such Share Options and Share Appreciation Rights remain exercisable. The Administrator shall also make equitable or proportionate adjustments in the number of Shares subject to outstanding Awards (other than with respect to Share Options) and the exercise price and the terms of outstanding Awards to take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event. The adjustment by the Administrator shall be final, binding and conclusive. No fractional Shares shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional Shares.
(e) Mergers and Other Transactions. In the case of and subject to the consummation of a Sale Event, the parties may cause the assumption or continuation of Awards previously granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or its parent, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree. To the extent the parties to such Sale Event do not provide for the assumption, continuation or substitution of Awards, upon the effective time of the Sale Event, the Plan and all outstanding Awards granted under this Plan shall terminate. In such case, except as may be otherwise provided in the relevant Award Certificate, all Options and Share Appreciation Rights that are not exercisable immediately prior to the effective time of the Sale Event shall become fully exercisable as of the effective time of the Sale Event, all other Awards with time-based vesting, conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of the Sale Event, and all Awards with conditions and restrictions relating to the achievement of performance goals may become vested and
nonforfeitable in connection with a Sale Event in the Administrator's discretion or to the extent specified in the relevant Award Certificate. In the event of such termination, (i) the Company shall have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the Grantees holding Options and Share Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the number of Shares subject to outstanding Options and Share Appreciation Rights (to the extent then exercisable at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Share Appreciation Rights; or (ii) each Grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Share Appreciation Rights (to the extent then exercisable) held by such Grantee. The Company shall also have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the Grantees holding other Awards in an amount equal to the Sale Price multiplied by the number of vested Shares under such Awards.
SECTION 4. ELIGIBILITY
Grantees under the Plan will be such full- or part-time officers and other employees, Non-Employee Directors and Consultants of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.
SECTION 5. SHARE OPTIONS
(a) Award of Share Options. The Administrator may grant Share Options under the Plan. Any Share Option granted under the Plan shall be in such form as the Administrator may from time to time approve. Share Options granted under the Plan are Non-Qualified Share Options.
Share Options granted pursuant to this Section 5 shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so determines, Share Options may be granted in lieu of cash compensation at the optionee's election, subject to such terms and conditions as the Administrator may establish.
(b) Exercise Price. The exercise price per Share covered by a Share Option granted pursuant to this Section 5 shall be determined by the Administrator at the time of grant but shall not be less than the higher of: (i) the Fair Market Value of a Share on the date of grant; and (ii) the average Fair Market Value of the Shares for the five business days immediately preceding the day of grant.
(c) Option Term. The term of each Share Option shall be fixed by the Administrator, but no Share Option shall be exercisable more than ten years after the date the Share Option is granted. Any Share Option granted but not exercised by the end of its option term will automatically lapse and be cancelled.
(d) Exercisability; Rights of a Shareholder. Share Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. The Administrators may determine at the time of grant any minimum period(s) for which a Share Option must be held and/or any minimum performance target(s) that must be achieved, before the Share Option can be exercised in whole or in part, and may include at the discretion of the Administrators such other terms either on a case by case basis or generally. The Administrator may at any time accelerate the exercisability of all or any portion of any Share Option. An optionee shall have the rights of a shareholder only as to Shares acquired upon the exercise of a Share Option and not as to unexercised Share Options. Accordingly, an optionee shall not have any voting rights, or rights to participate in any dividends or distributions (including those arising on a liquidation of the Company) declared or recommended or resolved to be paid to
the shareholders on the register of members of the Company on a date prior to the name of such optionee being registered on such register.
(e) Method of Exercise. Share Options may be exercised in whole or in part, by giving written or electronic notice of exercise to the Company, specifying the number of Shares to be purchased. Payment of the purchase price may be made by one or more of the following methods except to the extent otherwise provided in the option award certificate:
(i) In cash, by certified or bank check or other instrument acceptable to the Administrator;
(ii) Through the delivery (or attestation to the ownership following such procedures as the Company may prescribe ("attestation method")) of Shares that are not then subject to restrictions under any Company plan. Such surrendered Shares shall be valued at Fair Market Value on the exercise date;
(iii) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Company shall prescribe as a condition of such payment procedure; or
(iv) If permitted by the Administrator, by a "net exercise" arrangement pursuant to which the Company will reduce the number of Shares issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price.
Payment instruments will be received subject to collection. The transfer to the optionee on the records of the Company or of the transfer agent of the Shares to be purchased pursuant to the exercise of a Share Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Share Option) by the Company of the full purchase price for such Shares and the fulfillment of any other requirements contained in the option award certificate or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee). In the event an optionee chooses to pay the purchase price by previously-owned Shares through the attestation method, the number of Shares transferred to the optionee upon the exercise of the Share Option shall be net of the number of attested Shares. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Share Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Share Options may be permitted through the use of such an automated system.
SECTION 6. SHARE APPRECIATION RIGHTS
(a) Award of Share Appreciation Rights. The Administrator may grant Share Appreciation Rights under the Plan. A Share Appreciation Right is an Award entitling the recipient to receive Shares having a value equal to the excess of the Fair Market Value of a Share on the date of exercise over the exercise price of the Share Appreciation Right multiplied by the number of Shares with respect to which the Share Appreciation Right shall have been exercised.
(b) Exercise Price of Share Appreciation Rights. The exercise price of a Share Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Shares on the date of grant in the case of any grant to a Grantee who is subject to U.S. income tax.
(c) Grant and Exercise of Share Appreciation Rights. Share Appreciation Rights may be granted by the Administrator independently of any Share Option granted pursuant to Section 5 of the Plan.
(d) Terms and Conditions of Share Appreciation Rights. Share Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Administrator at the time of the grant. Such terms and conditions may differ among individual Awards and Grantees. The term of a Share Appreciation Right may not exceed ten years.
SECTION 7. RESTRICTED SHARE AWARDS
(a) Nature of Restricted Share Awards. The Administrator may grant Restricted Share Awards under the Plan. A Restricted Share Award is any Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and Grantees.
(b) Rights as a Shareholder. Upon the grant of a Restricted Share Award and payment of the purchase price, if any, subject to the restrictions and conditions set forth in the award certificate, a Grantee shall have all the rights of a shareholder with respect to Restricted Shares, including the voting of the Restricted Shares and receipt of dividends; provided that cash dividends, shares and any other property (other than cash) distributed as a dividend or otherwise with respect to any Restricted Share Award that vests based on achievement of performance goals shall either (i) not be paid or credited or (ii) be accumulated, shall be subject to restrictions and risk of forfeiture to the same extent as the Restricted Shares with respect to which such cash, shares or other property has been distributed and shall be paid at the time such restrictions and risk of forfeiture lapse. Unless the Administrator shall otherwise determine, (i) uncertificated Restricted Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Shares are vested as provided in Section 7(d), and (ii) certificated Restricted Shares shall remain in the possession of the Company until such Restricted Shares are vested as provided in Section 7(d), and the Grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.
(c) Restrictions. Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided in the Restricted Share Award Certificate. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15, in writing after the Award is issued, if a Grantee's employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Shares that have not vested at the time of termination shall automatically and without any requirement of notice to such Grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such Grantee or such Grantee's legal representative simultaneously with such termination of employment (or other service relationship), and after the reacquisition shall cease to represent any ownership of the Company by the Grantee or rights of the Grantee as a shareholder. Following such deemed reacquisition of Restricted Shares that are represented by physical certificates, a Grantee shall surrender such certificates to the Company upon request without consideration.
(d) Vesting of Restricted Shares. The Administrator at the time of grant shall specify the date or dates and/or the performance goals, objectives and other conditions on which the non-transferability of the Restricted Shares and the Company's right of repurchase or forfeiture
shall lapse. Subsequent to such date or dates and/or the achievement of such performance goals, objectives and other conditions, the shares as to which the Company's right of repurchase or forfeiture has lapsed shall no longer be Restricted Shares and shall be deemed "vested."
SECTION 8. RESTRICTED SHARE UNITS
(a) Nature of Restricted Share Units. The Administrator may grant Restricted Share Units under the Plan. A Restricted Share Unit is an Award of share units that may be settled in Shares upon the satisfaction of such restrictions and conditions at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives, subject to compliance to Section 457A of the Code (if applicable). The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and Grantees. At the end of the vesting period, the Restricted Share Units, to the extent vested, shall be settled in the form of Shares.
(b) Rights as a Shareholder. A Grantee shall have the rights as a shareholder only as to Shares acquired by the Grantee upon settlement of Restricted Share Units; provided, however, that the Grantee may be credited with Dividend Equivalent Rights with respect to the share units underlying his Restricted Share Units, subject to the provisions of Section 10 and such terms and conditions as the Administrator may determine. Cash dividends, shares and any other property (other than cash) distributed as a dividend or otherwise with respect to any Restricted Share Unit that vests based on achievement of performance goals shall either (i) not be paid or credited or (ii) be accumulated, shall be subject to restrictions and risk of forfeiture to the same extent as the Restricted Share Units with respect to which such cash, share or other property has been distributed and shall be paid at the time such restrictions and risk of forfeiture lapse.
(c) Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15, in writing after the Award is issued, a Grantee's right in all Restricted Share Units that have not vested shall automatically terminate upon the Grantee's termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 9. UNRESTRICTED SHARE AWARDS
Grant or Sale of Unrestricted Shares. The Administrator may grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Share Award under the Plan. An Unrestricted Share Award is an Award pursuant to which the Grantee may receive Shares free of any restrictions under the Plan. Unrestricted Share Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such Grantee.
SECTION 10. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. The Administrator may grant Dividend Equivalent Rights under the Plan. A Dividend Equivalent Right is an Award entitling the Grantee to receive credits based on cash dividends that would have been paid on the Shares specified in the Dividend Equivalent Right (or other Award to which it relates) if such Shares had been issued to the Grantee. A Dividend Equivalent Right may be granted to any Grantee as a component of an award of Restricted Share Units or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Certificate. Dividend equivalents credited to the holder of a Dividend Equivalent Right shall be paid currently. Dividend Equivalent Rights may be settled in cash or Shares or a combination of cash and Shares. A Dividend Equivalent Right granted as a component of an Award of Restricted Share Units shall provide that such Dividend Equivalent Right shall be settled only upon settlement or payment of, or lapse of restrictions on,
such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.
(b) Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15, in writing after the Award is issued, a Grantee's rights in all Dividend Equivalent Rights shall automatically terminate upon the Grantee's termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 11. TRANSFERABILITY OF AWARDS
(a) Transferability. Except as provided in Section 11(b), during a Grantee's lifetime, his or her Awards shall be exercisable only by the Grantee, or by the grantee's legal representative or guardian in the event of the Grantee's incapacity. No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a Grantee other than by will or by the laws of descent and distribution or pursuant to a domestic relations order. No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation of this Section 11(a) shall be null and void.
(b) Administrator Action. Notwithstanding Section 11(a), the Administrator, in its discretion, may permit either in the Award Certificate for a given Award or by subsequent written approval the Grantee to transfer Non-Qualified Share Options to the Grantee's immediate family members, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Award. In no event may an Award be transferred by a Grantee for value.
(c) Family Member. For purposes of Section 11(b), "family member" shall mean a Grantee's child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee's household (other than a tenant of the Grantee), a trust in which these persons (or the Grantee) have more than 50 percent of the beneficial interest, a foundation in which these persons (or the Grantee) control the management of assets, and any other entity in which these persons (or the Grantee) own more than 50 percent of the voting interests.
(d) Designation of Beneficiary. To the extent permitted by the Company, each Grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the Grantee's death. Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased Grantee, or if the designated beneficiaries have predeceased the Grantee, the beneficiary shall be the Grantee's estate.
SECTION 12. TAX WITHHOLDING
(a) Payment by Grantee. Each Grantee shall, no later than the date as of which the value of an Award or of any Shares or cash received under the Award first becomes includable in the gross income of the Grantee for income, employment or other tax purposes, pay to the Company or a Subsidiary, or make arrangements satisfactory to the Administrator regarding payment of, any taxes of any kind required by law to be withheld by the Company or a Subsidiary with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Grantee. The Company's obligation to deliver evidence of book entry (or share certificates) to any Grantee is subject to and conditioned on tax withholding obligations being satisfied by the Grantee.
(b) Payment in Shares. Subject to approval by the Administrator, a Grantee may elect to have the Company's or Subsidiary's minimum required tax withholding obligation satisfied, in whole or in part, by authorizing the Company to withhold from Shares to be issued pursuant to any Award a number of Shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. The Administrator may also require Awards to be subject to mandatory share withholding up to the required withholding amount. For purposes of share withholding, the Fair Market Value of withheld Shares shall be determined in the same manner as the value of the Shares includible in income of the Grantees.
SECTION 13. TERMINATION OF EMPLOYMENT, TRANSFER, LEAVE OF ABSENCE, ETC.
(a) Termination of Employment. If the Grantee's employer ceases to be a Subsidiary, the Grantee shall be deemed to have terminated employment for purposes of the Plan.
(b) For purposes of the Plan, the following events shall not be deemed a termination of employment:
(i) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or
(ii) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee's right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.
SECTION 14. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder's consent. Except as provided in Section 3(c) or 3(d), without prior shareholder approval, in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Share Options or Share Appreciation Rights or effect repricing through cancellation and re-grants or cancellation of Share Options or Share Appreciation Rights in exchange for cash or other Awards. To the extent required under the rules of any securities exchange or market system on which the Shares are listed, Plan amendments shall be subject to approval by the Company shareholders entitled to vote at a meeting of shareholders. Nothing in this Section 14 shall limit the Administrator's authority to take any action permitted pursuant to Section 3(d) or 3(e).
In the event that the Plan is terminated while any Share Option remains outstanding and unexercised, the provisions of this Plan shall remain in full force to the extent necessary to give effect to the exercise of any such Share Option.
SECTION 15. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and any payments in cash, Shares or other consideration not received by a Grantee, a Grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company's obligations to deliver Shares or make payments with respect to Awards, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.
SECTION 16. GENERAL PROVISIONS
(a) No Distribution. The Administrator may require each person acquiring Shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to their distribution.
(b) Delivery of Share Certificates. Share certificates to Grantees under this Plan shall be deemed delivered for all purposes when the Company or a share transfer agent of the Company has mailed such certificates to the Grantee at the Grantee's last known address on file with the Company. Uncertificated Shares shall be deemed delivered for all purposes when the Company or a share transfer agent of the Company shall have given to the Grantee by electronic mail (with proof of receipt) or by mail to the Grantee at the Grantee's last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic "book entry" records). Notwithstanding anything to the contrary in this Plan, the Company shall not be required to issue or deliver any certificates evidencing Shares pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares or ADSs are listed, quoted or traded. All share certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Shares or ADSs are listed, quoted or traded. The Administrator may place legends on any share certificate to reference restrictions applicable to the Shares. In addition to the terms and conditions of this Plan, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.
(c) Shareholder Rights. Until the name of the Grantee appears in the register of members of the Company, which is prima facie evidence that the Grantee is a shareholder of the Company, no right to vote or receive dividends or any other rights of a shareholder will exist with respect to Shares to be issued in connection with an Award, notwithstanding the exercise of a Share Option or any other action by the Grantee with respect to an Award.
(d) Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.
(e) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to the Company's insider trading policies and procedures, as in effect from time to time.
(f) Clawback Policy. Awards under the Plan shall be subject to the Company's clawback policy, as in effect from time to time.
SECTION 17. EFFECTIVE DATE OF PLAN
The 2016 Share Option and Incentive Plan became effective immediately prior to the effectiveness of the Company's registration statement relating to its initial public offering in the United States, following shareholder approval in accordance with the law of the Cayman Islands and the Company's articles of association, and this Second Amended and Restated 2016 Share
Option and Incentive Plan shall become effective upon shareholder approval in accordance with the law of the Cayman Islands and the Company's articles of association. No grants of Share Options and other Awards may be made under this Plan after November 7, 2028.
SECTION 18. GOVERNING LAW
This Plan and all Awards and actions taken under them shall be governed by, and construed in accordance with, the laws of the Cayman Islands. In relation to any proceeding arising out of or in connection with this Plan, the Company and the Grantees irrevocably submit to the exclusive jurisdiction of the Cayman Islands courts.
DATE APPROVED BY BOARD OF DIRECTORS: January 14, 2016
DATE APPROVED BY SHAREHOLDERS: January 14, 2016
DATE OF APPROVAL OF AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS: August 7, 2018
DATE OF APPROVAL OF SECOND AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS: November 7, 2018
DATE APPROVAL OF SECOND AMENDED AND RESTATED PLAN BY SHAREHOLDERS: December 7, 2018
BEIGENE, LTD.
SECOND AMENDED AND RESTATED 2018 EMPLOYEE SHARE PURCHASE PLAN
The purpose of the BeiGene, Ltd. Second Amended and Restated 2018 Employee Share Purchase Plan (the "Plan") is to provide eligible employees of BeiGene, Ltd. (the "Company") and each Designated Subsidiary (as defined in Section 11) with opportunities to purchase Shares (either in the form of Ordinary Shares or ADSs). 7,355,315 Ordinary Shares1 (including the number of Ordinary Shares represented by ADSs purchased under the Plan) (representing approximately 0.95% (or less) of the issued share capital of the Company as at December 7, 2018, being the effective date of the shareholder approval of this second amended and restated Plan by the Board (the "Amended Effective Date")) in the aggregate have been approved and reserved for this purpose. The Plan is intended to constitute an "employee stock purchase plan" within the meaning of Section 423(b) of the United States Internal Revenue Code of 1986, as amended (the "Code"), and shall be interpreted in accordance with that intent.
1. Administration. The Plan will be administered by the person or persons (the "Administrator") appointed by the Company's Board of Directors (the "Board") for such purpose. The Administrator has authority at any time to: (i) adopt, alter and repeal such rules, guidelines and practices for the administration of the Plan and for its own acts and proceedings as it shall deem advisable; (ii) interpret the terms and provisions of the Plan; (iii) make all determinations it deems advisable for the administration of the Plan; (iv) decide all disputes arising in connection with the Plan; (v) implement any procedures, steps, additional or different requirements as may be necessary to comply with any local laws, including the laws of the People's Republic of China (the "PRC") and the other countries in which the Company operates, that may be applicable to this Plan, any Options or any related documents; and (vi) otherwise supervise the administration of the Plan, in its sole and absolute discretion and taking into account any matters in its sole and absolute discretion. All interpretations and decisions of the Administrator shall be binding on all persons, including the Company and the Participants. No member of the Board or individual exercising administrative authority with respect to the Plan shall be liable for any action or determination made in good faith with respect to the Plan or any option granted hereunder.
2. Offerings. The Company will make one or more offerings to eligible employees to purchase Shares under the Plan ("Offerings"). Unless otherwise determined by the Administrator, the initial Offering will begin on the first business day occurring on or after September1, 2018 and will end on last business day occurring on or before February 28, 2019 (the "Initial Offering"). Thereafter, unless otherwise determined by the Administrator, an Offering will begin on the first business day occurring on or after each March 1st and September 1st and will end on the last business day occurring on or before the following February 28th (or February 29th, if applicable) and August 31st, respectively. The Administrator may, in its discretion, designate a different period for any Offering, provided that no Offering shall exceed 27 months in duration.
3. Eligibility. All individuals classified as employees on the payroll records of the Company and each Designated Subsidiary are eligible to participate in any one or more of the Offerings under the Plan, provided that as of the first day of the applicable Offering (the "Offering Date") they are employed by the Company or a Designated Subsidiary and have completed at least six months of employment. Participation shall not otherwise be subject to any minimum performance targets. Notwithstanding any other provision herein, individuals who are not classified as employees of the Company or a Designated Subsidiary for purposes of the Company's or applicable Designated
Subsidiary's payroll system as of the Offering Date are not considered to be eligible employees of the Company or any Designated Subsidiary and shall not be eligible to participate in the Plan. In the event any such individuals are reclassified as employees of the Company or a Designated Subsidiary for any purpose, including, without limitation, common law or statutory employees, by any action of any third party, including, without limitation, any government agency, or as a result of any private lawsuit, action or administrative proceeding, such individuals shall, notwithstanding such reclassification, remain ineligible for participation. Notwithstanding the foregoing, the exclusive means for individuals who are not classified as employees of the Company or a Designated Subsidiary on the Company's or Designated Subsidiary's payroll system as of the Offering Date to become eligible to participate in this Plan is through an amendment to this Plan, duly executed by the Company, which specifically renders such individuals eligible to participate herein.
4. Participation.
(a) An eligible employee who is not a Participant in any prior Offering may participate in a subsequent Offering by submitting an enrollment form to the Company at least 15 business days before the Offering Date (or by such other deadline as shall be established by the Administrator for the Offering).
(b) Enrollment. The enrollment form will (a) state a whole percentage or the amount to be deducted from an eligible employee's Compensation (as defined in Section 11) per pay period, (b) authorize the purchase of Shares in each Offering in accordance with the terms of the Plan and (c) specify the exact name or names in which Shares purchased for such individual are to be issued pursuant to Section 10, and (d) provide such other terms as required by the Company. An employee who does not enroll in accordance with these procedures will be deemed to have waived the right to participate. Unless a Participant files a new enrollment form or withdraws from the Plan, such Participant's deductions and purchases will continue at the same percentage or amount of Compensation for future Offerings, provided he or she remains eligible.
(c) Notwithstanding the foregoing, participation in the Plan will neither be permitted nor be denied contrary to the requirements of the Code.
5. Employee Contributions. Each eligible employee may authorize payroll deductions from his or her after tax Compensation at a minimum of 1 percent up to a maximum of 10 percent of such employee's Compensation for each pay period. The Company will maintain book accounts showing the amount of payroll deductions made by each Participant for each Offering. No interest will accrue or be paid on payroll deductions.
6. Deduction Changes. Except as may be determined by the Administrator in advance of an Offering, a Participant may not increase or decrease his or her payroll deduction during any Offering, but may increase or decrease his or her payroll deduction with respect to the next Offering (subject to the limitations of Section 5) by filing a new enrollment form at least 15 business days before the next Offering Date (or by such other deadline as shall be established by the Administrator for the Offering). The Administrator may, in advance of any Offering, establish rules permitting a Participant to increase, decrease or terminate his or her payroll deduction during an Offering.
7. Withdrawal. A Participant may withdraw from participation in the Plan by delivering a written notice of withdrawal to the Company. The Participant's withdrawal will be effective as of the next business day. Following a Participant's withdrawal, the Company will promptly refund such individual's entire account balance under the Plan to him or her (after payment for any Shares purchased before the effective date of withdrawal). Partial withdrawals are not permitted. Such an employee may not begin participation again during the remainder of the Offering, but may enroll in a subsequent Offering in accordance with Section 4.
8. Grant of Options. On each Offering Date, the Company will grant to each eligible employee who is then a Participant in the Plan an option ("Option") to purchase on the last day of such Offering (the "Exercise Date"), at the Option Price hereinafter provided for, the lowest of (a) a number of Shares determined by dividing such Participant's accumulated payroll deductions on such Exercise Date by the lower of (i) 85 percent of the Fair Market Value of the Shares on the Offering Date, or (ii) 85 percent of the Fair Market Value of the Shares on the Exercise Date, (b) a number of Shares determined by multiplying $2,083 by the number of full months in the Offering and dividing the result by the Fair Market Value on the Offering Date; or (c) such other lesser maximum number of Shares as shall have been established by the Administrator in advance of the Offering; provided, however, that such Option shall be subject to the limitations set forth below. Each Participant's Option shall be exercisable only to the extent of such Participant's accumulated payroll deductions on the Exercise Date. The purchase price for each Share purchased under each Option (the "Option Price") will be 85 percent of the Fair Market Value of the Shares on the Offering Date or the Exercise Date, whichever is less.
Notwithstanding the foregoing, no Participant may be granted an option hereunder if such Participant, immediately after the option was granted, would be treated as owning Shares possessing 5 percent or more of the total combined voting power or value of all classes of share capital of the Company or any Parent or Subsidiary (as defined in Section 11). For purposes of the preceding sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the share ownership of a Participant, and all Shares which the Participant has a contractual right to purchase shall be treated as Shares owned by the Participant. In addition, no Participant may be granted an Option which permits his or her rights to purchase Shares under the Plan, and any other employee share purchase plan of the Company and its Parents and Subsidiaries, to accrue at a rate which exceeds $25,000 of the fair market value of such Shares (determined on the option grant date or dates) for each calendar year in which the Option is outstanding at any time. The purpose of the limitation in the preceding sentence is to comply with Section 423(b)(8) of the Code and shall be applied taking Options into account in the order in which they were granted. Furthermore, unless approved by the Company's shareholders in a general meeting, the total number of Ordinary Shares issued and to be issued upon the exercise of Options granted and to be granted under the Plan and any other plan of the Company to a Participant within any 12-month period shall not exceed 1% of the Ordinary Shares of the Company in issue at the date of any grant.
9. Exercise of Option and Purchase of Shares. Each employee who continues to be a Participant in the Plan on the Exercise Date shall be deemed to have exercised his or her Option on such date and shall acquire from the Company such number of whole Shares reserved for the purpose of the Plan as his or her accumulated payroll deductions on such date will purchase at the Option Price, subject to any other limitations contained in the Plan. Any amount remaining in a Participant's account at the end of an Offering solely by reason of the inability to purchase a fractional Share will be carried forward to the next Offering; any other balance remaining in a Participant's account at the end of an Offering will be refunded to the Participant promptly. Any Option granted but not exercised by the end of an Offering will automatically lapse and be cancelled. The Administrator may take all actions necessary to alter the method of Option exercise and the exchange and transmittal of proceeds with respect to Participants resident in the PRC not having permanent residence in a country other than the PRC in order to comply with applicable PRC foreign exchange and tax regulations, and any other applicable PRC laws and regulations.
10. Issuance of Certificates. Certificates representing Shares purchased under the Plan may be issued only in the name of the employee, in the name of the employee and another person of legal age as joint tenants with rights of survivorship, or in the name of a broker authorized by the employee to be his, her or their, nominee for such purpose.
11. Definitions.
The term "ADSs" means American depositary shares. Each ADS represents 13 Ordinary Shares.
The term "Change in Control" means (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company's outstanding voting power and outstanding Shares immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding Shares or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Shares of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company's outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.
The term "Compensation" means the amount of base pay (including overtime and commissions, to the extent determined by the Administrator), prior to salary reduction pursuant to Sections 125, 132(f) or 401(k) of the Code, but excluding incentive or bonus awards, allowances and reimbursements for expenses such as relocation allowances or travel expenses, income or gains on the exercise of Company share options, and similar items.
The term "Designated Subsidiary" means any present or future Subsidiary (as defined below) that has been designated by the Board to participate in the Plan. The Board may so designate any Subsidiary, or revoke any such designation, at any time and from time to time, either before or after the Plan is approved by the shareholders. The current list of Designated Subsidiaries is attached hereto as Appendix A.
The term "Fair Market Value of the Shares" on any given date means the fair market value of the Shares determined in good faith by the Administrator; provided, however, that if the ADSs are admitted to quotation on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), NASDAQ Global Market or another national securities exchange, the determination shall be made by reference to the closing price on such date. If there is no closing price for such date, the determination shall be made by reference to the last date preceding such date for which there is a closing price.
The term "Ordinary Shares" means the ordinary shares, par value US$0.0001 per share, of the Company.
The term "Parent" means a "parent corporation" with respect to the Company, as defined in Section 424(e) of the Code.
The term "Participant" means an individual who is eligible as determined in Section 3 and who has complied with the provisions of Section 4.
The term "Shares" means the Ordinary Shares or ADSs, as the context so requires.
The term "Subsidiary" means a "subsidiary corporation" with respect to the Company, as defined in Section 424(f) of the Code.
12. Rights on Termination of Employment. If a Participant's employment terminates for any reason before the Exercise Date for any Offering, no payroll deduction will be taken from any pay due and owing to the Participant and the balance in the Participant's account will be paid to such Participant or, in the case of such Participant's death, to his or her designated beneficiary as if such Participant had withdrawn from the Plan under Section 7. An employee will be deemed to have terminated employment, for this purpose, if the corporation that employs him or her, having been a
Designated Subsidiary, ceases to be a Subsidiary, or if the employee is transferred to any corporation other than the Company or a Designated Subsidiary. An employee will not be deemed to have terminated employment for this purpose, if the employee is on an approved leave of absence for military service or sickness or for any other purpose approved by the Company, if the employee's right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise provides in writing.
13. Special Rules; Non-U.S. Employees. Notwithstanding anything herein to the contrary, the Administrator may adopt special rules applicable to the employees of a particular Designated Subsidiary, whenever the Administrator determines that such rules are necessary or appropriate for the implementation of the Plan in a jurisdiction where such Designated Subsidiary has employees; provided that such rules are consistent with the requirements of Section 423(b) of the Code. Any special rules established pursuant to this Section 13 shall, to the extent possible, result in the employees subject to such rules having substantially the same rights as other Participants in the Plan. Notwithstanding the preceding provisions of this Plan, employees of the Company or a Designated Subsidiary who are citizens or residents of a non-United States jurisdiction (without regard to whether they are also citizens or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from eligibility under the Plan if (a) the grant of an Option under the Plan to a citizen or resident of the non-United States jurisdiction is prohibited under the laws of such jurisdiction or (b) compliance with the laws of the foreign jurisdiction would cause the Plan to violate the requirements of Section 423 of the Code.
14. Optionees Not Shareholders. Neither the granting of an Option to a Participant nor the deductions from his or her pay shall constitute such Participant a holder of the Shares covered by an Option under the Plan until such Shares have been purchased by and issued to him or her. Accordingly, Participants shall not have any voting rights, or rights to participate in any dividends or distributions (including those arising on a liquidation of the Company) declared or recommended or resolved to be paid to the shareholders on the register on a date prior to such Shares having been purchased by and issued to him or her.
15. Rights Not Transferable. Rights under the Plan are not transferable by a Participant other than by will or the laws of descent and distribution, and are exercisable during the Participant's lifetime only by the Participant.
16. Application of Funds. All funds received or held by the Company under the Plan may be combined with other corporate funds and may be used for any corporate purpose.
17. Adjustment in Case of Changes Affecting Shares; Change in Control.
(a) In the event of a subdivision of outstanding Shares, the payment of a dividend in Shares or any other change affecting the Shares, the number of Shares approved for the Plan and the share limitation set forth in Section 8 shall be equitably or proportionately adjusted to give proper effect to such event.
(b) In the event of a Change in Control, each outstanding Option will be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Offering with respect to which such Option relates will be shortened by setting a new Exercise Date (the "New Exercise Date") on which such Offering Period shall end. The New Exercise Date will occur before the date of the proposed Change in Control. The Administrator will notify each Participant in writing or electronically prior to the New Exercise Date, that the Exercise Date for the Participant's Option has been changed to the New Exercise Date and that the Participant's Option will be exercised automatically on the New Exercise Date,
unless prior to such date the Participant has withdrawn from the Offering as provided in Section 7 hereof.
18. Amendment of the Plan. The Board may at any time and from time to time amend the Plan in any respect, except that without the approval of the shareholders, no amendment shall be made increasing the number of Ordinary Shares approved for the Plan or making any other change that would require shareholder approval in order for the Plan, as amended, to qualify as an "employee stock purchase plan" under Section 423(b) of the Code.
19. Insufficient Shares. If the total number of Shares that would otherwise be purchased on any Exercise Date plus the number of Shares purchased under previous Offerings under the Plan exceeds the maximum number of Shares issuable under the Plan, the Shares then available shall be apportioned among Participants in proportion to the amount of payroll deductions accumulated on behalf of each Participant that would otherwise be used to purchase Shares on such Exercise Date.
20. Termination of the Plan. The Plan may be terminated at any time by the Board. Upon termination of the Plan, all amounts in the accounts of Participants shall be promptly refunded.
21. Application of Hong Kong Listing Rules. Solely for the purposes of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), to the extent that the Plan is deemed to be an option plan for the purposes of Chapter 17 of the Listing Rules, the number of Shares purchased by a Participant pursuant to Section 8 (the "Purchased Shares") shall be deemed to comprise of (i) first, such number of Shares determined by dividing the Participant's accumulated payroll deductions on the Exercise Date by the higher of (A) the Fair Market Value of the Shares on the Offering Date and (B) the average Fair Market Value of the Shares on the five business days immediately preceding the Offering Date (the "Deemed Option Shares"), and (ii) the number of Shares determined by deducting the Deemed Option Shares from the Purchased Shares, which shall be deemed to be a share award by the Company.
22. Governmental Regulations. The Company's obligation to sell and deliver Shares under the Plan is subject to obtaining all governmental approvals required in connection with the authorization, issuance, or sale of such Shares. In the event that the Plan is terminated while any Option remains outstanding and unexercised, then any such Options shall lapse and be cancelled.
23. Participants' Compliance with Laws. Participants shall comply with all applicable laws and regulations with respect to their participation in the Plan.
24. Governing Law. This Plan and all Options and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the Cayman Islands, applied without regard to conflict of law principles. In relation to any proceeding arising out of or in connection with this Plan, the Company and the Participants irrevocably submit to the exclusive jurisdiction of the Cayman Islands courts.
25. Issuance of Shares. Shares may be issued upon exercise of an Option from authorized but unissued Shares, from Shares held in the treasury of the Company, or from any other proper source.
26. Tax Withholding. Participation in the Plan is subject to any minimum required tax and/or social security withholding on income of the Participant in connection with the Plan. Each Participant agrees, by entering the Plan, that the Company and its Subsidiaries shall have the right to deduct any such taxes and/or social security from any payment of any kind otherwise due to the Participant, including Shares issuable under the Plan.
27. Notification Upon Sale of Shares. Each Participant who is or may become subject to U.S. income tax agrees, by entering the Plan, to give the Company prompt notice of any disposition of Shares purchased under the Plan where such disposition occurs within two years after the date of grant
of the Option pursuant to which such Shares were purchased or within one year after the date such Shares were purchased.
28. Effective Date and Approval of Shareholders. The Plan shall take effect on the later of the date it is adopted by the Board and the date it is approved by the holders of a majority of the votes cast at a meeting of shareholders at which a quorum is present (such date, the "Effective Date") and shall remain in effect for ten years from the Effective Date unless terminated earlier by the Board in accordance with Section 28.
DATE APPROVED BY SHAREHOLDERS: June 6, 2018
DATE OF APPROVAL OF AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS: August 7, 2018
DATE OF APPROVAL OF SECOND AMENDED AND RESTTED PLAN BY BOARD OF DIRECTORS: November 7, 2018
DATE OF APPROVAL OF SECOND AMENDED AND RESTTED PLAN BY SHAREHOLDERS: December 7, 2018
BeiGene (Hong Kong) Co., Limited
BeiGene (Beijing) Co., Ltd.
BeiGene AUS PTY LTD.
BeiGene 101
BeiGene (Suzhou) Co., Ltd.
BeiGene USA, Inc.
BeiGene Biologics Co., Ltd.
BeiGene (Shanghai) Co., Ltd.
BeiGene Guangzhou Biologics Manufacturing Co., Ltd.
BeiGene (Guangzhou) Co., Ltd.
BeiGene Pharmaceutical (Shanghai) Co., Ltd.
BeiGene Switzerland GmbH
BeiGene Ireland Limited
Company No. 247127
BEIGENE, LTD.
(the “Company”Company”)
FORM OF PROXY
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being (a) shareholder(s) of the Company, hereby appoint the Chairman of the meeting or |
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as my/our proxy to vote for me/us and on my/our behalf at the annualextraordinary general meeting of the shareholders of the Company (the “AGM”EGM”) to be held on June 1, 2017December 7, 2018 at 2:8:30 p.m.,a.m. local time at the offices of Ernst & Young at EY Tower, 100 Adelaide St. W, Toronto, CanadaBullpen, Charles Unit 4A, The Albany, 127 South Ocean Boulevard, New Providence, The Bahamas and at any adjournment or postponement of the AGM.EGM.
The Board of Directors of the Company (the “Board of Directors”) recommends a vote FOR the following resolutions.resolutions 1 to 6.
My/Our proxy is instructed to vote on the resolutions specified below:
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Resolution 1 — THAT |
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Resolution 2 — THAT |
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Resolution 3 — Ordinary Resolution THAT the | o | o | o | |||
Resolution 4 — Ordinary Resolution THAT the Company and its underwriters be and are hereby authorized, at their sole discretion, to allocate to each of Baker Bros. Advisors LP and Hillhouse Capital Management, Ltd. and parties affiliated with each of them (the “Existing Shareholders”), up to a maximum amount of shares in order to maintain the same shareholding percentage of each of the Existing Shareholders (based on the then-outstanding share capital of the Company) before and after the allocation of the corresponding securities issued pursuant to an offering conducted pursuant to the general mandate set forth in Resolution 3 for a period of five years, which period will be subject to an extension on a rolling basis each year. | o | o | o | |||
Resolution 5 — Ordinary Resolution THATthe | o | o | o | |||
Resolution 6 — Ordinary Resolution THAT the BeiGene, Ltd. Second Amended and Restated 2018 Employee Share Purchase Plan be and is hereby approved and adopted. |
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Please tick to indicate your voting preference. If you do not complete this section, your proxy will: (i) vote in the manner recommended by the directorsBoard of the CompanyDirectors on the above matters presented in the proxy statement dated on or about April 26, 2017November 8, 2018 provided with this proxy form (the “Proxy Statement”Statement”); and (ii) vote or abstain at his/her discretion with respect to any other matters properly presented at the AGM.EGM.
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NOTES
1. This proxy is solicited by the Board of Directors.A proxy need not be a shareholder of the Company. YouA member may appoint a proxy of yourhis/her own choice. If you wish to appoint someone else, please delete the words “the Chairman of the meeting” and insert the name of the person whom you wish to appoint in the space provided. The Chairman of the meeting will act as your proxy, whether or not such deletion is made, if no other name is inserted.
2. If this form is returned without an indication as to how the proxy shall vote, the proxy will (i) vote in the manner recommended by the directorsBoard of the CompanyDirectors on the above matters presented in the Proxy Statement and (ii) vote or abstain at his/her discretion with respect to any other matters properly presented at the AGM.EGM.
3. If you mark the box “abstain”, it will mean that your proxy will abstain from voting and, accordingly, your vote will not be counted either for or against the relevant resolution.
4. This form of proxy is for use by shareholders only. If the appointor is a corporate entity this form of proxy must either be under its seal or under the hand of an officer or attorney duly authorized for that purpose.
5. To be valid, this form must be properly executed, dated and lodged (together with a duly signed and dated power of attorney or other authority (if any) under which it is executed (or a notarially certified copy or such power of attorney or other authority)): as follows:
a. Persons who hold our ordinary shares directly on our Cayman Islands register of members on the record date must return a proxy card (i) by mail or by hand to the offices of our registrar in the Company’s registrar,Cayman Islands (the “Cayman Registrar”): Mourant Ozannes CorporateGovernance Services (Cayman) Limited, (the “Registrar”), at 94 Solaris Avenue, Camana Bay, Grand Cayman KY1-1108, Cayman Islands;Islands, or
b. (ii) by email at CaymanAdmin@mourantozannes.com.BeiGene@mourant.com.
b. Persons who hold our ordinary shares directly on our Hong Kong register of members on the record date must return a proxy card by mail or by hand to the offices of our registrar in Hong Kong (the “HK Registrar”): Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
so as to be received before the time of the AGM.5:00 p.m. Hong Kong Time on December 4, 2018.
6. Any alterations made to this form must be initialled by you.
7. You may revoke your proxy by (i) re-submitting this proxy form by mail or email or by hand before the AGM5:00 p.m. Hong Kong Time on December 4, 2018 or (ii) attending the AGMEGM and voting in person. Any written notice of revocation or subsequent proxy card must be received by ourthe Cayman Registrar or the HK Registrar, as applicable, prior to the time noted above for holding of the AGM.5:00 p.m. Hong Kong Time on December 4, 2018. Such written notice of revocation or subsequent proxy card should be sent to ourthe Cayman Registrar or the Hong Kong Registrar, as applicable, by mail or email.email or by hand.
8. The completion and return of this form will not prevent you from attending the AGMEGM and voting in person should you so wish, although attendance at the AGMEGM will not in and of itself revoke this proxy.
9. In the case of joint holders, signature of any one holder will be sufficient, but the names of all the joint holders should be stated. The vote of the senior holder (according to the order in which the names stand in the register of members in respect of the holding) who tenders a vote in person or by proxy will be accepted to the exclusion of the vote(s) of the other joint holder(s).