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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Other Named Executive Officers.
Each of Mr. Nguyen, Dr. Noonberg (prior to her resignation),Garren, Mr. HomanSmith, and Dr.NickersonMs. Karp, are eligible to participate in our Amended and Restated Severance Plan (the “Severance Plan”), which provides for certain severance payments and benefits in the event of a qualifying termination of employment. In addition, they have each been awarded stock options containing certain accelerated vesting provisions in the event of a qualifying termination of employment. The material terms of the Severance Plan and these option agreements, as they relate to certain
potential terminations of employment, are described below under the heading
Change in Control and Severance Arrangements —- Other Named Executive Officers. For the same reasons described above with respect to Dr. Kinney, the Committee considered these arrangements to be necessary in order to secure the services of these named executive officers and an important retention tool that
ensures that personal uncertainties do not dilute our executive officers' completehelps retain, stabilize, and focus
on promoting shareholder value.In connection with the hiring of Dr. Noonberg as our Chief Medical Officer in May 2017, we entered into an offer letter with her that sets forth certain terms and conditions of her employment. That offer letter provided for a retention (hire-on) bonus of $100,000, a starting annual base salary of $465,000, a targeted annual cash bonus for fiscal year 2017 equal to 40% of her base salary earned in 2017, and an initial stock option award for 100,000 shares, as described above.
Dr. Noonberg resigned from the Company on March 15, 2018. She was not entitled to and did not receive any severance payment or benefit in connection with her resignation, and her stock option was cancelled as of that date.
Other Compensation-Related Practices and Considerations
Stock Option Grant Practices and Procedures. All stock options awarded to our executive officers other than the CEO are approved by the Committee, and stock options awarded to our CEO are approved by our Board (based on recommendations from the Committee). Grants to other employees are pursuant to specific delegations of authority from the Committee, which delegations include individual grant limits, aggregate grant limits, specification of grant terms and specification of grant dates.
Stock option awards approved (or delegated for approval) by the Committee and the Board have always been granted on a date not earlier than the date of approval by the Committee, Board or delegated officer, and with an exercise price that is not less than the fair market value (as defined in the LTIP) on the dateevent of grant.
Tax Deductibility. Section 162(m)a change of the U.S. Internal Revenue Code of 1986, as amended, limited a company's ability to deduct for tax purposes compensation in excess of $1,000,000 paid in any single tax year to the chief executive officer or
control.
any of the next three most highly compensated executive officers (other than the chief financial officer). Prior to the U.S. Tax Cuts and Jobs Act of 2017 (the “2017 Tax Reform Act”), compensation deemed to be performance-based in accordance with Section 162(m) was exempt from this $1,000,000 limitation, and compensation paid to the chief financial officer was not subject to the deductibility limitation of Section 162(m). As part of the 2017 Tax Reform Act, the ability to rely on this “qualified performance-based compensation” exception was eliminated and the limitation on deductibility generally was expanded to include all named executive officers, including the chief financial officer. Our LTIP was designed and approved by our shareholders so that incentive compensation under the LTIP may be performance-based in accordance with Section 162(m). However, as a result of the 2017 Tax Reform Act, subject to its “grandfathering” rules, the Company may no longer take a tax deduction for any compensation paid to its named executive officers in excess of $1,000,000 in any tax year beginning on or after January 1, 2018.
2018 PROXY STATEMENT
TABLE OF CONTENTS
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The information in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated
by reference into any filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether before or after the date hereof and irrespective of any general incorporation language in any such filing.The Compensation Committee reviewed and discussed with management the
Compensation Discussion and Analysisincluded in this Proxy Statement. Based on those reviews and discussions, the Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy
Statement.Dennis J. Selkoe (Committee Chairman)
Lars G. Ekman
Christopher S. Henney
Statement and incorporated by reference into the Company’s Annual Report on Form 10-K. | | | | Paula K. Cobb (Committee Chair)
Oleg Nodelman
Sanjiv K. Patel | |
2018 PROXY STATEMENT
42 | | | | | | 2023 PROXY STATEMENT |
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The following table provides certain information on compensation earned by or awarded to the named executive officers of the Company during our fiscal
year 2022, and to the extent required by applicable SEC disclosure rules, fiscal years
2017, 20162021 and
2015.2020.
Summary Compensation Table - Fiscal Year 2022
Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards(1) ($) | Non-Equity Incentive Plan Compensation(2) ($) | All Other Compensation(3) ($) | Total ($) |
Gene G. Kinney, Ph.D.(4) President and Chief Executive Officer | | 2017 | | | 520,833 | | | — | | | 4,301,412 | | | 312,500 | | | 13,500 | | | 5,148,245 | |
| 2016 | | | 425,000 | | | — | | | 4,089,442 | | | 208,688 | | | 11,925 | | | 4,735,055 | |
| 2015 | | | 369,792 | | | — | | | 1,206,758 | | | 131,276 | | | 11,263 | | | 1,719,089 | |
Tran B. Nguyen Chief Financial Officer | | 2017 | | | 399,167 | | | — | | | 2,688,383 | | | 159,667 | | | 13,500 | | | 3,260,717 | |
| 2016 | | | 366,700 | | | — | | | 1,473,271 | | | 154,014 | | | 11,925 | | | 2,005,910 | |
| 2015 | | | 348,075 | | | — | | | 1,021,103 | | | 128,788 | | | 11,263 | | | 1,509,229 | |
Sarah B. Noonberg, M.D., Ph.D.(5) Former Chief Medical Officer | | 2017 | | | 310,000 | | | 100,000 | (6) | | 3,640,070 | | | 124,000 | | | 8,100 | | | 4,182,170 | |
| 2016 | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2015 | | | — | | | — | | | — | | | — | | | — | | | — | |
A. W. Homan Chief Legal Officer | | 2017 | | | 353,317 | | | — | | | 1,971,481 | | | 141,327 | | | 13,500 | | | 2,479,625 | |
| 2016 | | | 338,250 | | | — | | | 1,019,957 | | | 142,065 | | | 11,925 | | | 1,512,197 | |
| 2015 | | | 328,958 | | | — | | | 789,034 | | | 116,780 | | | 11,263 | | | 1,246,035 | |
Tara Nickerson, Ph.D. Chief Business Officer | | 2017 | | | 339,608 | | | — | | | 1,613,030 | | | 135,843 | | | 13,500 | | | 2,101,981 | |
| 2016 | | | 317,750 | | | — | | | 793,300 | | | 131,866 | | | 11,925 | | | 1,254,841 | |
| 2015 | | | 307,917 | | | — | | | 696,206 | | | 106,231 | | | 11,263 | | | 1,121,617 | |
| Gene G. Kinney, Ph.D.
President and Chief Executive Officer
| | | 2022 | | | 600,521 | | | — | | | 5,705,925 | | | 414,359 | | | 15,250 | | | 6,736,055 | |
| 2021 | | | 573,250 | | | — | | | 3,900,675 | | | 429,938 | | | 14,500 | | | 4,918,363 | |
| 2020 | | | 554,292 | | | — | | | 2,526,450 | | | 332,575 | | | 14,250 | | | 3,427,567 | |
| Tran B. Nguyen
Chief Strategy Officer and
Chief Financial Officer | | | 2022 | | | 480,389 | | | — | | | 1,940,015 | | | 267,216 | | | 15,250 | | | 2,702,870 | |
| 2021 | | | 458,574 | | | — | | | 1,310,627 | | | 272,278 | | | 14,500 | | | 2,055,979 | |
| 2020 | | | 443,415 | | | — | | | 884,258 | | | 221,708 | | | 14,250 | | | 1,563,631 | |
| Hideki Garren, M.D., Ph.D.
Chief Medical Officer | | | 2022 | | | 510,417 | | | — | | | 1,940,015 | | | 283,919 | | | 15,250 | | | 2,749,601 | |
| 2021 | | | 364,044 | | | 50,000(4) | | | 4,319,200 | | | 290,938 | | | 14,500 | | | 5,038,682 | |
| Brandon S. Smith
Chief Operating Officer | | | 2022 | | | 476,250 | | | — | | | 1,940,015 | | | 264,914 | | | 15,250 | | | 2,696,429 | |
| 2021 | | | 420,667 | | | — | | | 2,113,654 | | | 213,176 | | | 14,500 | | | 2,761,997 | |
| 2020 | | | 333,333 | | | 100,000(5) | | | 1,843,368 | | | 133,333 | | | 14,250 | | | 2,424,284 | |
| Carol D. Karp
Chief Regulatory Officer | | | 2022 | | | 472,154 | | | — | | | 1,940,015 | | | 210,108 | | | 15,250 | | | 2,637,527 | |
| 2021 | | | 450,713 | | | — | | | 873,751 | | | 214,089 | | | 14,500 | | | 1,553,053 | |
| 2020 | | | 435,814 | | | — | | | 589,505 | | | 174,326 | | | 14,250 | | | 1,213,895 | |
(1)
| (1) | ConsistsFor 2022, consists of NQSOs (nonqualified stock options) awarded under our Amended and Restated 20122018 Long Term Incentive Plan, as amended (the “LTIP”“2018 LTIP”). These amounts do not reflect compensation actually received. Rather, these amounts represent the grant date fair value of the options awarded, calculated in accordance with Financial Accounting Standards Board ASC Topic 718. For a discussion of the assumptions made in calculating the values reflected for fiscal year 2017,2022, see Note 109 of the Consolidated Financial Statements included in our Form 10-K. |
(2)
| (2) | Consists of cash bonuses paid under our Incentive Compensation Plan (the “ICP”) for the fiscal year performance periods indicated (these bonuses were paid in the subsequent year, but are reported for the fiscal year for which they were earned). For more information, see the Grants of Plan Based Awards - Fiscal Year 2017 2022 table below. |
| (3)
| Consists only of Company contributions to the named executive officer’sofficer's account under the Company’sCompany's tax-qualified 401(k) defined contribution plan. |
| (4) | Dr. Kinney was our Chief Scientific Officer and Head of Research and Development until his promotion to Chief Operating Officer on August 31, 2016. He was promoted to President and Chief Executive Officer on September 30, 2016. |
| (5) | Dr, Noonberg commenced employment on May 1, 2017 and was appointed as our Chief Medical Officer on May 16, 2017. She resigned from that position on February 2, 2018 and resigned as an employee on March 15, 2018. |
| (6)
| Consists of a retention bonus paid to Dr. NoonbergGarren in connection with the commencement of herhis employment on May 1, 2017 and appointment as our Chief Medical Officer. |
(5)
| Consists of a retention bonus paid to Mr. Smith in connection with the commencement of his employment and appointment as our Chief Business Officer. |
2018 PROXY STATEMENT
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The following table shows all plan-based awards granted to our named executive officers during our fiscal year
2017.2022.
Grants of Plan-Based Awards
Fiscal Year 20172022
| | Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) | All Other Option Awards: Number of Securities Underlying Options(2) (#) | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Option Awards(3) ($) |
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) |
Gene G. Kinney | | 2/22/2017 | | | 187,500 | | | 312,500 | | | 468,750 | | | 120,000 | | | 55.00 | | | 4,301,412 | |
Tran B. Nguyen | | 2/22/2017 | | | 95,800 | | | 159,667 | | | 239,500 | | | 75,000 | | | 55.00 | | | 2,688,383 | |
Sarah B. Noonberg | | 5/16/2017 | | | 74,400 | | | 124,000 | | | 186,000 | | | 100,000 | | | 56.37 | | | 3,640,070 | |
A. W. Homan | | 2/22/2017 | | | 84,796 | | | 141,327 | | | 211,990 | | | 55,000 | | | 55.00 | | | 1,971,481 | |
Tara Nickerson | | 2/22/2017 | | | 81,506 | | | 135,843 | | | 203,765 | | | 45,000 | | | 55.00 | | | 1,613,030 | |
| Gene G. Kinney | | | 2/23/2022 | | | | | | | | | | | | | | | 250,000 | | | 32.45 | | | 5,705,925 | |
| | | | | | | 217,917 | | | 363,195 | | | 544,793 | | | | | | | | | | |
| Tran B. Nguyen | | | 2/23/2022 | | | 2/18/2022 | | | | | | | | | | | | 85,000 | | | 32.45 | | | 1,940,015 | |
| | | | | | | 108,952 | | | 242,116 | | | 363,174 | | | | | | | | | | |
| Hideki Garren | | | 2/23/2022 | | | 2/18/2022 | | | | | | | | | | | | 85,000 | | | 32.45 | | | 1,940,015 | |
| | | | | | | 115,763 | | | 257,250 | | | 385,875 | | | | | | | | | | |
| Brandon S. Smith | | | 2/23/2022 | | | 2/18/2022 | | | | | | | | | | | | 85,000 | | | 32.45 | | | 1,940,015 | |
| | | | | | | 108,338 | | | 240,750 | | | 361,125 | | | | | | | | | | |
| Carol D. Karp | | | 2/23/2022 | | | 2/18/2022 | | | | | | | | | | | | 85,000 | | | 32.45 | | | 1,940,015 | |
| | | | | | | 85,668 | | | 190,372 | | | 285,559 | | | | | | | | | | |
(1)
| (1)This column shows the date that the Compensation Committee took action with respect to the award if that date is different than the grant date. If the grant date is not the meeting date, it is a fixed, future date specified at the time of the grant. |
(2)
| Consists of cash bonus awards under the ICP for our fiscal year 2017.2022. Under these awards, the named executive officers were eligible to receive a cash payout depending entirely or primarily upon Company performance relative to pre-determined objectives for fiscal year 2017.2022. In the case of Dr. Kinney, his earned cash payoutspayout depended 100% upon Company performance against those pre-determined objectives. In the case of the other named executive officers, their earned cash payouts depended 75% on Company performance against those pre-determined objectives and 25% on individual performance for fiscal year 2017.2022. The amounts shown in the Threshold column are those that would have been paid if the minimum or threshold level of Company performance relative to the pre-determined objectives established by the Committee had been achieved for payouts to have been earned (which minimum performance the Committee had set at 60% of the pre-determined corporate objectives) and, in the case of the named executive officers other than Dr. Kinney, no amount washad been paid for the individual performance; these amounts equal 36% of annual salary earned in 2017 in the case of Dr. Kinney and 24% of annual base salary earned in 2017 in the caseperformance component of the other named executive officers.bonus opportunity. The amounts shown in the Target column are those that would have been paid if each of the pre-determined objectives for Company performance established by the Committee had been achieved, and assume that the Committee also determined that individual performance supported a 100% payout; these amounts equal 60% of annual base salary earned in 2017 in the case of Dr. Kinney and 40% of annual base salary earned in 2017 in the case of the other named executive officers.payout. The amounts shown in the Maximum column are those that would have been paid if the each of the pre-determined objectives for Company performance established by the Committee had been achieved and the Committee determined that other Company and individual accomplishments supported a maximum payout; these amounts equal 90% of annual base salary earned in 2017 in the case of Dr. Kinney and 60% of annual base salary earned in 2017 in the case of the other named executive officers.payout. If Company performance relative to the pre-determined objectives for fiscal year 20172022 had not at least equaled the minimum (threshold) level of 60%, no payout would have been earned. Regardless of Company and/or individual performance, the maximum payout for each named executive officer waswould have been 150% of histheir targeted bonus payout. In addition, regardless of actual performance relative to the pre-determined objectives, the Committee retained discretion to reduce or eliminate any amount that otherwise would be payable. The amounts reported in this table are “estimated future payouts” as they existed at the time the award was made, and assume that each named executive officer actually earned theirhis or her target annual base salary in 2017;2022; the actual cash payouts to each executive officer are reported in the Non-Equity Incentive Plan column of the Summary Compensation Table - Fiscal Year 2022 above. |
(3)
| (2) | Consists of ordinary shares that may be acquired by exercise of nonqualified stock options awarded under the 2018 LTIP. These option awards have a four-year vesting schedule from the vesting commencement date (which varied by individual and grant)date), with 25% of the shares subject to the option vesting on the first anniversary of that vesting commencementgrant date, and the remainder vesting in equal monthly installments over the next three years thereafter, subject to continued employment (except in the event of certain terminations of employment, as described below under the heading Change in Control and Severance Arrangements). The option exercise price per share for each of these option awards is the closing market price of the Company’sCompany's ordinary shares on the date of grant. These optionsoption awards expire no later than ten years after the grant date. The options reported in this tableThese option awards are also reported in the Outstanding Equity Awards at Fiscal Year-End — - Fiscal Year 20172022 table below. |
(4)
| (3) | These amounts do not reflect compensation actually received. Rather, these amounts represent the grant date fair value of the options awarded,option awards, calculated in accordance with Financial Accounting Standards Board ASC Topic 718. For a discussion of the assumptions made in calculating the values reflected, see Note 109 of the Consolidated Financial Statements included in our Form 10-K. The fair values reported in this table are also reported in the Option Awards column of the Summary Compensation Table - Fiscal Year 2022 above. |
2018 PROXY STATEMENT
44 | | | | | | 2023 PROXY STATEMENT |
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The following table shows all outstanding equity awards - which were only nonqualified stock options - held by our named executive officers at the end of our fiscal year
2017.2022. Certain of the stock option awards reported in this table are also reported in the
Grants of Plan-Based Awards —- Fiscal Year 20172022 table above.
Outstanding Equity Awards at Fiscal Year-End
Fiscal Year 20172022
| Option Awards(1) |
| Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date |
Name | Exercisable | Unexercisable |
Gene G. Kinney | | 109,074 | | | — | (2) | | 6.41 | | | 01/29/2023 | |
| | 43,125 | | | 1,875 | (3) | | 29.81 | | | 02/04/2024 | |
| | 44,687 | | | 20,313 | (4) | | 27.81 | | | 03/11/2025 | |
| | 29,791 | | | 35,209 | (5) | | 34.61 | | | 02/24/2026 | |
| | 15,625 | | | 34,375 | (6) | | 52.21 | | | 09/01/2026 | |
| | 9,375 | | | 20,625 | (7) | | 45.13 | | | 11/02/2026 | |
| | — | | | 120,000 | (8) | | 55.00 | | | 02/22/2027 | |
Tran B. Nguyen | | 150,000 | | | — | (9) | | 6.73 | | | 04/01/2023 | |
| | 43,125 | | | 1,875 | (3) | | 29.81 | | | 02/04/2024 | |
| | 37,812 | | | 17,188 | (4) | | 27.81 | | | 03/11/2025 | |
| | 29,791 | | | 35,209 | (5) | | 34.61 | | | 02/24/2026 | |
| | — | | | 75,000 | (8) | | 55.00 | | | 02/22/2027 | |
Sarah B. Noonberg | | — | | | 100,000 | (10) | | 56.37 | | | 05/16/2027 | |
A. W. Homan | | 60,416 | | | 8,334 | (11) | | 22.14 | | | 05/01/2024 | |
| | 29,218 | | | 13,282 | (4) | | 27.81 | | | 03/11/2025 | |
| | 20,625 | | | 24,375 | (5) | | 34.61 | | | 02/24/2026 | |
| | — | | | 55,000 | (8) | | 55.00 | | | 02/22/2027 | |
Tara Nickerson | | 11,750 | | | — | (2) | | 6.41 | | | 01/29/2023 | |
| | 8,250 | | | — | (12) | | 6.73 | | | 04/01/2023 | |
| | 47,916 | | | 2,084 | (3) | | 29.81 | | | 02/04/2024 | |
| | 25,781 | | | 11,719 | (4) | | 27.81 | | | 03/11/2025 | |
| | 16,041 | | | 18,959 | (5) | | 34.61 | | | 02/24/2026 | |
| | — | | | 45,000 | (8) | | 55.00 | | | 02/22/2027 | |
| Gene G. Kinney | | | 45,000 | | | — | | | 29.81 | | | 02/04/2024 | |
| | | | 620,000 | | | — | | | 15.04 | | | 06/21/2028 | |
| 234,791 | | | 10,209(2) | | | 13.53 | | | 02/27/2029 | |
| 141,666 | | | 58,334(3) | | | 12.15 | | | 02/25/2030 | |
| 50,000 | | | — | | | 12.15 | | | 02/25/2030 | |
| 59,090 | | | — | | | 22.85 | | | 03/11/2025 | |
| 40,625 | | | — | | | 22.85 | | | 02/24/2026 | |
| 25,125 | | | — | | | 22.85 | | | 09/01/2026 | |
| 16,759 | | | — | | | 22.85 | | | 11/02/2026 | |
| 62,500 | | | — | | | 22.85 | | | 02/22/2027 | |
| 140,601 | | | — | | | 22.85 | | | 02/21/2028 | |
| 114,583 | | | 135,417(4) | | | 22.60 | | | 02/25/2031 | |
| — | | | 250,000(5) | | | 32.45 | | | 02/23/2032 | |
| Tran B. Nguyen | | | 30,000 | | | — | | | 6.73 | | | 04/01/2023 | |
| 45,000 | | | — | | | 29.81 | | | 02/04/2024 | |
| 250,000 | | | — | | | 15.04 | | | 06/21/2028 | |
| 91,041 | | | 3,959(2) | | | 13.53 | | | 02/27/2029 | |
| 74,375 | | | 30,625(3) | | | 12.15 | | | 02/25/2030 | |
| 50,000 | | | — | | | 22.85 | | | 03/11/2025 | |
| 40,625 | | | — | | | 22.85 | | | 02/24/2026 | |
| 39,062 | | | — | | | 22.85 | | | 02/22/2027 | |
| 60,150 | | | — | | | 22.85 | | | 02/21/2028 | |
| 38,500 | | | 45,500(4) | | | 22.60 | | | 02/25/2031 | |
| — | | | 85,000(5) | | | 32.45 | | | 02/23/2032 | |
| Hideki Garren | | | 76,166 | | | 145,834(6) | | | 24.90 | | | 04/05/2031 | |
| — | | | 85,000(5) | | | 32.45 | | | 02/23/2032 | |
| Brandon S. Smith | | | 165,000 | | | 75,000(7) | | | 11.12 | | | 03/02/2030 | |
| 25,666 | | | 30,334(4) | | | 22.60 | | | 02/25/2031 | |
| 7,812 | | | 17,188(8) | | | 70.81 | | | 09/29/2031 | |
| — | | | 85,000(5) | | | 32.45 | | | 02/23/2032 | |
| (1) | | 2023 PROXY STATEMENT | | | 45 |